September 23, 2025 · 1 hr 19 min
With Mikey Taylor — Investor & Former Professional Skateboarder
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How does a professional skateboarder transition into building a $400M real estate portfolio? In this episode of No Vacancy, Taylor Avakian sits down with Mikey Taylor — former pro skater turned…
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How does a professional skateboarder transition into building a $400M real estate portfolio? In this episode of No Vacancy, Taylor Avakian sits down with Mikey Taylor — former pro skater turned entrepreneur, investor, and city councilman. Mikey shares his unique path from skating the streets to leading one of the most successful real estate ventures in Southern California. You’ll learn: - How Mikey reinvented himself after a pro skating career - The mindset shift from athlete to entrepreneur and investor - Lessons from building community-driven real estate projects - Why discipline and creativity go hand-in-hand in business - Mikey’s advice for athletes, creators, and anyone facing reinvention Whether you’re in sports, business, or real estate, Mikey’s story offers a powerful blueprint for resilience, creativity, and long-term success. CONNECT WITH ME: EMAIL: taylor@thegroupcre.com WEBSITE: www.thegroupcre.com Subscribe and Stay Ahead! Stay informed and empowered in the multifamily real estate market. Subscribe to the channel for exclusive insights, rental updates, and expert analyses on the Los Angeles market. 🔔 Don’t miss out on the latest trends and tips to maximize your property's potential: https://www.youtube.com/c/TaylorAvakian #NoVacancyPodcast #MikeyTaylor #RealEstateInvesting #Entrepreneurship #TaylorAvakian #AthleteToEntrepreneur #Skateboarding #PropertyInvestment #BusinessMindset #CRE
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by 30 you're a dinosaur. An 18-year-old kid you just can't compete with. Oh, this was like I gotta figure this business out because my career is gonna end soon. Giving a check of that size to your investors was it was the best feeling. A lot of developers look at the entitlement situation here and go three and a half years I could go do this in Texas and be done in 6 months.
Yeah, this was an incredible episode. Uh Mikey and I just jumped right into it. So, I didn't really give a background on him, but Mikey Taylor was the guest today. We talked about everything from being a professional skateboarder to growing and buying and starting and selling St. Archer Brewery to then starting Commune Capital, which is his real estate development firm where they have 350 million assets under management that he's building on social media. It was a really great conversation and so I'm excited for you guys to hear this and also mention that I am also a real estate uh broker. I sell apartment buildings in Los Angeles. If you or someone you know owns a property and is thinking about selling their asset or is curious to know the values, give me a call. Check the description. There's a link down there. It goes to my website.
You can click on that, fill out the form. We'll get back to you in 12 to 24 hours and uh see give you more information about your property. See if it's the right time to make a move, whether you're investing or selling. This is what I do. So, I hope you guys enjoy the episode and uh yeah, catch you on the next one. The sentiment is it's still such a buyer market. It's such a buyer market right now that you kind of have to either [bleep] or get off the pot or like wait it out. Yeah. That's why there's deals actually getting done because the debt's coming due and they're not going to cash in. Especially for these funds. This is a private investor so it's he has a little more leeway but I mean he's not he doesn't want to put money back into it, right?
It appraised for 29 like beginning of last
year. Yeah. Right. Yeah. It's rough out there. Yeah. So what what why are people slow to act?
Is it a capital issue?
I think it's an opportunity that interest rates are still too
high.
Yeah.
Yeah. like negative leverage still because so if you're thinking about it from a like a return perspective on something like this, you're going to buy a new construction building. It's going to be let's say you're going to lease it up over 8 months. You're going to be stabilized at like a, you know, five and a half 575% cap rate. Um, in year 10 you're predicting it to exit at a 5756 maybe, but most people are conservative and they're underwriting to like a six, six and a quarter. So, plus the regulation uh concerns. I think the the California there's like a smog in a haze over LA and SoCal because of the regulations and people are discounting prices 50 75 basis points purely just upon the unknown of the
regulations and are the sellers saying yes some huh some because what it looks like is that and you have such a better pulse than I do on this but looks like listing price or what they're bringing it to market for is all still too high, but it seems like if one's trading, it's trading below asking. Yes.
Right. Yes. 100%. So, this is something that I ran into a little bit, too, because people who sell homes, right, they see where everything trades above listing price. That doesn't happen in commercial real estate, right? The whole strategy is you list it 10% above where you think it's going to sell, five to 10%, and you negotiate, and you get down. because it feels like a win for everyone. Like that is part of the strategy and what we're going to the market at. And most people, most buyers understand that game, right? Um I tried at one point to pitch and I lost the pitch. I'm like, "Hey, like let's be the most attractive price in the market and try to go and win the business." I ended up being right in terms of the price, but the sellers didn't want to take that route. They didn't want to
leave anything on the table.
Yeah. I have talked to a buddy who's a broker as well and he said the same thing you just did. Yeah. He can't get the sellers to get on board and he's like I think it's a good strategy.
Like I agree. I just saw this I said this to my buddy. I saw this on Instagram and I'm like [bleep] that might be genius. So this guy in Scotland or Ireland or something um was trying to sell his house for like a million bucks. Couldn't sell it. So he decided to sell raffle tickets to win the house for a dollar and he sold two if it's true. He sold two million raffle tickets. I'm like, "Bro, that's kind of genius. If you caning make that work,
that is genius, right?" Yes. If you could pull that, that is genius.
Like that. Like, if you have the distribution to get people to buy a dollar raffle ticket, they're like, "Oh, I won a [bleep] house, you know, and you get two million." I'm like, "Oh, is there a business model there?" Like, what? What do you do? You know, that's really good.
So, um, okay. So, you said you brought up negative leverage, right? Yeah.
How?
So, people that are buying right now that are buying existing or stabilized products, yeah, they're just expecting rent growth to get them to the point where they can actually cash flow. How do you do that if you're an
investor? Most deals that trade are not uh negatively leveraged at the end of year one. So, like the buyers are not buying it without seeing a pretty clear path to get to positive leverage after year one. Okay, what I mean by that is like either they're building ADUs, so they see, okay, if I build these ADUs, then we'll get to positive leverage and that doesn't affect I don't need tenants to get kicked out. No one's buying a property and expecting tenants to leave. Yeah, that's right. No one no one is doing that anymore. Um, so if there's a path where there's vacancies in the unit or they can build ADUs, then they'll take a property that's existing at five and a half and take it to, you know, six, six and a half. So they it's a value ad plan. It's a value ad.
value ad is what what is trading today. The stuff that's stabilized that's selling is super interesting because it's very niche. Like the the buyer pull, I mean, so the the buyers who are buying buildings that I wouldn't consider a good investment, it they're not buying it for uh they're not playing the game, if you know what I mean. They're buying it for diversification of assets to get depreciation on their ordinary income to have real estate hopefully have some income and passive cash flow and stuff like that passive. Uh but they're not going in trying to get a specific IR specific yield. They have no intentions of selling it ever. So like their timeline's different. Those are the people who [bleep] up my job when I have to go to a seller because you they see this price that something sold for that
is just very unlikely to happen, but it does it it happens every now and again. And it's that one outlier comp where someone says, "Well, this sold for, you know, a five cap. Like, why can't my be my building be worth a five cap?" And I have to tell them, I'm like, "Well, it could be, right?" but also this person was in a 1031 exchange or this person just sold their company and their business or this person just, you know, 100% bonus depreciation just came back and they had a million and a half bucks making 4% and they're like, "Yeah, let me go, you know, put this in a real estate asset because their residential real estate agent was looking for them and and sent it to them, right?" All of the deals that we're doing are represented by residential agents or I wouldn't consider them like very
active multif family agents buying these deals. And it it's almost like wow there's a lot of trust in these agents in in for their clients investing these deals that I wouldn't buy myself, right? And I have to I'm like, "Wow, that is like this is millions and millions of dollars that they're putting them in these deals that I wouldn't consider that great of a deal, but I'm happy that they're buying my
properties." Are they small?
