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Show Summary
In this episode of the Real Estate Pros Podcast, Micah Johnson interviews Mike Hills, a managing broker at Atlas Real Estate, who shares insights on long-term real estate investing. Mike discusses the importance of a long-term mindset, the significance of treating tenants as residents, and the innovative Uplift Program that empowers residents to become homeowners. He also highlights the necessity of understanding local markets and regulations, and shares current investment strategies that focus on buying properties below replacement cost. The conversation emphasizes the value of education and knowledge transfer in real estate, both for investors and residents.
Resources and Links from this show:
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- Investor Fuel Real Estate Mastermind
- Investor Machine Real Estate Lead Generation
- Mike on Facebook
- Mike on Instagram
- Mike on LinkedIn
- Atlas Real Estate’s Website
- Mike Hills’ Phone Number: (720)220-8500
- Mike Hills’ Email: [email protected]
Listen to the Audio Version of this Episode
Investor Fuel Show Transcript:
Mike Hills, 720-220-8500 (00:00)
So the Atlas investment thesis is four things But the first one is buy for the 20 year picture. Buy as though you’re never going to sell. Lots of gurus out there that are telling you to buy in cashflow markets. Cashflow markets are great, but the way you get rich is appreciation. Now I’m not saying buy just for appreciation. I’m saying buy in markets that you think reasonably today are going to go from here in 20 years they’re going to be here.and be willing to pivot and move as it happens.
Micah Johnson (00:26)
Yeah.Hey everyone, welcome to the Real Estate Pros Podcast. I’m your host, Micah Johnson. And today I’m joined by Mike Hills, who’s been making some serious moves in the long-term buy and hold space for quite some time now. Mike, welcome in, glad to have you.
Mike Hills, 720-220-8500 (02:19)
Mike, I appreciate you having me. It’s been a pleasure getting to know you and thank you.Micah Johnson (02:24)
Absolutely, man, I really enjoyed our pre-recording call. I’m excited for what our listeners are gonna get to hear today because you’ve been doing this a while. There’s a way that you even approach what you do. There’s a way you source properties. Just your whole method, I think folks are gonna get a lot of value out of. So let’s dive in on that. So for people who may not know you yet, what’s your main focus right now and what markets are you operating in?Mike Hills, 720-220-8500 (02:47)
Absolutely. So I’m the managing broker at Atlas Real Estate and we are a, what we call rodeo region. Although we are operational in nine states, mostly in the West headquartered in Denver, Colorado, Idaho, Arizona, Nevada, Utah, both sides of Kansas city, Texas, Georgia, and then licensed in a few other states that we haven’t opened yet among those North Carolina, Florida, Alabama, and Indiana. So doing a bunch, our backbone of the company, we manage about just under 6,000 rental units.Of those 3,000 are single-family homes. And of those 3,000 single-family homes, we own just under 1,700 with the capital partner out of Silicon Valley. So, you know, I’ve been doing it a long time and we are, we are investors before anything else.
Micah Johnson (03:28)
Man.And that’s what’s beautiful. I was going to point that out because a lot of times with property management, you got folks who aren’t investors. But when you have someone who’s been there, signed the documents, knows what to do from left to right throughout the whole process, it’s only beneficial on down the line. And I think we’re going to dig into that some with how you all have been planning or how you are planning your next purchase. Right. That whole mentality comes into how to be successful in any real estate market because there’s always a chance to capitalize.
Mike Hills, 720-220-8500 (03:54)
Yes, sir.Micah Johnson (04:03)
So you’ve been doing a great job with that now actually for years. What’s been the main key to staying consistent?Mike Hills, 720-220-8500 (04:09)
So I would say there’s reallytwo things. And our tagline of the company is owners helping owners. We owned real estate as a company and built the property management company to manage our own properties. Because we didn’t like most of the property management out there. Because management is really, really hard. For your listeners that own real estate, they know exactly what I’m talking about. It’s just a giant pain. It is a fist fight every single day. So I would say the first one is just owners helping owners and thinking like an owner. So our property management team.
The average employee at Atlas, and we have over 125 employees, owns 2.3 doors of real estate because we help them encourage our employees to own real estate. Because if you own, you think like an owner. And then I would say the second one is long-term mindset, both for our individual owners that own maybe one or two doors, but also our institutional clients that have spent millions of dollars buying real estate. So both of those, I would say, are the keys.
