One Rental At A Time with Michael Zuber

Episode 302: One Rental At A Time with Michael Zuber

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REIS 302 | Retiring Using Rentals


A lot of people turn to real estate as a part-time hustle to get their money moving. However, for those who want to pursue it as full time, when can you actually jumpstart and leave your career? Michael Zuber tells his story of how he went from being an executive to retired using long-term rentals as a side hustle. In his book, One Rental at a Time, he shares his fifteen-year journey from a single house on Norris Drive in Fresno, California to financial independence and ultimately retirement. This is not a how-to episode, but there is a lot of lessons to be had out of listening to someone’s life story. Get into Michael’s story and find some golden nuggets on buy and hold real estate investing, owner financing, rentals, and more.

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I never get tired of this show because I’m always talking to these interesting people like Michael Zuber. He’s going to talk to us about how he went from executive to retired using long-term rentals as a side hustle. This story is going to be good for a lot of people because a lot of people can’t jump off the cliff and go full-time and nor should they until they’re positive that things are going to work for them or until they have some foundational income from the property. Before we go to that, I’ve got to say hi to my sponsor and friends out there in TaxFreeFuture.com. If you do not have a tax-deferred or tax-free investment vehicle i.e. account where you can grow your retirement or your finances, you are missing out on a huge advantage. Please check out TaxFreeFuture.com because you will not believe what your financial advisors are not telling you. We’re going to tell you what they’re not telling you. Watch those 37 little videos and it will blow your mind. Michael Zuber, how are you doing?

I’m doing very well, Mitch. Thank you very much for asking.

Are you over on Silicon Valley?

I am.

You are a geek, aren’t you?

I was a jock converted to a geek. I was a software sales professional. I lived in Silicon Valley my whole life. I worked in tech for the last several years. Yes, I was a geek.

I love geeks because we need them more and more. We used to beat them up but you can’t bully a geek anymore because you’ll end up screwing up your whole life. You can be interested in anything and be interested in retiring. You can do anything for a living and want to retire. What was the revelation? Why real estate? When did you come to that conclusion and why?

It was on my 30th birthday, I’ve always been focused and I take two times a year to self-organize and review myself. One is my birthday because it’s in the summer and then the other is New Year’s because they are about six months apart. On my 30th birthday, I realized I had wasted my twenties. I left my house at nineteen. I moved out. I had the toys, cars, watches, clothes, the ridiculous expensive belts and all that stuff. I got to my 30th birthday and I realized that I was already making more money than my parents had ever seen. I was making six figures consecutively since I was 25 and I had nothing to show for it. I had made a bunch of money in the stock market. I thought I was the next Warren Buffett. I was in day trading and then the tech wreck happened. I went from making six figures a year day trading in addition to my job to losing all the $40,000 in the market. On my 30th birthday, I realized I had nearly nothing.

I did what you were supposed to do when you realized you weren’t Warren Buffett. You’ve got to figure out something else. The other thing I did on my 30th birthday is I looked at my org chart. I was an individual contributor but I looked up two or three levels right to the VP and I’m like, “Do I want to be him or her?” The answer was unequivocally no. They were all for the most part on their second or third marriage. They were all addicted to something. Most of them, some substance that I wanted no part of. They were all unhealthy and had no life. I knew that wasn’t what I wanted. As I was going through my twenties, I thought that was what I wanted, go to school, get a good job, get a good education and climb the corporate ladder. My 30th birthday was a wake-up call. I didn’t want any piece of that.

I went to Borders with tail between my legs. Borders is a bookstore for those that don’t know or remember. I went to the bookstore and looked around. I bought lots of books. The one that changed my life was Rich Dad Poor Dad. It’s a different way of thinking. It challenged me to revisit what I was raised with. I read that book five times back to back. I traveled all the time in my job. People talk about being busy. I worked 60 hours a week and then traveled 40 to 50 hours on top of that. I had a job that took me all around the world. I realized I didn’t want to be the people above me and I hate flying. Yet, I did 100,000 to 200,000 miles a year because it paid the bills. I had to do something else. Buy and hold rentals became the answer and I jumped in. I started what I call sacrifice. I now call it to play good defense. We live significantly below our means and we started buying one rental at a time way back in 2002 to 2003.

REIS 302 | Retiring Using Rentals

One Rental At A Time: The Journey to Financial Independence through Real Estate

That’s the name of the book, One Rental At A Time.

It’s the story of our fifteen-year journey from a single house on Norris Drive in Fresno, California to financial independence and ultimately retirement.

This is not a how-to book, “This is what happened to me or this is how I did it.” I got a one-star review from a guy named Homer Simpson on my book, My Life & 1,000 Houses: Failing Forward to Financial Freedom. He says I didn’t teach them how to do anything in that book. I said, “First of all, I never said this was a how-to-do-anything.” It’s autobiographical. Even so, it might have worked for me. There are a lot of lessons to be gotten out of listening to someone’s life story, which is why I prefer History channel or autobiography channel over sci-fi movies and stuff. I want to learn how to get better on this planet. I can learn it from people that weren’t better as well as I can learn it from people that were better because you can start to see some trends. I’m sure someone could write all the trends down and we can read them but you have to see how they show up in people’s lives and how these trends appear. They don’t always appear.

One of the greatest things you said was you have to live below your means. How can you have anything if you’re an indentured servant to the credit card company? What are you thinking? I finished interviewing this girl, Leonie Fitzgerald who helps people go through their budget and find money they don’t know that they can free up. They’re amazing little hacks and I’ve started even looking at my life. I’ve got some money being wasted over there too. I need to go check that out. It might only be $25 to $30 a month. Find five or six of those things and enroll that into your IRA. You’d be buying a mobile home or something pretty soon to rent or sell. What inspired you to write the book? Because that’s a whole different interface. You’ve got a geek that goes into real estate that writes a book. What’s going on?

