230. Unlocking Profitable Opportunities in Commercial Real Estate with Paul Moore

You may already be taking actions such as investing in properties that align with your values, incorporating sustainable practices, or supporting local communities, but the impact you desire may still be eluding you. Instead, you may find yourself facing challenges such as difficulty finding suitable properties, encountering resistance from traditional real estate practices, or struggling to measure and communicate the social and environmental impact of your investments.

Join us on Average Joe Finances as our guest Paul Moore shares the secrets to success in commercial real estate.

In this episode:

• Discover the most effective real estate investing strategies to maximize your profits.
• Uncover the hidden benefits of investing in self-storage and how it can be a game changer for your portfolio.
• Learn about value-add opportunities in the self-storage industry
• Explore the untapped markets in real estate investing and find out how to tap into their potential for lucrative opportunities.
• And so much more!

Key Moments:

00:00:46 - Paul's Background and Transition to Real Estate
00:03:13 - Value Investing in Real Estate
00:06:30 - Success Stories in the Current Market
00:08:25 - Shift in Capital Stack Strategy
00:14:06 - Importance of Due Diligence and Partner Selection
00:15:02 - Self Storage as an Attractive Investment
00:17:51 - Value Creation in Self-Storage
00:19:32 - Blue Ocean Strategy for Self-Storage Investments
00:23:46 - Lack of Online Presence in Mom and Pop Self Storage Facilities
00:27:19 - The Appalling Situation at the Wall
00:28:03 - Making an Impact on the World
00:29:22 - Fighting Human Trafficking 

Find Paul Moore on:

Website: www.wellingscapital.com

Twitter: twitter.com/PaulMooreInvest

Average Joe Finances®

All of our social media links and more: https://averagejoefinances.com/links

About Mike: https://mikecavaggioni.com

Show Notes add-on continued here: https://averagejoefinances.com/show-notes/

*DISCLAIMER* https://averagejoefinances.com/disclaimer

See our full episode transcripts here: https://podcast.averagejoefinances.com/episodes

Transcript

Average Joe Finances: 0:00

Hey, welcome back to the Average Joe finances podcast. I'm your host, Mike Cavaggioni. And today's guest is not a stranger to the podcast. He was here quite a while ago on episode 30. We're welcoming back Paul Moore. So Paul, I am super excited to have you on. Thank you so much for joining me today.

Paul Moore: 0:17

Absolutely. It's great to be here. What an honor, Mike. Thank you.

Average Joe Finances: 0:20

Yeah, the honor is mine. So and the pleasure of having you on is mine as well I'm super excited to have you back on get an update on to what you've been doing since the last time we talked which was Like over 200 episodes ago so i'm super excited to get into it So for those that have not listened to this podcast before or at least not Listen to episode 30. Can you introduce yourself? Tell us a little bit about who you are and share your story. So who is paul moore?

Paul Moore: 0:49

Absolutely. Let's see. I went to school for petroleum engineering, which was my first mistake and then I went to got an MBA went to Ford motor company for about almost five years I really liked ford in their headquarters, but I really just felt like I really wanted to do something I had an entrepreneurial bug so We started a company in Metro Detroit and thankfully we're able to sell it to a public company. Five years later, I found myself launched into the Blue Ridge mountains to raise our kids and I thought full time investor now, and I wasn't, I lied to myself, Mike, I didn't know I was lying, but I was a full time speculator. And I didn't know the difference and, so I made a lot of money speculating, but I lost a lot of money as well. And I learned a lot of hard lessons that have really helped me 10 years later, 11 years later, got into commercial real estate, been a multifamily syndicator. And now we have 6 funds with a diversified portfolio of self storage, mobile home parks, RV parks, multifamily and more. And so that's what we do now. And love and life. And even during this shaky economic time, which we could talk about if you had time we we're doing the same thing we were when things were booming five years ago.

Average Joe Finances: 2:09

Yeah, actually, that's exactly what I wanted to talk about because when the first time we talked we were talking about speculation versus investing, and we talked about what you were doing in commercial real estate. And back when we last talked, this was. Shoot almost. This was over two years ago, and the market and the economy was in a totally different place. This was in the middle of the pandemic and we weren't sure where things were going, but all of a sudden, real estate took off and you were able to take advantage of a lot of that. And now, since then. There's been a lot of things that shifted and I myself and now am now experiencing this because I think the last time we talked I'm not even sure if I was in my first deal as an LP, but now I'm in a couple of deals as an LP, I'm actually working on my first deal as a GP right now. And it's just a totally different market from the time that you and I spoke last. And it's I find myself having to do things that I don't recall us having to talk about before because it was just so different. And so I'm really. Interested in learning what you've had to do to shift your focus in the way that, with the way that the market has shifted, like how have you shifted with the market? Cause you said, you're still doing the same things. So how are you doing those same things?