Micah Johnson (05:06)
Love that and let’s talk about long term, right? That made that term gets kind of tossed around between different parties and what exactly they mean about it So when you say long term, what is it that y’all are thinking and how do you execute on that?Mike Hills, 720-220-8500 (06:07)
So the Atlas investment thesis is four things and for the sake of this call, we won’t get into a lot of them most likely. But the first one is buy for the 20 year picture. Buy as though you’re never going to sell. Lots of gurus out there that are telling you to buy in cashflow markets. Cashflow markets are great, but the way you get rich is appreciation. Now I’m not saying buy just for appreciation. I’m saying buy in markets that you think reasonably today are going to go from here in 20 years they’re going to be here.and be willing to pivot and move as it happens.
Micah Johnson (06:36)
Yeah.Mike Hills, 720-220-8500 (06:39)
Denver, where I live, great example. I’ve been investing in Denver for more than 20 years. And today, I may not buy in Denver proper because the rules, the laws have made the city and county of Denver really tough to invest in. Surrounding markets, I still love Colorado. Denver proper, really tough. So be willing to move and pivot based on external forces.Micah Johnson (07:03)
I think that’s fascinating too, because you’re talking about a state that was very landlord friendly and some of it that still is, but now cities adjusting inside of it to become not so landlord friendly. being able to pivot, what has that been able to do for y’all’s business and to keep things flowing?Mike Hills, 720-220-8500 (07:14)
Yes, sir.It’s the big thing is just move where we believe in the 20 year picture. I’ll talk about Kansas City. I’ll talk about Phoenix. 10 years ago, we didn’t think Phoenix was a place to buy in. Today, love Phoenix. 20 years ago, now, Phoenix is also one of those things, they have water issues. So we got to pay attention to that. I own personally in Phoenix. It was the first place that I bought investment real estate outside of Colorado. And it’s done very, very well for me. But it’s something that we pay attention to. Kansas City.
Micah Johnson (07:33)
Okay.Mike Hills, 720-220-8500 (07:49)
10 years ago, we didn’t invest in Kansas City. Today, I love Kansas City. So it’s just this willingness to always say, where are we today? Where do we want to be tomorrow? And be willing to say, look, we’re wrong. Let’s move forward. Let’s pivot. Let’s change strategy and philosophy as long as we’re still buying for the long term, which is pillar number one.Micah Johnson (08:14)
think that’s so important for people to hear. The real estate market is not stagnant and it’s not quote unquote national. National statistics are some of the most deceiving things you could ever look at because it’s so nuanced per market. Each market is…Mike Hills, 720-220-8500 (08:24)
Yes.Micah Johnson (08:30)
Each one is its own thing. It has its own rules. It has its own growth patterns. I live just south of Jacksonville. Fascinating place, what they’ve been doing up there, how fast it’s been growing. Watching over the last 10 years, all the things they’ve been bringing in, every base of the military redoing our ports during COVID, like all these little adjustments that they’re making that show you, okay, hold on. There’s long-term growth available here. This isn’t just a flash in the pan.Anytime I drive through town right now, I see cranes everywhere, which is like an indicator to me that works going on. You don’t see cranes in places where things aren’t going well. And it truly is local to the ground where you can go over to Tampa and Tampa struggle a little bit. I’ve got a lot of investor friends in Tampa where everybody went there, everybody got excited. They all started building and now everything’s sitting, right? All these little different factors. And then we just went through for Florida.
Mike Hills, 720-220-8500 (09:06)
Correct.Micah Johnson (09:24)
They went through two years in a row where they got hit in St. Augustine where I’m at. That was how long ago was that? 2014 2015 ish, I think where we went through our two years in a row that doesn’t normally happen and those things have huge effects on on what’s happening.Mike Hills, 720-220-8500 (10:15)
Well, and it’s interesting because you’re spot on. know, one of our, one of our sayings is we want to out local the nationals and out national the locals. And what I mean by that is, you know, we operate property management in, Vegas and Denver and Phoenix and Tucson and Texas and Atlanta and Athens, Georgia. And the rules are different. So as a national company, what we do is we have some, some pillars that we hire and build on.Micah Johnson (10:25)
⁓ love it.Mike Hills, 720-220-8500 (10:44)
But we want local boots on the ground. It’s really hard to run property management in Texas. If you don’t live in Texas, because the rules are different. And for your listeners that you know live in Florida and they’re buying a home or two homes in Memphis, Tennessee and trying to self-manage, man, is that tough. Because you’re, I don’t know how many miles it is from St. Augustine to Athens or to Memphis. But it’s not an hour drive. So it’s a trip.Micah Johnson (11:02)
Yeah.No, it’s a trip, man. You got a day, about
half a day getting there.