Does that play for smaller deals? Mostly like 3 million and below. Yeah.
Yeah.
Like all the most of the deals that are trading are below five. Okay. Because of ULA and stuff like that. And then all the syndicator money and all the people who are raising capital are going into these quote unquote non RSO, non-rank control areas. So Inglewood, South Bay, uh, Burbank, Glendale, San Gabriel Valley, uh, Ventura, even a little bit, people are going into those markets and and are willing to take more risk there because they can see a path to getting it's better to get 8% annual growth than 3%. like they can see a path to getting somewhere in five years where if you buy an RSO building that's not 6% cap rate going in, it's like you better have turnover or you better have vacancies. You better add ADUs otherwise you're not getting to where you need to go.
Yeah, I agree. I think it has to be a there's got to be a value add or development play for that. So then like did you see this whole thing that happened in New York where they Yes. killed the broker fee? Yeah.
And then it just got pushed over to red.
I just saw your uh video on it. Okay. So my question to you, I've always viewed it as, and you know the thesis behind my business, like we go into the areas that are actually more regulated. Yeah. Because I think the politicians are so bad at this that added regulation just drives prices up and keeps your competition out. Correct.
Do you think that's not true?
Do you think these investors don't see it that way or do you think they just don't want to be bothered? Like what's your assessment of the the different in difference in strategy there?
I think that the people who've been in Los Angeles and have seen the regulations change, especially in their day-to-day operations of what's going on, they have this um this like bias towards the pain that they've experienced over the long haul. They've seen how hard and difficult it's gotten and that's very
off-putting to them, right? On their existing stuff, they've had a bad uh you know, eviction that's cost them more money than needed to be. They've had insurance jump up 4x and they're like, "What the heck?"
Like this.
It's this they're they're jaded. Exhausted. Exhausted. Yeah. Right. The new people who haven't experienced what it's like to be a landlord in Los Angeles, they're willing to take some of that, you know, headbanging or at least they don't understand or know it as well as I think the people who've been in the business for 20, 30 years. And when you were buying properties in the 60s, 70s, 80s, 90s, early 2000s, like you
did pretty well. Like it was hard to up over that 30-year period if you held it long enough.
And I think people are realizing when they're looking at where values are today and where they bought it. They're like, man, I don't want to go through that anymore.
Yeah. And you have to be a business today. Like it's really hard for the mom and pop investor.
Very hard. Insurance goes up 4x. You're getting lawsuits and tenants. You can't get evictions out. That's right. You got to, you know, people aren't paying on time. It is not like it is not a a side business anymore. It has to be your full-time business to be able to make it work in LA, which I think is a barriers to entry, which for people like yourself who see that I I would agree like I'm long Los Angeles purely based on the supply and demand fundamentals of the city, they can't get out of their own way when it comes to developing. No, no, they can't. They don't make it easy at all. And I don't think they're going to continue to make it easy, which for someone who's willing to uh take that on, it just makes pure macroeconomic sense. Supply, demand, people want to live here.
People are going to continue to want to live here. I hope industry comes back a little bit in terms of movies and film and TV and stuff like that because I think that was a big
push. Yeah, we'll see on the I think the see who the next governor is and see if that has an impact.
I mean, are you friends with Caruso? Are you you know?
Um I I wouldn't say we're friends, but I our city works a lot with them. Got it.
Yeah. Do you think what they're doing with the Palisades in that um the company they started to streamline a lot of that stuff is a benefit or do you think it's kind of a for show? And we don't have to include this,
but maybe a little of both, but I don't think it's going to move the needle as much as it looks cool, I guess. Yeah, right. Like to move the needle truthfully like somebody has to come in and completely reform SQA. It's SQA. Like that's it. Like if you don't get rid of SQA or change the way SQA is impacting real estate, nothing's changing. Mhm. You know, and so until that's done, I mean all this stuff is little moves, but that's 18 months that you are locked in on your
entitlements. What is SQUA? What is your experience been with SQA on your development projects?
So, we we haven't had any development projects like held up or we haven't had any of the unions like stop our project because of our size. I think we're a little bit lower than that threshold. Got it. But dude, the amount of scrutiny that goes into a project to make sure it's in line with SQL from the city standpoint, that's it's that's a big chunk of the entitlement phase. Mhm. And so like our entitlements, I don't think we've ever gotten through entitlements less than two years. Like our entitlements are two plus years and then that's another 12 plus months for permits. Yeah. Right. So you're three and a half years into a deal before you even break
ground.
Yeah.
And that and and what I I don't think a lot of people understand is the cost of that. The timing costs.
Yeah.
That's right. It costs money to have things take a long time. Like you're you have debt, you have, you know, construction debt. you have uh people that you're paying.
It's like, well, yeah, you have that's right. You have costs that are associated during the entitlement phase. Yes. And look, there's times where you you don't get it. No, you swallow that cost, you know. But yeah, that's a big thing. Like it's a big reason why real estate is at the price it is today. It's like there's a lot of investors just like you said that don't want to go through the nightmare of dealing with tenants that stop paying and what that looks like to get them out. A lot of developers look at the entitlement situation here and go three and a half years. I could go do this in Texas and be done in six months. Yeah.
You know what's interesting though is I haven't seen it and it's probably a function of where the market is too, but people aren't valuing RTI projects. Like they're not get they're not I'm not seeing it being valued from raw land to RTI in a big enough spread where where people were getting these products RTI and then selling them. I don't see that as much just because there's not enough room. There's not enough room. Like you really have to pick up the land for like 25 to 35 a door. Yeah. um to to make it's pencil for someone to buy it at 45 or 50 or 60 depending on the location for you to make a spread or you have to get big enough scale where you get 100 200 300 units and you can take a smaller
chunk of correct sizes. Yeah, that's right. We we you know thinking about it now we did purchase something last year that was freshly entitled.
Okay.
still had to go through the the permit phase, but there was a unique situation with the land. They had fallen out of contract twice. There were some environmental issues that we had to work through that allowed us to actually find the right price to get that done. But nine times out of 10, like we we need to go through the entitlement to hit the the return profile that we're targeting. Yeah. You know, it's like I I don't if I'm going to develop, I want a big return. Mhm. And we deal with investors like it's not just for me. So I need to hit I need to hit a return for an investor that matches the risk profile 100%. If you're buying entitled paper it's like but I I agree with you like any of my friends that sell paper that's not working.
They're not doing it. What are the returns that you're trying to hit for your your investors right now?
Um okay. So if we're looking at a deal from a project level, we want to get pretty close to a 7% yield on cost. Okay. And that's when you consider leverage and rent growth, that's usually going to land at, let's call it a mid to high 20% irr. And then when that goes down to like net of investor, we're usually landing between 17 and
21, I'd say.
Okay. I mean, that's solid. Yeah. But look, it it's a lot of freaking work. Like it's it's not like we're just finding these things over and over and over. Like we've got a well it's a it's actually shifted a little bit. I I would say from right now to two years ago deal flow is almost everywhere. We we see a lot of deals. Yeah. But we still have to go through so much work to get that return.
You know.
Mhm.
It's not just like you see it it makes sense.
You're like okay. No. It's not like in 16 and 17 everyone's like 18% IRRa we didn't do anything like that doesn't exist anymore like you have to like do a good job now to like scrape for a decent return.
