Generate Massive Income: Taking Risks For Big Wins In Business w/ Real Estate Investor Mike Ayala

Mike DeHaan: [0:00] Real quick, guys. If you want to take your real estate investing business from 6 to 7 figures in the next twelve months, and you wanna do without being a slave to your business, then you have to check out our scale community. You can get the full details at collectingkeys.com/scale. But very basically, it is a community of like minded investors who are working to become the absolute top tier investors in their market. Along with three coaching calls per week led by Dan and myself, we also have a whole bunch of videos and materials that go into all the different SOPs that we use to run our business on a daily basis. This includes how we manage our sales team, how we hire, how we do our marketing systems, how we get the best assignment fees possible, how we do renovations, how we do all the different kinds of creative financing. And if you are serious about taking your real estate business to the next level, it is absolutely something that you should check out. So go to collectingkeys.com/scale, see all the details, and see if you're a good fit.

Mike Ayala: [0:59] Sometimes we're doing seven things in our business, and two or three of them are sucking the life out of the one or two that are really making the money. And those are the hard conversations that we have to have with ourselves. But I think starting with a business that actually is a good profitable business is what really allowed me to scale and make mistakes. Because if you've got a fine margin business, not a lot of room for mistakes.

Mike DeHaan: [1:26] What is going on, guys? On today's episode of the collecting keys real estate investing podcast, we have Mike Ayala, and we have such a great entrepreneurial discussion on today's show. Mike has done so many different things underneath the sun from being in the trades to running a very successful real estate business now where he's going into mobile home parks. He owns a bunch of those. He's owned a bunch of single families in the past. He also has like this family couples business retreat thing that he runs. It's kind of like a side passion project. All while managing his relationship with his wife and his three kids. And we just go down such an entrepreneurial rabbit hole in this episode. It's a really really solid conversation.

Dan Austin: [2:07] He is a great example of an overnight success that took ten, maybe fifteen years because everything he talks about, it's like not necessarily linear and he talks about failures along the way and not, you know, it's not being easy and he's not just the guy that got into real estate and all of a sudden said, this is how you make money. He talks a lot about scaling, building massive income and then investing passive, which I love.

Mike DeHaan: [2:31] Yeah.

Dan Austin: [2:31] Obviously we both love that.

Mike DeHaan: [2:32] It was that, I mean that's fully on brand with our whole, you know, making massive income instead of passive income motto that you've heard us preach many many times. And as we kinda get to the end of the show, he has just like a really, I wanna say like sort of somber perspective on that and why so many of the different people out there that are just preaching, you know, hold hold hold, wealth building everything with real estate are kind of full of shit. Right? And I just really love his take on it, kind of stuff that he goes down at the end of the episode.

Dan Austin: [3:00] If you want a real take on the real estate market and real estate investing in general from an a player, listen to this thing.

Mike DeHaan: [3:06] Absolutely. So anyways, guys, it's a really great episode. Definitely reach out to Mike after the show. He's a super super nice guy and he also has some great content of his own that he puts out there. So we appreciate you guys listening, and enjoy the show with Mike Ayala. Enjoy. Alright, guys. We are here today with Mike Ayala, and I'm super excited to have him on the show. If you are unfamiliar, he is a very, very, very successful and honestly savage investor, business owner, and family man who is super involved in GoBundance as well, which a lot of you know Dan and I are in. He has a podcast that he also does with Aaron Ibuchastegi. You guys have heard on here before called The King's Table, where they cover everything you can possibly think of regarding like macro and microeconomics and real estate, and it's really awesome. You should go check that out. But, Mike, I'm super excited to have you on the show, man. So I guess to give people some context, do you mind breaking down what your current business and assets kinda look like?

Mike Ayala: [4:07] So I have a mobile home park portfolio with different investment groups, different investors. We currently have 20 communities that's through the Midwest and Southeast. We have a property management team. And as with anything, I'll just stay say first and foremost, obviously, I think sometimes people think that we're going to get into real estate or any business for that matter, and it's just going be all roses. We tend to talk about the wins, but I mean, there's challenges everywhere. You guys know the environment we're in is challenging. We just came off of, you know, ten years really of maybe the most, like, interesting and and easy time ever to make money. And why? Because the government's just out of control printing it. But obviously, that's created some challenges. So, Moone Park, I have 20 communities, but again, I've got a bunch of black eyes to go along with that too. I've got a couple other investments. We've got a luxury vacation rental that I've done with another partner. It's a small fund. My wife and I, we still have some single family rentals and some commercial buildings. I had 45 single families at one point. We've divested a lot of those. I still have a few and some commercial buildings, but really have restructured a lot of that. And it all kind of started back in the day with a HVAC company that really just kind of opened my eyes to all this, which I sold in 2014. And honestly, at some point in time, when I get the mobile home park portfolio to where I want it to be, And I really struggle with this, and this is the entrepreneur's challenge.

