The Fastest Way To Build A Six Or Even… Seven Figure Real Estate EMPIRE!
Success isn’t just about numbers–it’s also about mindset. If you’re looking to aggressively raise equity, you need a passion for capital, the right strategy, and a handful of factors that will make your project stand out in an ever-crowded field.
And today, I’m thrilled to be talking to Marcin Drozdz. Marcin’s the managing partner of M1 Real Capital, where he’s focused on value-add multifamily properties throughout the Southeast.
In this episode, we dig into mindset–specifically, the mindset you need to attract millions of dollars of capital to your next project. You’ll discover how to create a structure that attracts high net worth investors, and what he does to create equity and raise money in his funds.
Key Takeaways with Marcin Drozdz
- How to cultivate a mindset that attracts large amounts of capital to your projects.
- What it means to live by the Be Do Have philosophy.
- Six factors that will make you and your project stand out.
- Marcin’s unique strategy to create equity and raise money into his fund.
- Great giveaways to attract the right talent to your projects.
Marcin Drozdz Tweetables
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Connect with Josh Cantwell
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Josh Cantwell: So, hey there. Welcome back to Accelerated Investor. And before I introduce today’s show, I just wanted to reach out and tell you just how grateful I am for you for listening to the show, participating in the show, leaving all the ratings and reviews you’ve left, the comments and questions that have come in. It’s really a blessing for me to jump on and just kind of share my life and my investments and my friends and my different connections with you. It really gives me a lot of energy to share this. And we’ve been running the show for a long time. We’ve had amazing guests. But it’s really about you, the listener, and the things that we can share with you to impact and improve your life. So, I just want to say thanks. I want to say thanks for being here. Otherwise, when I do these recordings, I would just be talking to myself. So, anyway, today’s guest is a fantastic guest. The interview with him was really fun for me. His name is Marcin Drozdz. He’s the managing partner of M1 Real Capital, where his team focused on multifamily, specifically value-add multifamily properties throughout the Southeast. They’ve acquired 1,500 units across the United States.
And today we’re going to talk specifically, number one, about the right mindset to attract millions of dollars of capital to your next project. And we’re going to talk about, number two, what we call the Be Do Have philosophy. You’re going to love that. You’re also going to learn about the factors, the six factors that will make you and your project stand out. And we specifically talk about Marcin’s factors that he uses to create equity and raise money into his fund and the different factors that I use that I hang my hat on with my investments. And we’re also going to talk about, this concept number three, about what you want you need to give away. This is really, really good stuff today, guys, specifically about the mindset to attract millions of dollars of capital to your next project and a little bit about the structure to attract high net worth investors but you’re going to love this. Marcin and I have a lot of experience doing this, so I think you’ll enjoy this interview as him and I get back and forth. Here we go.
Josh Cantwell: So, hey, Marcin. Listen, I’m so excited to have you on the podcast and talk about raising capital, deploying capital, and just being an aggressive equity raiser for commercial deals. Thanks so much for joining me today on Accelerated Investor.
Marcin Drozdz: Yeah. Thank you, Josh. Really appreciate the opportunity. Looking forward to getting into it. I spent a fair bit of time reading your bio and you’ve raised a fair bit of money, so I’m really excited for this conversation. It’s really cool.
Josh Cantwell: Yeah, me too. So, listen, I’m always curious. You know, when I meet somebody new and we’re having a new conversation, I’m always curious what they’re up to like today that kind of gets them going, right? Like, being an entrepreneur and running a business is really all about passion, waking up and being excited for life and excited about what you’re doing. And there’s definitely days that are easier than others, and some days we’re super excited. Some days are really down. But usually, there’s a project that somebody is working on that kind of gets them going. So, what are you passionate about today?
Marcin Drozdz: Sure. So, I mean, for me the day-to-day is always buying apartment buildings. So, I’ve got a few things in Texas right now. I got a PSA signed back in 120 units. I got another LOI that will probably turn to a PSA. It’s about the same size. So, I mean, that’s kind of standard fare for us but if I had to think about what I’m really excited about right now, it’s when COVID first hit, I put together some materials to help people learn how to actually structure and scale their capital raising business. And that’s worked out really well. So, we’re in the middle of the mastermind training right now. And the more I do that, the more, again, I look at what you’ve done over the last few years watching people just grow and have that light bulb moment turn on is fantastic. So, I think that’s been my passion project of late.