I started off as a finance person. You go from finance to being a geek to being a real estate person. My mind is all wacky. The short answer is I remembered that trip to Borders like it was yesterday. I was looking for a book that was somebody’s story that I could see myself in. I was a busy technology professional who was working somewhere between 60 and 100 hours a week and wanted out. Every book I found was a real estate agent or somebody trying to sell me something. It was never a true review of somebody’s history of one house through financial independence while holding a demanding full-time job, having a growing family and investing through the market cycle, which was nuts, the 2003 to 2008 crash and the return.

I felt somebody had to fill that need. We successfully went through that entire thing and I felt I owed it to my younger self. I have a goal to try to create something that outlives me by 100 years. I wrote the book in a way that talks about the cycle without putting years on it. If you’ve been involved, you will know what year I’m talking about, but market cycles will outlive me. I will be dead and buried and the market cycles will still be here. I tried to write a book that will outlive me by 100 years. That was my goal when I put pen to paper. I stayed with my goal as I fought through to New York editors that tried to steal my voice. It’s a review of our history. I’m not promising how-tos or do this and that. I give some lessons learned. I tell the truth, what worked and what didn’t work. I got 60 or so five-star reviews and like you, I have a one-star review with someone that said, “You didn’t tell me how to do it.” I’m like, “I never told you I was going to do that. It’s our story.”

I like that you did it like that. As a matter of fact, I want to read your book. Everyone who’s been following this show knows that I’m the owner-finance guy. I am on the other side of the coin where I talk about the other idea besides buy and hold. There’s this other way to do it. Sell it with owner financing, creating a cashflow that has a life. It has a term and it has an end date but you can create great wealth and there are differences. People might be going, “Mitch, why are you interviewing this guy with rentals when you hate rentals?” I say, “I don’t hate rentals. They’re just not for me.”

I’m sure more people have gotten rich off of rentals than owner financing strategy simply because I don’t think people understood or even think about owner financing until someone shows them another side. My mission was to say, “If you don’t like being a landlord, there’s another way to do it.” It has its differences. It has its pluses and its minuses. When you do owner financing strategy and you’re the bank, you’re the mortgage company. They send you a mortgage payment. You don’t have all the liabilities that come from the back fence, the backyard to the front curb in the mailbox to the front yard and all that’s in between. I also don’t get the appreciation. I also don’t get appreciation per se.

I’m nothing but authentic. I didn’t know the owner-finance strategy was even an option when I started. I went to a bookstore. I found Rich Dad Poor Dad that only talked about rentals. I traveled ungodly. I found one thing that worked and I put all my chips on that number. If I had known, I might have done some things differently for sure.

You may have done some of them differently. There are two theories out there. You can get money for rentals a lot easier than you can for owner finance wrapped notes. There’s hardly anyone out there that invents wrappable money for people like me where I can borrow the money to buy a house say $50,000 and then I can sell it on a wrap mortgage for $100,000. You have $2,000 down and not have to pay off my underlying lien and I have permission from the lender to do that, which is called the wrap, where it wraps around my mortgage to my lender. Whoever figures that out is going to make a lot of money. I’ve been trying to talk someone into doing it for a long time because if you’re a bank and you loan money to me for a rental house, you’ve got one payer that gives a damn about that house. That’s me because the renter doesn’t care whether that house gets foreclosed on or not.

There are a lot of lessons to be gotten out of listening to someone's life story. Click To Tweet

If I sell a house to a guy and he puts $10,000 to $20,000 down, now they got two people sincerely interested that this thing goes right, me and the guy that’s living in it as the owner. I don’t know why you wouldn’t pick two concerned citizens over one, but they don’t have that money out there. I have to create it through private lenders. I have 44 lenders that have been with me for over a decade and a lot of them for over a decade and a half and going on two decades. People don’t let you use their money because you don’t pay them back. I did a course on how I raised that private money. I looked at some other people’s courses and mine is different. There are many ways to do this business. I depicted my ways. It’s called Private Money Changes Everything. If you’re interested, you can go to 1000Houses.com and check it out.

You read this book and you’re all in. You sounded like me in a way. I have to be careful about what I read because if I believe the author, I will jump in beyond belief. Are you familiar with Lonnie Scruggs’ Deals on Wheels?


I read half of that book and I bought 140 mobile homes in six weeks. I got back and I said, “I don’t have any more money to buy any mobile homes. How many have you got?” They said, “You’ve got 140. They’re all vacant, aren’t they?” I said, “Yeah because I’ve been busy buying them.” They said, “You better go to work selling them.” “By the way, I hope there’s nothing in the back end of that book. I need to know because I don’t think I’m going to look anymore.”

When I get committed to something, I’m either in or out. I don’t know what half speed is. I’m either on or off.

With rentals, did you find that it starts slow? Did you ever have that moment where you’re like, “My bottom line says I’m supposed to make this much but because of the liabilities, I’m not making that much?”

