Category: Finance Tips
Air Date: 05.011.2021

Top Real Estate Investing Mistakes To Avoid

Everybody makes mistakes, but some are bigger than others. Here are some of the top real estate investing mistakes to avoid so you can stay on the right track.

Mike Morawksi’s journey in the real estate industry, and in life in general, hasn’t always been smooth sailing but it has certainly been colorful and full of great successes to make up for the low points. Everybody makes mistakes, but some are bigger than others; the mistakes that Mike made during the 2008 financial crisis led to him being sentenced to 10 years in federal prison. But we are not defined by our failures, we are defined by how we get back up from them. Mike took a situation that could have ruined his life and turned it into something that he is extremely proud of. In today’s episode, Mike candidly shares his mistakes and what he learned from them, as well as his numerous achievements and how they have shaped his life. One of these is the book he has written, Exit Plan, which is freely available as an Ebook, and is well worth a read. Mike has a wealth of knowledge, experience, and advice which will be extremely valuable to anyone in the real estate industry so don’t miss out on this one! 


Key Points From This Episode:

  • The moment Mike decided he needed to change his life and what made him decide to pursue a career in real estate. 
  • Mike’s journey from house-hacker to coach, and everything in between. 
  • How Mike quickly scaled up from his first 11-unit deal.
  • Decisions Mike made that led to him being sentenced to 10 years in federal prison.
  • Words of wisdom from a man Mike met in prison, which turned his life around. 
  • The numerous achievements that define the majority of Mike’s time in prison.
  • Why Mike decided to enter the coaching and training space when he left prison.
  • What Mike loves about the multifamily real estate space.
  • Advice for anyone in working in real estate who has not had to deal with a financial crisis yet.
  • Mike explains why it is essential to have an exit plan (which is also the name of his book) and the different types of exit plans that exist. 
  • An example of one of Mike’s exit plans that he used in 2008.
  • The “sweet spot” and suggestions for what you should be doing when you get to that point. 
  • What Mike is most proud of and the quality that has helped him get to where he is today.
  • Book recommendations from Mike, and how you can get in touch with him.



“We can fall, and we’re going to fall at some point. We’re going to stab our toe, but it’s a matter of how we get back up from it.” — @MikeMorawski2 [0:09:44]

“I came back with the intention of delivering a message to people that could help them, because it’s really easy to get in trouble and it’s really easy to make a mistake that will change the direction of your life.” — @MikeMorawski2 [0:13:40]

“I believe coaching is really important in our lives. It helps keep you balanced and it helps keep you accountable.” — @MikeMorawski2 [0:23:22]

“You can either do the time or let the time do you. I could have chosen to let my life be over, but I chose not to. I’m proud about the fact that I’ve been able to come back.” — @MikeMorawski2 [0:33:09]


Links Mentioned in Today’s Episode:

My Core Intentions

My Core Intentions on Instagram

My Core Intentions on Facebook

My Core Intentions on YouTube

Exit Plan by Mike Morawski

Exit Plan [Free Ebook]

Lehman Brothers

University of Minnesota 

The Inland Real Estate Group

Bear Stearns

The 7 Habits of Highly Effective People by Stephen Covey

The Millionaire Real Estate Investor by Gary Keller

Kent Ritter

If you enjoy the guests and content please subscribe and leave a review.  Your reviews matter and each one has a major impact on the success of the show!

Interested in Investing Alongside me in our next multifamily deal?

Contact me at

My operating partner, Birge and Held Asset Management have a twelve-year track record creating sustainable wealth for over 2000 investors through high-quality multifamily investments.

Thanks for listening!

—Full Transcript Below—

MM: I came back with the intention of delivering a message to people that could help them, because it’s really easy to get in trouble, and it’s really easy to make a mistake that will change the direction of your life. I really feel today that there’s a lot of women and men who run companies, own companies, who are in middle-management positions, who are running teams that are faced with pressure every day, that are faced with hard decisions that they need to make every day. One wrong move and we can wind up in a bad spot.” 