Mike Ayala: [5:38] I really wanna get back into the HVAC space, but we'll save that for another time and day because as a visionary, like I mentioned off camera, just staying focused is probably our biggest challenge. But, you know, I've done a lot of different things. Crazy enough, I've owned a paint store, I had a cabinet shop, I was a general contractor for a while. I've done a lot of different things, but trying to stay focused right now on the mobile home park portfolio.

Mike DeHaan: [6:03] Yeah, I mean, you're a sure entrepreneur, right? Like you've done so many things. Because I bet HVAC is looking interesting right now, because you're probably looking at all the equity you have in this real estate, and you know, cash flows are getting less, interest rates are getting kind of more challenging to play with. You're like, I could just print money at the HVAC company right now. You've already done it successfully, is it gonna be that different now? It'll probably be easier, honestly, because there's less competition. But nice, man. That's awesome.

Mike Ayala: [6:29] And I probably have a little bit of a contrarian view, not in the sense that, cause I love what you said about business. And I've realized this through my own, I guess, shortcomings. I think as entrepreneurs, and even, well, I think this is a human problem. But I read the book Good to Great with Jim Collins years ago. It was probably 2005 when I read this book. And one of the eight things that separate the good from the great companies was their flywheel. They stayed focused on their flywheel. And a lot of companies get spread too thin, and we lose focus of our core offering within a business. And the companies that really did great, they focused on that flywheel, which if any of you guys are motorheads out there, you had a motorcycle or a lawnmower or whatever, the flywheel is literally, once that thing gets running, it takes less energy. And what I've come to realize, like, and this is a big struggle for me. But when we think about the flywheel, whether it's a W-two employee that wants to quit their job, or whether it's a business owner that wants to get into a different business, or whether it's a real estate investor that wants to get into a different asset class. And sometimes that's not always the thing that we should be thinking about. It is human nature, but the contrarian thing that I was saying, I'm still optimistic on real estate long term. But again, coming out of the years that we came out of, I don't know that real estate's gonna be as easy as it was, you know, in the teens going forward the next ten, fifteen years. And I'm not telling your audience not to invest in real estate.

Mike Ayala: [7:55] I think everybody should be a real estate investor. But I think we really have to just start asking ourselves the question, what is my flywheel and is the grass greener on the other side?

Dan Austin: [8:04] That's so funny you say that. Were just kinda having a similar conversation Along those lines for our business, and talking about how spread thin we can get, and like where we need to focus all our efforts, because as Mike and I have kind of been learning as you know, early entrepreneurs, wherever you're like getting momentum, you gotta stick with it, and sometimes it takes longer than well, actually I shouldn't say sometimes, it always takes longer than you think it will.

Mike DeHaan: [8:26] Totally. And when it comes to real estate right now, it's about managing expectations. You know, somebody that's going in and listening to Bigger Pockets episodes from ten years ago, and that's what it's gonna look like now, it's not the same. You know, and I mean, our whole philosophy with collecting keys is that we teach people how to make massive income, not just passive income through real estate. Because that is such an important piece now that most people just completely ignore. They think that they can have kinda like a standard financial situation and just accumulate properties and eventually reach financial freedom, which I guess technically you can. But it's gonna take like a very very long takes a long time, you know. And at this point, it's honestly easier to go and learn to just like make a lot of money, you know, as successful business owner than it is to spend every waking minute saving up trying to like scrape together assets to make a little bit of cash. No, that's awesome. So you did a lot of stuff. I mean you're not an old person. Well how did you kind of get into entrepreneur A continuous compliment. Yeah. Mean it's just an observation Like though, you know, it's not a guy, a seminar that's like in his sixties. Did you come from an entrepreneurial family, or what did that look like?

Mike DeHaan: [9:34] Because you must have been learning to be an entrepreneur relatively early in life.

Mike Ayala: [9:38] Man, such a great question. Kara and I have actually spoken on stage as we spoke at Brandon Turner's Better Life Marriage Conference just last year. And one of the things that we've really been focusing on is investing with your values. This is cliche, but it's always easier to connect the dots backwards. And to answer your question, I did not come from an entrepreneurial family. I was the first entrepreneur in the family. I was the first person to start a business in the family. I actually grew up with a dad that was a drug addict, abusive, and in and out of my life until I was eight, when I actually went to live with my grandparents. My mom finally left him and she got remarried three years later to a guy who I call dad today. But even during that time, my mom, she was working two jobs, going to college, trying to get her nursing degree. So she was never around. My stepdad, who's my dad, was working out of town. They were just doing everything they could to make ends meet. And honestly, during my high school years, man, I was a hellion. But the one thing, the one I mean, drugs, alcohol, I started drinking in seventh grade crazy enough, like, me and my buddies tapped into his mom's alcohol cabinet, we literally was taking alcohol to school in seventh grade and just off the rails, man.