Mike Hills, 720-220-8500 (11:13)
Soit’s it’s tough. So when we go into a new city, we want to do it with the right amount of scale so we can bring our philosophy, but then hire local people because they’re the ones that know the citizens, know the marketing, know the people, know the rules. And then we do it that way. but it is, it’s very, it is hyper local, but the national statistics scare everybody.
Micah Johnson (11:40)
They do, they do. And it doesn’t really apply to it. Cause like you’re saying, you got to speak the language. That’s something a lot of folks struggle with in Jacksonville. They don’t speak the language. Typically they talk too fast. If you want to know what they’re really doing wrong, right? So that’s still Southern Georgia. You don’t talk quite as fast and don’t make anybody move in a hurry. Where when I was, I was investing in Jacksonville and Tampa back before 2020.And Tampa was completely opposite. You better talk fast and get things done, because there was no slowing down. that’s where I really started to pay attention to. Being local has huge benefits if you’re able to be there across every facet of real estate. But I can definitely see it in property management, because if you want your tenants to be taken care of and feel understood and everything that makes a good tenant a good tenant, having somebody that’s living in that market, it really is a game changer for them.
Mike Hills, 720-220-8500 (12:31)
It really is. And it’s just… What… How about this? The word landlord has been around for a thousand years. It comes from feudal Europe because he who owned the land was the Lord. So, internally, we don’t refer to them as tenants. We refer to them as residents. They live in our homes. And we have a duty to them. We also have a duty to our owners. But this is about treating residents with the dignity and respect that most landlords do not treat them with.We all have heard of the horror stories of landlords that are just taking advantage of residents and we just don’t do it. How about this? We have a program that I built called Program Uplift. And what this is is we teach our residents how to go through the cycle, what we call the virtuous cycle, to be a resident, learn how to buy a house, buy their home, and then turn into investors. I have owners of real estate that have hired us to do their property management and they say things like, whoa, whoa, whoa, whoa.
you’re going to teach my tenants to own real estate, I don’t want you to manage my houses. I’m like, wow. So you really don’t care about them as humans. You only see them as yield. And if that’s the case, I don’t want you as a client. I want to raise the tide on all of us. And the way to get people out of a system of poverty, to get them out of divorce issues is all about home ownership because it makes families
Micah Johnson (13:45)
Right.Mike Hills, 720-220-8500 (13:54)
stable. And that’s what we want for the American citizens. And honestly, we do it as landlords, but we do it with the dignity and respect for the residents to teach them how to take control of their financial future. And it actually makes us fairly unique in the property management space.Micah Johnson (14:53)
I It’s a powerful philosophy. And one, as another human being, I appreciate you doing that. Thanks for taking care of people, right? Like we figured out in business a long time ago how to make a bunch of money. And now we’re all figuring out, how do we do this in a way that’s net positive to everybody involved where their life actually gets going? Because if you’re trying to trap somebody into a rental for the next 30 years, that’s not such a great thing to do unless they just obviously want to. But most folks don’t know, right? The power of knowledge is what changes your life.Mike Hills, 720-220-8500 (15:09)
Yes.Micah Johnson (15:23)
and having somebody that I’m just thinking about it, they come rent one of y’all’s units, don’t even know they’re fixing it, interact with a program that could literally change their lives forever to go from a renter, not to just a homeowner, which does have huge benefits. I remember my transition into owning my own home for investing, it’s besides the investment part, my kids have a place to go. Nobody’s taking anything from me. Like it’s stable that.There’s something about the mental part of it that just relaxes your life. And then you can start thinking bigger out of the box. What is it that I actually wanna do now that I don’t have to worry about home? Now what? And that is a powerful move. So.
Mike Hills, 720-220-8500 (15:59)
Mm-hmm.Yes.