[00:00:33] KR: Welcome to Ritter on Real Estate, the show about how to passively invest like a pro. On each episode, I interview real estate experts who give their top investing advice, strategies and tools, and I break down the insights and the practical steps to avoid the pitfalls and make better investments. I want to help you passively invest like a pro. This is Ritter on Real Estate, and I’m your host, Kent Ritter. 


[00:00:55] KR: Hello, fellow investors. Welcome to Ritter on Real Estate, where we teach you how to passively invest like a pro. Today, my guest is Mike Morawski. Mike is a 30 plus year real estate investment veteran. He has controlled over 285 million in real estate transactions. Mike is an entrepreneur, author, real estate trainer, public speaker and personal coach with a strong personal resilience and a deep desire to help others live an extraordinary life. He’s coached hundreds of real estate investors to fulfill their dreams. I’m so excited to have you on today, Mike, to gain some those pearls of wisdom for our listeners. Welcome to the show.

[00:01:35] MM: Thanks, Kent. I’m really glad to be here.

[00:01:37] KR: Yeah. I’m excited to have you on. Let’s start at the top. Tell us a little bit about you and your story, and what led you to where you are now with us today?

[00:01:48] MM: I was in the general contracting business, and did a lot of work and rehabs. One morning I woke up and I was burnt out. I just didn’t want to do that business anymore. I looked at my wife at the time and I said, “I don’t know what to do.” We decided to sell the company, and I had a pretty good size company in the northwest suburb of Chicago. I sold that company and took a year off. During that year, I did a couple of house hacks, and this was long before house hacking was a thing to do. Today, it’s sexy, right? Back then, it was not so appealing to people. 

Over that time, l met a real estate agent who was really successful. I thought, “Maybe this is a business to go into.” So I decided to go to him and I said, “Hey, Todd. Can you teach me what to do to be successful in the real estate business?” and he goes, “You know what, let me make you a cassette tape.” I say that because that’s how long ago this was. I don’t think you can find something today to make a cassette tape on. He made me a tape, I listened to that thing over and over again. Went, got licensed and my first eight months in the real estate business, I sold 78 houses. Built a team selling 125 a year. From there, I did that for like the next eight to nine years. 

In 2005, I saw the market starting to shift and get soft. As the market started to shift, I thought, “Geez, I really am going to need to do something different, because I’m not sure what’s going to happen.” I’d always wanted to be in the apartment business. I had watched some of the large syndicators that were in the Chicago market over the years and I understood the model. You raise private equity; you marry it with a great real estate deal and provided everything goes well, everybody makes money and things are great. Well, I syndicated my first deal in 2005 and I was so excited. I put a little ad in the paper that said “Real estate investors wanted” and my phone rang off the hook. I was able to raise about $200,000 on a $600,000 deal and I was off to the races.

Over the next 30 months, I bought $60 million worth of real estate, I raised $18 million in private equity, and it was about 4,000 apartments in five different states. Along the way, I built a property management company where we were managing 7,500 doors. Today that brings me to the coaching and training space, that’s where I’m at today. 

[00:04:17] KR: Very exciting. 2005, you did your first syndication, you started building out your property management company, you scaled out from there. Take us to the rest, from their — I mean, continue through to today.

[00:04:31] MM: 2005, I did my first deal, it was an 11-unit deal. It went well. The deal had some hair on it, and I didn’t know enough about the business when I first went into it. But I think that’s how we learn along the way is, we make some mistakes and we get back up, right? Well, from that first deal, my next one was 64 units, then 87 and then I was in 180 range, and 250. Before I knew it, I was closing 400-unit deals. I was in five different states around the country. How I did that was, I did my first deal in Chicago and realized we weren’t going to make any money in that market, that we needed to go somewhere else. I chose markets that the price point was better. I had a different all-in cost, and I was able to get a better return for my investors. And things went well for a period of time. 

