Real Estate Investing | Subject-To Deals, Building Teams & Tokenized Funds with Michael F.

Michael Fernandes (00:00)

yeah, so I’ve always been taught that you’re, you’re, a lot of people get stuck on, either the perfect time or thinking they need to know everything about something before they go and do it.

and then that will paralyze you or that perfect time will never come, right? Or you’re just gonna feel like, I don’t know everything yet. You’re much better off taking imperfect action than trying to wait for the perfect time ⁓ and learn as you go. ⁓ I’m not saying to make dumb decisions or just jump into anything. You have to have some sort of base,

Kristen (00:34)

Right.

Welcome back to the Real Estate Pros Podcast. I’m Kristen and I’m here with Michael Fernandes, who is a real estate entrepreneur. He’s in investing, construction, scaffolding, cannabis. There’s a lot going on. And recently he just launched a fund called the Investors Pool. So I’m excited to get into all of that. Thanks for being here, Michael.

Michael Fernandes (02:31)

Thank you, Kristen, for having me.

Kristen (02:34)

So you have a very interesting background. Let’s get into that and kind of what brought you to real estate.

Michael Fernandes (02:38)

Yeah, I guess that was all kind of by accident like most things in our lives, I started out, my journey started out in the military. I left home when I was young. My father actually had to sign for me. I had a child when I was very, very young.

not knowing how to really provide yet. The only thing I could think of was the military. So I did four years, ⁓ kind of learned some discipline and got a base and learned about a lot of things I didn’t know about teamwork and hard work from the military. ⁓ When I came home, I didn’t have too many transferable skills. ⁓

and ⁓ I had been doing martial arts pretty much my whole life by that point since I was…

was about five or six when my father put me in. ⁓ And ⁓ I had an opportunity to ⁓ get on an MMA fight circuit ⁓ in Florida. I had moved to Florida after I came out of the military. And I had an opportunity to get on an MMA circuit, obviously amateur first, work my way up. ⁓

ended up getting injured so my career ended up there about I don’t know five years, yeah five years. And ⁓ while I was sitting on my couch not knowing what to do I had a friend of mine who he had a he had a mortgage company really and he’s the one that introduced me to real estate.

do absolutely nothing. the only thing I knew in life was the military or MMA. That was really it. So it was difficult to transition over. I mean was like a fish out of water. But he was patient and I ended up becoming top producer at that company after about six months. Stayed with him for a number of years.

until the market tanked and then I worked for a few other companies in between after him but I stayed with it for working for other people for a number of years and I was obviously doing a little investing on my own, spec homes and things like that but nothing major. Then the market tanked.

I had lost practically everything that I had built at that point and had to restart.

And then that’s when I got into real estate investing at that point. It was kind of out of necessity because I had to take the knowledge that I had and expand on it and then kind of…

do a lot of trial and error. then there wasn’t that many people out there that were teaching or ⁓ coaching or anything like that. So I had to do a lot by trial and error. I had a couple decent people locally that showed me some things that had been in the space for a while. ⁓ Ultimately it was really subject to and seller financed real estate that got me out of the…

hole that I was in. I was able to close my first 14 properties in 90 days by doing that and that’s really what saved me. And then ⁓ one thing led to another, you know, learning from different people, taking different courses. ⁓

and expanded my knowledge. did have a little time, a couple years, where I worked for Sequoia Capital, which was a fund. So that’s what introduced me to the fund ⁓ space. ⁓ that was just before the Market Tank. That was about two years before the Market Tank that I had started with them. ⁓

Then ever since I worked for them, I’ve always wanted to do my own fun. Just never, never had the ability or the time to do it. ⁓ And then once the market tanked and I went on my own, was, you know, kind of forced to do that imperfect action that we were talking about before. ⁓

Kristen (07:41)

that.

Michael Fernandes (07:55)

led me to try different things, trust me a lot of different failures that I had. It wasn’t all roses, that’s for sure. And then that brought me to where I’m at today, we’ve been able to build some pretty good businesses and now start this fund.

Kristen (08:15)

That’s amazing. mean, it’s a really impressive trajectory and you’ve built something really impressive. ⁓ You know, hundreds of doors across the country and vertically integrated, which I feel like is a very challenging part to do. mean, vertically integrating is very hard. I’m sure…

It was kind of ingrained in you from your background that building a team around you is probably a really important part of this. How do you go about building that team to help you scale?