Josh Cantwell: Nice. That’s fantastic. So, when you’re raising capital, especially in today’s market, we’re obviously in an inflationary market, we’re in an interest rate rising market, the Federal Reserve’s going to come out next week as we record this and probably make a three-quarter or even a one-point bump in those rates, which I honestly feel like is already baked into a lot of the debt, but what are you seeing or what adjustments have you had to make in the past 3 to 6 months? And what adjustments do you think you’ll continue to make to be flexible, to be nimble in this kind of market?
Marcin Drozdz: You know, Josh, it’s crazy. Six months ago, not even six months ago, I was told I was best and final on a deal in Jacks, Florida there. And I asked the broker how many people are best and finally told me, 11.
Josh Cantwell: Wow.
Marcin Drozdz: Yeah. I’m like, “Dude, this isn’t storage wars. Like, call it what it is. You’re trying to run an auction and just call it something else.”
Josh Cantwell: Yeah.
Marcin Drozdz: Those things aren’t happening anymore. The market’s still active. We’re still writing but best way to summarize it is we’re setting better expectations both on the equity side with our equity investors to let them know that the IRR that they may or may not have seen over the last couple of years is not something that is going to be sustainable into the future because it’s just math. It doesn’t work. It doesn’t make sense. If it happens, fantastic, but you definitely have to have those expectations reset on your equity side with your investors or partners. And then on the other side is setting better expectations with sellers and underwriting. We were underwriting in the five, six months ago on the interest rate. We’re underwriting in the sevens now. And that continues to push back, push down on pricing. I think sellers are seeing it because I’ll tell you what, brokers, realtors that weren’t calling these six months ago, they weren’t calling me back. Today, they’re texting, they’re sending smoke signals. They got carrier pigeons coming to my house. So, you can tell that they now need to do their job again. We’re not all lined up anymore. The best way to put it is just setting better expectations on both sides.
Josh Cantwell: Yeah. How much has on the deals that you’re going to acquire, how important do you think it is now to lock in debt for the long term? You know, with some guys that were just buying on bridge, buying with floaters, you know.
Marcin Drozdz: You know, I’m just as curious to hear your opinion on this, too, Josh because I got a little bit of a decision to make right now on this last PSA is do you go fixed P&I right out of the gate and then fund CapEx with cash or do you risk it? Do you bridge for 12, 24 months and then fund your CapEx, do interest only, and then finance? So, I don’t know if I’ve made up my mind just yet, to be honest with you, but I guess I’m curious to see what, you know, ask me again in 30 days.
Josh Cantwell: Yeah. I could say for us, we’re definitely considering more bank financing because it’s kind of the easy blended middle between bridge and long term. The difference is ,obviously, as you know is with bank, you got to sometimes do some sort of personal guarantee or a partial guarantee or full guarantee of the debt. So, because we want to do a lower loan-to-value, we just are not really afraid at all of that personal guarantee because the amount of debt that we’re putting on this deal is so low compared to the purchase price and compared to the future value, it just doesn’t scare me that much. So, we’re starting to take a look at more bank debt because we can lock in bank deals for five, seven years, still getting those interest rate quotes right now in five, five-and-a-quarter. Cost of money, two years IO with some rehab dollars baked into there. So, it’s a nice mix but the tradeoff, as you know, is some sort of personal guarantee. So, you might get comfortable with that. You got to make sure that your loan-to-value is low enough that that personal guarantee, that risk is so low, it’s not really an issue, right? It’s just not something that we really even care about but it’s allowing us to get that longer-term debt that we want with some IO for the first year or two.
It’s just hard to go bridge right now, man. With a year or two, where interest rates are going to be? I don’t know. I’m betting that four years from now, if we refi or sell some of these assets, that interest rates are going to go up, and then four years from now, they’re going to be settled back down. Not back down to where they were six months ago but they’ll be back down to where they are today, somewhere around 5%, 5.5%, 6% long-term debt. They might go up to 8% or 9% in the middle, right? And sometime in the next two years or seven like you talked about. It might go way up but I think they’re going to settle back down. There’s just too much appetite for both on debt and equity for apartments, in my opinion. So, that’s what we’re investing on.