Well, and
for us, it’s free. The uplift program for our residents doesn’t cost them anything. And what it is, is it’s it’s free knowledge. And now let’s be honest, if they end up buying a house, we are a full service brokerage. So the goal is to help them buy with us. it’s, you know, we’re not, it’s not a hundred percent altruistic. You know, there is a component to it that we do get paid on, but on the front side, if they never buy anything, we never get paid and we do all of the knowledge for free. But how about this?
We do the same thing for our owners and for your listeners. One of the things that we do, we offer what we call free portfolio evaluations. So, know, Micah if you called me and said, Hey, I own X amount of properties in these cities. We would do a free portfolio evaluation and say, Hey, these are good deals. These are making money. This is good debt. These are dogs. So sell this one, either keep the money, 1031, exchange it, buy this one, reinvest the money. We do that again for free. Now.
We would hope that if you transact, you would use us. But it’s one of those things that if you never do, it’s knowledge transfer and it’s going to you and any of your listeners to say, look, we’ll look at your portfolio and give you a 100 % objective view.
Micah Johnson (17:07)
Beautiful.Mike Hills, 720-220-8500 (17:18)
Because here’s what happens. You know what I know as an investor? You my wife and I, I told you earlier, we own a little more than 40 units. We get so wrapped up and emotional in the deals we buy. It’s why I don’t manage my own units. Why I let a third party manage it. Cause I don’t want to be emotionally tied to it. It’s why every year I have the Atlas team look at my own personal properties and say, which one should I keep? Which one should I sell? So that I don’t look at it from an emotional perspective. I can get a third party that says, Hey, do this, do this,Micah Johnson (17:35)
andMike Hills, 720-220-8500 (17:48)
this, do this, and then I can act freely based on that information.Micah Johnson (17:53)
Again, it comes back to knowing what to do based on the information that you have. Education is the number one thing to be successful in real estate. It is what you have to learn in order to do a job for a long time right. You’ve been doing this for years and years now and you don’t do that in this industry. Most people are in and out in about two years. Not many people last because…Mike Hills, 720-220-8500 (18:15)
Yes, sir.Micah Johnson (18:17)
One, they think it’s a get rich quick scheme and it’s not real estate, get rich slow scheme. It is a long term thing. That’s why I love talking to folks who get it. This is a long term move. You are what my mentor calls, you’re paying it forward to your future self. That is what you’re doing. Always keep that in mind as you’re going through this. This is where a future version of you do this part now. They’ll appreciate it later.Mike Hills, 720-220-8500 (18:41)
Yes, sir.Micah Johnson (18:42)
to give them that information. And we all know this about customers. One thing I appreciate about that, it’s more new customers are the most expensive learning how to get.more out of the same customer is how businesses really grow. And you can still do that with a good heart, right? In the end, there’s no such thing. I don’t believe there’s any true altruism because you feel good after you do something good for somebody. It always pays you back in an emotional way. So like we can have a little word argument on how true it is. But even when you’re doing it like you’re doing it, having somebody come back and use your brokerage.
In my opinion, that’s another benefit that you’re adding. Hey, I’ll educate you. And we took all this time. And now you know if you come work with me, the same level of professionalism and expertise applies here too. And it just keeps rolling up to the next level where for your true customers, they don’t go away now. They are sticky and they will be with you for a long time, which again leads to impact on humanity. What you’re ultimately after.
Mike Hills, 720-220-8500 (19:35)
that’sMicah Johnson (19:43)
watching those people grow, right? How many, let me ask you this, how many people have made it from that education phase and now have properties under management with you? Have there any that have gotten that far yet?Mike Hills, 720-220-8500 (19:57)
So I know I just did my annual review, not corporately, but with my team. So we sold 34 homes to first time buyers that were residents of ours, not to mention all the other first time buyers, people that were residents of Atlas properties across, and these were mostly in Denver, Kansas city, Vegas, and Phoenix. Those are the four, a couple in like Colorado Springs, but the majority of those cities. And then we had more thanMicah Johnson (20:10)
Yeah.Mike Hills, 720-220-8500 (20:26)
I think we did 95 portfolio evaluations for our owners that said, look at my properties for me. Now, owners aren’t really selling properties right now. But that’s one of those things that they’re going to sell. And but I’m most proud of the 30 plus residents that bought houses. It’s so cool. It is so cool. And you know 30 doesn’t seem like a lot. But when you look at the world out there, it’s a lot.Micah Johnson (20:46)
That is so cool.Mike Hills, 720-220-8500 (20:55)
It’s a big number and I mean it gives me chills. We get to be a part of changing people’s lives or hopefully sending kids to college or just giving them the financial stability it takes to live this life. Because you know what I know? Life is hard and the world is full of fear. And when you have a home, a home, it just…It helps with that. I get all excited about it. my apologies for the listeners out there. I mean, I’m happy to talk about any of this at any time. My cell phone number, my email address is on here. Call me, talk about it. Tell me why I’m wrong. I’m not, but feel free to challenge me. You know so but I appreciate it, Micah, because it is a really, really fun thing. And I know you have another question, but I do want to make to get to.
