Real Estate Compliance: Avoid Costly Mistakes & Legal Risk

Mike David (00:00)
Yeah, yeah, I’ll tell you about one of my this had to be maybe my second client in the consultation practice. They were a validation company for lending compliance. Basically, if you had signed up for some type of secured loan, whether it was a car business debt, the major companies, banks and other individuals, sometimes the actual car manufacturer would want a letter delivered to somebody and then it would be your job to travel out to their home, travel out somewhere else and give them a letter or give some information and

it was before things would go bad and it would just be like, hey, you what’s going on? haven’t heard from you. So a lot of this really opened me up to what happens when there’s a breakdown in communication. And there was a time where an individual was unsure of why I was coming out to meet them somewhere. And the gentleman came out with a gun and it just, you know, a lot of things kind of became really real there.

Leo Wehdeking (02:24)
Hello everyone, welcome to the Investor Fuel Podcast. I’m your host Leo Wehdeking and today I am joined by someone I’ve been looking forward to chatting with, Mike David, who’s been making serious moves in the real estate industry. Mike, glad to have you here, man.

Mike David (02:39)
Hey, Leo, thank you so much for having me. I appreciate you making some time here on this beautiful Friday. How are you?

Leo Wehdeking (02:44)
I’m

actually pretty good, pretty good, man. I’m pretty excited to have you over here. Mike, I think I think that our listeners are going are really going to take something away from how you’ve been approaching the real estate business and also your consult consulting business. Right. So let’s dive in. All right. And for people who may not be familiar with your world, can you give us the short version on what’s your main focus these days?

Mike David (03:12)
Yeah, yeah, appreciate it. Well, my name is Mike to be just a pleasure to meet everybody. ⁓ Many of you may know me from my time at bigger pockets. I built the investor concierge division there. Primarily we connected investors with different professionals in their network, primarily lenders agents. So we have about 50,000 investors build their team in a three year period over there. So that was a great time to do some consultative work with them. Really helped me build my network in real estate. Right now I’ve moved fully into government affairs and compliance.

So I’m focusing more on health care providers, physicians, groups like that that have licenses on the line and they need support dealing with state and local government, other regulations. But it is great to speak with everybody here because I wanted to bring one of the topics about real estate lending compliance that was very big for me there and share some tips with people there so you can stay out of hot water.

Leo Wehdeking (04:04)
All right, all right. Love it, man.

⁓ Mike, something that actually caught my attention about you ⁓ is the way that you’ve been able to build up your consulting business. And also something that you mentioned about is the lending compliance department. All right. ⁓ That’s actually not easy, you know, to understand.

Mike David (05:08)
Yes.

Leo Wehdeking (05:14)
these days, can you be a little bit more specific on how you’ve been able to keep your business running ⁓ smoothly?

Mike David (05:24)
Yeah, yeah, be glad to share. of the biggest things to be able to help people is to know your limits on what your license or your consultative abilities and there you you can never give people financial advice. You can never give them legal advice if you’re not licensed for that. So there’s a lot of things where you just have to know when to say I don’t know or give a referral out to somebody and that is how I’ve really been successful is by telling people this is up until the line that I can help you. Now you actually have all of the you know reasonably priced information here that I’ve given you. Now you’ve got to take

this up the next line and that’s where this has been to lenders maybe even real estate agents a lot of the time it just came from listening to people that were actually your target audience and taking their you know user complaints and turning that into SOP ease or creating new offers that address what you were hearing from people time to time specifically for real estate folks were unsure how they were going to get you know 20 % down to invest in non-owner occupied properties and they were hearing these strategies when people were saying you don’t need your own money or there’s you no

experience needed and I would just you know give them the interface of it that these lenders who make their fees in this way by you know taking an origination fee and then servicing the monthly rental note they make their money differently than a fix and flip lender so really drilling in with people on first how you can help them and where your ability to help stops and then second when you recommend that somebody looks into something actually being able to tell them here’s what you need to research for yourself so I think by empowering people listening to them I’ve been able

to take moving from having one client and one job into a consultation practice where a lot of it is centered around compliance and getting people information sooner and in an easy to digest way rather than just throwing a lot of stuff at people.

Leo Wehdeking (07:07)
Alright cool cool man. Now Mike can I ask you something in what markets are you operating in?

