#37 - 1,100 Units Owned at 28 Years Old w/ Morgan Ehrenzeller

Jeff Albaum

Mm-hmm.

Morgan Ehrenzeller

won the job sites with my dad, 14, hired offshore coders, coded me a software platform, 15 with my partner, making good money, got into cryptocurrency. We were under 18 at the time, so PayPal limited our accounts, 80 % of our revenue was coming into PayPal for our revenue, our SaaS. So that made me pivot into another, how can I keep accepting money that isn't fiat?

because PayPal keeps limiting our accounts and we can't collect money for our software. So then I discovered Bitcoin and cryptocurrency. So I went down this journey. Bitcoin was about $30 a coin. At that point was kind of one accident or however you want to say it, but we started moving all of our PayPal profits and SaaS into Bitcoin. Some call it luck. I think there was a slight degree of luck there, but we did it because we didn't have a choice because all of our money

We couldn't accept it through PayPal for our software company. So then we started redirect, sorry, go ahead.

Jeff Albaum

And so who's we? You keep saying we started this software company, who's we?

Morgan Ehrenzeller

my partner and I at that time period. Yeah, so I had a, his name was Damien at the time. Yes.

Jeff Albaum

Okay, but who is your partner?

And how did you, like you guys friends from school? Like how did you guys meet?

Morgan Ehrenzeller

No, we met, we actually met online through one a forum. So we met, we met through forums online. Uh, both had very entrepreneurial spirit, created software company together and then started distributing that, selling that, buying advertising, setting up an auto buy system. So when they bought it, the product, we had delivered to their email address. Um, and then all of that would be, uh, tied on serial keys with your Mac, with your Mac ID address and all of that to your computer.

Um, well, that's a whole nother, that's a whole nother life ago. Oh, I could go deep down into that, but we did, we did that, did that as a teenager, nonetheless, um, got into the cryptocurrency from that, um, one accent, but also very, very luck. Uh, but Bitcoin was 30, $30, $50 a coin. Um, and then by the time I was 16, 17, 18, uh, I had a lot of money for my age and I didn't know what to do with the money.

Jeff Albaum

Okay.

Okay.

Morgan Ehrenzeller

and my, but my parents, my parents, don't come from money. so some of those ones, if you want to drive a Ferrari, you're going to take advice from someone with a fryer or someone driving a Toyota. I didn't want to take my parents advice, what to do with the money. And every person that I thought had money at that timeframe in my, in my life was involved in real estate. so I was like, you know, I just did all of this. If I can figure out how to.

Jeff Albaum

Right.

Morgan Ehrenzeller

you know, do what I just did in the past four or five years as a, as a teenager, I can surely figure out real estate. Um, so at 17, then I, in the sense, pushing myself off the cliff, I bought a duplex, uh, one creative finance when I was 17 years old for 20 grand, put five grand down. Half of it was burnt. One side of that duplex was burned out from a fire. The other side was trashed. They renovated, uh, and all that.

Jeff Albaum

Mm-hmm.

Morgan Ehrenzeller

So I bought my first duplex at Seventeen, and then I went to college, and then I graduated.

Jeff Albaum

Okay, and was this Duplex Locals? Like were you doing the construction management yourself? Okay.

Morgan Ehrenzeller

Yes, yeah, that was in my backyard, so to say in central PA. But that was, I know that was a lot. But in a nutshell, that is, you know, who Morgan is today and how Morgan started. And now I'm sure you want to get into all the meat in between and how how it all came to blossom.

Jeff Albaum

Okay.

100 % dude, but before that I'm so curious. What kind of software business was it?

Morgan Ehrenzeller

so it was a, it was a company that from a parent's perspective, you could use it for the family to make sure monitor your children, make sure your children are when videos, shouldn't be doing things on the calendar. They shouldn't be, or from an employer standpoint. So you have the, B2C, the business to consumer and the B2B lens and then business to business could monitor and the efficiency of employees. Okay. Are they really doing the shit they should be on their work computer?

Jeff Albaum

Okay.

Morgan Ehrenzeller

how, you know, where is all this time being spent? and so forth. So you had, you know, both aspects of it, the B2B and the B2C, so to say.

Jeff Albaum

Right.

Sure. And so you guys were making too much money that PayPal stopped accepting your payments. So you had to move into Bitcoin.

Morgan Ehrenzeller

Yeah, yeah, they kept limiting our account from all the money we were pulling in on the daily.

Jeff Albaum

Are you comfortable sharing like how much money you guys were making at that time?

Morgan Ehrenzeller

When we were about 1516, we were pulling north of $1,000 a day. I mean, it's not not a lot, but it was a lot of, there's a lot of like, a lot of transactions, because our packages were like, 1530 and 45. So it could be like, you know, 20 to 40 transactions a day, you know, on the smaller scale. So I think that's what caused the I don't want to say red flags or yellow flags was the

Jeff Albaum

Holy smokes dude.

Okay.

Morgan Ehrenzeller

a lot of transactions, small volume or dollar size, but no, I don't wanna say high volume, but starting out higher volume.

Jeff Albaum

Okay.

Sure. And what were you and your partner each bringing home from that at the end of the day? So on a monthly basis, let's call it.

Morgan Ehrenzeller

Well, really the thing about the software company, which I why I loved it so much and quite frank, sometimes earning me to get back into it is once you have the product done, really your if you can you can automate and systemize everything else, really your only outlay at that point is advertising and marketing dollars. So once you can find a really good channel for your marketing and get good, you know, ROAS, your return on ad spam.

Jeff Albaum

Right.

Morgan Ehrenzeller

and dump fire on it then once you dump fuel in the fire, once you find out that that good niche. I mean, margins and software were well above 90 % not accounting in our model or well above 90%. You know, that wasn't dumping high, high fuel in the fire for advertising dollars. Obviously, you know, you can adjust that accordingly. But, you know, we're

Jeff Albaum

Right.

Morgan Ehrenzeller

14, 15, 16 years old at that point in our life. So.