Paul Moore: 3:30

We really believe that, Warren Buffett, Charlie Munger, Howard Marks, these guys have really, they understand the market better than some, or maybe a lot of the real estate investors we talked to. But interestingly, real estate is In my opinion, better suited to follow their strategy that they have to scratch and claw and what is it in stock market? 91 percent of active traders lose money or whatever. And reAl estate's really well suited for the value strategy that was first touted by Benjamin Graham about 80 years ago and then learned by Buffett and then passed on to Howard Marks and these other guys. And so it's really simple. In, in stocks, I think it's really hard to find good value. Like the way Buffett figured out Apple was undervalued at 15 dollars a share about nine years, 10 years ago. And now it's whatever. I don't even know what it is, but let's say it's 10 or 15 times higher than that. And that's Buffett's largest holding, but the way he figured out that the efficient market hypotheses wasn't always true. He figured out that Apple really was undervalued and he bought a bunch of it. It's much easier in real estate. Let's face it. There's all kinds of mom and pops, mom and pop owners. It's completely fragmented. What's true in L. A. Is not at all true in Tucson, and it's not all at all true in San Augustine, Florida. There's different metrics in every market, but even more so the condition of the properties different. The mom and pop owner and their motivations are different. You've got, I'm thinking of one we bought in Beeville, Texas. We bought a self storage facility. We were the largest investor, at least our operating partner bought it. Five million, five and a half million dollars with a residential agent getting no bites. The five siblings, their parents had passed away, sadly, and all five siblings were fighting and they just wanted a cash offer, so my partner offered him a fair value which was $2.4 million for the piece of crap facility that they had. And then he went in and he dramatically improved it. And within four months, remember he bought it for $2.4 million cash. Within four months, it was appraised at $4.6 million based on him putting in professional marketing website. Wow. All kinds of stuff. And then he was able to refinance almost all that cash back to the investors. And then he had a big winner on his hand. You don't get, it's hard to get deals like that. In the stock market, but that value investing, buying from mom and pops, improving it, and then selling it to a bigger group is just a wonderful strategy.

Average Joe Finances: 6:14

Yeah, Paul, value add is definitely amazing. I one of the deals I'm an LP in literally we, It was purchased at $6.6 million, 20 months later, it got refinanced and appraised at $13 million, right?

Paul Moore: 6:30

Wow.

Average Joe Finances: 6:31

For, it's 102 units. Actually it's out near your favorite area. It's in Roanoke. 102 units. Oh, really? Yeah, and it, they, the GPs refinanced it and every single one of us LPs got a nice fat 21 percent return when they refinanced it, got a nice check and we're still in the deal. We still have equity. So that was really cool. As a matter of fact, I got that check on my birthday this past June 2nd, which was awesome. So I was like, okay, happy birthday to me. This is cool. But they did that in 20 months. It's that is like unheard of when you think about if you're looking at the stock market, double the value in 20 months. So the only thing doing something like that is some crazy crypto that is worth nothing the very next day.

Paul Moore: 7:14

Oh yeah. That's completely speculative.

Average Joe Finances: 7:17

Yeah. SO Paul.

Paul Moore: 7:20

That's great. Well, Congrats.

Average Joe Finances: 7:20

Thank you. Thank you. Now I'm curious. Now, again, now that property was purchased again, it was, now what, 22, 23 months ago. Different market, right? Then what it is today as you're looking for deals today, I know for me I shaved my head. I'm bald now. But I rip my hair out as I'm looking for deals, like trying to find something that works in this current environment and looking at all sorts of different markets. And I, I've been finding it's very hard to find something that sticks. So when it comes to like your buying criteria and what something is in your buy box, how are you finding ways to find something that fits without having to fudge it, fudge the numbers and put yourself at risk?

Paul Moore: 8:04

Yeah, and to be clear, we're not the operator on these, we're a fund of funds, if you will, our goal is to go out and find the very best operators we can with the best track record, best financing, best value add opportunities and things like that, and then we invest heavily with them. I'm going to probably tell you something that you might not have expected. We changed our place in the capital stack. And what I mean by that is in this last seven months, uh, nine months, we have actually been looking for PREF equity deals. So preferred equity. You've got senior debt, and of course that's the safest and typically the lowest return. You've got LP and then GP equity, the top of the capital stack, and that's the least safe by far, but also has by far the highest chance for return. Preferred equity sits in the middle, and it's got higher should have higher returns than the senior debt. And should have much better, more safety than the LP and GP equity on top. And They get paid before that. Yeah, they get paid first. Yeah. After the lender. Yeah, an example of one of these is, somebody who thought that they would get 75 percent LTC debt and raise 25 percent of that, in equity. Now they're the lender says, okay we're only going to give you 55% percent. So they raise the 25 percent equity. They've got a 20 percent gap. And that gap is where we come in with checks from one to $5 million. A typical structure would be, of course it has to check hundreds of boxes to get there, but a typical structure would be, we would get like 9 percent cashflow. And then on top of that, we would get seven, six, seven or 8%. Upside when the property refinances or cells, and we typically have a short time window on it, like 2 to 3 years. In that upsides compounded, we typically get fees with that. They pay all the, the lawyer, the attorney costs, et cetera. We might get a few points. So we can get 17 percent a year on these or more. And we have a much safer place in the capital stack and we have management control, right? So if the asset manager completely muffles, muffs that we can take it over And we can before the bank gets it back, you know We can take it over and put our own asset manager and there's all kinds of provisions like that in there But.