There are a couple of answers to that. First and foremost, I believe real estate investing and the path that I followed tests you for ten years. First off, all of us build an Excel spreadsheet that says we make X. The actuals are less than X and sometimes significantly less than X. You have that. In addition, I went from 2003 to what turned out to be the peak in 2008. I had six houses and one duplex. I had eight doors. Let’s say I was making $1,000 or something like that. I’m crazy busy. I don’t know any different. I try to buy the ninth house because that’s all I know, three-bedroom, two-bath, two-car garage, single-storey. That same house I bought on Norris Drive three years earlier, five years earlier for $107,000 is going for $265,000. That was a crazy seller’s market. The tension in this is it’s still rented for $1,100. I bought it $107,000 and rented it $1,100. It’s now worth $265,000 and rented for $1,100. My stupid financial brain doesn’t let me buy the ninth property and I know I’m nowhere close to being done. I felt like I was stuck.

I go to a local Meetup. I talked to guys like you that are more experienced than me and he said something so innocent that I messed up. He goes, “Have you ever looked at commercial properties?” I’m going, “I don’t want a shopping mall or an office building. That’s for billionaires.” He goes, “No, Michael.” He pats me on my shoulder and said, “Come on. I will teach you.” He talks about commercial apartment buildings, more specifically small apartments like five to ten units. I’m like, “I didn’t know what that was.” I had never lived in one and I never saw one. I thought millionaires own those. I’m like, “No, I haven’t.” He goes, “You should go check them out.” I do what I did in the beginning. I go all in and I figure it out. I end up doing a 1031 Exchange and take all what turned out to be fake appreciation in my Norris Drive house that I bought for $107,000 exchange to $263,000 or $265,000. I 1031 all the money into a five-unit apartment building for $223,000.

The rents did make sense.

$3,000 and it was $40,000 less and the rents were tripled. As you’ve already highlighted, if it works once, do it again.

REIS 302 | Retiring Using Rentals

Retiring Using Rentals: Rents go up when the demand goes up.


I’m not wrong about my assessment of the rental game. I’m going to use that if you don’t mind. You can do the rental game but it’s going to test you for ten years until you get over the critical mass part where you’ve paid down enough or price of the rents have gone up enough. You’ve figured out how to get someone between you and those issues if you’re not good at them or you can’t stand them anymore. It’s more of a forced savings plan the way I looked at it. You have to go back and pile the money that you made back in to get it ready for the next renter on many occasions, not all occasions. I could have been quite possibly the worst landlord in the world. That’s why it didn’t work for me. I might have been able to get a little bit better at it, but I got so disgusted with myself for how things are going. I was trying to sell to get out of it because I was buying in rough parts of town. When you’re broke, you think that you need to buy the cheapest houses that’s how you will be better off because those people will wear you out. I had 25 of them and I want out. No one in that neighborhood could get a loan to save their life even if the house would qualify for a loan. I didn’t know if that was going to happen either.

He showed me how to owner finance them and that was my revelation. I was trying to get out. I said, “I can’t sell these houses.” No one can get a loan that wants them. I don’t want to sell them to a landlord because they won’t make me any money. He says, “Just owner finance them. You will collect some money up front and you will be getting the same spread. You won’t have any liabilities and it will be their house and the phone calls will stop.” I did it on accident. I sold the 25. I got about $3,000 down a house. I had $75,000 in the bank. I’ve never seen that much money in the bank, not on anyone’s bank account. The $7,500 a month started coming in, which was what I was supposed to get on the rent roll.

I was so dumb to think I was going to collect it all. I was trying to clear $3,500 and I wasn’t able to do that like half of it. Once I sold them with owner financing, it started coming in and it started sticking because there wasn’t any way to send it out. There’s another theory, which my good friend in the book, we did our first 450 houses together holding hands until we looked at each other and says, “We don’t need to hold hands anymore. We both got this figured out.” He wanted to go that way and I wanted to go that way. He went into apartments and I went into self-storage. What he does is he buys the property. He rents it for at least twelve months so he has an argument for capital gains. It’s not always twelve months. It could be twelve months, thirteen months, fourteen months, whatever. You never kick out a tenant that’s paying you well and that’s not a problem. You just let them go. Why kick a sleeping dog if everything’s good? Just leave it alone. You’re still getting the appreciation yourself. What was your worst deal? What was your biggest nightmare?

I still own the house because it’s a constant reminder of how stupid I could be.

Where are you buying these houses at?

I only invest in Fresno, California.

That’s a pretty good place to do that because, by California standards, they still have some affordable houses down there.

Families can live on an income of $50,000 a year in Fresno.

I had a student there and I learned that that’s one of the few places.

It’s been wonderful. I’ve invested through the tech wreck, through the housing bubble. I’ve seen Fresno and I live in the Bay Area. I’ve seen the dichotomy. Fresno for the most part, at least as a rental, has been doing well. Rents went up during the dot-com crash. They went up during the housing crash. Values went down but I was in an apartment building so I didn’t care.

This is a good point. I have often said and I expanded that if there’s such a thing as a recession-proof business, the owner-finance strategy was one of those businesses. It included rents because my owner-finance price was based on the rents. I learned in the last recession that I was buying houses at the lower of the low because the bank stopped loaning money. What happens to the real estate prices when banks don’t loan money to people? They draw. If no one can buy a house, what do they do? They have to rent. You’re either owning a house or renting a house. I supposed there’s a little segment that goes under a bridge, but we’re not talking about that. If they can’t buy, they have to rent. What happens when there are a lot of pressures on rents? Rents go up when the demand goes up. During the recession, the rents would go up, which means it makes rentals recession-proof as well. I’m not an economist but I lived through this and I saw it with my own two eyes and with my own money on the line.