Micah Johnson (21:19)
Me too.Mike Hills, 720-220-8500 (21:42)
what we’re currently doing now and why what we’ve built matters and how it bleeds into what we’re investing in today.Micah Johnson (21:49)
and that literally was my next question. So you took the words right out of my mouth. How is it being applied today? What’s going on now?Mike Hills, 720-220-8500 (21:56)
So we are closing on our first deal in three days. It’s a property outside of Denver in a little city called Wheat Ridge. It’s on the west side for anybody that’s ever gone skiing, flew into Denver National Airport and driven up I-70 into the mountains. You literally go right by this property. And what it is, it’s 19 units individually plotted for town home sale. Well,You know, we can talk about affordability and Trump’s tweet and all of that stuff, but the truth of the matter is what’s happened is that, especially in major city centers, this builder bought property, took him five and a half years to get through all the platting and all the permits. And by the time he underwrote the deals, when he sold the deals, when tried to sell the deals, the world had changed. So he’s all in for 12.2 million bucks.
His loan with the bank is a little over $9.2, $9.3 million. We’re under contract to buy it for $9.1 million, which is a 25 % discount. When you average that to the 19 units, we’re buying it at what’s called less than replacement cost, meaning you couldn’t buy the land, develop the land, permit the land, entitle the land, and pull the product out today.
Micah Johnson (22:56)
Wow.Mike Hills, 720-220-8500 (23:13)
cheaper for less than we’re paying for it. And these things were built in May of last year. Got their CEO April May of last year. It’s a phenomenal deal. So, what we’ve done, I’ve had investors for the last 2 years calling us and going, hey Mike, you sold me a fourplex. You sold me a single-family home. You sold me a 10-unit apartment. You know, 2017. I want to buy something else. And you know what saying? Don’t do it. Everything’s hard. So, what happened is these people have come to us and said…I want to buy something else. So what we did is we put Atlas money together along with current client money. Frankly, your investors would hear it as a syndication, which it is, but that’s not, we’re not a syndicating company, but we’re buying this for below replacement cost. The plan is to own it for three to five years and then sell it, do it again and do it again. So your listeners that are interested in this, our goal is to do two to five of these a year.
Micah Johnson (23:50)
Mm-hmm.Mike Hills, 720-220-8500 (24:09)
So somebody’s interested in that because they can’t find, you know, something to buy. And our, average investor put in 150 grand, but a little on just under $3 million of the money raised was from people that I’ve never been to their house. They’ve never been to my house. This is not family and friends. This is current clients that are now choosing to invest alongside us because of the success we’ve had in the past. And it’s been really, really fun. ⁓Micah Johnson (24:14)
Right.Mike Hills, 720-220-8500 (24:36)
given the economy, and yet we’re still finding deals to buy.Micah Johnson (24:40)
And it’s yeah. And you’re doing it in a way where you’re staying effective. You’re staying true to your overall mantra, which is actually take care of people. Don’t just transact actually take care. Cause you, you have a lot of folks who just transacted over the last few years that they’re hurting actually there. Their pain is going to be other people’s reward in the future because of what they did and what the deal you explained is, is one that’s like that. You’ve miscalculated things happen that you can’t account for. now.You get a deal that’s financially distressed, but in great condition and you’re getting it at the rates that you actually have to get deals at, right? We’re not out here to buy things full value. We have to get them at discounts to make numbers work. Like that’s what makes you an investor, but you stayed patient. you didn’t just, even with pressure coming from your clients, you stayed patient. And I think that’s one of the most valuable things anybody can do for one of their clients is tell them no.