Jeff Albaum

Yeah, dude, that's crazy. So what I'm so curious about is like, why, like, that's an insane story. That's an insane, like, like teen period. Why did you stop? Like, why did you do anything else? Like what made you go like, I'm going to take, cause and I'm, we're going to get into it, but like real estate is traditionally not known as a massive income generator. It's a great wealth creator. Right. And it like, it, I'm sure you can make great, great cashflow, but you're not making 90 % margins. Like that's ridiculous.

Morgan Ehrenzeller

Mm-hmm.

Jeff Albaum

So why did you take this income generator that you had and do anything else? Why didn't you just like keep doing that?

Morgan Ehrenzeller

If I could rewind it, if I could rewind in time, would have. Believe me, I didn't know back then what I know today. And back then when I was 14, 15 and 16 year olds, I didn't have the resources that I have today. So believe me, this was a really off the shelf type fly operation we had going. But I mean, we were making good money for our age at that point.

Jeff Albaum

Okay.

Okay.

Morgan Ehrenzeller

and it's

Jeff Albaum

Dude, that's unreal. It's great money for any age. You're pulling in like what? 15, 20,000 bucks a month at the end of the day?

Morgan Ehrenzeller

Yeah

Yeah, yeah, yeah, easily.

Jeff Albaum

That's crazy, dude, like all before you're 18.

Morgan Ehrenzeller

Yeah, but ultimately what stopped that was a mixture because of the pressure we were getting with PayPal kept limiting it. And keep in mind, cryptocurrency isn't what it is today. It wasn't mainstream. This is like 2011, 2012, 2013. No one knows what the hell this thing is at this point. And even on the grand scheme today, it's still very, very new to the world. So just keep in mind, this was...

Jeff Albaum

Right, this was like the Wild West.

Right, right.

Morgan Ehrenzeller

a while ago. This was very, very, very early adoption of this. So we had a mixture of this and then, you know, once the PayPal kept limiting, limiting, limiting, I'm sure they were tying it to our IP addresses and stuff like that, but we were doing things, obviously getting VPNs, virtual private servers, having, you know, things like that to create the PayPal account and to try and limit it. So it was a mixture of all of that. And then also,

I was probably seventh, eighth grade through 10th grade. mean, I would go to school and then I would be working on the computer till 3 a.m. every day, every night. And that was my life. School and then on the computer till 3 a.m.

Jeff Albaum

Did your parents know what you were doing? Were you showing them your bank account, being like, is what I'm doing? And were they like, are you selling drugs? Like, what is going on?

Morgan Ehrenzeller

Yeah, so they, they knew I was selling software and stuff like that in the background and to like I played games like runescape and stuff like that. I was always selling like gold and other like games and stuff like that. So I was always had the entrepreneurial stuff or entrepreneurial mindset growing up. So it's like kind of a normal thing for me growing up if that makes sense.

Jeff Albaum

Okay.

Okay, there's like Morgan's doing his thing. Let him be his grades are fine. Like it's it's all good.

Morgan Ehrenzeller

Yeah, yep, yep. Actually, my grades, was the, I graduated very small class. was, I graduated with about 72 kids in high school. I won from a report card standpoint. I was the fourth from the last ranking from a GPA standpoint and all of that. Meanwhile, I mean, I'm sure none of my classmates or peers were doing what I was doing, but

Jeff Albaum

You

Right, right.

Morgan Ehrenzeller

That just shows to tell you how much of a report card actually means in the world.

Jeff Albaum

That's wild, dude. Okay, all right, so you buy this duplex, you take all this money, so are you comfortable sharing, like, how much cash did you have by the time you were going to college? Like, you probably saved up, like your expenses are probably pretty low at this point, so all the money you're making, presumably you were saving a good amount, you take some of that, you put five grand down and buy a duplex, you fix it up and you go off to college.

Morgan Ehrenzeller

Mm hmm. Yep. So I fixed up the duplex at that point till still had money, you know, coming in always stayed busy, stayed active. Growing up, always had multiple jobs, multiple entrepreneurial things going on in the background. So always working, know, always grew up with a very hard work ethic. And I was grown up to, you know, the saying, make, make hay when the sun shining, so to say, that's how I grew up.

Jeff Albaum

Okay.

Sure.

Morgan Ehrenzeller

But, and then I got into mining farms a little bit. Crypto, was starting to build my own cryptocurrency miners in my later teenage years. So I was seeing the cash.

Jeff Albaum

Okay. Because this is like 2012 era.

Morgan Ehrenzeller

It was about, at this point it was probably 2016 when I got into the minors. 2016, 2016.

Jeff Albaum

Okay, so what is the price of Bitcoin around that time, more or less?

Morgan Ehrenzeller

2016 2017 was probably around 15 grand 15 20 grand 2017 and the 2017 I know we had a big spike in that's when it broke I believe 30 grand

Jeff Albaum

Okay, and you had held like you owned bitcoins throughout this entire period or did you sell before this?

Morgan Ehrenzeller

I did. And then also I was doing other things like exchanging as well too on platforms. But so I was doing that a lot too exchanging through different platforms, but I've been

Jeff Albaum

Okay.

So if I'm a third grader, what does that mean? What does exchanging mean?

Morgan Ehrenzeller

where an exchange like a, you could exchange example, say you go to a cryptocurrency ATM machine and you go to a kiosk and you want to exchange just like a currency, but for Bitcoin, say you have one USD equals 19 pesos, there's gonna be a currency exchanger there will say, oh, I'll give you one USD for 19 pesos, but I want 10 % of, I want a 10 % fee.

Jeff Albaum

Okay.

Got it. Okay.

Morgan Ehrenzeller

or I want a 5 % fee or I want a 15 % fee, I want to cut.

Jeff Albaum

And so you were that intermediary for people between Bitcoin and USD.

Morgan Ehrenzeller

I was doing that a little bit one and off between, you know, some cash money. I believe what the hell was that money gram back in the day. Put PayPal, you know, handful of different things. So was doing that. And then, but to answer your question, yes, still have crypto holdings throughout this time period. But I also have been keep in mind, I've been financially independent since I've been 14. So when I went off and went to college,

Jeff Albaum

Yeah, yeah, yeah.