Mike Ayala: [10:53] But the one thing I can always say is that even during high school, if I wanted anything, I had to work for it. That was one thing that I learned at an early age was I had a couple of things. Number one, I had a really good example of what I didn't want life to look like. And I think this is the problem that we experience. I'm kind of hard headed, but it takes me time to learn some lessons, but I've always been the person that can learn from other people's mistakes. I want to be the dumbest guy in the room. I want to take lessons from other people. And watching my dad was like my real dad and my mom's situation was really a driver for me. So to answer your question, my wife and I started dating in high school. And even from an early age, we were always talking about the future. So it was like vision, what do we want life to look like? Her and I separated for probably a year, the last year that I was in high school. I went off the deep end, which we can or don't need to get into, but literally ended up in jail. Methamphetamines off my rocker. She left me during that time, but she wrote me a letter in jail actually telling me that her parents said that they would help me when I got out and all this stuff.

Mike Ayala: [12:05] And I was just like, why do you even care? Why would they care? I'm the last person I have adult kids now and my youngest is 19. And I'm pretty sure that if her boyfriend did what I did, I don't know that I could do what they did. But anyway, I'll set that aside. Cara and I got married. Cara was 20. I was 20 No, Cara was 19. I was 21 when we actually got married. And Dylan showed up one year later. So we were kind of launched into a family at a pretty early age. And we were pretty clear on We didn't know what we wanted, but we knew how we wanted our life to look. We always said that we wanted to make memories over possessions. We wanted to have dinner together. I didn't want to be a Disneyland dad. I didn't want to be the dad that was working seven days a week and all this stuff because I grew up with that. And so to make a long story short, I actually started working for a plumbing company, went to apprenticeship school, became a plumber. I'm a plumber by trade. Most people don't know that. And I just if you look back in your life, there's probably these times where there was a lot of luck involved. And for me, there was a lot of luck involved because the company that I was working for was growing really fast and had a lot of work and didn't have a lot of employees. So I was literally by the age of 22, so 19 to 22. I'm not even technically a journeyman plumber yet, I'm running projects for this company. At the age of 23, I ended up running a $3,500,000 casino expansion out of town, running a crew of 16 guys that were twice my age, had more experience than me, but my boss didn't trust them. And here's the kicker.

Mike Ayala: [13:47] So I'm working seven days a week out of town. My wife's pregnant with our third child. We had a lot of kids really quick. So I have two kids under the age of four, literally. At that point in time, she's pregnant with our daughter and I'm gone. I'm working one hundred plus hours a week. I would leave that job on Sunday night, run home, have a cold dinner, wash my clothes, and go back out of town at 03:00 the next morning. I'm literally groundhog day to what I grew up with, other than I wasn't an alcoholic and I wasn't abusive. But we just looked at each other and was like, this is not what we signed up for. And man, just to start I literally said this, Mike and Dan, was like, if we're gonna work one hundred plus hours a week, I might as well do this for myself. That's what I thought entrepreneurship was. I quit my job, started a business. And this is the crazy part. And I had a lot of luck involved in this. Literally, we got our plumbing license in July 2024. And by the end of that year, we were doing a million dollars in revenue and I had 17 employees. Like, it was insanity. And you fast forward, we were never not profitable. And I'm not saying all of this because I'm amazing. I'm saying this because I was really lucky and the timing was right.

Mike Ayala: [14:58] And I also understood that I didn't know what the hell I was doing. And I hired a consultant, I got out of the way, and I just did exactly what they told me to do, and it freaking worked. By 2009, we were on the Inc. Fastest growing companies in America. And I mean, I had 100 employees. It was insanity.

Dan Austin: [15:13] Yeah. That is an insane story, yeah.

Mike DeHaan: [15:16] Yeah. I mean you say luck, right? But I'm a firm believer people create their own luck. Like even in that situation where you were doing the casino expansion, you were put in that role of seniority even though you were half the age of everybody else for a reason. It's because you had proven yourself to be the person that was right for that. And you can say luck being at that company, but there's also other people that would have been in that situation that they wouldn't have been given that. You know? That wouldn't have been given that shot that you were getting. So is that the company that you ended up selling? Yeah. It is? Okay.

Dan Austin: [15:46] What was the reason to do the exit at the time? And you you talked about getting back into HVAC again, but at that point in time, what was your logic and why?

Mike Ayala: [15:56] So back to the marriage conversation, which doesn't have to be marriage, can be for anybody listening right now, but values actually led that conversation. So you fast forward to 2012 and Cara said to me, this was 2012, she said, Hey, when our daughter graduates, I want to take a year off. So again, we were always thinking about the future, always life by design. And by the way, backing up a little bit, even through all of that scale and growth, I'm not saying it was easy, but my kids have seen the world. We had dinner together. I was really clear on values and why we started that company and also what we wanted. And I'm proud to say that we kept our family first, we kept our kids first. And there's a lot of excuses that we give ourselves and that we create. When in reality, I'm not saying that there isn't seasons of time where I had to work more than I wanted to, But most of the time as entrepreneurs, investors, even w two employees, we're making all of these excuses around why we have to do certain things and why the things that really matter suffer, when in reality, who gets to choose that? Even if you're a W2 employee, you're choosing to be there. So Kara said in 2012, when our daughter, Ketan, graduates, which would have been 2022, or was 2022, she did not die. But Kara was looking ahead ten years and she said, I wanna take a year off. We started having kids early. Our entire adult life has been raising kids, building business. And I was like, okay, great.