Average Joe Finances: 10:29

Oh, wow.

Paul Moore: 10:29

That's what we've been doing We figure we'd rather have 9 or 10 percent cash flow and, securely and a 16 or 18 percent upside more securely. And and so that's what we're doing right now. That's where we're focused. Plus, we're also working with our existing sponsors to have a track record and a history with us to go do deals like the one I told you about in Texas earlier.

Average Joe Finances: 10:55

Yeah. Paul, that, that is absolutely awesome. So something as simple as changing where you are, where you're at in the capital stock just to give you a safer investment right at the same time, but still getting a really nice return. So I was doing the quick math in my head. I was going to say it's definitely over 15%. So you said 17%. So I was like, okay, perfect. Just looking at that, that's a pretty good spot to be in when you're looking at a, two year investment. So with that being said, what kind of criteria are you looking for? In those deals, like with those particular GPS that you work with what are some of the things that you're looking for that, that gives you the warm and fuzzy that this is a good deal to get into?

Paul Moore: 11:34

Yeah. So the last deal we did, we invested$5 million with a sponsor that had a pair a pair of sponsors. They were brothers and they had a $300 million net worth. And so we liked that. They had many years in the business. They didn't have any LP equity, believe it or not. They had all, it was all their own cash that they had turned over from refinancing over and over these, thousands of units. They have 4,000 units in a very small area that they knew really well.

Average Joe Finances: 12:03

Oh, wow.

Paul Moore: 12:03

They know the mayor, they know, they probably know the governor even. They, they just got, they get tax breaks for going in and doing this affordable housing. They've got great. Bank history great history of paying off loans. They've got, they've got waiting lists for their properties because the properties are in a very hot area where there's a lot of people trying to escape from a major metropolitan area about 10 miles away. So they're coming here and trying to get, a 2 bedroom for $2,000 a month rather than $5,000 a month in the city. And so it's just. A great fit. We've got a 28 point due diligence checklist. We go through including their skin in the game, their track record, their criminal background reference checks, multiple site visits all kinds of stuff. We go through. If you've probably read Brian Burke's book the hands off investor, we follow a lot of the stuff that Brian said in that book about, criteria. Trying to really diligence due diligence, these properties really well. And these operators more importantly.

Average Joe Finances: 13:11

Paul, not just the properties, like you mentioned you're doing due diligence on the partners too, right? On those GPs. And I think that's really important. And I'm really glad you brought that up because one of the things I've had people approach me before saying, Hey, Mike, I know you've been at LP on a couple of deals. I want to be an LP on a deal. And, I've been looking at this and I've been looking at this which one do you think is a good one to get into? I'll say, Hey. It's not about what I think. I said, you need to look at that deal. Do your own research on that market. Just because you got sent a PowerPoint saying that here's what this looks like. Here's what that looks like. You could sit there and believe them all you want. I like to trust, but verify, right? So every deal that I've got into as a LP, I've researched the area to make sure that what they're telling me matches what I'm finding as well. Then I'm also looking at, like you said, at their track record, what they've done, what they've been doing. That stuff is important to me because I want to know if I'm putting my money into this, I'm putting it into safe hands because you've seen far too often now, especially with the way the market shifted. A lot of people out there doing capital calls and just things where it's. The deals aren't going as planned, right? And I get it that happens, but if you do your due diligence and you really focus on the people that you're partnering with and you look at their history and you look at, deals that they've gone full cycle on and just get a good feeling for what they're all about, you put yourself in a safer position when you put your money with them. And I feel like that's.

Paul Moore: 14:38

Right.

Average Joe Finances: 14:38

I think that's huge. So I'm really glad that you brought that up, like doing your due diligence, not only on the property, but also on the team itself.

Paul Moore: 14:46

Very true. Warren Buffett said you can't do a good deal with bad people.

Average Joe Finances: 14:52

There you go. Perfect. Absolutely. Okay. Now, Paul, with your fund of funds, it's not just multifamily that you invest in, right? I know that you've done RV parks, right? You've done self storage, which I think self storage is something that you've been focusing on a lot lately. Is that true?

Paul Moore: 15:12

Yeah, it is. We've been doing self storage for about five years.

Average Joe Finances: 15:15

So why self storage? What about self storage is so attractive to you?