You have to be so efficient with everything that happens that if you're not perfect you're losing basis points left and
right. Yeah. Yeah. This is going to be this is an environment now of like the real players Yeah. And anyone who just kind of, you know, rode the wave of
natural appreciation, I think they're going to get exposed. And I'm seeing it, too. And that's that's the conversations I've been having with these owners is like, are you going to [bleep] or get off the pot? Like, we got to do something, right? And uh money is not cheap right now. No, it's not cheap. Equity isn't super cheap as well. And so, it's this this pull and this there's a lot of headwinds that are affecting a lot of things. However, if you can have all of the pieces in place of your processes, which you guys have have done pretty eloquently, I'd say, is like you understand what needs to happen or you understand the deal so you can feel comfortable getting to an exit. Like you know where every step is along the process where okay, we execute this, we do this. It's kind of like you systematize the process.
Um, which makes it I think a lot more comfortable and for you and for the investors of okay, we can execute on this and you've done it. Um, I want to kind of jump back a little bit and talk a little bit about the skating because I think that's such a important part of your journey. So, um, how does a kid who spent two decades throwing himself down handrails end up running an eight figure real estate fund? Give me a little bit about Mikey the beginning, right?
Yeah. Um, okay. So, I I'm like born and raised Southern California. Started skating in the 90s before it was cool. And I was young, so like I had no clue what my life was going to be like. And I I didn't know what my like true skill sets were at 12 years old, right? And so I picked up a skateboard. I'm a very obsessive and competitive person. And so I got pretty good at it. It ended up turning into a career. Started having sponsors pay me. And right around 2000, the skateboard industry kind of exploded. It it the skateboard industry back then looks very similar to
what's happening with golf, right?
like golf is becoming a cool thing and people are now wanting to get into golf and dress like golfers who who have no business doing it, right? That's how skateboarding was. And so being a pro at that time, I got to ride the income wave. I got to ride the opportunity wave. But I was still stuck in a career where, you know, by 30, you're a dinosaur. You know, an 18-year-old kid you just can't compete
with. So, I knew that I had to figure out what was going to happen after skateboarding and I didn't make enough money to just end my, you know, I couldn't retire at 30. So, I started working on my first business was which was down in San Diego. It was a craft brewery and we started that in 2012 is when we officially opened.
And how old were you?
I was 28. Okay. Okay.
So, you were getting on the tail end of your career.
Did you know you're like, "Okay, that's it's coming." Oh, this was like I got to figure this business out because my career is going to end soon, you know. So, I how I tried to time it was I had I had a little bit of income coming in from skateboarding. That's not actually fair to say. At that point, I was making the most amount of money I had ever made as a skater. Just the window of of it was running. And I started my business and what I thought was going to happen or what I was hoping was going to happen is I would get the business to the point where it was sustainable so that when the sponsors went away it was just invest right. And you know oddly enough the business we had this idea that we thought had the potential to kind of change the
craft beer industry in San Diego. And we were right on our idea. It was the perfect timing. kind of everything came together and our company just exploded. It was like radical growth and then we ended up selling the business to Miller Kors in 2015. But the odd thing is that whole experience with St. Archer actually gave me more time as a pro skateboarder because I was getting so much attention on what we were doing that it actually built up my brand. Interesting. Which was fascinating. So, you know, when we sold in 15, I was still a skateboarder. Still a pro skateboarder. Wow. Yeah. And then I ended up getting paid into 16. 16 is when I officially stopped. And then from there, I spent about I think me and the partners spent maybe 10 months with the business once Miller Kors owned it. And then we all left.
And then it probably took me maybe a year to figure out what the next business was. And then this is what I, you know, eventually started.
So, what was what made you want to move into real estate? Because I would say unconventionally most athletes and people in entertainment, which I would consider an athlete at at some point, right? Cuz we get paid for fans and viewership, right? It's entertainment. Um, what made you want to get into something that's boring and old and slow like like real estate? Was there something Did you have an experience of it when you were little? I know your parents I read something that at 19 you met with like a financial adviser to figure all that stuff out. So, was that in the back of your mind? Did you have some friends who were in real estate? What was your foray into the actual real estate?
Yeah, I'll give you the whole thesis and how it all came together. So, my first experience in real estate, I was investing passively. So, I had a friend who brought me an opportunity to invest in a storage unit as a LP. And at that point, almost all my money was in invested in the market. It's very conventional. And so, I put maybe like a $25,000 check in, right? and started getting a dividend from the cash flow and started watching the value grow and you know that also can happen in the stock market but there was something about real estate for me I was like I like that a lot and so passively I started shifting more money into real estate but I was focusing my time at this point on building the business building the brewery when we sold the brewery
there were two things that I was looking for first when we did our company, we had to raise money. It was the first time I had ever done that. And I actually liked the process of having an idea, having to bring it to the market, get buy in, and then having to use the money to create the company. And then we went full circle where we got to an exit and, you know, giving a check of that size to your investors was it was the best
feeling. It was a 12x, right?
It was like 12 13x. It was nuts, you five years. We had we ended up giving the the div the first dividend on the first buyout because we had a a a front end back end job. We let's see that was three years, three and a half years and like I had like I had investors gave me 100 grand like pro skaters first investment. It was like million one back, million two back. It was awesome, right? Yeah.
It must have felt so good.
So, um, the the thing that I wanted to to recreate was I wanted to find something where I could use investor capital again. I wanted a high uh confidence in payback, investor payback, and I wanted to create a business. I didn't want to just do my own real estate. I I felt like I I wasn't going to be challenged enough. And if I wasn't challenged enough, it meant I'd be bored and I'd stop doing it or not do it well. And then the second part was when we went into the beer industry, we found an industry that felt somewhat similar to real estate. It was old. It was there was nothing cool or current. It it was almost like an untapped market for dis disruption almost. You got to be careful with that word. But sure, I felt like we had an opportunity to change the game.
And so after St. Archer. I was trying to find an industry that I can implement the model we built in St. Archer into an industry that hadn't experienced that that would allow me to have a similar experience. And so I was looking around. I at first I thought I was going to do a shoe brand. And uh you know to the point where I had my business plan done, I had shoes designed. I had samples from China. Like I was I was like on the one yard line of go time. I ended up backing out of that and then I started looking into the real estate industry and I was like, "Oh my gosh, if you look at commercial real estate, I don't know if there is more I don't know if there's a more stale market than this." Mhm. Like this is the most old school way
of doing business. No culture. Nothing. Yeah. There's no culture. No. And so I was like screw it. This is it. Like this is the one. And so I had an idea of how we were going to separate ourselves. I had ideas of of how I thought we could bring investors into the business. And it's interesting because agents, if you start peeling away from commercial and start getting into more residential, actually agents are do a pretty decent job at creating culture and community and an experience. But the further up the asset class you get, the less they have of. So dude, I did take actually elements of of how if it's a company like the agency or compass or how these companies do it. We definitely pulled some stuff from, you know, and then we're heavy on social media. Like we raise our capital from Instagram and Facebook and YouTube.
And still to this day, like I have people calling me that run huge firms. I had a call yesterday. They think we're absolutely nuts. They're like, "Why are you doing this? Go to a family office, get a check for 50 million bucks." Like, "Why are you bringing in hundreds of investors to do it?" So, even like even with what we've been doing over the last 10 years, people still don't think
we are doing it right. So, walk me through the way you do it right now. So, you said social media is where you get most your your money. Was that intended or was that something that as a um happened because of your social following?
like, okay, so here I'm going to give you kind of some of the ideas that I thought I was going to pull off and then how we had to tweak them. Okay, so when we started the brewery, there was really no branding. Like there there was no there was no companies that were selling the consumer to buy the product before they went to the store. And secondarily, the whole entire focus was about the beer itself. There was no like there was no culture, there was no community, there was no like us against them type of vibe. And so we put all of our attention towards creating what we wanted to
do almost like a movement, right?
