Real Estate Nerds 11: Bad Beats

Blindly Pursuing Passive Income

Michael Blank

Apartment Building Investing Expert

Listen to the Podcast Here:

Whether your goal is to quit your job to get into real estate investing, volunteer more, spend time with your family, or become a full-time entrepreneur, our guest today has advice for you. You have to be clear about what you want and live a more intentional life that includes lots of self-reflection.

Welcome back to The Real Estate Nerds Podcast! Today, our host and real estate attorney Scott Smith welcomes Michael Blank. Michael is a leading authority on apartment investing in the U.S. and has seen many successes throughout his career. But he’s not here to talk about that. This is a a   Bad Beats episode, so Michael actually dropped by to tell us about one of his worst deals from his early career. Michael shares one of his worst deals that resulted in him losing all of his IPO money pursuing passive income through a restaurant experience. He signed up with a high-end pizza franchise and had six locations in two years which were hammered during the 2008 recession.  Even though this deal cost him a lot in  time, stress, and money, he also reveals how this Bad Beat transformed his life in a positive way to make him the investor and mentor he is today. Remember: smart people learn from their own mistakes, but geniuses learn from the mistakes of others. We know which one you are already. Tune in to the full episode to learn the lessons that will kick your investing to the next level.

Michael Blank’s Restaurant Blunder

Scott invites Michael on to the show. They go over Michael’s background in real estate, and then take a little trip down memory lane to set the scene for Michael’s all-time worst deal.

[1:30] Michael spends his days teaching other investors about breaking into and succeeding in multi-family investing, even with little capital. While someone like Scott helps protect real estate investment assets, Michael plays a different role on a real estate dream team by actually advising on investments.

[2:20] Scott asks what led up to Michael’s Bad Beat. Michael is highly educated, with a Computer Science degree and Master’s. He joined a software startup in 1997 that successfully went IPO, giving him quite a bit of cash to invest. In 2005, he read Rich Dad, Poor Dad and had a revelation that his finances needed to be kicked up a notch. He quit his job, flipped houses, learned about investing options, and got a mentor in pursuit of financial freedom. Oddly, he began his investing career in restaurants and traditional stocks.

[3:40] Michael explains that he went “all in” in pursuit of financial independence and early retirement. Though he thought restaurants would be an easy way to sit back and count his passively-gained riches, his start wasn’t all sunshine and roses: “My first big massive worst deal was in the world of restaurants. It was good for about five years…then the recession hit.”

[4:04] “Long story short, I subsequently lost all of my IPO money through the restaurant experience. And that was a pretty tough experience.”

[4:50] Michael shares his first painful lesson: “One of the first things I learned, is that I don’t control anything.” Scott points out that you can control processes, but not outcomes. Michael had such significant luck in his life to that point, that he’d grown accustomed to feeling as if he could control business outcomes.

[5:57] Michael was quick to learn his lesson and gain some wisdom from his mistake: “I realized the question I should be asking is: What should I be learning right now?”

[7:00] Scott asks Michael about his experience with franchising, which he was counting on to make the investment profitable. One of the big mistakes Michael made was not getting a mentor with comprehensive understanding of the business he was going into ahead of time. He also realizes he was too eager to invest, and the sense of urgency impaired his judgment.

[8:24] The two investors discuss the competing entrepreneurial urge for speed and slow, deliberate process required for good judgment. When asked if he would repeat the investment knowing what he knows now, Michael says: “Would I do it again? No. But it made me the person I am now.”

[10:00] Scott and Michael discuss the necessity of failure for growth. Michael learned a simple truth about appreciating failure: “If you want to be successful, it’s almost part of the process that you have to fail at something.”

[10:15] By January 2013, his restaurants were costing him $10,000 monthly, he was nearly out of liquidity, and had to let his operator go. Under the stress of running everything on his own, Michael began contemplating next steps.

Bouncing Back From a Bad Beat: The Gift of Failure

In the wake of Michael’s loss, he constructed a new path for his life. Listen to hear how his career of teaching other investors was largely born out of his failure–and why he is grateful for that failure today.