Michael Fernandes (08:44)

Yeah, was probably one of the more challenging ⁓ pieces of it. The amount of ⁓ people that you go through, I had obviously no clue. All these companies that I had worked for before… ⁓

you know i i never really saw the the hiring side or or anything like that right so i did i didn’t know what i was in for ⁓ actually had one of the guys that own we work he was what he was one of the one of the ⁓ family members of we work along with alongside of that adam noyman and ⁓ he told me he said you’re gonna spend about seventy percent of your time hiring people because

It’s just the nature of the beast, right? You go through so many people, you get good people, you get bad people. ⁓ And again, it’s like anything. In the beginning was a lot of trial and error before, you know, I was really able to build a system around it. A lot of the things that I had successes with all had to do with systems that were built around those different things, right? So hiring was just another one. ⁓ And I was lucky.

pretty early on to find some people that have stuck with me through the years. A lot of the people that have been with me have been with me since 2010, 2011, and stuck with me through all the ups and downs. And there were ups and downs, that’s for sure.

Treating people right is probably one of the most important things. ⁓ Being fair and allowing people to make decisions. I’ve never been one to ⁓ micromanage. That’s not me. Everybody’s an adult, ⁓ so if you can’t do your job, ⁓ I’m not gonna sit behind you and hold your hand through it. ⁓

Everybody supports each other and we’re all here to help each other but nobody’s gonna do your job for you. So most of the time people end up weeding themselves out ⁓ but the core team that we built have been here for a number of years. So yeah.

Kristen (11:42)

Yeah, that’s amazing. No, I think those are really good pieces of advice there. And something that I’ve heard you say a couple times is kind of, you you learn through making mistakes. And I think a lot of people are afraid of making mistakes. So I’d love for you to talk a little bit more about that and, you know, taking action.

Michael Fernandes (11:53)

Thank you.

Yeah,

yeah, so I’ve always been taught that you’re, you’re, a lot of people get stuck on, either the perfect time or thinking they need to know everything about something before they go and do it.

and then that will paralyze you or that perfect time will never come, right? Or you’re just gonna feel like, I don’t know everything yet. You’re much better off taking imperfect action than trying to wait for the perfect time ⁓ and learn as you go. ⁓ I’m not saying to make dumb decisions or just jump into anything. You have to have some sort of base, but…

Kristen (12:36)

Right.

Michael Fernandes (12:43)

You don’t have to know all the ins and outs, right? As long as you have an understanding, ⁓ you can pretty much work your way through anything if you’re committed. ⁓ commitment is probably another piece of it just because…

When you’re learning ⁓ something new or starting a new business and you’re out there doing it and you’re taking that massive imperfect action, you’re gonna take a beating along the way. It’s just the nature of the beast. Business is not for everybody. It’s not an easy place. So people that tell you that, they’re…

full of it so to speak because there’s challenges all along the way there’s been many a times where I was wondering how the hell I was gonna make payroll so ⁓ you have a lot of those so you need a lot of you need a lot of grit you need a lot of perseverance but to get it all started you need that that imperfect action you have to just go for it and try it because you are gonna make mistakes

And the mistakes is how you learn. That’s the only way you learn. So if you’re not making mistakes, you’re not learning. If you’re not learning, you’re not growing. So you have to ⁓ be willing to, what’s the right word to say, expose yourself, so to speak, right? ⁓ And be willing to fail because it’s all part of growing. I’ve definitely failed more times than I’ve succeeded.

and but I will always get up and always keep going. One thing I do not do is I don’t know how to quit. don’t understand that. I’m not saying to beat a dead horse. Don’t chase a business that’s not doing anything for you. But if you have a good idea and you keep hitting a wall, don’t quit. Keep pushing until you succeed because you’ll eventually get there.

Kristen (14:36)

Right.

think that’s really good advice. Yeah, I think some people, it’s a fine line because some people learn themselves to death and never take action and then some people take action without learning anything. So there is that sweet spot of being educated and taking the risk.

Michael Fernandes (15:07)

Yeah, yeah. Unfortunately, some people get stuck in that analysis paralysis a lot of times, you know. And that’s the kind of thing you want to avoid. So like I said, you got to have some sort of a base to go off of. ⁓ Can’t just know nothing. But you don’t need to worry about knowing everything either.

Kristen (15:28)

Absolutely. So let’s talk about the Investors Pool. It’s a fund that was really recently launched, which is really exciting, and it’s based on tokenization. Tell us a little bit more about it.