Paul Moore: 15:20

One thing we like about self storage is that it seems to do pretty well during recessions because of the four D's. See if I can remember all four. Divorce. Downsizing, dislocation, and death. And we saw a lot of that during COVID, unfortunately. And we saw people being dislocated from their college dorms. We saw people downsizing. We saw people leaving places like San Francisco, Chicago, Manhattan, and going to rural areas, or maybe building a new home. I'm here at Smith Mountain Lake in Virginia, and there's just a Boom of people coming from Connecticut, Pennsylvania, New York, New Jersey, people coming down here saying, Hey, I can, live in twice as large a house on the water or $1,000 property tax a year instead of $30,000 in New Jersey. And I can work remotely, which we've never seen before. So a lot of those people need self storage along the way. One thing I love about it is, if you raise my rent on my $2,000 apartment by 10%, I might leave rather than get locked in for $2,400 a year to, increase. But if you raise my rent on my 100 self storage unit by 10%, I'm probably not going to take a weekend, get my friends together, rent a U Haul, and, just to pull my stuff out of there, move it down the street to save $10 a month, especially when these are all month to month leases, and that guy could raise my rent by $10 or more next month. And in that way, it's sticky. We've seen a lot of people, uh, I'm thinking of a doctor who said, Oh! I'm thinking he was thinking about investing in self storage. Oh, I just remembered. I've had a self storage unit for seven years full of junk. I've been paying for it. It's been on my credit card for seven years. I almost forgot I had it. So he invested and so it's there's just it's, it's a large industry too. It's got the same number of units or excuse me facilities as all subway mcdonald's and starbucks combined And about 50 of those are owned by mom and pops that have one asset And so to buy one of those mom and pop assets i'm thinking of the one I mentioned in beeville, texas Or i'm thinking of one that we just acquired in las vegas, in march The rents were $60 a unit for a 10 by 10. And the going rate in the area was 148 a unit. So it was only 41 percent of market had a bunch of homeless people in it had trash all over the place. No marketing taking that over and cleaning it up and then putting in a website and then raising rents to market. When you can raise your rents, like Two and a half times that's creating first of all, a great margin of safety between the debt. This was all cash, but if it would have had debt, great margin of safety, great debt service coverage ratio, and then a chance for great profits. So we love self storage in good or bad markets.

Average Joe Finances: 18:23

Yeah. You're also increasing the value of that property immediately as soon as you do that. That's huge. And you know what? I'm really glad you pointed out to if somebody is renting a storage unit for a hundred dollars a month and you raise it 10%. Okay. 10. Whereas somebody is renting for a thousand dollars a month and you raise it 10%. Now that's a hundred dollars. Looking at that comparatively, yeah, the self storage I'm not going to go and move my stuff for an extra 10 bucks a month, whatever. It's fine. But when you just did that on a hundred units, right now, that's right. You just raised a, an extra thousand dollars a month, which is fantastic.

Paul Moore: 18:58

Yeah.

Average Joe Finances: 18:59

If you've done a thousand a month. You just raised it $10,000 so.

Paul Moore: 19:03

That's right. It would be $10,000 a month,$10,000 months, $120,000 a year at a 5 percent cap rate. That's $2.4 million increase in the value of that facility. That's big money right there for only 10 bucks a month.

Average Joe Finances: 19:17

Yeah. Only 10 bucks a month. And you just raise the value of your property two and a half million dollars. Absolutely amazing. So yeah, I really like your perspective on that because it just shows that there, there is so much to be had in the self storage area. And I've had people come on the podcast before and talk self storage but I appreciate your perspective on that because. I don't think ever anybody's ever broken it down that way. Like comparing it to rent, like just how much more simple that is. Because again, like you said, you're not going, they're not going to get their buddies all together and rally and I'm going to buy you a pizza and beer. Let's move all the stuff out of self storage. Where the heck are you putting it now? And another self storage unit that you're probably putting it somewhere else, it's probably more expensive, right?

Paul Moore: 19:57

Right.

Average Joe Finances: 19:57

Because you guys just took over this unit and it was probably the cheapest one in town because you got the best value. So it's, yeah, it's definitely something to, stuff that should be on your mind when you're looking for these deals is what kind of value can you add? So definitely appreciate that. Okay.

Paul Moore: 20:12

Speaking of value ads, you can add retail stuff too. You can sell locks, box, boxes, tape, scissors. You can do all kinds of additional stuff, like you can add rental insurance. It might only be five bucks a month in your pocket, because you split it with the rental, the, did I say yeah, the insurance company. You split it, but five bucks a month, we just found out, five bucks a month on a thousand units would be like $1.2 million additional value. Mom and pops don't think that way. Some do, but most don't.