Morgan Ehrenzeller

It wasn't mom and dad paying for college. wasn't mom and dad paying for Morgan's rent. It wasn't mom and dad paying for Morgan's meal plan. It wasn't mom and dad paying for Morgan's textbooks. It wasn't mom and dad paying for Morgan's electricity bill and water bill and sewer bill. That was all Morgan since, you know, 14 years old. So, you know, as yes, I'm accumulating this Bitcoin and all these other coins, but keep in mind, I have to sell some too to survive. I have to sell some to pay for my college.

Jeff Albaum

Sure.

Okay.

Sure.

Morgan Ehrenzeller

I to sell some to pay for my life, have to sell some to pay for my utilities, my rent, my car, my insurance, all that. So I have a lot too, but keep in mind, I'm constantly buying, selling, buying, selling because I got to stay alive as well too throughout college and all that.

Jeff Albaum

Sure. And was the software business still running at this time?

Morgan Ehrenzeller

No, no, no, no, I stopped at right when I went to college.

Jeff Albaum

Got it, got it. Okay, so your income kind of cut off as soon as you left. Got it, okay.

Morgan Ehrenzeller

Yes, yes, I stopped it. Went to college, focused on some things I shouldn't have been focusing on. And then pause like the whole entrepreneurial thing until I graduated and then I graduated college 2020. And then I point heels heels deep in real estate sense.

Jeff Albaum

Okay, so all right, so from when you graduated college, you have all this experience from growing up and you had this construction background from your parent or from your dad and you had this entrepreneurial background from the software company, you buy this duplex, that was your first four in real estate, you go to college, you finish college and you have your duplex, that's the only real estate holdings that you have at that point.

Morgan Ehrenzeller

My last semester of college, COVID just happened. COVID was just coming out in the world. So a lot of fear in the market. I went to a foreclosure auction. This is in Bloomsburg, Pennsylvania. That's where I went to university. I went to a foreclosure auction. I was the only person that bid on this house. I got it for 10 gram. There was like 2,500 bucks in fees. So.

Jeff Albaum

Okay.

Okay.

Morgan Ehrenzeller

I had money, you know, leftover from software throughout college. was doing things, flipping, you know, clothes, Supreme. had Supreme bots, clothing bots like that, you know, buying stuff as soon as it would drop, sell it, new shoes, cars, just flipping cars. One time I picked up a dog for free and flipped a dog. Um, but did a lot of all that, uh, throughout college. then nonetheless bought that, that last one. So I had money from all that.

Jeff Albaum

Okay?

Morgan Ehrenzeller

bought that foreclosed house for 10 grand. was my last semester of college, COVID happened. And then I graduated and then I put all the sweat equity into that one single family house, 17 grand into it. It was worth about 140, give or take. And then that was the deal that got me really hooked was, okay, I bought this for 10, put 17 into it, 27 into it, 30, 27, 30 grand into it.

Jeff Albaum

Okay.

Morgan Ehrenzeller

in four weeks, it's worth 130. I just made over 100k in equity into my net worth in four weeks at 22, 23 years old. And that was the deal that got me hooked. And the rest was the rest is history.

Jeff Albaum

And so did you refinance that? Did you flip it? Did you sell it? What did you do with it?

Morgan Ehrenzeller

Good question. So I took it and I went and I refinanced it. So I pulled all the equity out. And then I went and I bought another two houses I picked up off Craigslist. I bought them outright, killer deals. I picked them up for 44 grand. I wrote about 200 total. And then also from that money I had, I went and I picked up another foreclosure, but this bank financed the foreclosure for me. So I only went

Jeff Albaum

Okay.

Okay.

Morgan Ehrenzeller

I got this other foreclosure for 13 gram and I only had to put 25 % down of that 13 grand for this property. And the people that foreclosed one, they were staying in the property and they continued to pay me rent after I closed on it. So they got foreclosed and pay the bank. And then after I closed and bought it,

Jeff Albaum

Holy smokes.

Morgan Ehrenzeller

They paid me rent for three years after that. The rental loan paid for the entire house. And I ended up selling the house a couple of years ago. but that was, we had this big win right at college, took all this money, deployed it into another three assets and your classic, you know, burst strategy, you know, guys started small, the single family headed out the park, pulled all the equity, bird, it bird, it bird, it bird, it bird it. And that's, you know, in a sense how I'm here.

Jeff Albaum

And so you were probably getting debt when you, and so just, you wanna break down the BRRR acronym for those who might not be familiar with it?

Morgan Ehrenzeller

buy, rehab, refinance, repeat. So you buy it, you buy the property and then you renovate it. So you gotta buy it under market value. Then you renovate it and generally after you renovate it, have to be, you wanna be maximum me personally, 70 % all in of the after repair value. That way you can exit, exit it cleanly and get all your chips off the table. And if you did a great job, you have some cream on the top, pat yourself on the back. You have some equity there too that you pulled out.

Jeff Albaum

And so you were.

Mm-hmm.

Okay.

Yeah, and the coolest part of the refinancing is it's tax free. So you're pulling out this chunk of change and you don't know any taxes on it. What and the debt this this was around 2021 2022 or still in 2020.

Morgan Ehrenzeller

And then you repeat.

Yep, absolutely.

2020, 2021. And then I still had.

Jeff Albaum

So your interest rates were like two or three.

Morgan Ehrenzeller

Yes, but also at this point, I was trying to get loans from banks and the banks were shutting me down. They're like, Morgan, you don't have three years tax returns. You don't have three years jobs history. We're not giving you money to go play Monopoly. We're sorry, but no, we're not giving you this. So then I got forced back into a wall and got really, really good at creative finance. So I didn't have to use the banks.

Jeff Albaum

Right.

Okay.

Morgan Ehrenzeller

So to this day and my entire portfolio, my entire portfolio has been built off of creative finance. actually

have one traditional loan right now out of everything in my entire portfolio.

Jeff Albaum

Wow. So what does that look like when you say creative financing? What does that mean?