Michael Fernandes (15:33)

Yes.

Yeah, tokenization, the funds, so I got involved in a REIT not too long ago, probably about five, six years ago. And that was the first time that I had ever been introduced into fractionalized real estate.

you know, thousand investors or a hundred investors, everybody owns a little piece of it, you put in whatever, five, 10, $15,000, and you can own a small portion or as big of a portion as you can afford of a, whatever it may be, a building, a complex, whatever it is, right? So I was always impressed by that, but the one thing I didn’t like,

is once you put your money in you were you were stuck for you know five six years in in that deal and it

I my freezing? No? Okay. So, I’m sorry, my computer was freezing. But, ⁓ I felt trapped. You weren’t able to get your money out. You weren’t really able to see any returns off anything for a while.

The one thing about tokenization that really drew me to it was the amount of flexibility that you had because a lot of the parts of a fractionalized REIT are really the same as a tokenized asset where there’s still a bunch of investors, everybody’s still pooling their money together, everybody owns a little piece of it.

But the one big difference is your ownership is represented by crypto, right? So every asset has a cryptocurrency that gets created specifically for that asset. whatever percentage of that asset that you own is the number of tokens you receive. So if there’s 15,000 shares on that property,

that represent the whole asset and You know we’re we’re we’re at $500 per share That equates to $500 per coin so you buy in at that 500 or whatever the minimum may be and then

Once you purchase those, now that represents your ownership. You can do whatever you want with that. You can take it and trade it on the open market. You can sell it ⁓ or you can hang on to it. But you’re free to decide what you want to do. it gives you that freedom that other funds don’t have. You’re not tied. So if you need to pull your money out or you’re just not happy with the way the fund manager is ⁓ operating the property,

You can go and sell your tokens off and get out of the deal. You’re not stuck until the property sells or liquidates. Right? So it gives you a lot of freedom and lot of flexibility. Yeah.

Kristen (19:37)

right.

Yeah, that’s really cool. I I think that’s a very good way to go about it. mean, all of this, you know, I don’t know, it’s not technology, but all of these new innovations are, I mean, it’s a really great option. And I think you guys are utilizing it very well. What kind of people are you looking for to be involved in this fund?

Michael Fernandes (20:00)

So we’re what’s called a Regulation D and Regulation S fund through the SEC. A Regulation D fund requires accredited investors. Within the US, you can be an accredited investor, you can be an institutional investor. The Regulation S part of it is the…

part that allows us to accept investors from anywhere in the world. As long as they’re a US friendly country and do trade with us, you can invest in the project. Now, with a regulation S, they do not have to be accredited. They can be accredited, non-accredited, or institutional from outside the country. And we did this just so we could… ⁓

really open ourselves up to a broader audience and allow as many people as possible to participate in the fund. ⁓ there is some limitation on the US side where you have to be accredited, which accreditation is…

civil way to put it is about a million dollars in assets, ⁓ could be property, could be really anything, and then you have to make ⁓ over $250,000 per year in income, and then if you fit within that bucket, they’ll consider you an accredited investor. Yeah.

Kristen (21:33)

Amazing. Well, I think you’ve built something so impressive and now you have this fund that I think a lot of people are going to want to be involved with. Tell people where to find you, where to find the Investors Pool.

Michael Fernandes (21:44)

Yes, you can visit us online, theinvestorspool.com ⁓ You can also find us on Facebook, Instagram, and LinkedIn as well. If you search The Investor’s Pool, ⁓ we’ll pop up. But the best way to do it is definitely go to the site at theinvestorspool.com. You can sign up through there. They’ll do your compliance through there. Everything gets done through the platform. It’s very simple. ⁓

It’s all very very automated so ⁓ it’s it’s it’s ⁓ If you’re not tech savvy, it’s still fairly easy so ⁓ yeah

Kristen (22:29)

Amazing. Well, thank you so much for being here, Michael. I think you gave a lot of inspiration for people.

Michael Fernandes (22:34)

Yeah, thank you for having me. appreciate it. It’s always ⁓ good to be able to get the word out and hopefully give somebody some inspiration.

Kristen (22:44)

Absolutely. Well, I think you had a lot of great stuff to share. Thank you everyone for listening. Hope you learned a lot and got some takeaways there. Please check out the Investors Pool, reach out to Michael. I think there’s a really great opportunity there. So we will see you back next time. Bye.