Playing good defense is living below your means. Click To Tweet

If you are a landlord of affordable housing, if you look at the Monopoly board, think of the light blue and the orange that is on that side of the board. That is absolutely recession proof. I have fifteen years and three recessions to prove it. Not only did rents go up but the quality of my tenants went up because people that were on the boardwalk in the Marvin Gardens and all that stuff have trade down. They get scared. They want to save. They’re going to get rid of the four-bedroom, two-bath, two-storey with the pool. They’re going to move, “Give me a three-bedroom, one and a half bath. I’m going to save for a while.”

Families combined together to make a stronger rental unit, a stronger probability that you’re going to get your money all the time because you got multiple people. I would go into these neighborhoods where I could substitute like if it was $1,000 rent, I would back into that with a formula and come up with an owner-finance value, which I call the OFV, which is a value unto itself. It’s more like a cap rate as you would do apartments or storages. I’m coming to a value based on its income. I’m making the price, the OFV, the Owner Finance Value so that when someone buys my house and gives me 10% down, he still has the same approximate monthly liability as he did when he was a renter. I’m trying to move someone who’s paying $1,000 a month rent to pay $1,000 PITI or maybe PITIS. The “S” stands for servicing fee because I charge people for the servicing fee, cutting another expense off my side to someone else’s side.

As the rents went up, my owner-finance value is going up because I was backing into a higher price. In the middle of a recession, your rents were going up. I had the only home for sale where the price was going up. Everyone else’s price was collapsing. Why was it going up? Because I was offering the financing and it was the most beautiful thing I’d ever seen in my life. I was buying a house a day until I scared the crap myself. Five days in a row I was buying a house. At the end of the 45 days, I had 45 houses. Since I was the buying and the selling side, I couldn’t very well be selling while I was buying a house a day. I woke up on that day and had 44 vacancies and that’s what scared me. The next recession won’t be that way because I’ve solved that issue. I haven’t seen the last 300 houses I bought. I haven’t seen the last 300 people that bought my houses. I plan on buying 500 houses next time, as long as I have the private money to do it. You can’t buy houses in a recession using the bank’s money because they close. Were you married when you started this journey?

I was and she gets a lot of credit because this business will test you. We got tested on that very first house we bought.

Was your wife for or against it? Was she paranoid, scared or petrified?

She’s 100% in. We found out together when our first buy fell apart. We buy this house on Norris Drive. We spend a year looking at Silicon Valley because all those books I talked about said to buy in your backyard, 30 minutes from your house. Silicon Valley hasn’t made sense as a rental in decades. We then moved to Fresno. We find the house on Norris Drive. We are ecstatic. We don’t know any different. We put 20% down at cashflows. We find a tenant in a week. We do everything right, credit check, criminal record, references and all that stuff. After two weeks of living in our house, they get divorced or separated. The wife takes off. We never see or hear from her again. The husband decides to drink to heal his wounds. Not only did he decided to do that but he also makes that his profession. He stops working and drinks all day and decides to destroy my house. We live in California and invest in California. We have a 60-day eviction that we’re staring at and then we have a $15,000 remodel after this is done. Think about that. We spend a year looking in the Bay Area, nothing works. We go to Fresno and we know no one, no connections. It’s a dot on a map.

Did you move there physically or did you move where you were looking for houses?

We moved where we were looking. We live in Silicon Valley. We will never go anywhere. I looked at my wife fully ready for it to hear that answer. She goes, “That sucked. Is there anything we can learn from it?” I’m like, “Not unless you have a checkbox on the application that says ‘Are you going to get divorced?’ or something.” She goes, “Let’s keep going.” I was shocked. That house turns out great because I’ve already used it as an example. We did a 1031 and pulled $150,000 out and put it in a commercial building that we still own. It has a happy ending.

What did you buy your first house for? What was it worth? Did you buy it at a steep discount? Did you buy it at 50% of its value? Did you buy it for value?

Right out of the MLS. I didn’t know any different.

REIS 302 | Retiring Using Rentals

Retiring Using Rentals: Finding stuff is easy. Securing the capital is the hard part.


You had to put $15,000 on top of that to repair it. You got your ass kicked. Hats off to you because you didn’t quit and hats off to your wife too. She didn’t give up. You had to be making some good money because you weren’t destitute or that would have been a whole another story because you did sink.

I had a sales job. I was very good at it. In a sales job, if you’re very good at it, you can make great money because there’s this thing called accelerators. The reason we got done is not because of my income, it was because we were living below our means. We took our spending down to probably 30% of our joint income and we lived on that.

What you’re saying is very important. You prepared yourself for this battle, didn’t you?

Yeah. We didn’t know going in that this would happen.

You think faster so you can grow faster, but it ended up being your safety net instead or your life jacket. This is important life stuff. You had a great job and some people will say, “I don’t have a great job.” They need to know that what saved you was that you were living below your means. You weren’t living below your means for that reason but it ended up being a lifesaver.

My circle of influence when I was 30, 90% of the people I worked with made my amount of money or more and they spent it all. They have to work for the next 30 or 40 years to survive. What we did was we lived below our means. I don’t care what income you’re at, if you can earn, that’s another important thing. I hate these people that talk about, “Go quit your job and jumping full-time.” That’s a ridiculous strategy. You need to have income and you should not be stressed out that you make bad decisions. You need to qualify for loans. There are many good things but you’ve got to live below your means. I call it playing good defense. Most of the people that made my income spend it all.

You need to try on that business with some security to find out if you’re any good at it or you like it or if you’re going to want to do it. It could be that you suck at this and it’s not what you’re supposed to do. I failed at everything else besides this, in sales, you name it. I have a stack of business cards. I used to have a business name X and they’re this tall. People ask me, “How did you get to real estate?” I said, “It’s the only thing that’s left.” You always pay for education. I don’t care who you are. You’re either going to pay the street, which is what you did. Think about the street as it has no conscience. They don’t care how much they charge you. They will charge you more than you even got. I tell everyone I graduated from La Calle U. Calle means the street. I can think right off the top of my head of $800,000 it costs me so far because I didn’t know. The street charged me $800,000. This got to be the most expensive university on the planet. Screw Harvard, it has got nothing on La Calle U.

