Welcome to Cleveland real estate investor. On this podcast, you'll hear about every aspect of the real estate investment business. You will talk to your rockstar investors about their businesses, how they built them, where they came from, and where they're going. Who am I? I'm Joe Lieber and I've made millions of dollars from the real estate investment business over the last 20 years. If you're ready to hear the good and bad from a guy who's learned this business from the school of hard knocks and get educated by some bad ass entrepreneurs, then put your helmet on, strap on your chin strap. Let's ride.
(00:36): So, Hey, welcome to Cleveland real estate investor. And today I'm going to do an interview with my dear friend here, Mike Mereiter. Welcome to the show. Mike. Thanks for having me Joe. Really appreciate it. Oh yeah man. Listen to some of your other shows. I really like what you're putting out there. I appreciate it man. I do. I actually don't really like doing podcasting. I just do it to try to get some relevance. People know who I am and you know, give really, it's all about give, give, give and they say that the, it will tip in your favor, right. The scales will tip in your favor if you give, give, give. So Mike, let's talk about how I met you. So I'm involved in a few high end masterminds and that's how I met Mike. Right? We're in a high end mastermind together.
(01:22): Exactly. We just kinda started chatting. I think it was really over like one of the dinners at one of the mastermind events. Yeah. And just kind of hearing what you had going on and just talking about customer deals I was working with. Yeah. But a pretty cool mastermind to be in. It is, these masterminds I want to do for the audience, I want to tell them the difference between a mastermind and a REIA and different things like that. Right? So a Rhea is something you go to that's local and there's really no barrier to entry to get into these things. But the mastermind that I'm in with you, when I say high end mastermind, it's $35,000 a year to be in this group. Correct. And we get to meet about three times a year. And if you're in this group, you are a player.
(02:10): I mean, let's face it. No one's going to write a $35,000 check if they're not doing business. And it's all real estate guys for the most part who are at the top of their game. They're crushing it. And even when you get to the top of your game, it's awesome to get there. But you gotta stay there, man. And in order to stay there, you have to constantly network with like minded people who are flying high. Right? And we don't see that at Rios, right? It RIAs, it's more, you know, people are just starting out and wow, you're great. You own 50 houses. It's like, bro, I've owned 50 houses for 25 years. You know, like I'm trying to go to the next level now. And that's the point is mastermind. There's really six influences to a mastermind. What makes them great? And I'm not going to go into all six right now, but one of them that we're gonna talk about today is the multiplication effect, right?
(02:58): And that is the point of a mastermind. You can multiply your efforts and through in this situation, joint ventures, right? And that's what we're gonna talk about today, is joint venture agreements. What's a joint venture? Well, how does it work? Well, how does it not work well? And how did Mike and I just complete our second now joint venture deal? So I'm gonna talk about this mic. I want to get your thoughts on this. So I feel there's four components to a joint venture or to a really a real estate deal. There's one is the acquisition, right? And then two is I'm being loose here and I say acquisition. A lot goes into that, right? I mean, whether you're direct mailing to get that deal or you're doing auctions or scouting, MLS, I mean, whatever the case is, a lot goes into it. So the acquisition is a main component, right? Then there's the financial part of it, right? Someone's got to pay for the house and pay for the rehab. That's a big piece. Yeah.
(03:57): It's a lot of times like if you're starting out in real estate or maybe it's something you want, I want to scale up and grow into the next level and you might not have more access to deals or more cash. Exactly. It's a great way to kind of bridge that and just grow yourself. There's a lot of people that you work with over the years, you know, you learn little bits and pieces that they bring to the table and they might have different experiences, different different dealings that they've done in the past that can bring a lot of values.
(04:27): Exactly. And that's all a process, right? It's a learning process and, and at different times you need different things. It's not always easy for everyone to raise capital. Some people are real good at it and others struggle, you know, it's about your network really to be able to raise capital. So that's a huge component is the money. Then the third thing to a real estate deal that I think is a major is the operations or rehab, right? I mean, you shine at that dude, you're really, really good at that. But that's a big component is performing the work. Do you have the guys that do it? They have the ability, can they do it in a good time at the right price? It's a huge big deal.
(05:04): Yeah. And that's really where I started off. I started off in construction and landscaping. So that was kind of where I had my background and my experience and I'm a little bit newer to the whole, the money side and the finding that position of the deals, you know, it was great to build a joint venture with you on. And these last couple of deals that we did, you've brought a lot of different things that we weren't necessarily looking at before.
(05:29): Right? See how for the audience listening to see how this is all coming together now. Right? So you know, Mike is really good at the construction side, but he wasn't great at raising money or even finding deals. So when I'm bringing a deal to the table and money, but maybe I'm overwhelmed right now and can't perform all these rehabs. This is where great joint venture deals go. And then there's the fourth component to this whole thing is the disposition, right? And there's a lot of ways dispose of these houses. You and I have so far. We're two for two. We're retail, we sell in retail, which is not that challenging to do, right? We put it on the MLS and pray. That's really, it's no real big secret to it, right? It's, it's an LA, we're not watching a million dollar listing in LA and you're like having open houses and themes and you know, all the staging and all that.
(06:20): Not here in Cleveland. It's let's leave. And real estate investors know, you know, we don't even stage here really. It's so unusual to see someone stage a house in Cleveland. It's kind of funny, but that's what we do. And whatever it is, it goes in the MLS and you pray. But there's also, I do a lot of disposition with turnkey, right? Or we get houses, rent ready, we place tenants. And we sell them to out of state or international investors. I do a lot of that and that's a whole nother unique talent set if you're looking for that particular buyer because it's about relationships and I have a lot of international and national relationships where it's very easy for me to be able to sell these homes. But these are the things that make the joint venture relationships great. Right? So someone might want me to come in to sell a property that we didn't make retail ready, but we made rent ready and there's a difference there between retail ready and rent ready.