So our brand was all about California lifestyle through our lens, right? It was surf, skate, snow, music, art, culture, right? The way we look at our state. And we told stories. We never sold the beer. And we got it to a point where people would buy our beer because they felt like it was a statement of how they viewed our state, right? And so with real estate, the crossover was real estate companies like mine, right? You're a real estate investment firm. All they're focused on is the return, right?
What was the return I got to the investor?
That to me was the parallel to the craft beer industry just focusing on the product. Okay. How do I now offer more than a return to our investors? And so how we started doing it and the whole marketing concept was similar to saying Archer. I'm going to take my investors. We're going to tell their stories. There's going to be some type of financial maybe component to it. But we weren't going to talk about returns and any of that stuff. And the challenge I had was no one felt comfortable going online talking about their story that had a financial component. people were uncomfortable about money, right? So, I had to kind of jump into becoming the face of the business and found a way to kind of add value through education, have some entertainment blend to it,
and then have like the backend for anybody that wants to ride with us, they can jump in with the real estate. Got it. Um, and that took some time to kind of figure out. The investor finding investors through social media came from when I was raising money in the beginning like it felt so
wrong in a sense like I was calling people to have lunch and dinner. I was you know having coffees. I was driving all over the place. And I remember when I was raising money for my first deal I would be at like five different locations in like a 4hour span. And I remember thinking, what am I doing? Like this is like has to be the wrong way of doing this. Yeah. And I had already built the brewery on social media. I was like, social media is where scales at. Like I can create a video and get to thousands of people. Why am I spending my time getting to five in real life? And so I tried to crack the code of what it would be like to raise money online. And that took time.
It it was that was a very difficult task, but we've got it to the point now where I feel like
we've got it dialed. And what is the formula that feels right to you? What was that? Was there a moment or was there something like a specific post or what's the what's the content framework that builds trust, right? Because it is trust. People are investing their hardearned money, but also feels authentic to you and the brand that you're
doing. Yeah. So, this one it wasn't like a one post that changed all. It was 40 years of trial and error, right? is a lot of testing. So, here's like a macro flyby of how it works. You have to get attention. Like the name of the game is if nobody knows who you are, doesn't matter what you're saying. So, you have to grab their attention. So, you've got to kind of have like a widefunnel approach that's engagement based. And then everything from there needs to be trust built. And the part that we really had to fine-tune is the reason why the dinner and the lunch in real life is so valuable is because you have an hour plus with somebody to actually build a relationship. Online it's 4 to 60 seconds. So you have to do a lot more to build that type of trust.
So we started doing you know our short form which was to go you know far and wide. We started doing, you know, weekly webinars that were like hour calls with us. We started doing a long- form podcast. We started doing, you know, long- form content on YouTube. And everything was meant to drive somebody top of the funnel down. Mhm. And then we started pairing in some of those old school approaches into our business like, you know, investor dinners, poker nights, property tours. Um, and then you know where we're at today, we have a full organic approach and we have a paid approach. Got it. So we, you know, everything we were doing up until about a year and a half ago was all organic. Yeah. Now we have a system where we're actually creating content to people
that don't know who we are and we have a full sales funnel that eventually drives
to investors. Does the paid work?
Yes. It's just it that one was uh I spent a lot of money and a lot of
time perfecting it, but it does.
Yeah.
And the CAC makes sense because so I um I'm a big fan of social clearly and um I've never done really any paid stuff, but I did like two Instagram clips for my podcast to get new people to just follow the account. I'm like, let me try this out. Never done an Instagram ad, nothing. I think I spent 40 bucks and I got like 150 follows. And for me, I was like, okay, sweet. Like I get it. I don't have a conversion mechanism because right I'm not my business is selling apartment buildings, right? So I'm not it's it's harder to um I guess my my TAM my market is pretty defined. It's like there's 100,000 owners of apartment buildings. That's my clientele. That's what I'm trying to go after. But what I'm trying to do is build the branches from someone's daughter, someone's son, someone's nephew, someone's this.
Like I just had got a call from an agent who liked one of my posts and sent it to another agent who they're developing some big community in Malibu and they want me to come and chat with it to see if it would be a good fit for me to sell this kind of community. I'm like wow I would have never ever reached out to that person or connected with them any other way except for the exposure from the social media. So the paid side combined with the organic side and and what I assume is you do the kind of the Gary Vee model is whatever performs really well on organic then you're going to put some money behind and go from the paid side. Is that is that correct?
No. No. That's how I thought in the beginning. I thought it's not like that. No. I thought that's how it would be in the beginning but it's not interesting. You have to curate the
paid to be like this
specific interesting. There's a model that is working on paid and it's where they're similar is there's an algorithm on paid as well and that changes over time the same way organic does. So if you look at our ads today they look very different than they did a year ago. Yeah. Right. Static ads did phenomenal a year ago. They don't anymore. Video is, you know, video is what's working now. Yeah.
Um how much time are you spending or I guess what is your budget allocation for social? What does your team look like? like what is the behind the the camera the scenes like what does the actual team look
like on the organic side or the paid side or
both from the commune right okay how much of your business is and money I guess percentage- wise is spent on the social and then how much is it on the development the building the team give me like a look of what commune looks
like okay so our staff is still majority admin you know analysts asset managers, controllers, that's still the biggest bulk of our business. Okay. The sales and marketing side is probably now 30% of the company. 35%. Okay. Um so we're and and it's trending, right? So I would like it to actually get to the point where it's closer to a probably a 50/50. Yeah. Uh blend. Um, on the marketing side, oh gosh, I might be off on this number, but I want to say we spend on the paid side maybe maybe 25 to 30 grand a month in paid ads. Okay. Something like that. It's not bad. No, it it it all is relative to the metrics you're looking at, right?
So, like, you know, the big one for us is like, you know, you have your cost per accredited lead, you have your cost per meeting booked, but at the end of the day, you got to close. So, we're constantly looking at cost per capital. Got it. And you know, cost per capital, you have a a market rate for broker dealersh and so I'm mindful that I want the social part to be cheaper than the broker dealer. Got it. Because it's a whole lot easier for me to just pay somebody to go raise money than everything we're doing on social. And what we've seen is we're able to do that. We're able to get the cost of capital below broker
dealer. It's coming down. So, what is the structure? Because um I think we talked about this too when we met too, but there's like 503b or 50 the way that you structure
funds.
We do Yeah, we do them as 506 C's. 506 C's. And 506 explain to the people who don't understand what that is the
differences. Okay. So the SEC loves to create different structures that allow you to do do certain things and don't allow you to do others. for a syndicator, if you're going to create a fund, you have to create the offering and then in the offering, it allows you to do certain things for the 506 C. And the reason why we do uh these offerings is it allows you to market, right? So, there's another offering is the 506b that's uh you cannot market, but I think you get more nonacredited investors that are allowed in. Got it. And I want to say I've never done a 506b, but I think it's a little bit cheaper to do as well. I just always wanted the marketability. Got it. So that's been the majority of offerings we've done. We've done a handful of unlisted REITs so that we can have retirement dollars come in.
Okay. Qualified dollars. And then um I've been working on and trying to build out a regulation A plus offering for years. And that basically allows you to market, but you don't have to be an accredited
investor. Is that new? It's I think it was created in the 17 tax cut and jobs act I think is when it was created. And what's what has been the issue holding that up?