Mike David (07:14)
Yeah, yeah, so this is very interesting. part of a group that is wholesaling nationwide right now. We’ve got different individuals in different states and point of contacts there. Primarily I cover Missouri, Lake of the Ozarks, Branson. Occasionally some things in Saint Louis and Kansas City come my way. We do off market outreach to owners, so occasionally I’m getting things that are bigger than I can handle or they’re just outside of my buy box. Typically I try to look for small multifamily or mixed use with some form of small

commercial or a residential office combination.

Leo Wehdeking (07:48)
Alright cool cool. Now Mike, changing the subject a little bit, ⁓ I know that every operator has a moment where things got real, maybe a deal that went sideways or a time that they had to pivot real fast. Do you mind sharing one of those moments?

Mike David (07:52)
Yeah.

Yeah, yeah, I’ll tell you about one of my this had to be maybe my second client in the consultation practice. They were a validation company for lending compliance. Basically, if you had signed up for some type of secured loan, whether it was a car business debt, the major companies, banks and other individuals, sometimes the actual car manufacturer would want a letter delivered to somebody and then it would be your job to travel out to their home, travel out somewhere else and give them a letter or give some information and

it was before things would go bad and it would just be like, hey, you what’s going on? haven’t heard from you. So a lot of this really opened me up to what happens when there’s a breakdown in communication. And there was a time where an individual was unsure of why I was coming out to meet them somewhere. And the gentleman came out with a gun and it just, you know, a lot of things kind of became really real there

because what started as a lending services agreement, what was a business consultation, whatever they got into, you know, times it got

And at the end of the day, the person that gets put in danger is an individual just trying to deliver a letter.

And at that time, I was still building my business, so a job where all I had to do was drive out and do an insurance verification of a tow truck lot or the occasional verify the trucks were stored in the right place. This was great, but occasionally you would get these ones where people were not able to perform on the loan. And that was one of the last ones I did because I was able to find a different client after that.

So the thing that broke down for me there is I was so ⁓ desperate. If you’ve read Rich Dad Poor Dad, Moving from Employee to Self-Employed, I was so desperate to get out of employee only that I took on these moonlighting insurance compliance roles. And not all of that ended up in stuff that I really could see myself doing. But that’s one that I share with people all the time. If you’re not willing to basically have this happen to you, then there’s going to be some things in self-employment that will not be great for you. And as you move on to business owner, it only

from there.

Leo Wehdeking (10:38)
Yeah, I believe that in order for you to be self-employed, you need to keep, you know, ⁓ everything in place. You need to know what you’re doing. So, you know, so that these kind of things don’t affect you in the future. You know, that’s actually very cool. All right. And can I ask you something, something else, Mike? Now, ⁓ what are you most focused on solving or scaling next? What’s the next real goal for you?

Mike David (10:52)
Yeah.

you.

It’s a great question. Right now I am building my management consulting business, Deep Value Add. We are focusing right now on compliance industries, anybody that has a license, anybody that has built up a business that’s primarily about themselves being the primary person there. This could be associations and groups that you’re a member of. Sometimes businesses cannot afford to bring on another full-time employee. Society for Human Resource Management basically has a bad hire costing between six to nine months.

of the person’s compensation when somebody comes on and then de-offboards from your company. So a lot of what we’re looking at right now is if folks are not in a position where they can solve the issue by just bringing in more people and more full-time employees, then the best thing we can do right now is to implement the…

biggest items that are going to bring low-lift things out of the way and then decide what is your biggest go-to-market strategy right now for getting into this problem. For my most recent clients that is involved with getting between their sales and marketing department and just trying to help them better market the offer so that when the salespeople are receiving these leads, they’re a bit warmer. That’s been through user-generated content. And a lot of times companies will have social media marketers, they’ll have marketing policies,

things like that, but what they really need to figure out is from a user experience perspective, what are the customers asking for? Do they have objections? And if the salespeople are the first ones hearing about this at the closing stage, you’re reducing the likelihood that you’re be able to close this person. So we’re working on something between the sales and marketing compliance department, but right now I have been blessed to be busy. So I am just kind of working on my existing clients and looking to maybe get more involved, I’m doing the October,

30th event with Pace Morby at Downstream Casino for the Joplin area real estate investment association. So Pace Morby’s given a keynote on the 30th. I’m speaking before him. It’s going to be a great event there in Northeast Oklahoma, kind of serving in Kansas City, Northwest Arkansas, Tulsa, Kansas. It’s going to be a really good investor summit that I’m speaking at. And right now I’m helping the promotion of that with the association. I want to see as many people there as we can.