Marcin Drozdz: Yeah. You know, what you say makes a ton of sense and I’ve got a few different quotes from our guys exactly for that reason. And like you said, you got the long-term fixed piece for Freddie/Fannie, and that comes with its own benefits and drawbacks, but that bank piece seems to be that hybrid right down the middle. And maybe, in fact, that is the right move. I guess what I’m curious to see and this is probably a conversation that could go on for as long as we want but when they raise the rates, pardon me, when they drop the rates back down eventually, whether it’s in six months or two years, if they don’t get a grip on inflation first, what’s that going to do? Because the government can say the rate is whatever they want but the private lenders are going to be saying like, “CPI is still 7. We don’t care if sulfur is still 5 50 plus.” So, that guess, I guess, is as good as anybody else’s, right?
Josh Cantwell: Yeah. Absolutely. So, listen, let’s talk about raising money. You’ve stood up and raised well onto the nine figures in some of your past seats that you were sitting in. You’ve stood up $100 million fund and raised money for that. Like you said, you’re right now working on these acquisitions, 100 units here, 200 units there, and just continuing to raise money for those. First of all, let me ask you about your mindset when you’re raising money. And I want to tell you this little story first, and then I want to hear your side of it. I had a friend of mine tell me years ago, his name was Francis Ablola, still a good friend of mine, and Francis said to me, he said, “Josh, look, when you’re in sales and raising money to some degree is sales,” he said, “Look, if you have something that you are so convinced of that’s going to benefit somebody else, you have a moral obligation to sell it to them. And that became my mindset for raising capital. I just thought the other investors’ money was better off in my apartment buildings or my private equity fund than the stock market or with another investor. So, I was convinced it was better. So, I felt based on Francis’s advice, I had a moral obligation to present it to them. That’s where my passion for capital comes from. Where does your passion for capital come from?
Marcin Drozdz: You know, I like how you phrased that question because so many people think it’s like a tip or a trick or like here’s an email sequence or whatever it is but it goes so much deeper than that. It really is a mindset piece. And for me, the best way I’ve ever heard it articulated and I’ve internalized it since then is I went to an event with Robert Kiyosaki 15 years ago and he stood up on stage and he said something called Be Do Have. Now, he didn’t pioneer that concept, but that concept really was instilled in me over the years. And the best way I’ve learned to discuss it is in the form of the three types of people that are out there. So, you got what’s called the victim, the worker, and the winner. And the victim is the person that thinks in terms of Have Be and Have, Do, and Be. So, in other words, they say to themselves, “Oh, well, it’s so simple for Josh or Marcin to say X, Y, Z because look at all the things they have. If I had those things, then I could do the things that they’re doing, and then I could be happy.” So, they put the having first and then they put themselves in this victim mentality where it’s like, look, I understand the more things you have to start is great in terms of moving forward. But if you just say to yourself, “Well, I don’t have this, I don’t have the contacts, I don’t know the people,” then you’re immediately the victim. Now, that’s one.
The other one and the people that are probably on your podcast and your friends and colleagues are probably they’re not victims. They’re listening to you, they’re taking action, but they might be in the second category, which is a worker. And the worker is the person that thinks in terms of Do Be Have so, in other words, pardon me, Do Have Be. So, they think to themselves, “I got to do all this. I got to go make that sale. I got to go do this.” Like, it’s tactical. It’s like they have to do something right then and there to get something, to get a result, the Have result. And then once they get the result, then they allow themselves to be happy or be chill or be on vacation or be present with their family or whatever it is. Whereas somebody like yourself or Mark Cuban, myself is, you’re always thinking about who do you need to become to be able to do the things that need to happen for you to get the result.
So, I’m always thinking about it in the context of when somebody who I admire or somebody I aspire to become like I think to myself, “What are the thoughts that go through his mind or her mind? What are the things that they focus on? What are the things that just flow off them like water, like a water off a duck’s back? What are the things that they’re focused on within their business or their family or their relationships? What are the thoughts?” Because that’s how you can become the things that you want to focus on. So, once you do that, the doing becomes self-evident and then having is the result of all of it. I mean, guys like you and I, if we’re talking to somebody who hasn’t even bought a duplex and you’re saying, “Yeah. Look, we’re just reviewing the 200-unit building right now,” their mind, you can just see it just exploding because they can’t put themselves in the position of becoming that person. So, the mindset piece is the biggest part. And the fastest way to collapse that timeframe is to either invest, work with, or surround yourself with the people that are already operating at that level like it’s basic.