Morgan Ehrenzeller

Um, so that means either there was a existing loan on the property and I came to the seller and I said, Hey, let me take over that debt. And well, so will you carry a second position or if there is no debt on it, Hey, will you carry a note? I'll give you X amount of dollars down. Let me go in. I'll fix up the place. I'll refinance it and you know, 12, 18 months. I'll make it worth a lot more money.

And then when I refinance it and I do it successfully, I'll pay you back out on the refinance. So it could be a mixture between a sub two is what, you know, if there's already debt there subject to existing mortgage or a seller finance or a hybrid or a master lease option, we've done them where we lease the property and then we buy it out later at a certain degree purchase price, or we've even done entity buyouts where we buy out the entity.

Jeff Albaum

Mmm.

Okay.

Morgan Ehrenzeller

that is tied to a loans or we keep them sometimes depending on the structure, keeping on in each payment that we make dilutes their ownership share to get around just to get around different red tape, depending on clauses, terms, bad boy clauses and mortgages, stuff like that. So just getting really, really creative to work outside of traditional banking.

Jeff Albaum

wow.

Sure.

So who's the best avatar for an owner that this would work well for? Paint a picture of what that looks like. I think I've heard this all the time, but I have never done this myself successfully, so who does this work well for from an owner perspective?

Morgan Ehrenzeller

Great question. Yeah, so this is how I was able to run so fast quite frank too. Let's run all this, but everyone is a little bit different. And I would say, one time I did this with a single family because if the sellers would have sold it, their income would have went over a threshold and then they wouldn't have got their free insurance. So if...

Jeff Albaum

Sure.

Morgan Ehrenzeller

they would have sold it and collected that money down. They wouldn't have their insurance benefits would have diminished and they wouldn't have got their

Jeff Albaum

But how did you know that? Like were they listing their house so they wanted to sell it or you found them off market and cold?

Morgan Ehrenzeller

No, because I, that's because I could talk to them and I was figuring out their pain and I was walking through all of this. Um, so I, I only know this is because I'm at the end of the day, I'm a professional problem solver. So this is the problem and how do we solve it? Um, and asking, you know, really good questions and knowing what type of questions the framework or those questions that's, know, how I'm uncovering this stuff, uh, and how I'm able to tie back a, you know, a value proposition on how to make it work for everyone.

Jeff Albaum

Sure.

Morgan Ehrenzeller

So that was one where, you know, if they sold and, you know, the money they collected, their insurance would have been off. So they, this works well for them, you know, because they get to keep their insurance. It works well for me because I get it. And then later down the road, they'll, you know, get a big balloon payout when, when, you know, it works well for us all. Another one, capital gains tax. So, you know, someone who could be 90 years old, their entire portfolio, maybe they ripped some costs, so on that there's a lot of depreciation.

So they sell it to me, there's a lot of depreciation, they have to pay all that back to the government. There's not a lot of equity either. So oftentimes even that equity there and say they're 1031 and they're kicking the can down the road, they sell it, they actually got to come to the table with money. So they have to figure away how do I keep kicking this can down the road? Because if I sell it, I'm screwed.

Jeff Albaum

Yeah.

Right. Because even if you 1031, you offset the capital gains, but you don't offset the depreciation that you owe. Oh, interesting. Right, right, right.

Morgan Ehrenzeller

Yes, and I'm not CPA, I'm not a CPA, so consult with one prior. So this could be another, you know, another instance where they realize, oh shit. So how do I get around this? Okay, in this scenario, you're 90 years old. Listen, Mr. Seller, none of your kids are involved in real estate. None of them are financially intelligent, you know, have financial literacy. Don't take it, you know, don't take it personal, but

Jeff Albaum

Mm-hmm.

Morgan Ehrenzeller

You know damn well, as well as I know, they're gonna piss away everything you left them in two to three years. It's gonna be gone. They don't know how to operate this. They don't know what to do. They have not the slightest clue. You know it's gonna be gone. I said, instead of that, know, you're gonna, one, you're gonna pay money to sell it because the capital gains tax to the depreciation. Two, you worked your entire life for this legacy. You know it's gonna be pissed away in three years. Morgan, I know.

You're exactly right. So how about this? How about we delay this capital gains tax that you're paying the depreciation schedule, seller finance it to me over 30 years. And when you die, all of your kids, they'll get a monthly mailbox money from you every single month. So now you know, they're taken care of for the next 30 years, and they're not going to piss it away in the next three years, because they got a big chunk of change, and they don't know what to do with it. So I said, now you won.

You know your legacy is in stack because for the next 30 years, they're getting mailbox money from me. Until you delay the capital gains tax, you don't have to come up with money and bring it to the table. And you know, just walking them through all of this, because a lot of people, don't really think about all this, the deeper and the deeper and the deeper you go.

Jeff Albaum

Mm-hmm.

And how, over what period of time did you establish, this sounds like a real situation. So over how long of a period of time did you establish the relationship with this person before you had the conversation you just described? Like was this a, you chatted with them for 20 minutes on the phone and then this is what came up? like how long?

Morgan Ehrenzeller

It is, that's why I'm telling you.

15 minutes on the phone and this is the next call maybe.

Jeff Albaum

wow. So you were asking them about their family on the first call and you you understand

Morgan Ehrenzeller

Sometimes if I'm trying to figure out how to get creative on it, I have to ask certain questions to see how this potentially would work for creative.

Jeff Albaum

And what was the pitch you used to get them on the phone in the first place?

Morgan Ehrenzeller

I see I'm at a point now in my life where I don't really go hunting for the deals. The deals all come to me. So I set it all up inbound marketing. So it all comes to me. like now I have, I mean, at this point I have my own acquisitions team that are running everything and are filtering it all and going through and sending it all up the chain. But I mean, they all come, go ahead.

Jeff Albaum

Okay.

Got it.

Okay, but let's say you didn't have those things. And so let's say you're just starting out. What would you recommend to someone who is trying to get one of these deals, they wanna use creative financing, let's say they've identified the building and they've identified the contact info. What then?