Mike Ayala: [17:31] Then I started realizing she was serious about this. So I started looking at my business, which we all have this awakening. And I started realizing there's no way I'm gonna be able to take a year off from this business the way that we're currently structured. And I did have a business partner. And by the way, with the EOS terminology, I didn't know it then. I'm a visionary. He was an integrator. So we were actually a perfect match, but I just didn't understand this then. So I actually came back to him and I said, Hey, I think we need to hire a general manager. I started thinking about I wasn't telling him why, but I started thinking about what does this look like in ten years. I had no intention whatsoever of selling that business ever. But I started looking at, what do we have to do to structure this business properly so I could take a year off? And when I said, I think we should hire a general manager, he looked at me and he said, Well, what the hell are you gonna do? Because that was my role. And that was the moment that I realized, and Karen and I had a lot of conversations about, Are we serious about this? Yes. And I knew that there's no way that my business partner was ever gonna let me take this business to the point where I could be gone for a year or even a month and and be able to do that. And so I won't get into the weeds on this, but I also when I had that realization, I also understood, now what? And out of nowhere, guys, I get this phone call one day from KPMG, which is one of the top two accounting firms in the world. And they're like, Hey, there's this company that wants to buy your mining division.

Mike Ayala: [18:58] So we went through eight months of hell, due diligence, gonna sell half of our company. It fell apart at the finish line. But what was great about that experience was that my partner and I were on this side of the table negotiating against someone else. And we also had a valuation on our company for the first time ever that we were both in agreement on because we were negotiating with someone else and not against each other. And so when that deal fell apart, I just started thinking about, like, what would a buyout look like for one of us? And started having that conversation with him. And I created seat a and seat b. And I said, I don't care which seat you take. I don't think we're aligned long term. You pick buy out or stay, and this is what the person that gets bought out looks like. And he chose ultimately to buy me up.

Dan Austin: [19:43] Wow. That's an incredibly I don't know what the right word is. That's an that's a really the way you took that, the lot of maturity and vision to, like, set it up that way. It seems like super fair and gave him the opportunity, and either way, you were going to do you were going to move on, either scaling that business or obviously ultimately selling.

Mike Ayala: [20:00] You know, it's the only way to really think about it at the end of the day, and there's a great book out there, Seven Habits of Highly Effective People by Stephen Covey. And one of those is win win. One of the seven habits is win win. And if you read that chapter, which I had read before that, most of the time when we're negotiating, it's not pleasant. I mean, it could be somebody in here wanting to buy their first single family or buy a business or whatever. And in reality, what we're usually thinking about, if you read Trump's book on negotiation, it's like, screw the other guy. But there's nothing like, truly, if we can formulate win win, which is what I did there, there's a win in it. So

Mike DeHaan: [20:38] Yeah. Yeah. And more often than not, that is possible. Most people just don't necessarily explore it or are being a little bit selfish with how they wanna pursue it. Hey. We really appreciate being a listener of the collecting keys podcast. Did you know that we also are on social media and on YouTube? You should go and shoot us a follow on those as well. You can find both Dan and I on Instagram. I am at Mike underscore invests. Dan is at investor man Dan. You can also find short clips from the show at collecting keys podcast on Instagram. And if you wanna see our faces talking while you're listening to the show or you wanna check out some of our crazy animated adventures we've been putting together into some funny little web cartoons that sort of show the crazy stories that guests tell on the show, then you should go over to YouTube and check out the collecting keys channel. Shoot us a subscribe over there. It really helps continue to grow our audience. We really, really appreciate it. Well, anyways, enjoy the rest of the show you guys. We appreciate you all. So sold in 2014, real estate, you're trying to balance things with your family and your wife at this point. I guess, were you already familiar with real estate in 2014 or is that all like even more recent and you just went right into that business full time?

Mike DeHaan: [21:49] Or did you get some good balance with your family in there in the middle?

Mike Ayala: [21:53] Yeah, so I kind of mentioned this early. I bought my first single family in 2005, so I was 25 years old. And guys, take this wherever you want. If you guys want to shorten me up, feel free to. But I remember in 2005, we took a trip to my wife's sister's house in Sacramento. I lived in Elko, Nevada. So we went to Sacramento. I was on the way back. I stopped at Barnes and Noble. And this CD series called The Real Estate Investors College jumped off the table at me. It was on a discount table. And I didn't really know much about real estate at that point in time, but I had a cousin that was investing in real estate. So it's a five hour drive from Reno to Elko. I plugged in the CDs. It's 16 CDs. And I think I'm on CD seven by the time we get to Elko. And I literally wanted to drop my kids off and my wife and just freaking keep driving because I was like, oh my god. It was like the bigger pockets of that point in time. Right? Like, the heavens opened up and it was like, woah. Well, then I was working with a consulting company in the HVAC space same year. And I went to an annual planning event and my coach, my head coach was speaking from stage and he said, he made this comment. He said, If your business isn't helping you achieve your personal goals, you just own a job. And I was like, Oh my god, that like that hit me between the eyes because I'm like, maybe a year and a half into business. And I'm just like seeing back to why we started the business.