2008, I’m sitting in a restaurant having lunch with my CFO and we’re watching the news, happened to be on. They were carrying boxes out of Lehman Brothers by the dozens. I looked at my CFO and I said, “Hey! We’re screwed,” and he goes, “Yeah. We’re in big trouble.” It wasn’t just us, it was the whole world, right? We went into the worst economic crisis in the world. I made some bad choices along the way businesswise, in growth. I closed an awful lot of real estate. 2007, I bought 17 deals. That was 2700 units. We grew way too fast, very unstable. It’s like balancing a chair on two legs and trying to sit there comfortably.

2008 happened and we thought, “Well, maybe we can ride this out because we’re in the commercial side. All these people are going to lose their houses in the residential side due to foreclosures. The occupancy should be okay in the apartments. We should be able to keep our occupancy up, pay our bills, we’ll be all right.” Thought we could mitigate it through, but that wasn’t really what happened. 2010 rolled around and, you know, the end of 2009, people started moving out of apartments in droves. Our occupancies went from — we were buying deals, Kent, that were 75%, 78% occupied, reengineering them, doing rehabs, refixing them up, putting them back on the market, re-tenanting them, driving occupancies into the low 90s. Then we hit a wall at the end of 2009. 

I had a deal, and I’ll just tell this quick story, but I had a deal in Anderson, Indiana where, when we bought this it was the number one city in the country to raise a family in. It was a 200-unit deal, and I get a phone call on Monday morning from my property manager and she’s in tears. She says, “I have 32 moving trucks in the parking lot and I have a scheduled move out for 45 days. This is the kind of stuff that happened across the board. Our occupancies dropped from the low 90s to the high 70s, mid-70s. When you take that kind of a hit and your occupancy drops, your NOI gets out of balance, your values drop. 

Nobody ever saw a 40% decrease in value coming, nobody ever saw 30% decreases in occupancy coming and we got hit really hard. I’m the kind of guy, I like to make everybody happy, I’m the hero, I think I can make everything work well. What I tried to do was I tried to keep all my investors safe. I had a few deals that got really bad and should have just went to foreclosure and should have let 30 or 40 investors get hurt, but I tried to save everybody. I tried to ride the ship and move money between companies.

I had profitable companies that were doing really well, and I’d take the profits from there and I would move them to companies and properties that weren’t operating well, thinking that the market was going to come back. I’ve seen corrections in the market before, maybe 10%, 12% but nobody saw a 40% correction coming. I saw corrections that took 17, 18 months in a recession for that market to come back. Nobody saw it taking eight years to come back, right? I got caught in this place where I was moving money back and forth, trying to keep the ship afloat. That wasn’t so much the problem. The problem was that I didn’t disclose it to my investors. Because of nondisclosure, I wound up being charged on wire fraud and mail fraud charges and get sentenced to a 10-year in prison sentence, in federal prison.

[00:09:13] KR: Wow! That’s obviously worst-case scenario, right? I mean, I just think that there’s — I understand kind of the intention of what you’re trying to do and how did it end up playing out? You end up, I imagine it’s probably the low point in your maybe life, but definitely career. From there, how do you pick yourself back up, how to get back to where you are today?

[00:09:39] MM: I said earlier on, I said it’s how we stumble, right? We can fall, and we’re going to fall at some point. We’re going to stab our toe, but it’s a matter of how we get back up from it. You’re right, it was a low point in my business and I really thought it was the lowest point I could go. I went to prison and I went from this level of success where I lived modest, upper middle-class lifestyle. I never bought boats, I didn’t buy fancy cars, I didn’t buy a big house, I didn’t fly private, I didn’t do any of that stuff. I tried to save my business. But I went from, at one point, we made millions of dollars in that 30 months. During that time when the market was going crazy, our equity balance came up, we had cash in the bank. It was an interesting time to all of a sudden turn around and lose it in like nine seconds.

I go to prison and I go from living this relatively pretty decent lifestyle to now all of a sudden, I’m living in a room with three other men in a two by five locker, with three green outfits and five pairs of underpants, thinking that my life is over. Then my wife decided she was going to leave me and when that happened, that ruined me. That was like the worst day of my life, the worst experience of my life. 