Average Joe Finances: 20:42

Yeah, No, no, that's a great point. And yeah, even the retail side, right? You have the self storage office, you're selling tape, you're selling boxes, things that people need. So even when they're exiting your self storage unit, you're still finding a way to make a little bit more profit because now they're coming to you saying, okay I got to get all my stuff out now because I'm moving into a bigger place. Oh, I need boxes. Where am I going to get boxes from? Oh, cool. They sell it right here at the office. How convenient is that? Yeah. So yeah that's awesome. Now, Paul, when it comes to. Finding these properties that you find that makes so much sense. Are there any particular markets that you find are better than others when you're, when it comes to self storage or just anything in general that you have found that has been more profitable for you?

Paul Moore: 21:28

Yeah, we like a blue ocean strategy, especially going into a market like this. So the red ocean strategy would be like building Greenville, South Carolina or Dallas or Nashville, where lots of people are building lots of people converting the old Toys R Us. And that's fine. That can work really well. AJ Osborne made tens of millions of dollars converting a super Kmart in Reno to a self storage. And so hats off to him. But we like. More the blue ocean place, which would be, for the people who have read the book, blue ocean strategy, a place that's out of the way. So imagine. I Was a little nervous about this, but imagine a 1500 unit self storage facility in Ishpeming, Michigan, up in the upper peninsula of Michigan with only like 5,000 people in the town. But that self storage unit facility serves the whole region. So people might drive, 45 minutes or whatever to get there. And so it is extremely profitable. Yeah. But here's my point. Public storage. And all the other big guys, they're not going to be building, and driving you out of business in Ishpeming, Michigan or Beeville, Texas. And so that's some of the markets we like.

Average Joe Finances: 22:48

Yeah, that's fantastic. And that is a little nerve wracking though, when you look at it and you're looking at the population, you're like, okay, there's only 5, 000 people here and we're putting 1, 000 storage units in. Are we actually going to get, that's. We're looking at, 20 percent of the population has to use this for this to work, but great point, right? Because there's nothing else in the area. Folks are going to commute and they're going to travel there even, 45 minutes, maybe even up to an hour just because they need to store their stuff. It's better than having to ship it somewhere else or the next best option is two hours away in another state. Yeah, that's

Paul Moore: 23:22

To be clear. It wasn't built ground up building ground up would have been very risky, but it was already existing. It was poorly. I'm guessing it was fairly poorly run. I don't remember the details on that 1, but usually those small town places are, and they knew that by adding marketing and good management and cleaning up the place, they could improve it. And it has just performed marvelously for our funds.

Average Joe Finances: 23:46

Paul, one of the things you had mentioned is on several of these deals, you had mentioned building a website. Are you finding that like a lot of these mom and pop self storage units, they don't have any website. Like they have no online presence whatsoever. Is that something that you've seen? That's quite common.

Paul Moore: 24:02

Yeah. One of my favorite stories is we were looking at a self storage facility near Raleigh, North Carolina. And the the owner said why would I need a website? Why would you say I'm at 100 percent full with a waiting list for years? And of course, right away we think, okay, so you're probably way underpriced. How do you collect your rent? Oh, everybody brings a check in here and drops it off every month. Really? Okay. So they have to think about it every month. See self storage is the one place, Mike, the one asset type you want everybody to know about you till they rent. And then you want everybody who's renting to forget about you.

Average Joe Finances: 24:44

Yeah. Great. The case in point, like you had mentioned with that doctor that had it on his credit card for seven years and almost forgot that he even had it. Actually that brings me back to, when I first joined the Navy and I was living on a ship and I was, getting ready to move into a place. So I moved a bunch of my stuff, that I had my own personal belongings back home in New York, moved it down, but I had nowhere to put it. So I put it in self storage and then I eventually got into an apartment. And I didn't realize until I was in that apartment for a couple of months. Oh, yeah, I've been paying for this self storage over here. I got to move my stuff out and move back to my apartment. So for months, they got some extra months out of me because I forgot I had it. So that's a great point. And yeah, down in good old Norfolk, Virginia. I totally forgot that I had this stuff sitting there. And then all of a sudden I moved into my apartment. I'm like, man, my room's kind of empty here. And I'm like, oh, yeah, my stuff's in the storage unit back in Norfolk. Yeah. So I have experienced that myself as well. So that's a great point, right? You want people to set it and forget it.

Paul Moore: 25:44

That's exactly right.

Average Joe Finances: 25:45

All right. Awesome. All right, Paul when it comes to just investing in general, not just self storage, but, we're talking about your multifamily apartments that you invest in, RV parks, everything else. What is the reason why you do this? What is your why for investing in this, in these commercial properties?

Paul Moore: 26:07

I don't know if I can get this quote I heard it the other day. We each have two lives. The second one begins when we realize we only really have one life. Okay. I probably botched that. I tried. Anyway, you can edit that out. The point is I've only got one life on this earth.

Average Joe Finances: 26:25

I'm not gonna edit that

Paul Moore: 26:26

and I don't know if you've seen.