You that you bring the minimum way down. Okay. Right. So like our minimum ranges from 100,000 to 250,000. Yeah. If you bring that down to 5,000, a thousand, 100, and you're non you're you don't have to be accredited, your number of investors goes through the roof. So, you have to make sure that you can manage a big chunk of of investors. Like we currently have we're getting pretty close to 700. Uh the calculation for us is can we manage 10,000, you know? Got it. Especially with what we do on social media. Totally. So that's been something that we've, you know, for a long time have been trying to figure out, you know, what the added regulation is and what the additional requirements are for a firm to do it. So we've been in research mode for quite some time, but that is something I really want to do in the
future. What do you think um would allow you to have 10,000 investors? Is it like the systems in place? Is it are you basically building your own custom software? Like how do you manage 10,000 people?
A little bit of both. Like the the good news is like you have to have a third party transfer agent there is a lot of software to help manage it but I do think even on our end considering the software we would use that's third party we'd still need to staff up a little bit I
think.
Okay.
And so digging into like your investment philosophy right so give me your first deal that you did um and then how that cascaded into today and
what your investment philosophy looks like right now.
Okay. The first deal that I did on the active side, yeah, was a 340 unit value ad apartment in Long Beach. Wow. Um, LB, baby. LB. That was my first one. Uh, it was on Fifth Street. And, um, it was a Deep Value ad. So, the thing was, you know, class B is like I'm almost like hesitant or No, no, it wasn't class B. Class C I'm almost hesitant to say it was maybe worse than that. It was rough. It was in really rough shape. And so we went through a pretty big value ad. If if I remember right, we bought it for maybe 75 somewhere around 775 and we put a few million bucks into it. Um we had a whole slew of problems. Um ended up getting red tagged from the city. Had to deal with a whole bunch of stuff. We ended up completing it.
We got it stabilized. We got the rents we were targeting. We refied out of that bridge loan and we got some really low interest rates. I think we we did a 10-year loan at like 26. Oh my gosh. It was phenomenal. And then we ended up selling that asset 2 years ago. Okay. I think we sold it for right under 14. I want to say 137 or 138. Okay. So, we posted again. Um it was a a great kind of first deal we did
full cycle.
We had another deal that we did in Ohio that we closed on maybe 6 months after the Long Beach one and then we sold that one like four months after Long Beach. So we had like two backto-back hits which was really positive for the investors. But how my philosophy changed I don't like value ad anymore. Interesting. Very it shifted into on the multif family side all almost all development. Uhhuh. So the the
why why don't you like value ad?
Um, okay. I I want to be just first off saying like if you're doing value ad stuff, like I'm not saying this from a moral standpoint. I'm just saying for me, I did not like having a place that had tenants in it and then renovating it to a point where that tenant is never coming back. Got it. Right. I just didn't like that. And so I wanted to find a way that was felt like I was benefiting the community a little bit more. So and so I started focusing on developing like how can I add units? Mhm. Um now developing is a lot harder than value ad but I felt like it was worth it for what I wanted to accomplish. Um and then the secondary part is we sold the asset in Ohio and I wanted to go all in on SoCal.
So I got very very focused on doing business in the state. Mhm.
And was that uh from a personal standpoint, supply, demand, economics, like what drove you to say I believe in SoCal?
Okay. So, I started doing we did our first deal like 17 or 18 on on the active side. By when did I really start going all in here? Probably right around 2020. Okay. Right. And there were two things that I noticed. One, nobody wanted to invest in our state. Mhm. And two, every investor I was talking to was going to Texas or, you know, sunb belt states. They were so hot on these like Atlanta markets. And I just went, "Oh my gosh, if no one's willing to build here and we're already entering a housing crisis and I'm looking at the investors go, we're nuts. This is it. This is where I need to be." And so we put all of our focus towards basically three key cities. And you know, we got a lot of blowback from investors, but we got investors that were like, I get the vision.
And then now it's actually starting to shift. You're starting to see people that were investing in these, you know, trendy markets throughout the nation and distributions are pulled back. Rent, you know, concessions are happening and they're going, damn, what are they doing over there? So, it's starting to shift. It's it's not at, you know, it's not even close to equilibrium. Yeah.
I'm not getting the blowback I used to get. That's interesting. I was going to say I'm I'm I'm curious how hard it was to raise capital when cuz I I started in 2018 and uh 2018 to like 2022 was damn good for a broker. Like it was fantastic in Los Angeles because rates were low. Um you know, you could buyout still kind of worked. Um people were making a ton of money. You're you're refing out at incredible rates. Like it was fantastic, right? Then the rates started jumping up and things started shifting. A lot of political changes happened. New regulations started happening. This sentiment, this era, this this fog started coming over um Los Angeles in Southern California. And today it's it's one where 50% of the conversations people don't love LA. They don't they don't like being a landlord in in a rent regulated or
regulate regulatory heavy city like Los Angeles. So you're seeing that some of the capital that went out because I've noticed it too to those Sunb Belt states they might have bought at the wrong time. Maybe they bought whoever bought in 17 and sold in 22 crushed it. That's right. But anyone who bought in 2020 and needs to sell 5 years later in 25 they're they're pretty screwed. So are you seeing that capital who invested in that time period be like I kind of like lower returns but California real estate the growth the fundamentals like is that what you're saying?
Um, okay. That's a good question. So, a lot of the investors that are that we're seeing or talking to in kind of those other states, Yeah. Um, they're in like, well, we're waiting it out mode, right? What I'm seeing is I'm still getting an even probably buyin from investor, okay, on who is willing to come into the state and who's not. But like on social and like if you're going to like the actual uh syndicators and groups, I'm not getting blowback from them like I used to, right? Like people would invite me to speak at conferences and even when they'd announce me, they'd be like, "This guy invests in Southern California. this is nuts and the audience be like ooh right
now that's not the case it's becoming more accepted but I would say no with investors you're there's a lot of politics involved right so if like you know you typically you're somebody on the right you you have a very bad taste in your mouth with California and so you know we see a lot of that cross over when we're talking about investment it's like hey guys I get the thesis is I can't invest in this place though, you know. So, you definitely have that still. Mhm. But I would say the investor that is a little bit less emotional that is able to underwrite simply risk and return. Yeah. Those are the ones that are going, I I see it. I understand.
Okay. Yep. And then that's where you focus your energy on because that's and I think people will come back to it, too. I'm I'm very much bullish because I feel like the the basis and and the value that you can get into Southern California, a coastal city, compared to Phoenix or Texas or we we're selling properties well north of the cap rates and return metrics in Southern California as those states and like long-term like man this is a wonderful place to live. like it's really it's and and the supply demand like it just kind of makes sense if you have a long-term vision for it. So I think people who can see that will feels like it's actually they're cheating everyone else because they're like I see it and no one
else does. 100%. Well, I mean here here's like the most obvious one. When you have a cap rate in Boise, Idaho trading at the same cap rate as a coastal community in SoCal, something's off. Yeah. Right. I I'm sorry. There is not a premium for Boise, Idaho. The way there is for Southern California. Yeah. Just it's that that is showing you that either one's underpriced or one is extremely overpriced. I think in that case it was a combo of both of both.
So, um, I want to get into the development because when I started in college or when I was in college, I didn't really know what I wanted to do, but real estate was always in the back of my mind. And so, I had some mentors. I went to them and said, "Hey, I want to get into development." Right? 20 21-year-old fresheyed. And they're like, "Okay, awesome. But you got to learn some stuff first, right? Development is not something you jump into typically first." It felt like you kind of did jump into development pretty damn quickly. How did you learn what you needed to learn to make this happen? Were you Did you sit on some job sites? Did you meet with a bunch of contractors? Were you like, "Fuck it." Like, "I'm just going to figure it out." How did you learn actually how to develop a project?