I was in prison for about three months, little under three months. And I walk into the gym one day and you have to remember, I’m probably 35 pounds overweight at that point, and not feeling good about myself, just hating life, wondering what’s happened to me, how I’ve gotten here and trying to mitigate through prison camp with a lot of people that you wonder, you know, how you’re going to do this on a daily basis.

This kid walked up to me one day, and I say kid because he was younger than me. He said, “Look, don’t let these people beat you. All they want to do is beat you. They want to take every ounce of blood that they can suck out of you, out of you.” He goes, “What they can’t take is what made you successful. What they can’t take is your desire, your commitment and your knowledge.” He said, “Come in this gym, come to my class every day, work out with me, let me help get you back in shape physically.” That was the best advice anybody ever gave me. There’s a saying in prison that says, “We can either do the time or let the time do us.” I chose to do the time. 

I started going to the gym every day, I started losing weight, I started to feel better physically. As I felt better physically, I felt better emotionally. I decided to go to college. I’d never been to college so I had to get two things. I had to find a scholarship and a correspondence program. Went to college and got a bachelor’s degree in theology over a four-year period. I wrote two books while I was gone. One is, Exit Plan: Your Complete Guide to Multifamily Investing and Why You Need an Exit Plan Before You Buy. We can talk about that more. Another one on property management. I taught real estate investing and I taught property management in prison for five years. I wrote an ethics program and taught ethics. How ironic, right? I taught Bible study for five years. But Kent, I was on an outreach program, and I’d go into the community and I told my story about 40 times to small local business owners and to the college students in the area.

I befriended a professor from the University of Minnesota, and we just got published in the Business Journal of Ethics, a publication, an ethics case study that we worked on for about two years. Just had it published and it gets taught at the college level for forensic accounting classes and sales and marketing and accounting classes in prison. Not in prison, but in college. 

I’ve done a lot, and today, like I said, I’m in the coaching and training space. I came back with the intention of delivering a message to people that could help them, because it’s really easy to get in trouble and it’s really easy to make a mistake that will change the direction of your life. I really feel today that there’s a lot of women and men who run companies, own companies, who are in middle-management positions, who are running teams that are faced with pressure every day, that are faced with hard decisions that they need to make every day. One wrong move and we can wind up in a bad spot. I hope that I can deliver a message that people are going to grasp, hold onto and really be able to grow from and learn from.

[00:14:22] KR: One, just thanks for sharing your story. I think it’s inspiring to hear the resiliency and how you got through that, and how you turned that, what was a terrible situation into something so positive. Now, you’ve come out of it, and you’ve taught an ethics class or written an ethics course and now it’s being taught. That’s great, so congratulations and just happy to hear where you are and how you’ve come through that now. 

As we kind of get back to the focus on investing, I know multifamily real estate is still one of your passions today. I know you spend a lot of time, like you said, coaching and teaching people about the subject. Why is multifamily your investment, your asset class of choice?

[00:15:06] MM: People ask that question a lot and they ask that question in a couple of different ways, “Why do you like real estate so much?” I’m passionate about it because there’s so much to learn. If you look at the multifamily space, there’s a number of buckets you could play in. Student housing, medicals, assisted living or market rate rent. That’s where I spent my time, was in the market rate rent arena. But there’s so much to learn, and I think it’s a very fluid business. Things change, cap rates go down, price goes up. Cap rates go up, price comes down, markets change. The bonds change. Interest rates change. It’s a very fluid place to be. It keeps you on your toes. I think it’s important as an investor, whether you’re an active or passive investor, that you are aware of what’s going on in those changes. 