Mike Ayala: [23:15] And it's really easy for a business, an investment portfolio, whatever it is, to take ownership of our life rather than us owning it. And I realized when he made that comment that if I didn't so this was my current state of mind. I thought I was gonna be in that business until I was 65. So Kara and I set a goal of two income producing properties a year for ten years. I thought to myself, based on that comment and Dolph's CD series, that if I just bought two single family rentals, I'm 25 years old. If I bought two a year for 10 years, by the time I'm 35, I will have bought the last one. I'll have 20 units. They'll have thirty year mortgages on them. This just shows how naive I was at that point. And by the time I'm 65, they would all be paid off. And I'd still be working in this plumbing business, but I'd have 20 rentals that would be my retirement. And so we bought two single families that year in 2005. And then the next year, we were doing a bunch of work in a mobile home park, a 72 space mobile home park that was run down. And I caught wind that the seller needed to sell it. They weren't paying us. And to make a long story short, I bought a mobile home park. A mentor helped me buy it. A mentor actually So I assumed the loan from a private investor, and my mentor lent me the $80,000 down payment that the investor needed to get out of the deal. And I assumed a note from that private investor, bought my first mobile home park, 72 spaces, 475,000, borrowed 100% of it. By the way, at that point in time, I had borrowed 100% of everything that I bought real estate wise.

Mike Ayala: [24:54] And I've continued to do seller financing over the years, but that's how I got into the mobile home park space. I'll fast forward to 2014. Kara and I owned 45 single family doors, three commercial buildings, and five mobile home parks.

Mike DeHaan: [25:06] That's crazy.

Dan Austin: [25:07] So you moved fast.

Mike DeHaan: [25:08] Moving super fast, but you were doing all the fancy stuff, assuming loans, seller financing, all these things way before it was cool. Right?

Dan Austin: [25:16] Right. Way before there was whole

Mike DeHaan: [25:17] like YouTube channels just about that. Yeah. Right. So did all that information come from your mentor? Was that like a sophisticated seller that was helping you out?

Mike Ayala: [25:25] Part of it was my mentor. And the crazy thing about mentors, what started that mentoring, and by the way, I still do money deals with this guy today. Nice. I probably have 15 loans with him still. But what was crazy about that is I went into him to truly ask his advice. And I would go ask him advice and then he'd be like, Well, what's the problem? Well, I don't have any money. Well, here, I'll loan you the money. So it started out as a true I wasn't going to him to borrow money, but then I just ended up borrowing a ton of money from this guy. And yeah, just, I mean, that's the way that these relationships work. And I think a lot of times we overcomplicate it, just like back to the win win. What people don't realize is sometimes we look at this from the perspective of like, why would this guy loan me money? Well, because he's in a good position on the property. Why would a seller do seller financing? Because he's tired of running the property and he gets paid anyway. And so many times when you think win win, like people start to think like, why would anybody help me? Well, because you're helping them. I've made my mentor, who I still borrow money from today, I've made him a boatload of money. But so many times we think about it from the perspective of like, oh, he's helping me because he's lending me money. No, that's his business.

Mike Ayala: [26:38] And he's making a boatload of money off of my time and my experience. And he doesn't wanna be out on the streets doing deals anymore. And so I guess to directly answer your question, I'm just a sponge, man. My brain's kinda creative too, but I would I would take every piece of advice. And again, I'm the dumb guy in the corner. Like, when somebody tells me you can do something, why would I think I can't? If he's doing it, I can.

Dan Austin: [27:03] Yep. That's such a great analogy. You mentioned too, even back when you were 24, hiring a consultant for your plumbing business, so it seems like you truly are taking advice and seeking advice. Do you have any, I guess, tips or thoughts around that? Because I I don't know too many 24 year olds that are seeking advice or looking for consultants to help them build anything. It's like at that point in time people are like, I could do anything. But in reality, sounds like your story is marked by mentors and seeking help and anybody that you can learn from, you're soaking that up.

Mike Ayala: [27:35] Yeah, well, know what the problem with most 24 year olds is? They just got out of college and they think they're really smart. You know what the problem with most of us is? Is like we wait until we're 30 or 40 or 50 to start, in air quotations, taking risks. And by then, we think we're really smart because life has taught us all these lessons when in reality, I was so young and naive that I didn't have a choice. I mean, if you think about my background, I went from jail to being a plumber. And when I started a plumbing company, I didn't go to college. I didn't have a marketing degree. I didn't have a business degree. I remember doing one of our first jobs and the contractor was like, Hey, you need to send me a bill. And I was like, I called my wife. This is true. I called my wife and I said, Hey, we need to send these people a bill. And she's like, well, how do we do that? And I'm like, I don't know. It's like, go get QuickBooks. There's gotta be something. There's gotta be some kind of billing software. And she called me from OfficeMax. And she said, there's like 18 different versions of this. And I said, well, there's gotta be one for like contractors. And she looks and she's like, oh yeah, there is one. There's QuickBooks contractor. So I'm truly like, I don't know anything about sales, marketing, leadership, hiring, business, HR, like all the things that ruin us. And so my only choice was to find the best consultant I could find and just do what they told me to do.