I learned I I actually learned a very I had a very like eyeopening experience when I started the brewery that changed my philosophy of business and the world opened up when I learned this. So going into the craft beer industry, I knew nothing about beer. Never brewed beer. Mhm. My approach was very different than what most people do, which is what your mentor told you. If you're looking at the craft industry, how the typical flow goes, you and I are in college, we're like, "Dude, beer is cool. Let's try making it." And we get a home brewing kit and then we brew some beer and we give it out to our friends and they're like, "Hey, this is actually kind of good." And then we're like, "How do we get a bigger system?" And then we rent a storage unit.
or brewing beer in there and you get to the point where you open a tasting room. That is the natural evolution for most small business,
right? When I came in, me and my partners were like, we don't need to know anything about beer. The same way you could have asked me how to build a how to make a skateboard, I would have told you, I don't know. I I have no clue how to build a skateboard. Yeah. I know how to ride it, though. So, we took the approach of it's our job to build a business. It's not our job to be a craft brewer. M and so when we built the business, we did basically the the the topdown approach. We need a management team. We need a sales team. We need a marketing team. We need, you know, brewers. We how do we bring people into our world to build this vision? M and that was very freeing for me because I went out of this what I actually
think a lot of us get trapped in is that we feel like we need need to be the expert at everything and then the time it takes us to get from you know I'm out of college to actually running a business we're like 60 years old right and it moved into all I need to do is be able to underwrite the people and then convince them to believe in the vision and then run the business accordingly to keep everybody involved. And that's exactly what I did with this company. So I I created the vision for Commune. This is what I want to create. I went out and found the people to do it with and I pulled people in who had a 20 to 30year track record building real estate. And so I didn't have to be the one that is the builder. M
I had to be the one that's running the business and then bringing all of
those components into line. How do you find talent like that? That's the hardest part.
Yeah.
How do you how do you convince really talented people who the people you want typically don't need you at a certain point, right? They have to believe in your vision and want to join because of something else. How do you approach getting a star talent?
Yeah. So, this one for me, this is this is one of my kind of god-given gifts that I didn't even really need to perfect. It's just been given to me. I've always had an ability to get people rally behind what I'm doing. Can't explain it. It's It's just always been there since I was a kid. I've been able to go, "This is what we're doing." And I've been able to take that person, they're like, "Let's go." And so I I just took that into basically the business, right? Like you know, for example, my my one of my partners, he's our COO. Um I met him after I started the business. So the you know, to give you guys like a really behind the curtain view. I am always going to be the visionary of the business. I will never be the operator, not my talent. Right?
So typically the first person I need to get bought in is the operator. Got it. Um, in this case, I actually felt like I needed to find the construction the guy with the construction experience first, and I needed to I felt like I needed at the same time the guy with the investment management experience. So, I basically started pitching a CFA who had built out a private equity firm in the past. Got him on board and then I got the construction guy on board. I didn't bring the COO on board. Um, that one took me a little bit of time and when I met our current COO, he was a financial adviser that was running a business and I started dripping it on him. I took a very slow like kind of approach. Hey, did you ever thought about getting into real estate? Yeah.
I mean, I own some real estate.
Why'd you pick Financial Advisory of Real Estate?
Well, I just like the cash flow. Sick. Drop it there. See him a month later. Dude, just got to tell you real quick about this project. You ever think about doing this? Right. It was like that type of approach and all the way to the point where I just waited for him to give me an in. And he gave me the in one day. He was like, "Dude, I love what you're doing." And I said, "Bro, come do it with me." He said, "What do you mean?" And I'm like, "Let's have a conversation about bringing you in, running this business, and making you a partner." He was like, "What the?" Talked to his wife, told me the next next week he was in and wow,
we pulled him in. How do you think about equity? Because um I give it out. You give it out. Yep. And why do you do that?
Um, oh, two reasons. Um, number one, I've always liked the idea that everyone around me is winning. I've always liked it. Probably because I came from the skate world and that's how it felt. Um, Jay-Z had a a a verse a long, long time ago. Something like, "If you're the only one rich or if you're f flying private, but every everyone else is, coach, that's not really wealthy." Something like that. Yeah. And it just like built my framework of like wanting the people around me to to win with me, right? Um that's one part two. When people own something, they treat it different, right? You you have a buy in that you'll bleed for. Yeah. And then last is something we do as a firm. We we have a program where we carve out 10% of the GP for all of our employees. And that is mainly
because you have two ways of keeping talent. Mhm. You either pay them more than anyone's willing to pay them, which only lasts for a certain amount of time, or you create such a special thing that even when they get offers that pay them more, they're not willing to leave. And I feel like you accomplish that through
equity. And that's that's the the key to be able to No, I I I agree with you, too, because it's it's so interesting as someone who um is growing a business as well is like I keep hearing this over and over again. talent, talent, talent. Like talent builds businesses 100%. And it's hard to understand what that means until you've actually experienced what that is, right? You keep someone says get a a player. If you've never worked with an A player, you don't know what that means. And and you you can kiss a lot of frocks before you find someone who actually works. It sounds like in the brewing experience for you, you were able to find some A players who you realized, okay, this is a different beast. This is something where I give them a direction and they just execute. It just happens, right?
And things start spinning and you're like, I got to get more people like that. Do you spend your time now at commune? Where is the bulk majority of your time spent? Like what is your obviously visionary, but where like how do you see yourself in the business and the company to help it grow to what you want it to become?
Yeah, really good question. Um, I'm just going to say this before I answer that. On the brewing side, what a lot of people do is they go, "Who do I know that brews beer?" Right? When we did the brewery, we went out and took the number one and number five, top 20 under 20. No, top 30 under 30 brewers brewers in the nation, brought them in. So, we I I was programmed from the beginning, go get the best. Yeah. Right. Y for me, in the business, my my roles changed throughout the years. It's like when I started I was involved in everything on all the calls with the attorneys. I was on the calls with the brokers. I was raising capital and that was more a function of in the beginning like I didn't raise money to build this business. I raised money to invest in real estate and then
my business gets you know some fees to grow but it's slow growth. So I had to build this one way more grassroots than the last. So that meant we all got to do things that you know aren't ideal. Mhm. until we grow the revenue to then hire. Now I'm at the point where my time is spent gosh I would say I'm leaning more and more towards content and marketing than I ever have in the past. That's probably 50% of my time now. Okay. Um, my calendar is stacked now where Monday, Wednesday, and Friday is all like big picture and I get this accomplished, it moves the needle type of stuff, right? So, you know, yesterday for example, you know, I want to rebuild our entire marketing strategy and you know, that was five hours of my day
yesterday morning, right? Then Tuesdays and Thursdays are just all meetings, right? if I'm going to do a meeting with the, you know, attorneys, meeting with asset managers, meeting with meetings are those two days. That's kind of been my flow, uh, more recently. Um, and it shifts, it changes.
Do you have a coach or how did you figure out how to structure your day like that? Because I'm super nerdy about systems and processes and and personal um personal productivity, I guess
you'd say.
And I like the structuring of the days. I do something similar like Fridays are my content days and Mondays are my meeting days and then follow like the way that I structure follow-ups and all that stuff. Did you have a coach? How did you learn what worked for you or get the idea?