I said that I was in the construction business. When I was in the construction business, I did a lot of work for Inland Real Estate. Inland, four high school teachers started that company. They bought one four-unit apartment building. They raised the money to do it. Today, 40 years later, they’re the largest REIT in the world, they’re in every asset class in 80 countries around the world. I say that because you never know where you can go with this business, but I did a lot of work for them. I did a lot of work on her swimming pools and in their apartments when I was in the construction business. I learned the model, I got it. I understood the private equity piece. I understood how the overall global picture of it worked. 

As I got into the intricacies of the early evaluations, and the due diligence, and looking at things like how household income interacts with rent increases. You start looking at those things and you don’t have to be an economist or a mathematician to get it. So, it’s an interesting space to be in.

[00:17:04] KR: Yeah, absolutely. I’m interested, through your experience, there’s not a lot of people — there are a lot of people in the space that have not been through a crisis like 2008, that weren’t investing in that period. I think it’s great talking with folks that have been through a crisis like that, and getting some of those lessons learned. 

What are some things, if you are out acquiring properties now, what are some things that you would do differently as you’re looking at properties as you’re underwriting or looking to acquire? What are things that — are there things that stick out in those deals that did not perform versus those deals that performed that you can share for things for people to look out for?

[00:17:47] MM: That’s a really great question and there’s a number of things. I wrote a list probably of 30 mistakes that I did wrong that I will do differently as I go back into that space. Part of my redemption is to go back and do some apartment deals. 

One thing was I was overleveraged. I bought property and back then they were throwing money at you, Kent. I mean, throwing money at you. Whether it was a private investor or whether it was a bank. I was in multimillion dollar deals at 10% down. It was a joke. I was way overleveraged. My average, I was 85% loan-to-value across the board. I would never suggest to anybody to be that. I would think that today, you need to be 65 to 70% in case something happens. I overpaid for properties. You know what? Don’t marry a deal, don’t get emotionally involved because when you get emotionally involved, you overpay. Overpaying just causes challenges, right? 

I didn’t pay attention to the KPIs, those key performance indicators. I looked the other way. I saw red flags. People told me about red flags around me and I didn’t pay attention. My thought was, “Hey! I’ll keep building the company. We’ll raise some more money, we’ll do another deal, we do another deal, we bring cash in. As long as I keep cashflow coming in, we’ll be able to —.” Iit doesn’t work that way. I grew way too big, got 138 employees. I didn’t need that many employees. I had loans that went sideways after Lehman Brothers and Bear Stearns went out of business. You’re right, there’s a lot of people that didn’t go through that time, but I went through that time with some guys who have come out of it, and they’ve done really well. I’ve gone through it with some guys that got crushed, and they are not in this business anymore. I’m grateful that I’m in the business, back in the business. I know that I was the result of the mistakes I made. 

I will do things differently moving forward. Let me just give you this as a good example. I under-raised, I didn’t raise enough money. One of the things I had in my documents was that I would not go back to my investors for a cash call. If I needed money, I had written in my PPM that I couldn’t ask my investors for capital, so I had my hands tied. I’m supposed to be this hero and I had things set up, thinking that the market was going to be great, and the market changed. One thing I would do different today is I would over-raise money so that I had money on the spread. Like you know when you evaluate a deal right now, you’re looking at that vacancy rate. Call it 10%. But what do you do when the vacancy rate drops below that, and how do you sustain yourself for a period of time? Today, I’d over-raise money and I put money in an escrow account, let it sit there at low interest, just for a safety belt in case something happened. I think there are different things to look at today.

[00:20:54] KR: Yeah. I think that’s extremely good advice, and I appreciate everything that you shared. Some of the things that you shared that stick out to me are, well, just going into the deal, right? The quote is that you make your money when you buy. Buying right, buying at the right price, not getting emotional I think is a huge risk for many investors, right? Because you spend so much time on these deals even before you own it. It’s very easy to get emotionally involved, and to want to tweak those numbers, and make that deal work on that spreadsheet, and that’s a dangerous game to play. So I appreciate that advice.

I think the idea about not being overleveraged, and being smart with your debt, and making sure that you’ve got a low enough loan-to-value where your debt payments aren’t so high, that if you do see that drop in occupancy, that you can ride out that storm.