Average Joe Finances: 26:27

It still works. That makes sense. It still works.

Paul Moore: 26:30

Okay, great. So I don't know if you've seen the sound of freedom movie. Have you seen that yet?

Average Joe Finances: 26:36

I have not. I've heard about it a lot. I have not seen it.

Paul Moore: 26:39

Yeah, it's pretty incredible. It's not like Somebody was eating popcorn two rows behind us, and I was like, I just wanted to tell him hey, can you stop? It was, that was just dumb, but, it was dumb of me to think that, that's what I'm saying. But it was like, it's just not a feel good movie, it's super intense, my son and I were depressed, during it, and for a couple days after it, but this is real. IF you got, if, if you took the record profits up through before last year, at least of Apple, General Motors, Nike, and Starbucks added those record profits together, double that number, that's the approximate profit from human trafficking worldwide every year, according to this US state department. And what's happening right now at the wall in Texas and New Mexico and California is appalling. These drug cartels are inviting millions of people from around the world to come there and we'll get you a ride to the wall and get you in free and then they take all their money at gunpoint and They take their children put them into trafficking and then they send the people on through the wall and the dhs Gives them a ticket anywhere. They want to go in the u. s. Robert F. Kennedy JR Just went to the wall and he explained all this is going on and this is this could be our kids, Mike. I'm thinking of my little daughter. This could be your kid or my kid. And to answer your question. The reason I want to do this is I want to make an impact on the world when I die and 40 years more when I'm 100. I'm saying I'm hoping that I want to leave an impact on the world. I want to make this world a better place. And that's why I'm doing this. And as well. That's the grandiose answer. The other answer is there's millions of people who want to invest in real estate right now. And they don't know how they don't know how to do the due diligence. They were there speculators like I was 23 years ago when I started and they don't know who to trust, where to look. We're trying to say, Hey, we can be a trustworthy place for you to invest. And of course there's no guarantee we'll do well. We may fail just like everybody else could fail, but so far we've, by. Applying sound investing principles and being very careful. We're giving our investors, hopefully a good experience.

Average Joe Finances: 29:04

Yeah, absolutely. That's the best you could do. And again, the important piece there, track record, right? They could look at you, they could look at your track record and see right away. Okay, these are some people that. That I feel like I can trust and invest with so going back to your other reason, your other why that is definitely an emotional topic because I do have two daughters, right? So that one definitely hits hard. I look at what some other folks are doing. I look at what Brandon Turner's doing right with better life. He takes all the profits from that mastermind and he puts it to a nonprofit to help stop human trafficking. So it really is. A disease that we have on this planet, right? It's a disease that's on earth that, that we have this problem and it's so hard to eradicate. So yeah any person whose mission is to try to put a stop to that. I'm a fan of automatically in my book because I have two daughters, right? Even if I didn't have two daughters, I would still feel this way, but more especially as a father. That is something that is very hard for me to get over. So I'm gonna go, I definitely want to go watch that movie when it comes out for streaming. Maybe I could find it somewhere, but I'm not sure how I'm going to feel after watching it. Cause like you said, you and your son were watching it and you like immediately got depressed. I don't know if that's good for my mental health or not, but, yeah.

Paul Moore: 30:21

We didn't know what to do. Are we going to go on a commando raid like that guy? Probably not. You might be. You're a, a military guy. Are we going to send money off to some place? We really don't know where it goes and what it's used for and lining someone's pocket, maybe. So we have taken the same approach at Wellings Capital that we do for commercial real estate. We're doing intense vetting on these organizations. We find one we really trust, and then we really want to promote them and get a lot of money to them. We've raised almost $300,000 for AIM, A I M, aimfree.org over the last several years, and I would invite Anybody to just go right there and see if you trust them yourself. Their charity navigator score is almost perfect and That speaks a lot and they're really doing a great work in cambodia

Average Joe Finances: 31:10

Is that their mission is to help end human trafficking? Okay, great So for all my listeners if you're looking for a place to put into for that check out AIM. I definitely I will put that out there for sure.

Paul Moore: 31:21

All right.

Average Joe Finances: 31:22

Paul this is we're taking it down a little bit more of a depressing route. So I want to reel it back in before I get all upset over here. Okay. But actually what I'd like to do, cause I know you've got some stuff going on over there. We've been talking off camera. We're limited on time. I'd like to transition this into what I call the final round. It's where I'm going to ask you the same four questions I ask everybody that comes on the show. It gives us a good idea how you are under pressure, which we already know you're going to crush it because just looking at your history over the last 23 years in real estate you're, you are crushing it. So I'm excited to ask you these questions. If you're ready to go. All right, we'll do it.

Paul Moore: 31:57

Let's do it.

Average Joe Finances: 31:58

All right, Paul, so the first question I have for you on the final round is what's the biggest mistake you've ever made when it comes to your finance or business life?