Mike Hills, 720-220-8500 (25:21)
Yes.Micah Johnson (25:37)
is to be honest with them, show them, this is what’s actually happening. And these are the opportunities that we can take advantage of. Again, with a pivot, an idea they hadn’t heard before to go out and get this deal where, man, because of your whole methodology of education, guess what hasn’t stopped for you? Education. You still learning every day. You’re still learning. You started here. Now you’re up here learning more and more and more. And it just bleeds out through your whole company.The way you’re hiring, man, I get pumped about this. I love working with folks and talking with folks that you just actually care. That is the secret sauce in my opinion. Do you just actually care? Because if you do, there’s signs. You can’t fake that.
Mike Hills, 720-220-8500 (26:20)
Well, it’s, I just think there’s so many people out there, these gurus, these people that are, you know, they’re just trying to make a transaction. They’re just trying to make a fee and I get it. They’re trying to feed their families, but it’s, you’re just not going to be in the business very long. I mean, for my math dorks out there, let me say it like this. Most deals right now are you’re lucky if you’re going to find a five cap, but when you’re, when you’re buying a five cap and your interest rate is six or more.you’re negative, you’re upside down, you’re negative leverage. So what we’re doing is the deal that we’re currently buying is at a, we’re estimating at a 6.1, 6.2 cap. And because of the size and the scale, our interest rate is gonna close at five, five, one, five, two. Now it’s a little bit bigger deal than you and I would buy as individuals, but that means we’re positive cashflow.
And the way we did this, we wrote into the contract that we have to manage it. So we’re already managing the property. We’ve already got 13 of 19 units leased up and we don’t even own it yet. So we buy this and it’s what’s called a current cash deal. So we buy it and immediately we’re positive cashflow. That’s the key to this entire thing is playing in the short-term game with a sight on the future, not banking on appreciation.
Micah Johnson (27:16)
Wow.Mike Hills, 720-220-8500 (27:32)
but betting that it’s gonna work out. And if it doesn’t, if it takes longer, you still have that current cash to protect your asset, to protect your money, your residents, give them good products and give your investors a return, a very good return, but also do it relatively safely compared to things that we don’t have any control over like development or we don’t need to talk about crypto, it’s stuff like that that I’m like, come on, let’s buy real estate.It’s worked for a thousand years. It’s going to work for many more. Let’s do it, own it, and we’ll be fine long-term.
Micah Johnson (28:04)
Right.Well, Mike, I really appreciate your time today, your story and your perspective. For folks that are listening that do want to touch base with you, I know it’s on the screen, but let them know what’s how’s the best way to reach out to you and get a call booked with you.
Mike Hills, 720-220-8500 (28:23)
Absolutely. there’s two ways ⁓ Atlas real estate at realatlas.com is our website. We do have all the social medias. Funny part is I don’t, have no social, I have no, I’m on LinkedIn, but I’m not very good at it. So to be very honest, but I have no Facebook. I have no, I will see the other one Instagram. Everyone’s probably laughing at me cause whatever.But if you want to call me, my cell phone is 720-220-8500. Again, 720-220-8500. My email address is [email protected] Again, realatlas.com if you want to look us up and learn more about us. If you’re interested in talking, great. Nobody’s going to try to sell you anything. I promise. But if you have questions, challenge me. We’ll argue about it in a good way. And if you live somewhere local, let’s meet up and I’ll buy you a beer and we’ll have a conversation.
Micah Johnson (29:09)
Love that man. So if you’re listening today, we’ll make sure that those are in the show notes so you can find the links, the email address, reach out to Mike, take advantage of somebody that’s doing this business the right way. And that’s something I really appreciate about that man. So thanks for being here. Thanks for the way you approach what you do on not only building your own life and protecting your assets, but those of others and helping them gain them too. So that’s really powerful.Again, we thank everybody for tuning in and listening in. If you got value out of today’s episode, please like the episode, share it with someone you think could get some value out of it. And remember to subscribe to our podcast. We really appreciate everybody tuning in and we’ll see you on the next episode.
Mike Hills, 720-220-8500 (29:47)
Thanks, Micah. Appreciate it, everyone. -