Morgan Ehrenzeller

I would say it's not necessarily where you're finding these deals. It's more of negotiation. Because a lot of these deals, like example, I bought a 47 unit for 20 K down. I bought a 46 unit for 100 K down. I bought a 130 pad RV park for 30 K down. I mean, I could keep going one and one and one, but none of these deals were labeled that when they came to market. Some of them are one market. Some of them are off market.

they were never labeled that they negotiated them to that. So I think the better question is how can one get better at negotiating these instead of, where's the honey pot? Because the honey pot isn't there. You have to negotiate to get to the honey pot. If that makes sense.

Jeff Albaum

Sure.

Sure, sure. let's, can we do a deep dive into one of those you just mentioned?

Morgan Ehrenzeller

Yeah, yeah, yeah, I guess.

Jeff Albaum

Okay, let's do the 46 unit that you put 20K down on. That's amazing. So where did that deal come from? How did you find it?

Morgan Ehrenzeller

Mm-hmm.

So that was on the market. Actually, yeah, that was on the market and it was on the market. It was on Zello and my old wrestling, I wrestled for 13 years. My old wrestling teammate sent it to me, texted it to me. That's exactly how that one came.

Jeff Albaum

Okay, and so you get this text, you're like, interesting, let's see what's up. So then who did you contact?

Morgan Ehrenzeller

Yeah.

I contacted the broker. Yeah, I contacted the broker, asked if there was any debt on it. They were wanting 2.3 million. We ended up getting it for 1.880 million. Initially, there was $1.1 million of debt on it. So I asked if we could assume that, if we could take that over. And then I convinced them through carrying a second position. And keep in mind this.

Jeff Albaum

Okay. And you said what to them?

Okay.

Morgan Ehrenzeller

This woman was really desperate and I'll tell you a story how desperate she was. The management there was her kids were managing it and her kids, she went and raised money from other investors for it. Her kid was managing it and went and stole all the money. This was in West Virginia, stole all the money and drove and started a new life in Oklahoma.

Jeff Albaum

Holy smokes.

Morgan Ehrenzeller

So she was going through it probably. So one, the property's in complete turmoil. 46 units, 47 units there and of that there's maybe five that are full. And of the five that are full, the money that's supposed to be coming in, the son stole it all. Yeah, so that was a little bit about that one, nonetheless.

So she was in a lot of, what's the word I'm looking for? Distress. So talked to the broker and up talking to them into saying, hey, will you carry a second position? And talked them into carrying a second position and giving them 20K down and they carried a second position of the remainder for 18 months.

Jeff Albaum

Which is like 700 grand, no?

Morgan Ehrenzeller

Yeah, it was like 700 gram, 710 I believe.

Jeff Albaum

Wow. Okay. And how did you weather the storm between closing and then the eight month 18 when you were able to refinance? Cause your payment on that must've been fairly substantial and you were probably losing a bunch of money if only five units were full, right?

Morgan Ehrenzeller

Yeah, so I mean, it's just one of those ones you have to underwrite correctly. So me, I underwrite all those vacant ones. I have my own construction crew and house. So like me personally for holding costs, mortgages, utilities, renovations, labor material, I budgeted, I budgeted 700K to turn this whole 47 unit around. Yes, 700K.

Jeff Albaum

Okay.

in 18 months. Okay.

Morgan Ehrenzeller

I did that and it cost me 493k when we were finished with everything. So I budgeted 700 and I came in at 493.

Jeff Albaum

Wow.

And were you using a construction loan to cover that? Like how did that work?

Morgan Ehrenzeller

No, I raised the money from an investor.

Jeff Albaum

Got it, got it, got it. Okay, so you said, Mrs. Owner, you have 1.1 in debt. I'm gonna assume that so you don't have to pay that anymore. On top of that, I'm gonna make payments to you for a loan of 700,000 that we agree on the price and interest rate in terms for 18 months. And was that amortized over 30 years, so your payment was spread out, but it was an 18-month term? Or was it interest only?

Morgan Ehrenzeller

Yes.

Correct on the correct on the second position, but also I got one better. I got no payments during those 18 months. So no payments at all on the second position note.

Jeff Albaum

Wow. And then it was just agreed upon. was a balloon. But was the interest was presumably accruing over 18 months. You just have to any payments on it.

Morgan Ehrenzeller

No, no, that's absolutely no payments, nothing. So the 710 was 710, 710 on month one was 710 on month 18.

Jeff Albaum

Whoa, what was her incentive to agree to that?

Morgan Ehrenzeller

honestly, I kind of forget, like I, she was obviously in a lot of distress. This was almost a year and a half ago at this point. but it was, just negotiate negotiated or, you know, going back and forth. She, like I said, this didn't come out on the market advertised as that. And then at two, three, cause that's what I'm saying. If this one came out advertised as that on the market, it would have been immediately gone immediately.

Jeff Albaum

Wow. And was it?

Was it?

Right?

Right, right.

Morgan Ehrenzeller

So that's what I saying, like I negotiated it to that.

Jeff Albaum

For those types of transactions, how does the broker get paid?

Morgan Ehrenzeller

So this is what I said to the broker too on the front end because that's ultimately what he gives a shit about is how am I getting paid? So I said to the broker and the friend, listen, if you can, like I told him what to say, what I wanted to do, how I wanted to structure it. And I told him on the front end, so listen, if we get this, I will pay your commission and I will pay it on the front end. So when we closed on it initially, I paid out his $80,000 in real estate commission.

Jeff Albaum

Right.

And that was based off the purchase price of 1.8.

Morgan Ehrenzeller

Yeah, 1.88.

Jeff Albaum

Okay. Wow, dude, that's amazing. And were you talking to the owner at any point directly or this was all through the broker?

Morgan Ehrenzeller

It was through the broker, so I was telling him what to say. He was relaying it, telling it to me, and then back and forth.

Jeff Albaum

Yeah. Wow. Dude, that's amazing. And so then you refinanced, you paid out the owner and now, and then you just got new debt with a bank because now you have enough income to justify them giving you loans.