Paul Moore: 32:09

I thought you only had 45 minutes and it's going to take hours, but okay. I had a show called how to lose money and so I, I told stories on there. We interviewed 238. People who were successful, they raised their selves from the ashes and almost everybody I know had that kind of a history, but at any rate, biggest mistake So I love investing in mobile home parks, but investing in mobile homes, it was a horrible idea. I bought four mobile homes over the years. This was many years ago, and I leased them. I rented them out, and it was an absolute disaster, Mike. Two of them that were in good shape. And 1 had been completely remodeled. 1 was almost new. Good shape when I started renting them had to be hauled away, literally hauled away to the dump and just dumped by the end of the premature end of the rental absolute disasters. A third one is a disaster as well. I actually signed that over to the tenants because I didn't want the liability that they were bringing me even like they're, they'd call me and be like, hey, we have a hole in the floor here. And I'm like, how'd you get a hole in the floor? We had a leak we didn't fix and are like, they were like, oh, yeah, grandpa broke his leg and he ended up dying and I'm like, I don't really think I want to own this anymore. So I signed it over. There was a rent to own anyway. So I just signed it over to 'em. I just leased the land to them now. But disaster, never do it. Don't rent mobile homes. Even if you own a mobile home park. Even the ones renting the mobile homes within the mobile home park, they usually try to sell the home to the person because it doesn't work out very well very often.

Average Joe Finances: 33:57

Yeah, no, that's a great point. And unfortunate lessons learned. So it, it's. All the people that I know that invest in mobile home parks, buy the land and they lease out the lots to the mobile homeowners are like, I want nothing to do with mobile home ownership. They've probably heard you speak before and that's probably why. Hey, I talked to Paul and I'm not going to buy the mobile homes. So no. Okay. I definitely appreciate that. Okay. So this next question, these all kind of tie into each other, but Paul, what is something that you've learned that you wish you knew when you first started out?

Paul Moore: 34:32

I wish I knew the power. let's see. I talked about this last time. Let me change topics here. I wish I knew the power of commercial real estate investing versus residential. I have nothing against residential. I still think it's great. I've got very good friends doing that. But, commercial real estate is based on math. And of course, that value is like the inverse of the P. E. ratio in the stock market. The value. Thank you. Is the net operating income divided by the cap rate or the, expected rate of return for an unlevered asset at that market at that time in that condition in that location. And you can actually force appreciation like we talked about earlier in the Las Vegas self storage facility when you can increase rents. Two and a half times increase occupancy along the way and do other, you actually collect rent instead of having homeless people living in some of the units for free. You've got a very, you've got a chance to get that appraised value up by the same ratio, likely two and a half times to, over what it was when you bought it. And so by forcing appreciation. You've got more control over your destiny than you did than we did when we were doing single family and mobile home rentals.

Average Joe Finances: 35:47

Yeah, a great point. Great point. Definitely appreciate that because there there's a lot of value there, right? There's a lot of value in, finding the right property where you can add value to it. I think that's huge. And it's funny because you were talking about how this, I'm assuming this is from experience that, that self storage unit in Vegas, you said having homeless people living in it for free. Is it safe to say that's one of the things that you acquired as you picked up the self storage unit and found out there was a bunch of people living in the units?

Paul Moore: 36:16

Oh, no, we knew that all the due diligence. We all, we realized that during the due diligence and that made it even more appealing.

Average Joe Finances: 36:23

Wow. Yeah. Yeah. Cause now you're like, okay, we can get these out and get these occupied.

Paul Moore: 36:27

Yeah, and nothing against the homeless people. I'm terribly sorry for where they're at, but it's illegal and it's not safe and it's not sanitary to live. There's no bathrooms.

Average Joe Finances: 36:36

Yeah. Can you imagine if one of them died in the self storage unit and now the owner of that unit is liable. So yeah definitely important. Okay. Moving on to the next question, Paul do you have any tips or tricks that you would recommend to someone that is just getting started out today?

Paul Moore: 36:54

Yeah. I think I would consider getting into the Airbnb realm. It's something, about, I think I would consider a couple things. Number one, I would probably consider doing a short term arbitrage, which means I'd set up an air. I would actually rent a unit. If I was just getting started and I would get permission to re rent it to sublease it on Airbnb or to long term and I would actually furnish it really beautifully. Do professional photographs, put it on Airbnb with a really short time leash. And then I would go out and look at the local hospitals, engineering firms, schools, etc. And try to find somebody, who wants to rent these out for three to six months at a time, fully furnished. Yeah, okay, so mid term. You can sometimes rent an apartment, yeah, for $1,200 a month. You get 300 more in the furnishings and the internet and the electricity and then rent it out for maybe double that. Especially if it has two or three bedrooms and they can put two or three traveling nurses in it. Yeah. That's one thing I would do. Another thing I would consider, Mike, would be trying to do outdoor industrial storage. What's that? It could be like boat storage, RV storage, industrial storage. Just rent a field from somewhere, somebody near, a, near town, get a rent to own on it, put it on Craigslist, start marketing it, fence it in. Then you get people parking their RVs and boats, if there's a huge demand in that area, you'll have people that, can't put their boat and RV and in their subdivision and so they put it there and then you fence it in and then you gravel it and then you pave part of it and then you end up buying it because it's a rent to own, and then you just turn it into and basically you're starting small and you're building that facility up to something great. Who knows? Maybe you'll even build self storage on it someday.