I think that goes to the other thing of putting extra cash into the deals. I mean that’s something that we started doing through COVID was putting about double the cash from a reserve standpoint into the deals that we previously had, just to have that extra cushion because you never knew what was going to go wrong. Luckily, knock on wood to this point, it’s been minimal impact. But just having that safety net I think is extremely important, so I appreciate you sharing those.

[00:22:12] MM: I like what you said about, you make money when you go into a deal. It’s true in real estate, that’s where we make our money, right? Is when we buy the deal, but we don’t realize until we get out of the deal. That’s part of my exit plan strategy. 

[00:22:25] KR: Yeah, very good. I love that. I love that transition into the exit plan because I do want to talk about that. You don’t know until you go in and try to sell it and say, “Wow! I can’t get that value that I thought I was going to and because I paid too much on the frontend, I have to be there.” Yeah, I think that’s it. You’re right. You don’t realize it until it’s time to sell. 

This exit plan, I think this is a really interesting topic. We spend so much time talking about how do you become an investor, how do you get into deals, how do you do your first syndication? There’s so much content about that. There’s not a lot of content, to your point, I think probably why you wrote the book of, how do you get out and how do you get out successfully. I’d love for you to just expand on that a little bit.

[00:23:11] MM: I’ve spent hundreds of thousands of dollars over the years in coaching, and training, and books and tapes. Really great trainers, really good instructors out there. I still have two coaches today. I believe coaching is really important in our lives and it helps keep you balanced, and it helps keep you accountable, Two major things. 

But over the years, I always love these seminars, kind of feeling empty, like I was missing something. One day it occurred to me, I read Stephen Covey’s book, The 7 Habits of Highly Effective People. Chapter 2 of that book is “Start with the end in mind.” It was almost like a realization that I went, “Oh my goodness! Start with the end in mind. Why am I not planning these deals? Why am I not planning my real estate structure to get out?” Because that’s where I make my money.

Today when I look at a deal, and I evaluate a deal, and I run a ten-year spread, there’s a sweet spot somewhere along the way where it’s most profitable. Why do you not do something at that sweet spot? You could sell the deal and relinquish all control or you can pull cash out, you can bring an investor in, refinance it, restructure the deal. There’s a number of different ways to exit and it’s not just one solid way. I believe that you have to look at your deal, going into it, before you ever get to the closing table, knowing how you’re getting out and when you’re getting out.

[00:24:33] KR: Yeah. I think that’s fantastic advice, I think that the exit strategy is so important. I always try to look at it as, we want to have multiple exit strategies. What are the three ways that we can exit this deal successfully? Like, who are we going to sell to? Who are the seller profiles? Who are we trying to sell to? Are there different groups that we can sell to or do we have to sell to one particular type of investor? Is refinancing an option? I think all those things, I think a great topic and something really important to look at as you’re looking at these deals.

Continue on with the exit plan. What is the process that we go through to develop this plan? Is it deal specific or is it more global than that?

[00:25:14] MM: Well, you know what? I look at each deal specific. You said something pretty interesting, you said, “Have three plans,” right? One of the plans I had in my business was that we were going to package everything or we would have sold the entire company to a hedge fund at a certain point in time. That was part of our plan back then. Of course, when the market crashed, none of that was happening. Matter of fact, the first institutional deal I ever closed was with an insurance company, and it was the Friday before Christmas in 2008. Kent, it was like a window closed and that was the last institutional equity deal that got done for two years.

People, I had no idea who they were, from large syndicators calling and going, “How did you get that deal done with them?” I was like, “Man, I just courted him. He saw what we were doing.” That particular deal was one of my exit plans. I was in a deal with some private equity investors and the insurance company decided that they wanted to be part of that particular deal. We exited the private investors, put them in another deal, and the insurance company came in, and we took a large amount of profit off the table when we did that. Which was interesting because it happened like before the world went to hell in a handbasket.