Okay, I'm going to struct Yeah, it's a good question. I've never had a coach. Um, we do have an implementer for a system that we brought into the company called EOS. Yep. Which is like a management system or an operating system. Uh, I don't know if I would say he's a coach, but we did bring somebody on to help us do that. For me, it's been almost just trial and error and like I I like learning. So, like I'm constantly reading and, you know, watching videos, but something that happened to me recently is I had a very structured system that fell apart, right? Like, you know, this is this is exactly how I work. I think I have everything dialed. I think I'm crushing it, right? And then I go out to Florida about two years ago and I go meet with Patrick but David and I see how
his system works and I went, "Oh my gosh, I'm nowhere close to where I need to be." So
humbling, right? And then I go back and I reconfigure and then I get things going and then I'm like, "I'm crushing it again." And then I meet somebody and go, "Holy crap, I'm this little peeon." Right? So recently what happened is we we built out our sales team in a way that we hadn't in the past. And I didn't realize it, but that pulled me into so much more of the training side that all of my systems fell apart. And three weeks ago, I was in a leadership meeting and because we use the EOS system, we have like rocks that were accounted for and we had something that we needed to get done and everybody looked at me and went, "Mikey, you got this?" And the way I reacted was like shocking to me. I was like, "No, absolutely.
What are you guys talking about?
No. don't give me anything. I was like really kind of frustrated and everybody's looking at me like, "What the hell was that?" And even I'm going, "Why did I, you know, and one of my partners goes, dog, like are you okay?" I'm like, "Bro, I'm so overwhelmed. Like, you guys are putting stuff on me. I can barely keep my head over water." Yeah. Uh above water. And it kind of hit me. I was like, "Oh my gosh, I have completely abandoned my system that allows me to be efficient without exhausting me." And so I went back, I grabbed my EA and I was like, "Something's broken and I don't know what. We've got to fix it." And when I said that, one of the sales guys was like, "Have you listened to Hermos's uh content on the maker and management?" And I was like, "Send it to me."
and I watched it and I went, he's explaining everything I did last year. So I pulled my EA in and I was like, rebuild this. And so we got back to creating a framework of, you know, I my job is not to fill my schedule with a meeting every 30 minutes. Yeah. Not how I get things done. Yeah. there's times for it and there's times where like I need to have the bandwidth to actually focus on what's happening with the business and uh now it's only been three weeks I'm like okay I'm
back you feel it is it's so funny when it's just like it just takes a little bit I'm I'm a big fan of hormosi as well and I struggle too because um I want to get to the place where my business is and it's it's tough being in a service-based business where you're a middleman because I'm I'm I'm providing a service and so people expect um certain response times and certain you know ex their expectations of what makes a good agent like I I was very curious to know I asked I always ask anyone who hires someone that's not me even just I'll call sales comps and be like hey how did you find your agent and or what did you like working with them and time and time again the feedback that oh they were very responsive
they just responded very quickly to me like it was 9:00 am at 9:00 I emailed him and he emailed me three three minutes later and I was like damn man like that's awesome but at the same time it's like wow that's what it has to come to like the the thought process of what makes a good agent is just speed. Yeah. And and to me that's what I struggle with because I'm like that's I don't want to be at the beck and call of someone where their only metric if I'm doing a good job is how quickly I
get back to them. Well, yeah. You got to be careful with it. Yeah. It actually sets a poor boundary between you and the client. Yeah. Um, but I mean, dude, there's a lot of Are you guys using any AI? Oh, yeah. Yeah. There's ways now around that. Yeah. Right. Where you actually don't need to respond and a response is happening. Yeah.
Uh, let actually let's dig into that a little bit because um I'm super nerdy about
AI. But, but let's do it. But I just want to make that point because it's something that I struggled with that I had to get to. When you're growing a business, it feels like you need to be like whatever you need, I'll do, right? And because our world is raising capital, that's actually a horrible place to be. Because as as a as somebody who raises money, you cannot come off needy, right? And that was something that did not come natural to me that I had to train myself for is like if an investor or a potential investor hits me up at 7:00 on a Friday. I am not responding you until Monday morning. Mhm. Right. And if the client goes, "Hey dude, I sent this message Friday at 7. It took you 3 days to get back to me." My response now is, "Yes, I don't work on the weekends.
That time is spent for my family. If that's an issue for you, go find somebody else. Yeah. And it's interesting what happens is you think that's going to push somebody off, but what you end up seeing is when you create boundaries, people actually want to work with you more. Interesting. Yeah. So, I I get it on the the oneoffs, but um be careful with that one. I like that. Yeah. Because honestly, what's going to happen to you is you're going to exhaust yourself into misery. And then two, you're never going to be valued by your client the way you actually want
a healthy relationship to be. Yeah.
No, that's so true. But AI, I love it, man.
Hit me with it. No, it's Okay, so um I'm going to take that advice and I'm going to go set some boundaries um when we get after this. But okay, so AI, so there's so many things that are changing. It's probably one of the most rapidly changing things that I've ever been a part of. And every day it feels like there's new tools. And I'm I'm like you in terms of I I' don't follow EOS yet because my team isn't big enough, but I love EOS and it sounds like you do too. And they talk about the visionary. I'm definitely more of the visionary type. Like that is I have ideas every single minute on how we can improve the systems in the business. And I really do think about my brokerage as an effective conduit between communication between a seller and a buyer and a professional marketer
that matches people in between. Like I got the marketing and sales and then I got the service-based business and the communication and then the execution and they're all stacked and layered on top of each other. With AI, I see so many possibilities of every single part of my sales process from initial contact generation, getting the the people's phone numbers to the closing and the postclosing of an escrow in a deal that AI can supplement to make tailor instead of having one tailor, I can have a hundred tailor and the skills there. So, I'm thinking about these systems and and what's possible and everything. it become it can become overwhelming at certain points. How are you looking at it? Because as someone who's a visionary, you have to think of not tomorrow but five or 10 years down the road, what does your business look like?
How are you thinking about AI? How are you implementing AI? And what do you think the future of it holds for you and the real estate business as a whole?
Yeah. Um, any area that I can plug in AI that is at the point of being able to run smoothly, I'm doing it. Um, you know, some of the most recent examples, you know, we use we we use AI for a lot of our marketing for sure. Um, chat GPT just integrated with HubSpot. Yeah. And there's I'm I saw this video. I right watched the video. It sent it straight to our team and said, "Figure out how this is done." And basically what this video is saying, and it looks like it it can get be done this way on HubSpot. You can record all your sales calls. Mhm. And so now you can integrate chatbt to take the copy from the sales call, find the keywords, and then stack the lead to the highest potential conversion for the sales team.
So that, you know, if they're talking to 10 people a day, their pipeline is going to get to the hundreds very fast. And they then can prioritize time based on the algorithm on who has the highest close rate or or the highest percentage chance. score like it's scoring leads based on sentiment that freaking let's go right um we've used AI for um automated not automated um text messages and emails for leads so that it's not an automated message it's actually building out like a communication yes you know where it's going um you know I I don't think we're the days of having like multiple underwriters that's going away. Yeah. You know, you'll need one guy to manage the AI. Mhm. And I think we're very quickly going to get to the point where all you have
to do is put in the address and then the AI will build the entire proform for you. Mhm. I think it's going to be done in 10 seconds. Mhm. Um that's not that far off. No. Um you know, as far as management of the properties, that's going to change that. um on the accounting level it's going to be a gamecher for us everywhere.
So and I believe this too and it and it makes me question a lot of things because real estate is one of those industries where asymmetry of information still allows for there to be alpha in these deals. If you know something that someone else doesn't, you can capitalize on that in real estate. That's going to go away. That's going to go away. Right? And so what then becomes to differentiate yourself be having deals make sense
or make a huge return. It's going to be like the it's going to be like hedge funds in the stock market. So explain that. The hedge funds are running off the hedge funds are making decisions on algorithms now, right? Yeah. It's it's computers underwriting moves in the market, right? people have almost the same access to that now, but they don't have the team and infrastructure to capitalize on it the same way the big players do. I think real estate is probably going to be similar, right? Where you can be a mom and pop and get all the information as quick as possible. I don't think you're going to be able to act
and move the way the big players can. M so I think there's it's not going to level the playing field but it will make it so that
people can get in easier if that makes sense. Got it.