The problem is most people would quit at that point. I almost quit. You pushed through and survived. You had the support of your wife and you both said, “No, we’re not running from this,” and that’s good. I was about to want to get out and stumbled onto a mentor who showed me how to stay in 24 years ago and millions of dollars ago. That’s what I’ve learned. I thought $10,000 at the time was expensive. $10,000 is $10,000. It’s a decent amount of money in anybody’s book, I get it. I couldn’t touch this guy for $10,000 if he would even take anyone. If he didn’t charge $25,000 or $30,000, he’d be an idiot. I paid $10,000. One of the questions I asked that coach was, “You want $10,000?” He was telling me, “I don’t want you to be mad if I solve this problem pretty fast for the $10,000. It’s not going to take too long to straighten you out.”

I said, “How long is it going to take?” He said, “You’re a fast study. We already know you’re a go-getter or you wouldn’t have 25 houses in two years. We’re not worried about you understanding the concept. I’m worried about you getting it so fast and turn it around so fast. You’ve paid $10,000 for two days’ worth of something.” I said, “Let’s think about that. If you turn this around out of my $7,500 a month, how much am I going to be able to keep?” He says, “You will be able to keep it all every month.” I said, “I don’t care if all it takes is ten minutes, I’m in.” I did the math, I was going to get the money back in a month and a half. That’s what gave me the confidence to hand him my last $10,000. $10,000 many years ago was a lot of money in anybody’s book. When it’s your last $10,000 and you look at your bank account, you’ve got $100 left, that’s scary stuff. I believed in that guy. He had 500 free and clear houses. I wasn’t going to question him. He was in his mid-30s. He’s smart. He started out from nothing. He didn’t even graduate in high school. He had to go back and get a GED. I like the comparisons of the two stories. Did you ever hire a coach or did you ever get some paid mentoring?

No, now that I’ve exited the workforce, I’m looking for those kinds of things. I had so few hours in the day where I could do my own stuff. I bought everything out of the MLS. What’s not understood is I did that between 5:30 AM and 6:30 AM every day because I had a family, I had a crazy business, I was on airplanes all the time. I didn’t have any other time. I worked Sundays probably 40 weeks out of the year because I was on an airplane for a business meeting on a Monday. I didn’t have time for any extra stuff. I looked up at 30 going, “Do I want to be these people?” The answer was no. A couple of them had heart attacks.

For once in your life, not making a lot of money could work for you well. Click To Tweet

Is there any way you could have been that CEO? Could you have been that guy and not do cocaine and take care of yourself or is it impossible in that job to do that?

I didn’t want to test that theory. Everybody thinks they’re different and unique. When you look up an org chart and you have a sample size that are hundreds and the vast majority of them had bad habits that I never wanted, I didn’t want to test it. It has no attraction for me.

I’ve been writing songs for 40 years. I made a decision a long time ago that I was not going to go into the music business for almost the same reason. These people drank and partied all the time and they live never knowing when the next flash of money was going to come in because they’d gotten famous for a little while or something. I couldn’t figure out how to get paid. You’re supposed to get paid $0.03 every time your song is played on the radio. Who’s keeping track of that? Every time the record is pressed, I get a nickel or $0.07. How do I know how many records got pressed? I got to go in there and watch the factory or something. There are a lot of similarities. When you were talking about when you retired, you didn’t own a million doors or anything. You only owned eight doors.

We got to eight. We did that 1031, which took from one house to five doors. I’m very simple but if it works once, I’m going to do it again. We went from eight doors to 80 at the peak. We survived the crash and we actually prosper because rents went up. My balance sheet went down but I don’t care. I pay my bills with my income statement. It doesn’t matter. Then the crash happens, the bank’s turnoff. I didn’t know what it meant to have a bank say no. I had nearly 800 credit score. I had a job that paid more than most. I had a net worth. I never missed a payment and all this income but the bank said no because I was the devil. I was a real estate investor. We had to figure it out because stuff was being sold for land value. I went to hard money first. I realized that it was expensive and then started raising private money. During the crash, we picked up nearly 70 doors, anything from houses to apartment buildings.

It got easy to pick up things in the crash.

Finding stuff was easy but securing the capital became the hard part.

The problem was securing the capital but the problem even before that was getting out of the mind screw that the sky is falling.

That wasn’t hard for me because like you, I like history. One of the things that I read back in 2003 and 2004 before the crash, I read about the savings and loan crisis. I read about the oil crisis in Texas. I read about the job sector in San Diego or whatever that’s left. I had all these history lessons and I read about people like you who survived and every one of them said, “I wish I bought more.” I went into this crash knowing that this was going to be my time or at least that was my thesis. I bought everything I fundamentally could. I would go take a mortgage on a loan on our cars that were free and clear. I borrowed against my 401(k). I borrowed every penny I could. I bought every freaking thing I could during that crash. I was all in because I figured that was my once in a lifetime chance. The market turns right. The hedge funds come in. All the rich people come in. The market turns and everything we bought was two to four times what we paid for it already. We went all in.