[00:26:36] KR: That’s another strategy, right? You can recapitalize a current deal. You can pay off your current investors, you can bring in new investors if you think there are still legs to run and take it another round. It’s another way to approach it. 

[00:26:49] MM: There always is, that’s why I talk about, there is that sweet spot. Somewhere between five and eight years is your most profitable point. At that sweet spot, why don’t you pull capital off the table, pull capital out of the deal and run for another round. There are different strategies.

[00:27:07] KR: Interesting. Between five and eight years is the sweet spot. Why is that?

[00:27:11] MM: I don’t know. But if you look at most deals that you do, and I don’t want to say everyone, but I think it’s pretty close to everyone. And you run a 10-year spread, you’re going to see a profitability point somewhere between five and a half to eight years, where it’s the highest peak. Then it starts to level back off, it comes over the top. When that happens, you talk about being able to time the market. Well, if you look at it right there, that’s where it’s happening for you because you’ve got your capex done, you got new tenants in, you’ve reengineered the property, you’ve reengineered the portfolio. Now, all of a sudden, you’re going to level off because you can’t do anything else. Once all of that heavy lifting is done, you can go on and do something different, restructure it. 

[00:28:01] KR: Yeah, absolutely. I think on my opinion of, you get to eight to ten-year mark, well, you’re going to get to a point where you’re going to have to re-renovate, you’re going to have go through another cycle of capex if you don’t have the money set aside to do that, which most people don’t, like why would you have a deal where you’re going to go through two cycles? You’re going to start having to pull from operations to do those things, to keep those units updated. If you think about timing of vinyl flooring, not even just style, but think about like LVT flooring, lifespan of five to seven years and things like. You’re going to start to run into those things. Plus just style changes, so I can see the — I kind of understand that sweet spot. It makes sense to me, but I definitely wanted to get your perspective too. 

I think like you said on the frontend, it’s how quickly can you get the work done? And you get the work done and you realize the value of these renovations. Then you’re right, you level off to a point where you’re just going to get organic rent growth, and organic rent, I mean it could be good, or it could be 1% to 2%. Over time, that’s going to erode your total returns because it’s just not as much as you’re able to get on that initial bump through the renovations, right? It makes a lot of sense. It’s like five to eight years. Then if you think about it from a tax standpoint, you think about the high end of that. When you get to a point where you’ve started to burn off all of your depreciation and you start to lose some of the value there too. That’s a little farther out, maybe year 15 or so. 

But there definitely is, I think, a max shelf life for real estate deals if you’re trying to really maximize the returns and not just hold for the super long-term for cash flow. That’s really interesting. I love the perspective on Exit Plan. I think that’s a big value, I think people should check out that book.

[00:29:44] MM: Yeah. Actually, if your listeners want to go and download a free copy, they can go to my website and do that. They just put in and you can download a free ebook. If you’re like me and you want to read a book, and highlight it, and write the margins, and dogear the corners, you can buy one there too. But your listeners can definitely go and download that e-book for free.

[00:30:10] KR: Awesome! Well, thanks for sharing that resource, Mike. You shared a ton of advice, a lot of good lessons learned. Appreciate your vulnerability and sharing your story with us too, because I think that you can see the well intentions behind why you did what you did, but still not understanding the full impact of that, and ultimately the consequences of that. But then, there’s great lessons learned there, and then coming out of it and your story of — I don’t know if redemption is the right word, but at least being able to come back from that, and come back better and find a new path. Now you’re coaching, and you’re teaching people, and allowing people to learn from your lesson so they don’t repeat the same mistakes. I just applaud you. I think that’s amazing. 

[00:30:53] MM: Thanks, Kent. I appreciate that. I think it is redemption. I think that when you bounce back from something that’s that devastating, you’re rebuilding trust in a lot of people. One thing about trust is, you get rid of trust, you empty a bucket just like that by turning it over. But you fill it back up by a teaspoon at a time. That’s where that redemption piece comes in. How you restore yourself to the community, the stakeholders, the people around you. 