You know, the next goal for me on a personal level is my fitness. So, I’m describing with some people, I’ve retained some people to work with me personally that make me feel like I’m standing still in the context of my physical fitness. So, I think to myself, “Oh, I’m in good shape. I hang out with these guys. No, I’m a piece of fill-in-the-blank. Okay. I’ve got to get off my ass.” And then it’s a new level for me to aspire to.
Josh Cantwell: That’s really fantastic stuff. So, your idea of a victim, worker, winner comes with thought first, what do I need to think of, how do I need to think, so I can become a certain person that then in our world of raising capital is very simple for us to attract capital, attract investors, whether it comes through a funnel, whether it comes through a referral, whether it comes from a speaking engagement, whatever, you feel like your thoughts are attracting these dollars, right? The mindset for attracting money is what we just described. Now, let’s talk about the tactical way to get more people in front of us or us in front of more people. What are some different things that you’ve done, whether it’s a funnel you’ve built or a book that you’ve written? What are some tactical things to do once our mindset’s right to just be in front of more private investors?
Marcin Drozdz: Sure. So, just one more thing to wrap up the last thought because I think it’s important. So, in the context I don’t want to leave it like it’s fluffy like think about it and it’ll happen but the thinking about it piece is really important because think about it in this context. You know, the Josh from 20 years ago, did he do the deals he’s doing today? No, of course not because you might have looked at a deal and said, “Holy heck, how am I going to do this $10 million raise or $100 million or whatever it is.” But that was a deal. And maybe at that time your sell for me or whatever it was, you could have looked at the same situation and said, “You know what, that’s a great deal. I’m not there yet but who do I need to become to be able to marshal $1 million or $5 million together? What skills am I missing? What teammates am I missing?” And those are empowering thoughts as opposed to limiting thoughts like, “Oh, that deal’s too big for me. I can’t do it. Forget about it. I’ll go back to flipping another duplex.”
And that makes it real because you have an honest discussion with yourself about what you’re missing, either strategically, tactically from a personal financial perspective, from your investor, from your networks to like, what am I missing to get to that next piece? That’s that becoming part. Now, as far as tactically, I think the thing that I’ve done the best over the last 16-plus years is the things I want, I give away. So, in other words, if I want to attract capital, if I want to attract great investors, I create an environment where other people can plug in and actually just effectively take the things that I’m looking for from me with no expectations. So, in other words, so many people think that whatever they know, they got to hold on to it. They got to guard it. It’s like it’s so proprietary. Anything that I can teach, I teach for free. Yes, we have paid things in page programs but the irony is the more you give away, especially if you have that abundance mentality, the more you give, the more you share, the world just especially when you add so much value to someone’s world that they just feel compelled, like absolutely compelled to engage with you, to partner with you, to work with you, to invest with you, to work for you, to volunteer for you because you have no expectation of them.
There’s leave an environment better than you found it. And if you can do that through like yourself, you take the time and the care to find the guest for your podcast, to give value to your network, whether you’re doing events, speaking engagements, whatever it is, if you’re coming from a genuine place of just trying to inform and not like dangle a little bit of information and then tuck everything else away behind a paid wall and say, “Okay. So, now I need you to give me X to get Y.” As long as you come from that abundance mentality, I can’t describe it, you will attract people well beyond your imagination. And if YouTube today and podcasts and what you’re doing, the world is, my God.
Josh Cantwell: Fantastic stuff. So, the interesting thing like the marketer in me, the Dan Kennedy marketer. We all know Dan Kennedy was fantastic. The Dan Kennedy marketer would say, “Give them enough information but make it useful and incomplete so that they have to buy the next thing,” because Dan was all about selling products and info products and seminars and workshops and home study courses. I used to do that years ago and I’ve sold over $50 million of info products and seminars and everything I just described over my lifetime. But a couple of years ago, when I got into multifamily and still was also doing the info thing, I was like my passion was in doing more multifamily deals. And I realized, look, the info game really never had an exit. Nobody was ever going to buy that business. So, I just got rid of it. I just stopped doing it. I went from selling 5 to 8 million a year of info products to literally just running a mastermind group because, Marcin, exactly what you just described. I could basically give away everything and put together an ecosystem of people that cared about each other, that wanted to help each other, that wanted to give, give, give, give, give.