I had been a student of history too but I lived through a previous thing. I was so young. I don’t know how much I got from it but I did remember a few things. It took four or five years but it all came back. They are cycles and it’s going to pass. Even if your property devalued in another three or four years, we will be on another ten-year run. It doesn’t matter as long as someone else is paying for those houses. If I make some money, I break even, I can afford to write a check for a few times, I’m losing every month, just hang on and it will be fine. I always made money. You made a lot of money, which was part of your problem but was also a part of the good side. I didn’t make any money. I was making $36,000 a year bartending. That wasn’t even recognizable to the bank because it was tips.

I want the audience out there to know, for once in your life, not making a lot of money could work for you well. It could be a good deal in the real estate investing business. To make $3,000 a month from an owner-finance house or a rental, it’s not a huge obstacle in the world. You can replace your income pretty quickly if you have a low income like that. For once in your life, not making any money might be the greatest thing that ever happened to you because if you only made $36,000 a year, you would have been self-employed way before you did.

REIS 302 | Retiring Using Rentals

Retiring Using Rentals: There are many ways to make a living and good income in this business. When you pay attention, the market tells you what to do.


If you’ve been comfortably living on $50,000 a year and you get into this business, you can retire in less than five years, either with your strategy, mine or any other. It took me fifteen years and 175 rental doors to be financially independent to cover my net and then some. I could have retired a couple of years earlier.

You had everything under control. You had the income. It was time to be able to double up on some payments or buy some stuff. You have the insurance, you didn’t have to think about that for a while. How far is Fresno from Silicon Valley?

It’s two and a half hours, one way.

If you can manage it from two and a half hours, you can manage it from two and a half continents. I coach seven people that are living in one place and investing way someplace else because where they live doesn’t make any sense to invest. A handful of them is from Los Angeles, California, the Bay Area, New Jersey and New York. Other people lived in Florida, which you can still buy houses in Florida but their foreclosure process sucks. If you want to do an owner finance strategy, you’ve got to get someplace where you can get possession of your house if someone doesn’t pay you. Florida is not the place by and large. It can be done and there are ways around it.

When you create a business that’s away from you, it’s more challenging. It’s a little bit bigger of a mountain in the first but once you get your boots on the ground and your system, you figure out the lay of that land, you know what you want to do, you’ve got some solid help, and you figure out how to mitigate it, you have a real business. You have a business that you cannot work in because it’s too far away. You have to work on the systems and on it as a business owner does. I’m talking about the business owner, not the CEO because the CEO is still working in the business. You’re the owner directing somebody who is handling everything, which means you get the weekly report, the every other day report, the quarterly or whatever report you want. You read that thing from a cruise ship or from your kid’s college football game, wherever that is. You run your business. Part of what we want in this business is freedom. If you get yourself a job, then what’s the point?

Most of the people I talked to on social media and all that stuff just have another job. They can call them the CEO of X or Y. If you’re wholesaling or flipping, you’re up for a job. Maybe it’s a high paying job, but it’s a job that is most highly taxed and you can’t leave. We have worked on our business since day one.

Let’s correct that though because you can make the wholesaling business with systems and into a business that you can be the owner of. If you’re flipping the houses and doing the contracting, then you’ve got to deal, you sell it, you make a one-time check cash and you’ve got to do it again. If you’re like me, I buy houses and I owner-finance them. I get some money now, down payment $10,000 or $15,000. I create $500 extra a month cashflow with each deal average. That’s going to dissipate someday because notes have a life. There are a beginning and an end. You have to take the wealth that you make from these strategies and you have bought into something that’s forever. Be it a part of the complexes or rental houses, industrial leasing space, strip centers, commercial buildings, office buildings or whatever it is. I chose storages because it is the path of least resistance to a renter. There’s no sheetrock, no hot water heater in windows, no plumbing, so that’s what I picked. Storage facilities, if you go on MLS or look for them with a broker, they will give you a 4% cap rate or something. It’s like nothing.

It’s 4% cap on pro forma.

It is if they’re telling you the truth on the pro forma, which they’re not.

We’ve talked about the market take it and the market give it. I can only speak about my market, so take it for what it’s worth. Apartment buildings in my market are overpriced and multifamilies are overpriced. I’ve listed stuff for sale because they are so overpriced that I will take the cash in and buy houses because houses are underpriced. These are all the syndicators and the Grant Cardone wannabees of the world. They’re overpaying for stuff. I lived through 2008 where the desert of the day were houses. When Countrywide and IndyMac were giving these stupid liar loans, I’ve already seen stupid things once and I know when to get out of the way.

Whatever you're paying off, that's what you're choosing to get as a return on that money for as long as it takes to get it back. Click To Tweet

The exact same thing that they blamed the banks for, they’re doing it again.

Everybody is a syndicator now. The supply of apartment buildings, of quality, of size is so small that when you triple, quadruple or quintuple the people that want them, the prices go up and they’re beyond price for perfection in my market.

Have you thought about building them?

I like a simple life so the answer is no. I’ve thought about it but I’m like, “My life’s good. I like helping people. I don’t need to add stress to my life.”

I’m building a $2.4 million storage facility that kicked the living crap out of me. I bought it and I went down to the closest city because I was out in the county. I said, “Is there any tree ordinance or anything out here?” They said, “No.” I bought a $630,000 piece of dirt, six acres, $100,000 plus an acre. I proceeded to tear down all the oak trees and then they come out screaming, “There’s a tree ordinance.” I said, “I went down there and asked. This guy right here said there was nothing.” We found out that two weeks after I bought the land the ordinance was passed and they annexed the thing. Here’s the good news and the reason why I’m bringing this up is that maybe it works the same in apartments.