[00:31:24] KR: Absolutely. Well, as we wrap up the show, I want to get into our Keys to Success segment and I’ve got a couple of questions I’ve loved to ask you, Mike. The first one is, what is the one question that every investor should be asking their deal sponsor?

[00:31:42] MM: Where’s this market going to go, right? I think that that’s a question that we need to be aware of today. We’re in a climate where cap rates are really compressed, it’s a seller’s market and that things will change. What’s going to happen when they change? What are the stopgaps that a sponsor has in place? I talked about the one, where you need to have enough money sitting on the side in case the bottom falls out, and can you withstand the storm for a period of time? You kind of addressed that when you said you put more money in reserves, right? Those are great things, I think, when somebody looks at you as a sponsor and they see that you’ve taken that initiative or done something like that that goes way beyond putting a feather in your cap.

[00:32:30] KR: I appreciate that, yeah. I mean, just trying to be as conservative as possible. Do what’s right with the numbers, not falling in love with the deal, not making exceptions to make that deal work I think is what’s critical and just being very objective. What are you most proud of in your career?

[00:32:47] MM: Honestly, it’s that I didn’t allow the situation in my life to keep me down, that I have bounced back. This will probably date this podcast a little bit, but I’ve been home for about a year. In a year, I have really bounced back. I go back to that saying that you can either do the time or let the time do you. I could have chosen to let my life be over, but I chose not to. I’m proud about the fact that I’ve been able to come back, build a company that I can help other people, that I can work with other people and coach other people, keep people accountable, help people make smart choices and live a balanced lifestyle. 

[00:33:33] KR: Yeah, that’s great. Obviously, something to be very proud of, so thanks for sharing. What’s one book that everyone should read? It could be yours.

[00:33:42] MM: Yeah. Well, they should definitely read mine for sure, and they should probably read the Bible too. But I have to say and I’ve said this over and over again. I think one of the greatest investment books I’ve ever read is Gary Keller’s book, The Millionaire Real Estate Investor. It’s very practical, it’s a guided tour of investing in real estate. He wrote that book, it’s got to be 20 years old now. I used to teach that and give it away to real estate investors when I was selling real estate. I think it’s a classic. I still refer to parts of it, and sections of it today in my own investing career, so I believe that it’s a classic. 

[00:34:22] KR: Great. Yeah. That’s a fantastic book. Lastly, what is your number one key to success?

[00:34:29] MM: Tenacity. I was probably in the real estate business three years, and this guy said to me, he goes, “Morawski, you’re so tenacious.” He was a client. I was very gracious about it. I said, “Hey! Thanks.” I had no idea what he meant by that. I ran right home, grabbed the dictionary and looked up the word, and figured out, “Wow! That is me. I’m very tenacious. I’m the guy that keeps going, and going and going.” I don’t let you telling me no or telling me that I can’t succeed keep me from going forward. I think it’s tenacity for me.

[00:35:01] KR: How can folks get a hold of you if they want to learn more about what you’re doing, your programs, the events you’re putting on? Where can folks reach you?

[00:35:10] MM: I love to network with people. I’m very open to it. Email me directly at or you can follow me on Instagram or Twitter or Facebook and my YouTube channel is My Core Intentions. I’m pretty loud on social media. Feel free to connect with me and if you have questions, we could schedule a time and I’m more than happy to spend some time with anybody.

[00:35:40] KR: Awesome, Mike. Well, thank you so much for being here today. Thanks again for telling your story and imparting some of your pearls of wisdom. Wish you the best with the next stage.

[00:35:49] MM: Thanks, Kent. I appreciate it. Thanks for having me on.

[00:35:53] KR: Absolutely.


[00:35:54] KR: Thanks for listening to another great episode of Ritter on Real Estate. Hit the subscribe button and make sure you don’t miss out on the content that will make you a better investor. Also, visit for articles, videos, and tools curated just for passive investors. Until next time, this is Kent Ritter with Ritter on Real Estate. Now, go out and invest like a pro.