I do get paid for that mastermind group because I’m just putting my time and energy into creating the ecosystem. But now there’s no, “Hey, buy this little thing for $49,” and there’s this massive upsell because the $49 thing was useful but it was incomplete. Now, it’s a totally different mindset and now I’ve seen this over the past five years of just raising capital is it just seems to come literally. You get referred all the time. People are coming to our website all the time. There’s all this type of stuff because of that mindset shift that you just described. I went through that in my own life and many people will say, “Well, if I just give, give, give, what am I ever guaranteed to get anything back?” So, when somebody said that to you, Marcin, how would you respond? If I just give all the time and, man, I’ve been giving for two months, three months, I’m impatient, I need a paycheck, I need to raise money now, when am I going to get something in return?
Marcin Drozdz: Well, the best way I had it explained to me and I forget the source but whatever you want, give it away first. So, if you want love, give love. If you want to start a fight with someone, give hate. Like if you want generosity, be generous. If you want like be the person like it sounds so frou-frou and, yeah, I know how it sounds but I’ve been living it for about 16 years, and ultimately what you give you will get back. And the irony is you may not get it from the person you give it to and that’s fine. Cheap people don’t understand loyalty and that’s something that a lot of people have a hard time wrapping their heads around is that there are certain types of people that deserve your time, deserve your energy, deserve your attention, your love, your passion, whatever it is. And there are certain people, as you go through the process, that you’ll learn that they’re just takers and those people will naturally just fall off, as I’ve found over that period of time. So, ultimately, I can tell you that today with the Internet online, everything, that the world is so small.
And I’ll give you an example. I had somebody comment on one of my videos, one of my team just texted me back. Apparently, they have $3 million to put into a building, the word 20. You can’t make this stuff up. These people just appear. And I mean, we only work with accredited investors anyway and it’s amazing. The quality people of substance look for the people that they can rely on, that they can trust. And if you’re open and you trust, how you do anything is how you do everything. The way you conduct your seminars and your podcast, kind of people you have on, you attract a certain type of personality. You’re not going to attract the person that’s going to fight with you over $500 as a refund for a weekend event that you spent tens of thousands or hundreds of thousands of dollars on. You’re going to get somebody who can meaningfully drive the business forward, right? So, I don’t know. What you think about? And anybody who comes along that asks, anybody create static, anybody wants a refund, whatever it is, I say, “Here you go. God bless. Move on.” I don’t have time like I’ve got too much positive stuff in my world.
Josh Cantwell: Yeah. I love it. Fantastic stuff. Now, Marcin, listen, with all the deals that you’ve done, all the capital that you’ve raised, what are some things that you think make your project stand out? What are some specific factors that you think, “Hey, if my deal has these couple of bullets or these couple factors, what are some of those factors that you think have to be baked into a deal to attract investors and get them to commit?”
Marcin Drozdz: So, I can answer your question, Josh, a little broadly because we don’t do deal-by-deal anymore. We just do funds. And the reason why we do funds is because, as you probably know, you have a lot more cash. You can make all cash. You can make more compelling offers because you can show cash as opposed to, “Hold on a sec. Here’s my deposit. I’m going to run around and go get the money.” And there’s nothing wrong with that. In some ways it’s simpler and maybe less complicated but we do a fund approach. And for me, the conversation is to not really spend as much time on the deal, but the content of the deal, but the context of what I’m doing. So, in other words, we’re more interested in describing the market, the investment thesis, the types of buildings, the buildings we’ve done, the features of assets that we’re looking for, examples of situations where that’s worked in the past and saying do you like this concept? If the answer is yes, okay, great. So, we’re going to continue to do this with these other projects. Here’s the timeline. So, it’s less of a, hey, here’s this specific deal. Buy into this one. It’s more of a here’s why this deal fit into this fund, for example, that was packaged in accordance with the thesis here, right?
So, it makes a lot more sense. And the best way to edify that so, for example, everybody talks value add, value add, value add. We’re going to do renovations, we’re going to, okay, great. So, here’s a really simple example of a no-brainer value-add building I bid on, owner was taking the quarters from the machines, never hit the income statement. Okay. That’s $20,000 a year in quarters that, God bless, I don’t know what he did with those quarters but it’s a lot of quarters but $20,000 as you know is like $400,000, $500,000 in value in the asset. So, just by putting those quarters back on the balance sheet, there you go. There’s $400,000. That’s real money. So, anybody can understand that. Explaining the concept of just leveling out the curve stoppers and repainting the lines and reserved parking like people try to explain cap rates all the time. I don’t talk about cap rates. I talk about, look, for every dollar in profit that we can create in this property, that’s $20 to $25 in profit. I have $20, $25 in value. Now, you and I understand cap rates and how that works but for somebody who is worth a ton of money but isn’t in the real estate game, they don’t care about cap rates. They care about the amounts that it reflects financially.