I’m building this thing up, $2.4 million minus $630,000 for the land. I’m leasing $1.8 million to build the facility. It’s not a high-rise facility. It’s just gliding electronic gate and there are rows and rows of buildings with doors in them, metal buildings. I’m going to build it for $2.4 million. The minute I’m finished before one person walks in, the appraisal is $5.4 million. Once I get it 90%, the appraisal is $7.3 million, not 90% but break even. I don’t enjoy the abuse I’m going through, as far as what you’re saying you want to avoid.

There are many ways to make a living and good income in this business. When you pay attention like you are, the market tells you what to do. It hasn’t been this way for a decade but construction costs are under the value that stuff is selling for. It absolutely would work for apartments.

I’ve had this dilemma and I don’t want to sound stupid. I keep trying to play this thing or give myself an excuse to do this but something’s telling me that it’s wrong. I understand the reason why these storage facilities and apartment complexes are selling in such tiny cap rates. For those of you that don’t understand capitalization rate, they’re selling you at 4% profit margin to look like that’s a good deal. You can make 4% for managing this big old apartment complex. The reason why that’s happening is institutions are parking their money there. They’re hoping to make 3% to 5% and be able to get their capital back out or whatever. They’re parking money there. That’s all I can figure. Either that or huge billion-dollar hedge funds. They’re saying, “We’ve got to do something with this money here. Put it over there.” At a point in your life where you’ve got $100,000 a month cashflow or more, does it ever make sense for me to say, “I’m going to buy that $5 million complex for $5 million cash so I can spend all the money when it comes in because it’s going to come in again next month?”

We’re at a different season of our investing career. For the first time, I’ve made decisions to pay stuff off. I have some housing that I bought during the crash that had 10% owner-financing on it or private money financing. I’m looking at that going, “I’ve got enough money in the bank. I’m going to pay some of those small notes off so I’m good.”

Whatever you’re paying off, that’s what you’re choosing to get as a return on that money for as long as it takes to get it back or that note would be paid off. If there are ten years left and it’s 10% money, then you’re choosing to put that money in 10% for ten years. Don’t ever pay off a 4% loan, just go buy another place or loan it to me, I will pay you 8%.

REIS 302 | Retiring Using Rentals

Rich Dad Poor Dad

I would never pay off a fixed rate Fannie or Freddie loan with 4% or even 5% on it. If the loan is sub 6%, I’m going to keep it until it runs out. I do have some stuff that I bought during the crash that had 10% and 12%. In this market, I’m paying those things off.

That’s what your spreadsheets are for. You’d go down there and say, “I didn’t remember that I have these four houses at 12%. There’s a guy across the street who will loan me money for 6%.” I’m not the guy I was back when I made that loan. I needed that money and no one would give me money back then. 12% was not good but good enough.

It made the deal. It gave me the appreciation.

It’s not about the cost of the money, it’s about the availability if you are making great deals. My first private lender was not only a hard money lender. It is a hard money lender with a hammer. I didn’t even know the word hard money back then. He still made me rich. He would loan me at 18% plus $2,000 kicker.

I thought 12% was high.

You’ve got to ask me what strategy worked for that money. It wouldn’t work for a buy and hold rental unless someone gave it to you. I was buying houses, some of them with the owner finance note and selling the note usually at the same closing within an hour. I’d buy it and I’d put the owner finance buyer and create the note. I would sell the note to the note buyer. I only had these houses 30 days at a time. That 18% is an annual interest rate. The reason why I had to charge the $2,000 lower kicker was I never had the money out over 30 or 45 days. He had to get $2,000 because he wasn’t making any money on the interest for that house. It was going in and out. I did it 450 times in a row and my average profit per house was $15,000 to $20,000. On top of that, you’re paying him $2,000 in 30 days of 18% annual interest. You had to do the math and figure out what 30 days’ worth was. People get stuck sometimes like, “I’m not going to pay that guy. I’m going to let that deal pass because 15% is too much to pay.” If you’re buying a $200,000 house for $100,000 and you only got five days to consummate the deal, who gives a damn how much the money is.

We bought everything we could during the crash because it was about the availability of capital.

Fix it later when you can get a breath, when you’ve got it straightened out and the white picket fence is all painted. Fix it when the Joneses are in there with their dog and their two kids and they got the shrub trimmed up and the rose bush. Go to the bank then and get out of the 15% loan or call your friends and tell them, “Who wants to make 10% or 8%?” or whatever, but fix it later. Get it and lock up that $100,000 worth of equity or whatever it is that you think is good. I love guys like you. I appreciate you being on. Are you selling anything? Do you coach? Do you do anything? What do you do?

I have the book, which was more of a cleansing moment for me to write about history. It’s only available on Amazon. I’m self-published. There’s also a Kindle version, which is all on Amazon. I did create an online course because many people have read the book and said, “How do you do it?” A lot of people are thinking about investing out of their area. I’ve documented how do you learn the market, how to run the numbers, how to build a team, how to create the business. That’s got released and now, I do sell something now for the first time.

I don’t know anyone that’s talking about this a whole lot. How to set up a market that’s far away from you in another state. Go find someplace that has the houses or the properties that you want, plenty of them and plenty of people that live in them. You probably want to look for a rapidly growing economy and a strong economy, not anything that’s dying. Figure out how to set up shop and have a real business. We’re going to send everybody to 1000houses.com/zuber. I want this show to be light on selling and more on the content that we delivered. Hopefully, those of you out there that are operating on a shoestring and they’re trying to figure out the mindset of this game, this podcast and Michael’s podcast, what’s the name of your podcast?

Books are just thick calling cards. Click To Tweet

It’s on YouTube. It’s called One Rental At a Time.