(07:12): And I might come in as a good joint venture partner because people don't have international and out of state relationships and we will sell these houses. But that's where I shine. I'm very well connected in that part. So I've always saw, and Mike just having an off the cuff conversation right now, like true to heart right now. You know what makes this work is it's kind of, we do a lot of 50-50 deals because it depends on what each of us are bringing to the table. When each of us can bring two things to the table, it works very well. So we just did a deal in Parma, Mike and I did and I brought the acquisition and I brought the money. Right? Cool. And Mike brought the operations or the rehab and really he brought the buyer because he dealt with the listing broker.
(07:55): I didn't want to deal with being the listing agent on the property. I said too much stuff going on to do that. But Mike was kind enough to hire listing broker, get the property listed and sold. Then it worked very, very well. It was a good 50 50 relationship. But the more you do in the transaction, the more you can make and the less you do, the less you make. The first transaction we did, Mike, I just brought the money to the deal. Right? I'm not going to get 50% of a deal if I'm just bringing money to the table, you know? Go ahead and talk about that a little bit. What makes it work for us?
(08:26): So I liked that side of it because sometimes I liked it. I enjoy the construction side. I enjoy putting a property together that you walk in and it's a disaster and things are falling apart and then when you close the door for the last time, like the property is just completely regenerated. It's got tons of years left in the property now. And you know, we're putting together a nice property that someone's going to live in for years. But aside from all that other components that go into it, like the money side, and we have some operations with buying deals, but we have nothing scaled up to like a large, we're not like large in that side of it. You know, we're focused on mainly the retail side of flipping. So being able to work with someone like yourself, it's great to build it. They add some more properties to our portfolio on an annual basis that we can sell. And then B, the second part would be, you know, the cash side of things because we don't work with a ton of private money. But as of right now it's nice. It's nice to go to work with you and have a private money side handled.
(09:30): Oh, it's, it's a big component. It really is. It takes a lot. It took me a lot of years to develop those relationships or I'm able to raise money really easily and really quickly through a lot of trust. And also it takes a while to build up your own money where you can lend and do deals as well, you know? But that's what makes your relationship so good. You know, my personal contracting team, we're not great at retail rehabs, so that property we just did in Parma, we would've probably done kind of a paint and carpet deal on it, got it. Rent ready and sold a turnkey. But we've got more money for it by going retail. And it's really what makes a great joint venture agreement. Everyone's bringing a unique talent to the table and it makes it work really, really well. Yeah.
(10:13): One of the big things I like to add to the equation is just being able to simplify the process. So if you find the deal you're bringing in you took it down, you're bringing the money to the table, then I like to make the whole backend side really seamless. So you're not dealing with the headaches and the police signs that are just time consuming. So that's what we try to do when we work with a joint venture partner.
(10:36): Yeah, man, for sure. What can we do to do more business together? What value do I have to bring to you? I like to add value. I want to bring value. What do you need? You need acquisition, you need monies, you need buyers. I know you don't need operations. You're very dialed in on operations and rehab.
(10:50): Thank you. Yeah, I mean, I just think right now, you know, the market's changing. We're having a little shift right now, just getting acquisitions at the right cost to start with. And you know, it's always funding. You know, funding is great to have that in the equation. Have it, you know, like you could deal with hard money lenders and different folks like that. But it's nice on a JV partnership because most people kind of have a little bit of effort into the project. So it's not like a one-sided deal. You're not trying to produce bank statements and show capital reserves and everything else that goes on to try and do a private money deal. And it kind of makes it nice cause it's just one less thing to worry about. You can worry about focusing
(11:36): Damn man
(11:37): And getting the property sold.
(11:40): Yeah, you're right Mike. And I'll tell you what, one side, that's a great point. I just want to expound on that for a minute. I have had joint venture relationships 10 plus years ago that did not go well because one partner ends up doing five or 80% of the work and it's still a 50 50 split. And that's how these partnerships go bad quickly. It's gotta be fair and it's sometimes you always have to have open communication with your joint venture partner and saying, Hey listen man, I'm doing operations. I raised the money for this deal and you're still wanting 50 50 and it doesn't work like that. It just has to be a conversation almost per deal with a good partner, a joint venture partner and say this isn't a partnership so to speak. It's a one off partnership on this particular asset and every one can be different man. You know? And you can't be afraid to go to that partner and say, well listen on this one, I brought the acquisition, you're bringing the money, I'm bringing the rehab and I'm bringing the sale. You're only going to get 20% of the net profits. You just, you have to have those conversations is what makes a good healthy relationship. Anyways. I think
(12:45): A lot of it too is don't go into your first joint venture agreement with somebody expecting the world out of it. A lot of times you know there's going to be more down the line. So you want to try to work together filling the voids that maybe the other person's missing to add value and then worked on the line. Like there's always more opportunities
(13:03): There is. So that's all I want to talk to you about today. I just wanted the audience to get a feel for joint ventures and how they can be beneficial. The great man, you know, it's really a great way to 10 extra business. I'm trying to build a tribe of 10 people that I know, like, and trust that we can do 10 plus deals a year with. And it's awesome. It'd be awesome. So that's what I'm trying to do. And you're a great guy. I love doing them with you.
(13:29): I appreciate that. Julia, thanks for having me on and it's been a lot of fun this past couple of years getting to know you then. I'm excited to go some more deals.
(13:37): Good man. Appreciate having you on, man. Thanks. Thanks Joe. Appreciate it. Have a great day.
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