So, those are the things I prefer to focus on rather than talking about, “Hey, this building is beautiful because of X, Y, Z,” tell me what corner, what street it’s on, how many cars drive by per day. Give me things that even I as a layperson that don’t know much about real estate can go, “You know what, that makes sense.”
Josh Cantwell: I love it.
Marcin Drozdz: It’s contextual, right? Like, don’t bury me in vacancy rates and sensitive… Like, if I want to read that stuff, I’ll ask you for it but most people just want to understand high level how it makes sense.
Josh Cantwell: Yeah, I agree. I think you have to have, like I said, in an investment thesis or a strategy, most people think, “Well, I just buy multifamily. I buy value-add apartments.” That’s not a strategy because that could be interpreted 5,000 ways. For us, what we’ve done is when COVID hit, we decided to bring all of our investments home in our backyard. So, we’re in Cleveland, Ohio. We have investments in Houston, Texas, like 700 units down there. We had over 2,000 units outside of Atlanta. We’ve sold a lot of those off. We’ve got about a thousand left and we have over 1,400 units in Cleveland in our backyard because we made our strategy like our high level, contextual, like you mentioned, strategy to really focus on B class suburban apartments, 1960s to 1990s vintage, that needed heavy new construction, meaning we were going to do hard turns of old units like 7,000 to 10,000, 11,000 a unit. And we hung our hat on our construction company. And we’re fricking killing it with that.
So, that’s the difference between just saying I’m a value-add multifamily investor versus what I just described and where you’re going to hang your hat. And what Marcin has done is basically saying, “I’m going to put together a fund,” that he might say, “Okay. We’re only going to buy Suburban B class. We’re going to buy in these markets because of these different maybe it’s rent growth, maybe it’s population growth, population migration, etcetera, etcetera, etcetera.” Now, his investors don’t really care about the actual building that they put in the fund. They care that the building just matches the criteria that he described. So, Marcin, for you, what are some of the factors or the context of your fund, specifically? You’re not like pitching our group, even though you could pitch our group if they’re accredited, which I’m happy to do but what are some of the factors for the deals you’re looking at to put in your fund?
Marcin Drozdz: Sure. So, on a macro basis, there’s three. I mean, obviously, net migration, you said it there. Industry, the types of industries that are relevant. And if we’re in a recession or going into a recession, that one’s definitely very important now because you don’t want to be exposed to hospitality or tourism as a primary industry for first base. And then the third one, which I find fairly overlooked, we categorize it as transportation. So, in other words, transportation. Talk to me about the seaports, the waterways, the major highways. Is your town on the way or is it out of the way? And that’s a really important basic tenant. If you look at, again, the whole recession thing on the horizon, if that, in fact, is a reality, logistics companies, places like Jacksonville, Florida, they got the second deepest deep-water port in North America next to the one up in New York. All the stuff from Panama, the Panama Canal goes up through there, and then they have the infrastructure, the roads. Memphis, they got FedEx Global World Headquarters. You got the massive airports there. So, Texas, you got the Texas Triangle and it’s the ninth biggest economy in the world.
So, the transportation hub is really the artery that pumps the blood through the economy because short of us teleporting each other, we’re still going to need roads and maybe 50 years, who knows? But for now, that’s not an option. So, train, rail, transport. So, those are the macro. On a micro level, we look at MSAs typically half a million or more that fit into the three macros. We look at assets that we can acquire typically for half of what they cost to build replacement cost. That used to just be kind of a byproduct of everything else but now with inflation and when you guys see it with construction, the cost of everything, replacement cost is another marker of value now because replacing that building is not the same discussion it was 36 months ago as it is today. So, replacement cost is a marker. Obviously, Class B, Class C, 60s, 70s, 80s vintage, that kind of stuff, 90s, if you can find it. Yeah. I mean as long as it fits into the macro, into the micro, those are some of the broader parameters that we look for. Also, we look at GRMs as an initial discussion. So, gross rent multiples. So, if we look for gross rent multiples of less than ten, that’s important.