Morgan Ehrenzeller

Yep, true.

Yep, yep, yep. So we got stabilized refinance pay out the first position paid out the second position, paid out my investor all his money back. So every dime that he put into it got all paid back as well too. And then there was a lot of money on top for us to split to

Jeff Albaum

Mm-hmm.

And did you, was it hard to, because presumably the mortgage you assumed had a low interest rate and the more you got was higher. So did that hurt at all?

Morgan Ehrenzeller

I mean, not really. mean, we took over the property. was pulling in like 3k a month. I mean, now it's pulling like 48 grand a month. So it's like, I mean, it's the poor said, I mean, the DSCR on the things like a 1.80. So like, it's, it's healthy. Yeah, we're paying higher interest, but you know, I got all the chips off the table, got my investor off his money back. We pulled out a lot of money on top of it and it's, it's cat flowing. It's, it's chucking like a train.

Jeff Albaum

So that the difference in interest didn't hurt you.

Got it.

Yeah. So who cares?

Dude, that's awesome. That's so cool. So now what are you focusing on now? Like are you just doing more of these deals? You said you had an acquisition team and in-bounds, like what is your day look like these days?

Morgan Ehrenzeller

Mm-hmm.

Yes, that's it. mean, this is literally what we do. We buy deals like literally just like that almost on a weekly basis. We just bought one last week. We have another 168 unit come in. We're buying that one for 13.6 million. We're assuming 12 million of debt at 4.37%. So coming to the table with 1.6 million.

Jeff Albaum

Wow.

And are.

Are those debt assumptions hard to do?

Morgan Ehrenzeller

start paying in the ass, but I mean the interest rate you want to maintain that 4%.

Jeff Albaum

Sure, but are there instances where you're unable to assume the mortgage?

Morgan Ehrenzeller

Now, I mean, ultimately you just have to, what they care about is there's really three checkboxes. One, experience checkbox. Does the person who's doing this, do they have the experience to do this? So that's checkbox number one. Checkbox number two is net worth standpoint. Okay, I'm giving them a, $10 million loan.

Jeff Albaum

Mm-hmm.

Morgan Ehrenzeller

whoever's doing this, have to have at least a minimum of a $10 million net worth. So you have to have, you know, experience checkbox, the net worth checkbox, and net worth has to be, your net worth has to be greater than what the loan is amount. And then you also have to have a liquidity checkbox. Okay, after this closes, do they have enough liquidity for six months to pay the mortgage for six months after this closes? So.

Jeff Albaum

Right.

Mm-hmm.

Morgan Ehrenzeller

If say you close, okay, you know, come up with a down payment, all that, say your mortgage payment is $100,000 a month, you got to have at least 600 grand sitting in an account for operating liquid. So you got to really hit those three check boxes.

Jeff Albaum

Mm-hmm.

Gotcha. Or partner with people who do, right? So you bring in a key principle for the net worth requirement. You bring in an investor for the liquidity requirement.

Morgan Ehrenzeller

I mean, I can hit all the check boxes myself. I normally just bring in an investor who wants to fund it and then we'll split everything. So I'll do all the work and then we'll force appreciate three, four, five, $6 million refinance out within 12 months, pay them all their money back. And then there's two, three, $4 million on top that we get to split.

Jeff Albaum

Okay.

Right. And then, I mean, the beauty of that is everyone's happy, right? Because now you own this asset just yourself. They've made a killing. You've made a killing.

Morgan Ehrenzeller

I I keep them, I keep them in there with me. So they stay in too and they get all the cash flow for the rest of their life.

Jeff Albaum

Got it, got it, got it, got it, okay. Got it. Man, that's incredible. do you raise money on a per property basis or do you do a fund?

Morgan Ehrenzeller

No, I don't have a fund. I don't do a fund. I, everything I earn is between myself and either one or two other partners. So I have a very small circle of who I do deals with.

Jeff Albaum

Got it.

Gotcha. Dude, that's amazing. So you're just like turning and burning these out on a weekly basis.

Morgan Ehrenzeller

Yeah, yeah, yeah, pretty much. That's a lot what we do a lot of deals that I just like that.

Jeff Albaum

Dude, so what does a normal Tuesday look like for you? Like walk me through it from waking up to going to bed. What does your day to day look like? Like are you still playing RuneScape at 3 a.m.? Like how does that work?

Morgan Ehrenzeller

No, no, no, no. So, normally I normally structure my property management meetings on Mondays and Thursdays with all my team. So Mondays and Thursdays are just stacked back to back to back to back to back meetings, keeping pulses on things. But generally that and in between construction. So managing everything else that's vertically integrated. it could be.

meeting with acquisition guys, what's coming next, know, lining up capital for the next deal that's coming in the pipeline, my construction team, do I have to move them to a different asset? Okay, is this asset the construction ahead of the leasing? Okay, maybe is this asset is the leasing ahead of the construction? So move around different construction crews in different areas to different assets, depending on where it makes the most sense for the portfolio. You know, dealing with insurance, the other day had

van drive through one of our motels. Two weeks ago, we had a gang of six trannies break in and pull a gun on a maintenance guy. I mean, there's a lot of shit that happens in this industry.

Jeff Albaum

Yeah. are you based, so you're based in Florida. Do you go in person to any of these or do you manage everything remotely?

Morgan Ehrenzeller

I mean, I, I'm at all of them. I mean, I don't buy a piece of real estate without visiting it. so I'm always there. walk it, but I, we have in-house teams locally that, and also remotely. so there's a mixture. I'm generally at each building at least, once a quarter, once every other quarter.

Jeff Albaum

Okay. And how many buildings do currently own? So like, are you on the road all the time?

Morgan Ehrenzeller

I'd go that, yeah.

Jeff Albaum

Yeah, okay. Dude, that's amazing. Where do you want to be in like, do you have like an income number that you're going for? Do you have a net worth number that you're going for? Do you have like like what are you going for? What are you going towards?

Morgan Ehrenzeller

Not really, just trying to get better every single day.

Jeff Albaum

Mm And where do you where do you want to be in like 10 years?