Mike DeHaan: [29:03] I mean, make that as a joke, but to be fair, that is on par with my experience with most contractors. Like they want like an envelope of unmarked $100 bills, like they have no point of sale either.

Dan Austin: [29:14] Yeah, right. Like how else am I supposed to collect money? Yeah.

Mike DeHaan: [29:18] Yeah. So nice, that's great. That's very cool. So as you were going through all this though, I mean obviously a recurring theme is focusing on your family, time with your wife, time with your kids. How did you balance all that? Because I mean you had very significant companies, you've done very significant investing. Literally before you hopped on, Dan and I were talking about how both of us were working until 09:30 last night. Right? And so, I guess what was your, I don't wanna say like a secret, or like your routine, or the arrangement that you have with your wife that made it possible for you to do that, correct?

Mike Ayala: [29:51] So, the old saying like, Kiss, keep it simple, stupid.

Mike DeHaan: [29:55] Yeah.

Mike Ayala: [29:55] Again, I just think we over complicate things, and it does get more challenging as we get older. I'm actually in a period of time right now where I'm actually struggling with what made me successful when I was younger. I'm kind of lazy. Like, this is when I'm looking around so a couple things. I love being with my kids. I love traveling. I love being home for dinner. I like my weekends. And when I would look around at my business at any given stage, I would look at everything that I have on my plate. And I think there's a couple maybe natural tendencies that I have. I wanna go back to what Mike said and not maybe, demean myself when we're talking about lucky. But I think I've had this natural ability too to see where I'm the bottleneck and to really know what I'm good at and what I'm not good at. And so I never wanted to be in the weeds. I didn't wanna run calls on weekends. I didn't wanna be the guy that said, you know what, if you want it done right, you gotta do it yourself. I don't wanna do it. Like, I actually know that there's people that can do all of those things better than me. And I think in fairness to the 24 year old Mike, he was forced into that because I didn't have the option of doing everything in my business. And I think this is really like kind of back to Ben Hardy's book, 10 x is easier than two x. Like, he just said it so much better than I would have.

Mike Ayala: [31:11] But the reality is I 10 x ed my business because I wasn't I wasn't in a place where I could one exit or two exit. I was literally forced into I knew I wasn't smart enough to do a I hired a controller almost immediately. And salespeople, you know, my HVAC consultant said, You need to hire a salesperson. Most HVAC owners are like, I'm the only one that can do that. Most HVAC owners are like, You know, I'm gonna run call this weekend because that guy's an idiot. I didn't wanna do any of that. Like, I wanted to be home.

Mike DeHaan: [31:42] So,

Mike Ayala: [31:43] I just forced myself. If I find myself working till 09:00 at night, how do I replace whatever it is I'm doing till 09:00 at night?

Dan Austin: [31:50] That is some sound advice. I got a question on that. So, I mean, you have a different background and experience in a lot of these areas and you said you were forced into that. Do you have any advice for guys like Mike and I who might be kinda caught up in that, we're trying to focus on our flywheel in finding that right strategic hire, because like we have, I mean, how many staff do we have, Mike, between all of our companies, like 20

Mike DeHaan: [32:11] A lot, 24. 20.

Dan Austin: [32:13] 24. So we have 24 staff members, we're a virtual company, we're not a construction company, so it's a little different than when you're talking about an HVAC company, but I know you get what I'm saying, We need probably another strategic hire to help us get out of that. Do you have advice for that?

Mike Ayala: [32:28] Yeah. And again, I think this is where our analytical mind comes into play, and this may or may not be great advice, but if you put the right person in the right seat, and obviously there's a bunch of complexities around that too, because I hired a guy in 2018, even after all my great wins and years of experience that almost destroyed our company from the inside out. I've got some partner issues that I'm working through in a business right now that I wouldn't wish on anybody. So I wanna be really clear that a lot of times we share the wins and we don't share the It never ends. The challenges never end. But I think the biggest thing is just continuing to take those risks within parameters that make sense. But when you get a good employee, take care of them. And I was a hellion when I was a young business owner. I was stressed out. I was yelling, screaming. But as I've gotten older, it's like, I think the only way to really figure out what's the next right hire and who's the next right hire is for you two or anybody that's listening to really sit down. And I think a lot of times, even when we do identify the role, which that's what I was going say, identify the role, and then really spend the time to make sure that you're clear on what that role is. And then try to get the right person for the role. And just know that, man, sometimes Harvard actually did a study that said it takes eight months for somebody to really figure out what their role is. That's a lot of risk.