Our investors understand that better than cap rates, by the way, because it’s more practical. Especially for investors that are coming from New York or California, they’re like, “What does that mean?” And you’re like, well, if you get $3,000 a month rent and you spend $1,000,000 for it, that’s $36,000 a year in rent. You have to multiply that 36,000 by 27 to get a million. Whereas if you and I buy an apartment, let’s just say in Cincinnati or down in Texas for $60,000 and we get a thousand a month rent, that’s 12,000 into 60 is only five times. So, easily, it’s like we’re oversimplifying because there’s expenses and there’s operating costs but anybody can understand five years of rent buys this, whereas 25 years of rent buys this.
Josh Cantwell: Love it. Love it. Love the comparison. That’s great stuff. As we kind of round third here and head for home to wrap up the interview, just a couple of questions. You know, raising capital is something that if you have a passion for it, really good at it, really fun, but can be scary when you first do it. So, what was it like for you when you first got going and how did you know that this was going to be a passion of yours? What were some of the early challenges when you started raising money for the first time?
Marcin Drozdz: You know what, Josh, I see it more as that. You have to see it for something bigger than just the binary activity that it is. For me, I always picture it as being part of building a company or furthering the cause. So, that skillset, by the way, whether you’re raising money for real estate, for your charity, whatever it is, as long as you understand and you tie it to something bigger than just the arbitrary this for this, and you just consider in a trading relationship, that’s tough. But if you look at it as a bigger cause. So, for us, for me, and early days, I always saw it as me helping build a business. Initially, it wasn’t my business but I was in the business of helping build an investing company. We were buying a private equity firm, you’re buying apartment buildings, things like this. And since then, for myself and for our own account, that’s exactly what it is. So, if you attach the activity to a greater goal and you don’t just see it as a binary this for this, it will get you past the tough stuff because, look, capital raising, there’s a reason why it pays to know how to raise capital.
The biggest companies in the world are capital raising companies, Blackstone, KKR, Fortress, Investment Management, and New York Apollo. These are hundreds of billions of dollars of entities, and they own some of the biggest companies in the world. And you know why? It’s because they can raise more money than anyone else. So, he who has the gold makes the rules. And as the CEO of your own company, your destiny, your life, if you can harness that skill set, you’re prepared. You’re ready and it’s tough. So, as long as you tie it to something bigger, then it becomes… It’s just another thing you have to learn.
Josh Cantwell: Yeah. Love it. Well, listen, Marcin, listen, I really enjoyed having you on the show today. I know our listeners can reach out on your website, MarcinDrozdz.com. We’ll put that in the show notes.
Marcin Drozdz: That’s right.
Josh Cantwell: And then M1RealCapital.com. Any place else that our group should go if they want to engage with you, invest with you, learn more from you?
Marcin Drozdz: You know, the website’s the best place because there are tons of free resources there. People want to see the real estate side of the business and when real capital is fantastic. You know, Josh, I really appreciated the way you framed the interview because most people just focus on the binary this to do this but you really dug into the how things actually work so people can take action with it. So, I appreciate that.
Josh Cantwell: Absolutely. Well, thanks again for carving out some time and joining me today on Accelerated Investor.
Marcin Drozdz: Perfect. Thank you.
Josh Cantwell: Well, guys, there you have it. There’s no topic in this industry that I get more excited for than raising money because, as Marcin said, “He who has the gold makes the rules,” but not only that, but I think he who has the gold and has the mindset to raise capital and take care of other people’s money really is able to set themselves up for financial independence. That’s what we’ve done. That’s what Marcin’s done. That’s what I’ve done. And that’s what’s most important to me. When I do this training, these episodes, this podcast for you is to give you the tools and the mindset and the different shifts that you need to make in order for you to have financial independence. That’s really what this is all about. Okay. So, sometimes this is very tactical. Sometimes it’s more mindset. It’s more about the way you’re looking at your business. Today was a lot more about the way to look at your business, to look at yourself and look at your passions. It’s really fun to do an episode like this because it gives me energy and so I look forward to sharing more episodes like this with you.
We talked a little bit today about coaching and mastermind, about the different things that we do in that. You can definitely check it out. You can apply to be in our mastermind program. You can go to FreelandVentures.com and then click on in the upper right-hand corner, click on the Mastermind tab and apply. You can also go to JoshCantwellCoaching.com. Again, that’s kind of reserved for intermediate to advanced investors who are really looking to continue to scale up their apartment and their forever passive income portfolio. Thank you so much for being here today, guys. Listen, I love it. Thanks for letting me share. We’ll see you next time.