Morgan Ehrenzeller

That's all, hey?

I as long as I keep growing. mean, I just enjoy the game. I enjoy I enjoy the game.

Jeff Albaum

Yeah, yeah.

And so, okay, going back to your day to day for a second, it's like, what time do you start your day? What time do you end your day? Give or take.

Morgan Ehrenzeller

normally waking up at seven, have coffee, meet with my assistant for the day. And then from there, go to the gym. like to hit the gym, focus on all the, my flow state of mind is generally in the morning. So I try to stack everything important in the mornings. and then anything not as important in the evenings, it's generally up at seven and in bed by usually no later than nine 30 10.

Jeff Albaum

Okay.

Oh, nice. Okay. And do you take like time off or are you able to kind of just get away and like turn it off?

Morgan Ehrenzeller

I am now, a little bit more now. It's really hard to do that in the beginning. It is incredibly hard to do that in the beginning when you first start. When you first start, there is no time for that. If you wanna build something huge, this work-life balance is complete bullshit. If you wanna build something actually really big and meaningful. So my first four years, no, there was none of that really.

Jeff Albaum

Mm-hmm.

Mm-hmm.

you

Mm-hmm.

Morgan Ehrenzeller

But now in the past six months, you know, I've been structuring things differently where buying time back and really really shifting it because I Yeah, I don't really need to buy any more real estate and I'll be I'll be fine I'm at that point

Jeff Albaum

Right. I know you can't have buyback your time behind you and not talk about it.

Morgan Ehrenzeller

Yeah, yeah, yeah, yeah. So, yeah, so now I do a big lot of focus on literally buying back my time heavily. So, just really spend the time on the high energy stuff that I really, really, really like doing.

Jeff Albaum

Yeah, if you had to give yourself advice, like what you know now versus when you were just starting out, what would you tell yourself?

Morgan Ehrenzeller

I would tell myself, get around the person or people, not the people, not person. Get around, get around that the people or the person that is doing what you want in life and how you want your ideal life to look and get around them and spend as much time as you can with them. Work for free for them if you can. Not a lot of people are willing to do that.

Work for free if you can because the education that you'll pick up in the long run far exceeds a paycheck. So always work for education and not money.

Jeff Albaum

Mm-hmm.

So how do you?

how do you do that when you're first starting out? know, add value, add value, add value. But if you go up to someone who's super successful and you say, I will work for you for free, they're like, I don't know who you are, I don't know what you can do, you just gave me a job to figure out what I can give you. So like, how do you do that pragmatically? How do you do that practically?

Morgan Ehrenzeller

You know, it's

It's almost like sales. You have to find it. Almost like going back to the negotiation and you asked me, how did you find out about this person's insurance? It's by asking the right questions. And so, mean, there's probably gonna have to be a degree of luck to it, but I am a firm believer the harder you work, the luckier you get as well too.

Jeff Albaum

Mm-hmm.

Mm-hmm.

Mm-hmm.

Morgan Ehrenzeller

So I mean, it's a matter of maybe catching the right person at the right time on the right day, or getting them when they're in a good mood, or getting the right person that doesn't have bandwidth issues right now, or is looking for an assistant. I mean, there's so many different things that go on in someone's life. It's hard to tell. You can't really tell what's going on in someone's life and what's not really a, hey,

Jeff Albaum

Mm-hmm.

Morgan Ehrenzeller

one size fits all, so to say. mean, there's so many different businesses, know, there's people doing wholesaling from multifamily, from RVs to motels to office to mobile home parks. the list goes on and on and on. So, I mean, it's kind of hard to give an answer for that one.

It's really finding out what about that individual person I would say and tying, finding out, asking the right questions and finding what's out, what's valuable to them and then figuring out yourself what's valuable to them and what the hell do I have to offer that could be valuable.

Jeff Albaum

Sure.

Mm-hmm, right. Maybe that that is the value add right as you figuring that out yourself and presenting it to them

Morgan Ehrenzeller

Probably yeah, and I said that's a great point because I buy a lot of deals from wholesalers and the wholesalers that get my attention I mean I get to send deals to me all the time are the ones that bring it to me on a golden platter They break it down of more. This is what you're paying per unit. This is the comps. Here's the comps Here's your upside. This is what your construction costs So they already outlay it on a golden plate and they serve it to me So they already did the thinking for me there. He did the heavy lifting for me

Jeff Albaum

Mm-hmm.

Morgan Ehrenzeller

Now it's just me analyzing the numbers and does this make sense? Yes or no? So that does make a lot of sense with what you said there. Yeah, that person doing the lifting on the front end and then presenting it.

Jeff Albaum

Yeah.

Yeah, that makes sense. Who are, I guess, what are you looking for right now? So if anyone's listening to this and they're thinking, man, Morgan is a stud. I want to go work for him. I want to work for him for free. What are you looking for that people could help you with right now?

Morgan Ehrenzeller

Yeah.

Oh man, I'm actually, we're always expanding, but, deals, deals is always one, we're always buying deals from people, so, and you can get financially rewarded for that very, very well, very, very, very well. So I was gonna say deals could be one, finding deals, good deals and bringing, and you get a very nice referral bonus for that.

Jeff Albaum

Mm-hmm.

Morgan Ehrenzeller

But as far as operations, I hand select everyone for very, very, very specific things. I don't really have an answer for anyone at this specific moment that we need at this exact moment.

Jeff Albaum

Fair enough, fair enough. Well, you have to come back for round two and then we can, get you, we'll get you however you need. Okay, final question on mentorship. When you're seeking a mentor, how important is it for you, and this is being a very person to person, but like how important is it to you that they holistically live a life that you like versus there's a specific thing you're going to them to learn from and everything else is maybe less important?

Morgan Ehrenzeller

Yeah.

That's a really, really good question. There's this thing called, and as we're mentors and what you just described there, it's called signal and noise. Have you ever heard of this before?

Jeff Albaum

I've heard of it, but break it down. couldn't tell you what it means pragmatically.