Mike Ayala: [33:56] And that's a lot of lost time and money, but that's the game of business. And so I think making sure Let me pull this back to the get go. The thing that I had going for me is a business with high margin. HVAC and plumbing have high margin. I think a lot of times, are we in the right business? Do we need to eliminate? I mean, even back to the flywheel. I don't know anything about your guys' business, or obviously the audience business. But even back to the flywheel concept, sometimes we're doing seven things in our business, and two or three of them are sucking the life out of the one or two that are really making the money. And those are the hard conversations that we have to have with ourselves, and that we have to have with our business partners, and that we have to have with our team. But I think starting with a business that actually is a good profitable business is what really allowed me to scale and make mistakes. Because if you've got a fine margin business, not a lot of room for mistakes.

Mike DeHaan: [34:52] Totally.

Dan Austin: [34:53] That's really a very valid point and something that we when we're looking at financials on on our business and what I see too is, you're right, if for you in that case, just go find some more customers and you'll make up for for the loss of that, you know, whatever the employee caused, right, because you know the margins can be high and when you're in those tight margin business, real estate, the tough thing that, because that's our main, our core business, in general can be tough, is like there is opportunity for high margin, but as we were talking about getting on this call, the market kinda dictates some of that a lot of times, so we can't control the macroeconomics of the market. Yeah.

Mike Ayala: [35:26] You know, it's such an interesting point. The thing that I've realized, and it took me getting away from the HVAC industry to realize this, for the audience, I don't care. I've said this for years. One to 10 rentals is really challenging.

Mike DeHaan: [35:40] Mhmm.

Mike Ayala: [35:41] In a business, one to 10 employees is really challenging. Real estate is a slow, long game. HVAC is not. And one thing that I realized, and it took me getting out of the business and into a slower business to understand this, But the amount of time that it takes to buy a rental, get a tenant, and then adjust when you have market challenges, employee challenges, all of those things, it's not quick movement. So I had a gold mine go bankrupt on me that owed us $400,000 in 2007. That almost put me under. And the thing that I realized, got Barry Liparelli, my old mentor, in a room. He sat in a conference room with me and my controller for six hours and went through every part of our business, money we owed, our debt, our income. And he said, well, the only way to get out of this is do more in sales. In real estate, you can't do that. You can't just go raise your rent. You can't just lower your mortgage payment. You can't just increase revenue if you have a challenge. You can't go to the bank. In HVAC, it's different. Barry said, Well, you gotta do more in sales. So what did I do? This was 2007. I went from zero money because we were doing some HVAC service, but again, I was a plumber by trade. We were mostly plumbing.

Mike Ayala: [37:03] We were doing some HVAC service, but we weren't doing any replacement. And so I walked away from that meeting and I met with my team and I said, how do we increase our replacement revenue and do more in HVAC? So we were doing $0 in replacement revenue when that happened. And when you fast forward to the year end of two thousand and eight, so one year and three months after that meeting, we were doing almost a million dollars a year in revenue on HVAC replacement. You can't do that in real estate. So real estate, as fabulous as it is, and I'm a huge real estate fan, everybody should own real estate. But it is a business, and it is a slow growth business.

Mike DeHaan: [37:42] Yeah. Especially on the holding side. So I guess, like, the contrary sort of perspective on that is if you are doing transactional real estate. So like our main vertical income has come from wholesaling for the past several years. And that's can be a quicker timeline. Right? You leave money on the table. It is an expensive business to run marketing wise and operational wise, but the margins can be immense. But it's amazing how many people are fixated with building these real estate portfolios that don't have any way of creating large vertical income if they need to in a shorter period of time. Right? And like even back in the day when it was Dan and I just hustling for the first couple years and we had like two team members, literally it was like, do we need money this month? Yes? Cool. We're wholesaling these properties. Do we have surplus? We do. Great. Let's keep these ones. And that was how we dictated everything on basically a sixty day decision, every single period. Right? And you know, you having the flexibility in the HVAC company is so huge. And so I guess, just sort of as to to wrap up this conversation, do you have anything that you do similarly with that now since mobile home parks and real estate is your primary business? Or how do you sort of hedge those challenges that will inevitably happen? I'm sure that they already do.

Mike Ayala: [38:55] It took me a few years to realize that when I went from running a successful operational business, which the natural progression and by the way, the real estate guys that are building a portfolio that are on Instagram and YouTube, you know, they're most of these guys are saying, you know, the flippers are dumb. The wholesalers are dumb. And I'm here to say that like, yes, I want to build long term wealth in real estate, but you have to be really careful because I shifted right from selling my business, which I often say was the best and worst day of my life because and then there's there's a lesson in that too. I lost my purpose, like overnight, like what's next? And it took me a year or two to figure that out. And then I went full time into the natural path because of the single families, commercial buildings, and mobile home parks that I had bought. I loved mobile home parks. So I I built a team. I wake up in, you know, 2018, and I've got a team of almost a 100 again. And the only difference is that, like, my asset is now real estate instead of HVAC sales and income. And then it took me a couple more years and some challenges during COVID. And again, everything's not rosy in any business. There's challenges everywhere. But it took me a while to realize the answer to your question. And the thing that I had going for me was I had a ten year buyout.

