From Broke to Millions, with Mike Ealy

CRE Clarity

Welcome to the Managing CRE Risk podcast with Jeremy Goodrich. Today we have a behemoth in the world of commercial real estate, Mike Ealy. Mike has over 23 years of experience in single-family, multifamily, and hotels and he shares with us how he mitigates risk in his businesses. We talk about the best markets in the country, how to get into the hotel industry, and how he made a 5M dollar profit on a deal during COVID. Join us and get inspired.

Learn more about Mike and his story at shineinsurance.com/managing-commercial-real-estate-risk!

“When you first start investing, you want to see the property and touch it. But as you get bigger and you start scaling, your team is everything.”

04:37

Mike has over 300 apartment units and 5000 keys in hotels all over the country. His main focus is the Midwest but he recently started to invest in the South East as well. Investing in the Southeast is riskier but the rewards are higher. Mike says that building a strong team enabled him to be able to invest in different states in the country.

Mike explains that the downside of a market where the margins are greater is you get hit harder when the market corrects itself. These markets are also not cash-flowing during the hold period, however, they appreciate a lot every year.

“I'm looking for deals that could potentially do a 3x multiple.”

13:14

Mike talks about a successful deal he picked up in 2020, mid-COVID. It was a 128-door deal in Cincinnati and he made 5M dollar profit on it. His biggest takeaway was to be consistent and persistent.

Mike shares some of the biggest mistakes he sees people make going into a deal.

• Being too dependent on a low interest rate. Don’t buy a property just because the debt is cheap, but because it’s a great deal.
• Not having enough reserves and CAPEX. Put at least 3.5-4% of your gross revenue away monthly.
• Don’t be paralyzed by the recession.

“I know multiple people that own hotels, and literally took home 2-3 million cash in revenue from it.”

30:34

Mike invests in hotels as well. They make more cash, depreciate harder, and have better tax benefits.

It’s difficult to get into the hotel business, but it’s possible with a great team with credible and experienced team members.

About our guest,

Michael Ealy is principal and owner of a private equity fund investing in apartments and hotels. Me and my partners have acquired 3,000 apartment units since 1999. In addition, our hotel partner-operator has 5,000 hotel keys or $1.5 BILLION worth of hotels under management.

Mentioned in the show:

1. https://nassauinvests.com
2. Michael Ealy - From Broke to Millions
3. His LinkedIn
4. Shineinsurance.com
5. www.shineinsurance.com/managing-commercial-real-estate-risk
6. Jeremy’s LinkedIn

Need an instant insurance ballpark for your next Multifamily deal?! Answer 9 simple questions and we’ll give you a sense of what insurance should be. Visit us here for everything you need to know: https://www.shineinsurance.com/ballpark/

Special thanks to Mike Ealy for taking the time to share so many great insights with us If you enjoyed this podcast, there’s a couple of things we need you to do right now:

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Then, please share the show with whoever you think it will inspire.

Until the next time, We truly appreciate you listening.

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