Morgan Ehrenzeller

So you have signal and you have noise. Me personally, I focus on the most three important things within the business within the next 18 hours. What are the most three important things that I need to do that me that moves the needle the highest within the business. Those three things that is the signal, everything else in the background, whether if that's drama, whether if that's, you know, whatever the case may be, whether

employee drama, know, HR drama, social media, know, haters, whatever it is, if it's not in those three, signal buckets, it's noise and just let it be noise. Do not give it your attention. So mixing that and what was the other the other part of the that we were talking about, sorry.

Jeff Albaum

Hmm

Well, like when you're looking, when you, yeah, yeah, yeah.

Morgan Ehrenzeller

The mentors, the mentors. I think it's good to be very specific what that mentor you're looking for. Because oftentimes a mentor in one area is not a good mentor in another area. Almost like attorneys. You know, when you're going and you're hiring an attorney to do real estate work, are you going go and hire a divorced attorney? Right? You're not going to hire a divorced attorney for real estate work.

Jeff Albaum

Right.

Right, right. So.

Morgan Ehrenzeller

The same goes with mentors. You could have a mentor for spiritual wellness. You could have a mentor for real estate growth. You could have a mentor for marriage counsel. You could have a mentor for a fitness coach. So, you know, it's very, very rare you're going to find a one size of Swiss army knife, one for all. So I think it is good to, you know, have

Jeff Albaum

Mm-hmm.

Morgan Ehrenzeller

those mentors in those specific fields that you're looking for that direction, if that makes sense or answers your question.

Jeff Albaum

Mm-hmm. Yeah, totally. Totally, totally. Well, man, I feel like I could talk to you for hours, man, but we have to start winding down. The last question I ask everybody is what is the input that you have? So you are a very high output person. You're doing a ton and you don't have a ton of free time, I would imagine. But what are your inputs? So do you consume content, books, podcasts, any of that kind of stuff? And if so, what?

Morgan Ehrenzeller

yes. Yes. Yes. Yes. So as far as inputs, yeah, have you on outputs, inputs is really investing in myself. I would say that is a huge one. And then, know, to a degree, everything you just mentioned hits that. so podcasts are good. I always watch a lot of podcasts. I'm always trying to learn new things. but I would say a really, really big one is you can get a lot of good, you know,

pre-education online, but it only goes so far. One of the biggest hacks, once you start making decent money, I started to look at, have two ways you can go in life about something. You can work your way there, it's gonna take you time. So that's probably like you're working through your real estate, you're on a trip, you're gonna fall, you're gonna scrape your elbows, you're gonna scrape your knees, that's okay.

You're meant to do that. You know, that's how you grow, but it's going to take you incredibly longer to do that. Or you could pay your way to someone who's already did that and they've already faced, they already tripped, they've already scraped their elbows, they already scraped their knees. So it comes to a point in life is what's worth more to you? Time or money? To me, my time is worth incredibly much more than what money is. So

Jeff Albaum

Mm-hmm.

Morgan Ehrenzeller

a lot of my impunts now are getting in better rooms. And this often where I get, I'm going at with this is oftentimes you have to pay to get into those better rooms, to get around higher educated people. And it's one of those ones, you're the average of the three people you surround, you're the average of the five people you surround yourself with. So chances are, let's say there's a free real estate, let's say there's a free

real estate mastermind going on tonight in Austin. You're going to go there. You're probably going to meet a lot of really, really green people, really beginner novice versus say you go to a high ticket, a community growth mastermind where the tickets 20 K to enter. What type of different caliber people do you think are going to be there between the 20 K spot versus the free spot? What type of different caliber people do you think you're going to be surrounded with?

Jeff Albaum

Yeah, I mean the people who can who are willing and to enable to put that amount in right

Morgan Ehrenzeller

because they're investing in themselves and they're putting all the chips on the table. They're there for the same damn reason you're there at the end of the day. But that's one thing, you you can get to where you want by working or you can get to where you want by paying your way there. So a lot of the implements to circle back is figuring out the next figuring out the next layer that I need and how I can position myself to get into that room, whether if it's money or whatever the case may be.

Jeff Albaum

Right.

Hmm.

Morgan Ehrenzeller

is dialing in that next layer of that next level and how do I get into that room? Because I know for me to work to get to that level, it's going to take me 10, 15 years or say I can pay to get into that room and maybe it cost me 10, 20, 30, 40, 50 grand. Okay, it cost me 50 grand, but how many it buys me back 10 years of my life. In that 10 years, how much money do you think I can make?

Jeff Albaum

Hmm.

Right.

Morgan Ehrenzeller

tens of millions of dollars. So it's 50 grand, a good return on tens of millions of dollars when you think about it easily. So that's a lot where I try to focus my inputs, know, all that stuff on personal development, but more, you know, getting in that higher elevated and higher caliber rooms, whether if that's money, that's money, whatever the case is, that's the case.

Jeff Albaum

Yeah, 100%.

Dude, you're a beast. Thank you so much for coming on, man. I appreciate you. This has been awesome. Where can people find out more about you? Where do you like to direct people if they wanna know more?

Morgan Ehrenzeller

Ha

Absolutely.

Yeah, I mean, I'm pretty active on social media. Instagram is just my name, Morgan, Aaron Zeller. I'm kind of constantly post stuff on there. know, stuff we're doing in operations, things in real estate, try to be really good education, things that's not recycled content, actual good stuff that you can take and go and implement that you're not seeing a lot online, or seeing it anywhere, quite frank. Because a lot of stuff we're doing, I don't see anywhere else, anywhere else online, just been all grit.

But yeah, you can reach out to me on social media, LinkedIn, YouTube, whatever the case is. It's all just my name, Morgan, Aaron, Zeller, but it's been a blast, Jeff. Thank you for having me.

Jeff Albaum

Thank you, man. I appreciate you and value your time very much. yeah, thank you and best of luck to your future endeavors. Sounds like you're crushing it and I'm sure you will continue to do so. So I very much appreciate you, man. Thank you.

Morgan Ehrenzeller

Likewise, thank you.

Jeff Albaum

All right, bye everybody.