Mike Ayala: [40:15] I had a solid real estate portfolio. I had plenty of assets that were cash flowing, passive income, like truly passive income, that allowed me some runway to go build this slower growth portfolio. But the downside to that was I didn't have the pressure to help me realize what this slow growth portfolio actually does for us. And if you talk to most syndicators, portfolio managers, where do you make your money? Fees. Buying properties. Woah. Like, that was never my mindset on real estate. It was always like cash flow, single family, multifamily, didn't matter. It was cash flow. And so that's all become like a real, you know, realization to me in the last few years. And one of the conversations that my wife and I are having now, you know, it's literally been ten years now since I sold my business. And I want to get back to more operating. I was talking to Doug Ottersberg the other day, who I don't know if you guys know him, but he's a mobile home park guy. And one of the things that I started thinking, Doug just blew my mind. Because everywhere across the portfolio, we have homes that we're setting and we're financing residents through a third party that's making 12% returns on those homes. And I literally walked away from my conversation with Doug thinking, man, every dollar that I make, I'm going to pour into financing my residence with a lender because I'm sitting on a gold mine and we're using a third party that's financing all of these. They're like, this was two days ago. So I'm starting to think again, like, how do I get out of the long slow growth, which I want to still I shouldn't say out of, but how do I de risk and decouple some of my risk from that? And it's getting back into what you guys are doing.

Mike Ayala: [42:04] And there's a million ways to do it, But it's whether it's wholesaling, flipping, financing homes, like, why the heck wouldn't I do that? So I want to get back to Austin just passed an 80 youth law. I want to buy an old house and on a 5,000 square foot law and add some eighty years. I would have not thought about that the last ten years. Again, as we get older, we think we're smart. But in reality, I've moved away from my core principles and went to slow growth money. I need to get back into some fast growth money. I can't just turn a switch and make more money tomorrow unless I do something different.

Dan Austin: [42:37] That's an incredible perspective coming from you, because you've been on both sides of it. You're on the backside of your first, like I would say, massive income, and you've gone and shifted into this more passive, and the realization of that because this is like, this constant, it's a constant conversation in my head and between me and Mike of like, how do we continue to grow this idea of massive income? Because a, it's a lot more fun than collecting rent checks, and the problem is, as you scale a portfolio, is you continue, you you said it Mike, is like the risk, you continue to add debt, which does come with risk, you you have market risk, like we're seeing even in our market where rents are are staying flat and decreasing slightly and you, so everything isn't always up and up and up, but what it is, it's fun, but you have, it seems like you have to have this other growth that's more of a quick growth income where you can increase your revenue by doing more sales, getting better at marketing, getting better at sales. And in my opinion, more fun and that's where we've been focused the last few years.

Mike Ayala: [43:39] Yeah, if you talk to anybody that's successful, they made their money by making money, and then they get to a point where now I've got extra money, so you start investing it. And that seems easier. And then we walk away from whatever we did to make money. And then you wake up I mean, you talk to anybody that's successful in life, they probably made their money in a business or on a really high earning w two job, and then they invested wisely.

Mike DeHaan: [44:03] But they're still gonna tell

Dan Austin: [44:05] you that you need to

Mike DeHaan: [44:05] be focusing only on passive income because they want you to give them their money so they can go and buy more assets with it. But they're already rich, so they can have the freedom to do that slow cash generation game.

Mike Ayala: [44:16] Yeah. If I could share a quick way that I think about this, I think it starts with return on your time, And then it moves to return on other people's time, which maybe it's a W two job, return on your time, a business, return on other people's time. And then it moves to return on other people's money. And then it moves ultimately to return on your money. And that's where everybody wants to get to return on your money, but we tend to forget where we came from. And if we just kept all of those things functioning, I'm pretty sure we'd be really rich.

Mike DeHaan: [44:49] Yeah. It takes so much discipline though. And that's the hard part, especially with so many shiny objects out there all the time. You know, you gotta just stick to the path. But, Mike, I really wanna be respectful of your time here, and I really wanna thank you as well for coming on the show. Really, really awesome story. I really appreciate all the different avenues that we went with that. You have a very unique perspective with a lot of these things. I mean, I'm assuming it's probably because of your entrepreneurial maturity and also the people that you surround yourself with. We we've had a lot of interviews on the show and you have a very refreshing take. So thanks so much for coming and sharing all that with us. To sign us off here, where can people find you, follow you, reach out to you?

Mike Ayala: [45:28] Probably the easiest is the Mike Ayala on Instagram. I have a podcast called investing for freedom. And as you said, maybe my favorite, The King's Table podcast with the other guys.

Mike DeHaan: [45:38] Yeah. It's a really, really good one. You guys go into all sorts of fun stuff over there. So, Mike, thanks so much again for coming on the show. We really appreciate it. And you guys, don't be afraid to reach out to them here. Remember, people go on these shows because they want you to interact with them. If they didn't want interaction from random people out in the internet, then they wouldn't do content and media. Okay? So go and shoot Mike a follow. Check out his other shows that he is on and send him a DM and let me know what you think. Thanks for listening everybody, and we'll talk to you guys next week.