Average Joe Finances: 38:47

No that's great point. And it's pretty simple too. Cause all you're doing is buying the land. And then you build from there. That's yeah, that's right. That's very interesting. Cause there is, there's a high demand for that. You you drive by sometimes you see these fencing areas where there's some boats sitting on trailers or there's RVs sitting back there, and that's one of the places that I never thought about. I wonder who owns this lot. And now that's a question I'm gonna start asking myself as I drive by. Okay. Yeah that's fantastic. Okay. So Paul, the final question of the final round, and I will preface this with besides your own, cause we'll get to that in a second, but besides your own, do you have a favorite business investing or real estate related book or podcast or both?

Paul Moore: 39:28

Yeah, I usually mention the one thing from Jay Papasan and Gary Keller because it helped me focus But that's been talked about so much. I'm going to tell you a more obscure one.

Average Joe Finances: 39:37

I think you mention that on episode 30, So you got to give me something new.

Paul Moore: 39:41

That's right. Good memory. I Recommend richer wiser happier by William Green. It came out two years ago. It's a fabulous book on balancing life investing It's purse, lots of personal stories about a lot of these famous people like Howard Marks, Warren Buffett, Charlie Munger, Ray Dalio. I don't know if he's in there actually, but at any rate, it's a fabulous book and it's just, it's like one of those things. I can't even highlight the book because the whole thing would be yellow.

Average Joe Finances: 40:16

Oh, wow. Okay. That is a great recommendation. Then I'm going to have to add that one to my list. I've not heard this recommendation before. So richer, wiser, happier. Yeah, definitely. Thank you. I appreciate that. William green. Okay. All right, Paul. That is it for the final round. You made it through easy peasy lemon squeezy. However, I'm not done with you yet. Cause I do have another question I'd like to ask you. And this is the most important question of the entire interview because people have been listening to this and they're saying, Hey, I really like what Paul's all about. I like some of the things he's talking about. I heard Mike mentioned a little bit earlier that he's got a book. So where can people find more information about you? Do you have a website you could share with us? Any social media profiles we can follow and where can we get your book and what's your book about?

Paul Moore: 41:01

Yeah. So you can. I've got a couple of books out. I got three books, but you can get me, you can catch up with me on Twitter. I would love it if you follow me at Paul Moore invest that's at Paul Moore invest. And my book I got a book on self storage on Amazon and bigger pockets. I've got a book on multifamily. You can find it on Amazon as well. Just look for Paul Moore. And the best place to go to find more information is our website, wellingscapital. com slash resources. That will get you a free special report on RV park investing, another one on self storage, another on mobile home park investing, and another which is a general course on how to invest in commercial real estate.

Average Joe Finances: 41:45

All right. Fantastic. So I'll make sure I have links to all of that in the show notes to make it easier for our listeners to go and follow you on Twitter. Check out your website, check out your books and just make it easier in general. The only thing I ask my listeners to do is please don't copy and paste or click it if you're driving right now. Appreciate it. Thank you. Yeah. So Paul this has been fantastic. I, to close things out, I want to ask you, do you have any final thoughts for our listeners?

Paul Moore: 42:12

Yeah. Like I said earlier, we only have one life, and I would just really remind people, go hug your kids, love your husband or wife, take care of your parents, take care of your neighbors, because, America, is not, honestly, in my opinion, Doing so right now, and, we're going to, we're going to look back at the end of our life, like Lee Iacocca and others said and said, nobody with nobody at the end of their life, which is they had spent more time at the office and so I just remind people, use your life wisely, love others and take care of your neighbors.

Average Joe Finances: 42:52

All right. Wise, wise, final thoughts. And I really appreciate that, Paul, again, thank you so much for taking the time out of your day from your lakeside enjoyment that you're having right now to chat with me I greatly appreciate it and so does my audience.

Paul Moore: 43:07

Thanks Mike. It's been a real pleasure and an honor to be here. Take care.

Average Joe Finances: 43:10

Absolutely. It was great to have you on again. And also I want to thank all of my listeners for joining me and our special guest today, Paul Moore on the Average Joe Finances podcast. Go leave us a five star review and tell us what you liked about today's episode with Paul. Aloha from Hawaii and have a great rest of your day.