Leo Wehdeking (13:17)
You will, you will, trust me, you will. All right, now, ⁓ I know that a lot of people listening are either earlier in their journey or just looking to level up with someone like you. And I think they will benefit from hearing this. When it comes about building relationships and growing your network, what’s made the biggest difference for you?

Mike David (14:19)
man, this is a tough one. One of the most important things that I’ve had to do was actually go and work in the ideal place where I’d want to be. So I actually had to pull in my own individual work time resource to get out and go work with individuals who are doing the stuff that I want to do. So in my circumstance, I was blessed enough to try to work with these folks either through my company or in a W-2 job. Prior to Bigger Pockets, I worked for the federal government in the SBA. I used to do disaster lending. If you’ve heard of the PPP loans or EIDL,

was the one that I worked on. So when you’re talking to people, you can learn something from everybody that you speak to. Primarily for me, the more that I worked in industries where could see myself wanting to network with these people and be in there, I was able to provide some side value to them just in things that had been work stuff for me. So a combination of it is, know, you got to line yourself up with where you think you want to be and then try to offer some value to people there. But I don’t think you can just reach out to people and just say, hey, I’ll work for free. At the end of the day, we had to meet through some type of

pre-planned organ, you know, I’m an association member or I’ve gone to a seminar to hear and then you meet somebody in the hallway of the seminar that was actually impactful on your network more than getting to know the speaker but all of that kind of revolves around getting to these places where you know the people are going to be and you know you got to just get out there and shake some hands. It’s tough. Yeah.

Leo Wehdeking (15:38)
Yeah, yeah, that’s actually that you cannot fake, you know, you need to

go out there and show yourself, ⁓ build relationships, you know. ⁓ For an example, you being in all these jobs, when you are an employee, make you have relationships that are helping you right now, building your business. Am I right?

Mike David (15:58)
100%. If I didn’t have the jobs that supported me as an individual to eventually go self-employed, I would have probably never taken the leap. Because it’s very hard to leave a stable paycheck with medical benefits, 401k match. With regular work, you just show up and you knock it out for eight hours. When you’re a business owner, the most impactful things I do are just a combination of things that are handled by other departments for me when I had a…

you know, standard job. So, you you miss it sometimes, but at other times, I wouldn’t trade it. I’d say right now I’ve been able to build something out that works for me. And most people can do the same thing. It just comes with first figuring out what service you think you could offer from 5 p.m. to 9 p.m. You know, what you could do in a productized digital service. Maybe, you know, with the future of AI and the way that things are going, you’ll no longer have to decide what it is I’m going to do or how I’m going to do it. If you just kind of pick an area and decide to

serve people in that area, can gain some moderate success. mean, pick the right area, talk to people who are already doing something about it. But in the future, it’ll be more important to pick something and stick with it than it will be to become somebody that just says, I will sell the new thing that’s coming out.

Leo Wehdeking (17:10)
All right, all right, cool. Now, Mike, before we wrap up, if someone wanted to reach out, connect with you or maybe collaborate or learn more about what you’re doing, what’s the best way for them to reach out to you?

Mike David (17:23)
Yeah, yeah, I got a variety of ways you can get in contact with you can always do it in this day and age at deep value add.com or you can look at me up on Instagram at Mike David, BIC on Instagram, Twitter, you can reach out to me on social media. If you go to my company website, there’ll be a redirect form to email me directly there. If you’re having questions about real estate, investing, lending, portfolio architecture, things to decide, should I leave my job and jump into residential real estate in the next five years?

don’t have the exact answer for you, but I can connect you with the resources out there that will let you make the decision.

Leo Wehdeking (17:58)
Yeah, you have the experience to do that. You know, that’s actually cool. All right. Well, listen, man. Perfect. Mike, I really appreciate your time, your story and also your perspective. We need actually more people in this space who are doing it the right way. So thanks again for being on the show. And for those of you just tuning in, if you got value from this, make sure you’re subscribed. OK, we got more conversations with operators just like Mike ⁓ who are out there.

building real businesses. right. So until then, we’ll see you on the next episode guys.