Everything this guy has is called One Rental At A Time. It’s not hard to figure out. It’s like me, everything I have is My Life & 1,000 Houses. One guy was cussing me out. He says, “All your books have the same name. How do we know what book we want to read? Make a subtitle.” I thought I was smart. I tried to copy Kiyosaki. I wanted to get my own colors and make sure the books always had that same color. Yellow seemed to be prominent but I didn’t want to copy the whole thing. I made it red instead of purple. He always Rich Dad everything. My series is My Life & 1,000 Houses. I was trying to learn from a guy who made $1 million selling books. I was trying to do what he did to the best of little Mitch Stephen’s ability. That guy’s book had an effect on me too. It’s a good book. After that, they’re all about the same.

It was that one book. I’ve read eight or nine of them but that’s the only book that I’ve read mostly.

It keeps regenerating the same thing. There are a lot of books where you read and by page 80, they’re just rehashing, readdressing and telling it to you again and then they’re going to readdress it and retell it again. I’m like, “I got it.” I’d like to thank everybody out there in the audience for stopping by to get you, Michael Zuber, One Rental At A Time. Stop by and get that book. If you’re thinking about doing something or setting up shop somewhere where it makes sense and not where you live, then check it out. Also, check those courses at 1000houses.com/zuber. I enjoy talking to you, Michael. You’re one of the five-percenters. You’re one of the guys who won’t quit.

Your book was one of the first books I picked up in Borders back in 2003 or 2004 or something like that. The title attracted me because I locked into that thousand houses. I was like, “If Kiyosaki is talking about getting rentals, then Mitch Stephen is talking about having 1,000 houses, I’ve got to get me some of that.” I read your first book. Thank you.

My book was born out of grief. I didn’t know that I was even writing a book. I thought it was journaling. It’s my cleansing. I was trying to get over with a tragedy. I didn’t know what I was doing at the time I was cataloging my life, “Why am I here? What have I done?” My doctors were my investors. They start out as investors but as I get enough of their money out, they all are very interested in my health. Two of them were book writers and I told them, “I didn’t know why I wrote this book.” People ask me all the time and I say, “I don’t want you to give back all this because I didn’t do it for that reason. It’s not right.” He says, “It’s a natural phenomenon. You had a tragedy and you sat down to catalog your life and apparently you don’t know what else to talk about but real estate and everything related to it.” It was true.

At the time, I was buying 150 houses that year when I was wrapping up this book. I didn’t have anything else to talk about. I was consumed with it and everything in my life is related to it. Some people ask me if they could read it. I told them I was writing a journal not to myself but to our audience. I don’t know why I was doing that either. They said, “If it’s to the audience, can we read it?” I’m like, “I guess.” I wrote 1,200 pages. I was pouring my guts out. They call it down to 400 and said, “You’ve got to put this out.” I never intended to write a book. However, it did change my life. Is your book changing your life at all?

It is a wonderful feeling. I’m addicted to the feeling of the emails and the tweets and all that stuff that comes around that’s changing people’s lives.

I almost quit because I told this guy who was a college professor at A&M. I said, “I haven’t said one original thing in this whole book.” Maybe there are two original thoughts, one sentence each or something but other than that, there’s nothing original. They came back and said, “You have a voice and you have a way of explaining things that are different from other people. You have a way of making complicated things rather simple to understand. If that reaches one, two or three people and it changes their lives, then it’s worth writing the book.” I was hoping that it would help one, two or three people. I had no idea. How long have you had your book out?

It came out January 27.

Years later, it will start to pick up steam. This too will test you. Maybe not ten years but self-published books take a long time to hit its stride. This book hit its stride eight years after its release.

I’m glad you said that because I’m selling one or two books a day and I have no idea if that’s good or bad. It’s not about the selling, it’s about helping.

These books are just thick calling cards. They will also work against you sometimes because I’ve had people come up to me at seminars and start talking to me like they know me. They knew facts on my life. I’m like, “Who is this guy? He knows us,” then he elbows me and goes, “I read your book.” Be careful, they’re going to do that to you. I’m going to read it. We’re going to trade books.

I look forward to it.

Thank you all for stopping by to get you Michael Zuber. I want to say thank you to my sponsor, TaxFreeFuture.com. Watch the 37 little videos over there. You’re going to find it very interesting how people take very tiny amounts of money in a retirement plan and grow it to big amounts of money rather quickly. The biggest stopping block for a lot of people is like, “I only got $1,000 to put into the thing. What can you do with $1,000?” There’s something to do about it. There’s a lot to do about it. The people that take the time to figure it out will have a lot better retirement than the people that don’t. You will not believe what your financial advisors are not telling you. We’re going to tell you what they’re not telling you and why they’re not telling it to you.

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About Michael Zuber

REIS 302 | Retiring Using RentalsMichael Zuber had work in Silicon Valley since graduating from Santa Clara University 20+ years ago.  After wasting time and money in his 20’s he found Real Estate Investing and more specifically Buy and Hold Rental Properties and never looked back.  Michael focused on his day job and grew his rental property portfolio from a single rental house to financial freedom in 15 years.  

Now that he no longer has a day job he shares his story via his self-published book (available on Amazon) called One Rental at a Time and his YouTube Channel also Called One Rental at a Time.  

Busy Professionals need to know they have a way out.  Also, Michael has a special interest in helping kids 15-25 see that they do not have to hold a corporate job for 40 years and pray for a good 401K.  They have options and the sooner we can open their eyes the better. Thus Michael Sponsors a monthly Book Report Challenge and Sends out $100 each month to the best Book Report.


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