What does it take from having a negative net worth to retiring within 4 years through real estate investing? Michael Manthei shares his journey, along with some of the top advices he would give us today, and some of the biggest challenges that he encountered throughout that journey. Michael is a syndicator, an educator in financial freedom, and lives to help others find purpose in their investing.

Tell us a little bit about you.
I have a beautiful wife, three beautiful children. We have several operating businesses today, all centered around real estate investing. It's so interesting to hear where people come from to get into investing. I'm always fascinated by that. And I haven't met too many people that were missionaries completely broke when they got into investing. Having been in ministry, it could be easy to think, Hey, I'm doing God's work when I'm in ministry. But part of my process and story has been being comfortable being who God made me to be, even when it's not ministry. So today, it's 100% business, and I feel more aligned with who I have been created to be than ever before.

What made you start thinking about real estate investing?
Like a lot of people, I read a little purple book. That was the first entry point that completely rocked my world. And I'm referring to Rich Dad, Poor Dad, if anybody doesn't know. It just blew my mind that people thought that way. I did not grow up in a family that talked about money, had any wealth, strategies or experience. And the other thing that really was a catalyst for me was, I call it getting healed. I got healed of a bad mindset, of a faulty perspective, of a lie that if I wanted to live a noble life, it meant I had to be in ministry. And I realized, all God's looking for is for us to be faithful to who he's created us to be. We can't live somebody else's life. And he's not asking us to. We each have our own journey. And to be truly noble is to fulfill that journey. So living my journey, and being faithful to that was finally okay with me.

But we went and talked with her parents, her parents have been very successful. They would be ones you'd want to take advice from. And she couldn't get it out of her mind to say, this goes against everything my parents ever taught me: have a savings account, don't spend everything you have. As we're driving over to her parents house, I realized the predicament I'm in, here's a guy with no money, no experience, and we're going to talk to her parents about using her life savings for something I think it's a good idea. I decided I'm not going to say anything. So we go over and she shares about how this is going against what they would have taught her. And I don't say anything. Finally her dad says, sweetheart, we've had to risk everything to get to where we are. And we've told you those things because that was the stage of life you were in. If you want to build wealth you have to risk, there's no other way to get there. And this seems like a good opportunity. That was our first one. That one went well.

I always knew, get me in the game, let me learn the rules, and I can start to creatively problem solve. If somebody is listening today, and they don't have any properties, or maybe they just have a property or two, it can feel impossible to get to financial freedom. But sticking with it, and building the momentum of your first few deals, things then start to snowball. And it's powerful. I knew we just needed to get in the game. The next year, we bought another single family house. Then we bought a 10 unit mixed use building, it was a corner grocery store with seven apartments and a little warehouse. It was an amazing God story of how it all happened. That one completely changed it for us. And it changed it for us because we bought that so undervalue. We used a hard money loan to buy it. It was $210,000. This was seven years ago, prices have gone up since but we got an unbelievable deal on it. We then went to our commercial bank, it appraised for $360,000 and they gave us a loan to pay off all the hard money loan, and gave us a credit line of $75,000. What it taught me was that I didn't have to be limited by my own capital.

With a hard money loan, did you put any money down? Or was it a 100% financing?
We didn't put any money down.

How did you get this loan?
Our first property that was $25,000, we never put a mortgage on. So we gave them a mortgage on our first single family house, and this new purchase. Yes, no hard money lender will typically give you 100%.

Okay, so you did not sell your first two homes?
We did not. I've never flipped anything. I'm long term minded. But the concept of infinite returns completely changed everything for us. And within two years of that purchase, my wife and I bought 55 units and built a million dollars of net worth and had enough passive income from those investments to be financially free. So I retired at 33, and that lasted about a week. And I realized, it feels so wrong to take everything God's given me and expect to go through the rest of life on my easy chair. To evaluate the future from that perspective was very profound. And after a lot of prayer and talking with my wife, we realized I absolutely love what I'm doing. But it would be so much more fulfilling to help other people in it, to do it in community. And that was five years ago. Everything we've done since has been through a syndication model. I went and learned syndications, and that's what we do today, we put those together, we typically have an infinite return structure. That's what I've been known for in our area. And we do education, we do live events.

And we do education, we do live events. You already gave one advice at least, to just go ahead and get started. But what are a couple more advices that you would want people to know? Let's say for back then, what was going through your head and what would you want someone that was in your situation to know in order for them to get their career started?
That's a great perspective. The action taking is a huge one for me. The other one is to get around positive people, generosity minded people that want to help, that was huge for me, I started going to local free meetups and just meeting people. And there were a couple of people in those groups that would walk properties with me, give me advice, that was a huge deal. I was always one that wanted to do everything on my own. And I'm realizing more and more throughout life, that that's fine, and you can be successful that way. But working with other people is also an amazing way to add strength to your picture. If you have a certain skill set, and you work with someone that has a complementary skill set, that can be a beautiful partnership. With partnerships, you have to be very deliberate with, you don't want to enter them flippantly. But if you really get to know the other person, and being open to working together can be a shortcut to success as well.

What were some of the biggest challenges that you faced during this journey?
Staying encouraged, and maintaining belief is challenging. If you have something in your heart that is greater than what you see around you, and what your peer circle is. That's probably why you're listening to something like this, it takes courage to break through the average of the people you're closest to, and enter a new realm of wealth and success. Just managing that, and staying encouraged is a huge part of the battle. That's more on the mindset side.

On something more practical, we started with such little capital, that it took every penny we had just to get into the next building. And I thought that we would just fund any renovations that were needed out of cash flow, which is fine. But you can't fund a renovation and live off of the same cash flow. You can't spend it in more than one place. If you're running a pro forma, and that's something that you need to be good at in this business, you typically put, in some of the older properties in our local city, 10-15% for maintenance and repairs. There were some years that even on a very large portfolio, I was spending 30 and 40% of the gross income on repairs, because I was buying buildings that had a deficit in deferred maintenance. It has worked out, we've made the repairs and dug out from that. We quality buildings now. But that made things tight for a while. And it's a great practice to make sure you have all the money upfront to correct any deferred maintenance. That's something we do today, if a building needs something, we raise additional capital and make sure the deal can support that and get that done at the beginning. I didn't really have that luxury when we got started. But we definitely had to work hard to still make it through.

You mentioned earlier that you have any events coming up on wealth creation. Can you please share a little bit about that?
We have been doing a two day event once a year. And at our last one, I put together a panel on generational wealth, and I got more positive feedback on that panel than anything else we did. It was the session I was most excited about because I'm obsessed with generational wealth, with growing wealth to the point that it will be around for my children's children, and also in developing my children into the type of leaders and character based people that can steward that wealth. Fast forward. I wanted to do a whole event on generational wealth. It's in Lancaster, Pennsylvania, at the end of May 2021. I'm also really proud of the humanitarian aspect of what we do as well, at our last event, we raised $120,000 to build orphanages. And at this event, we're going to raise money to impact human trafficking. So that's in anybody's heart and they want to get involved. Feel free to reach out.

Michael Manthei
Generational Wealth