Yeah.
I um I just saw a video of Jim Jim Simons who's the um founder of Renaissance Technologies and they were basically they built AI algorithms in 25 years ago and their returns are stupid like 40% year-over-year returns and I'm like my gosh and it's all a a privately closed fund now but they I was watching a video they have a million lines of code in their AI algorithm right and they have 100 employees all these quants who just manage the code like literally that as their their job. 90% of their workforce is just coders. So, it's super interesting to me to think that there's going to be some 18 16 15y old guy right now doesn't know yet. He's going to start a syndication business or real estate business and it's going to be 95% AI employees and he's going to build a billion plus asset under management
real estate business on the back of AI. like it it is going to happen which is just blows my mind that that's where the opportunity is going to lead itself and I think whoever can figure out really you're going to have to have an incredible skill set in being a leader and a manager you're also going to have to have distribution because I do think where you're going and and where I see it too is the alpha is going to be in the proprietary information that you have or the audience that you have that you can leverage for that distribution distribution is going to be almost everything because what's going to differentiate someone if the skill set behind the the clock or behind the cloak is the same AI machine AI algorithm doing all these calculations um you're going to tweak it personally to you but your differentiation is
going to be yeah the distribution so for for you and commune like what is your vision for the company what do you see it looking like in 5 10 15 years or what do you want it to
become Okay. So, I had a I had a guy yesterday um looking to invest with us and he structures the fund to fund and he was asking about the company. He goes, "So, you guys have 700 investors and you're managing $352 million." He's like, "You're doing it all wrong. Why would you do it that way?" Like, how I do it, I give you a check for 50 million bucks and you go place it at once. You do that over and over, you'd be multiple billions, right? And what I said to him was, I'm not doing this because I have to. I'm doing it this way because I chose to. This was the whole vision behind the business, right? It's why I named it Commune. Mhm. Because I wanted a communitybased group that believed in strength and numbers that we could come together and compete with the few. Right?
That was my whole philosophy and that's why I built it this way. Right? the the where we're heading five years from now. I I want to be at that 10,000 plus investor base. Um I want this to be the new school way of investing where like right now this happened to me 3 days ago like somebody was clowning me online because I raised money on Instagram. Mhm. Right. And his what he said to me was that's so retail, right? That's so retail. And I'm like, "Bro, hang on to that idea." Yeah. Because I'm gonna break it. Yeah. Right. Like, I want to ride this energy of like, it's actually about the masses. It's about us, right? And we could actually compete if we come together and I'm going to do it through social media. I'm going to make a community of people that rally
behind something that's beyond the real estate. Mhm. Um, some of the the the stuff that I'm looking forward to doing, I always always had this idea when I, you know, when I started the business that I would do these like yearly retreats, right? And it's just I haven't got to the point of launching. I would maybe this is my sign. Yeah. But like I really want to do uh like I'm into golf, right? And I want to start doing like a commune cup. Yeah. Like every year we're doing a golf trip and we're inviting 20, 30, 100 people out and you're building out a forsome and we're going to like have fun together. We'll do it abandoned dudes. We, you know, we'll talk investing, but it's going to be more about like getting people together and enjoying life. You know, this was a a cool one.
Last night we had a investor dinner. about 20 people came and we had everybody write down on cards kind of as the icebreaker of things the one thing that they want to do while they're on Earth like what is the like bucket list that we have to do right and we went around the table we mixed up the cards passed them out and you know somebody would read it and the table would guess who it was right and this guy Nikolai who's next to me after we went halfway through he goes you notice not one person said that they wanted something material-based. Every single thing that they're talking about is experience. Everyone, right? And do there are some wealthy people in that room. Yeah. Right. And so it was just like very reassuring for me that like what I'm trying to build is actually bigger than a financial return. Mhm.
So I guess it's just perfecting that. And I want more.
Like I want more people. It's that dog in you, man. It's that dog. It's hard. It's it's a question I ask too because there's people that you know who are just like machines like just like damn you're youing make [bleep] happen. Yeah. Right.
They're just dogs.
Yeah. And then there's the people who are just like happy doing their thing and like that's cool too.
Right.
That's totally fine. But there's something about being in a room full of dogs where you're just like man I feel at home. And it is that community. It's that community of like let's push each other.
That's right.
To be better.
That's right.
Let's push each other to build something incredible and spread the love. Let's make everyone, like you said earlier, let's make everyone rise up. Let's get everyone commu in the community to continue to grow. And I think that's so cool and what you're doing. Um, and I'm very excited to see where it's going. The last thing before we wrap up, I want to talk about uh currently like today, present day, what you're investing in, where you see opportunities at and what that looks like in the multif family development
market. Okay. So, multif family for us, we have we have a few projects precon in Ventura. We have one that we uh broke ground on about three months ago, and I have a handful of stuff I'm looking at currently in that city. I really like that area. Mhm. I have a project that we just completed down in San Diego. We have another one that we're working on and I'm looking at new projects there. So, I like San Diego. I like Ventura. Um, and then we have a lot of affordable housing projects actually in front of us. So, I have one that's uh we're looking at closing next month and then I have one that closes the following month and then one after. Okay. And um I I'm trying to create a little bit of I'm trying to actually tap both sides. The state is under supplied. We know that, right?
That's the obvious one. Rents are top of the market. And I'm definitely building product in under supplied markets and I'm getting top rent. But there is a whole subset of people that live here that are we're not building product for. Yeah. And so I do like that if you're looking at the investor lens in us, we're kind of creating a hedge in some regard that we're creating product that we're not going to hit a tipping point of people not being able to pay rent. Got it. Right. There's no breaking point. It's the missing middle. So we we're tapping into, you know, the the ED1 program that allows us to get through entitlements and permits fast. We have two models that we're doing that we feel like have the potential to increase our return on top of that. And so we'll start building those out and that'll be I think our
our our game plan for the next 5 years. Right now it's not a deal flow issue. Yeah. It's it's a can you raise capital fast enough. Interesting.
Yeah. Interesting. Well, this uh I'm very excited to see where commune can go. This was super cool. I love sitting down with people who have visions and who understand who've just built really cool things and I feel like you put a lot of care and time into thinking about what you wanted to build and people see it on social media and again it's very easy to be a critic when from afar but when you get to understand and see under the hood which I think is is actually maybe even something that you guys should should think about because you you do the business the right way. Yeah.
Right.
And people think, "Oh, it's just some social media guy. He's doing his thing, you know, raising money like those investors are, you know, they don't know they're talking about." When you see what's actually happening, when you understand there's business prowess, when you understand that there's thought and care and concern about what's going on and you're doing this the right way, you realize that this is something special. And I can tell from what you guys are building, it is very, very special. I'm super excited to see where it goes.
I'm so glad you said that because yesterday as I told you, I'm building out my whole marketing that that's that was the exact initiative is how do I bring people under the hood and actually showcase what we have. Yeah, that's man. Yeah, I love it. I love it.
That's where I'm headed. The visionaries, man. The great minds think alike. Where can people find you? Where can people go check out Commune?
Um, if you're on any of the social medias, you can find me at MikeyTaylor. uh Commune Capital for our company and our website's commune
capital.com. I love it.
Mikey, thanks for being here. Thanks for having me.