[11:31] Michael’s Bad Beat became transformational, in that he began focusing on teaching others the lesson he learned from investing. “It’s not all about you, it’s about what can you do to help others?”

[12:45] Scott agrees that service, working with others, and living in gratitude can enhance investing success as well as quality of life.

[13:50] Financial freedom was Michael’s major goal. Breaking free of the stress of financial dependence on others is what drove him to turn his investing attention to apartment buildings and teaching. Michael now creates podcasts and free information for investors and considers his life far more fulfilling now.

[16:00] Scott probes Michael about whether those that are struggling can be in the position to make the kind of strides he did. In Michael’s view, “There’s no pre-existing condition that helps or takes away from your success…You have to decide.” Simply making a decision can drive you closer to a goal that may seem out of reach. Michael gives some examples of this principle in action.

[18:00] The two investors agree that one must be a certain level of discontent with the status quo, or even a deep sense of dissatisfaction, for people to be willing to change. Someone whose life is already pretty good isn’t as motivated for success.

[20:00] Scott asks Michael what internal work he does on himself that influences his financial success and teaching. Michael points to the “Be-Do-Have” mentality: “Be first, do second, and have third.”

[20:18] If your person (being) isn’t complete, you won’t see the rewards. Michael believes mindset is the foundation of success. He shares some of his daily practices and morning routine with Scott.

[22:00] Scott wonders whether the daily practices of prayer, meditation, gratitude, and grounding that Michael uses now would have made a difference if he’d used them at the time of his Bad Beat. Michael is unsure, but points out that his mind was preoccupied with worry and stress for years prior to the failure. Today, he’s free of that.

The Takeaway: Become a Better Investor Through Intentional Living

Scott and Michael conclude this episode by discussing the greatest takeaway from Michael’s story. Michael believes the greatest lesson he has learned is the value of living a deliberate, present, intentional life in all areas.

[23:19] When asked what main takeaway Michael wants to share with listeners, he counters with a challenge anyone can take on: “I would challenge everyone to live more intentional lives.” This involves clarity about what you really want before worrying about how to get it. Rather than drifting through life on autopilot, an intentional life involves mindful precision. A morning routine is an excellent start.

[24:47] Michael also points out that an intentional life makes establishing and meeting effective priorities easier. Scott agrees, and highlights that his morning routine involves intentional goal-setting. Scott begins his morning by physically writing down (as in, pen to paper) his three main priorities for the day.

Connect with Michael Blank

Connect with Michael Blank through his website, To learn from one of the most significant mutli-family real estate mentors directly, check out his podcast and YouTube channel. If you’re interested in seeing where Michael’s inspiration for more fulfilled living, or simply want to improve your own skills the way he did, check out  Rich Dad Poor Dad and The Miracle Morning. Investors can also learn more about breaking into and succeeding in the multi-family real estate world directly from Michael’s eBook.

Listener Resources

Thank you for joining us on today’s episode of the Real Estate Nerds Podcast.

For even more free educational resources on real estate investing and the law, check out the Royal Legal Solutions blog. You can also reach our host Scott Smith directly, connect with him on LinkedIn, subscribe to the Royal Legal Solutions YouTube channel, or join our investor community on Facebook.

Don’t forget to subscribe to stay up to date and have the most current episodes of the Real Estate Nerds Podcast directly in your listening library. Every subscription helps us create new, custom content for you. What did you think of today’s episode? What would you like to hear more about in the future? Leave your thoughts and questions in the comments section below, or leave us a review in the iTunes store. We love hearing your feedback, so fire away. Join us again next week for an insightful multi-perspective conversation with investor Amanda Han. Thanks for listening and joining us on our journey to become better investors!

Hosted by Scott Smith, Lead Attorney and Founder of Royal Legal Solutions. Schedule your personal consultation now. If you have questions about our content or suggestions for future episodes or guests, reach our podcast team at [email protected].