How Michael and Grace Santos Invest Out of State Using Buy Boxes, BRRRRs, and Rental Exit Strategies

Michael And Grace (00:00)

Yeah, so you know if you are someone who just starting in real estate investing, you need to start off with education. You need to start off learning from experts who’ve been doing real estate investing for many many years. You know finding a group that can help you kind of like go from the basics to the advanced. Because right now if I were to

start all over again, the first thing I would do is I’ll take the first six months learning about everything from like again the basics of real estate investing to learning about how to raise private money because those two together will help you not only you know find deals but make you find multiple deals and be able to fund them.

Scott Bursey (02:13)

Welcome back to the real estate pros podcast. I’m your host Scott Bursey And today we have several heavy hitters in the investment space joining us. We have Michael and Grace, the principal behind MWGM properties, a group making serious moves in strategic asset acquisition. Guys, welcome to the show.

Michael And Grace (02:34)

Thank you so much for having us.

Scott Bursey (02:36)

It is just wonderful having you here. And before we dive into the how, we’d like to know about the who. For those that may not be familiar with your world, can you give us an idea of how your career began and where you’re at now?

Michael And Grace (02:49)

Yeah, so background was no real estate investing background. I’m currently still, along with being a real estate investor, licensed marriage and family therapist. So that was where I came from in the field and I got into real estate investing. And I was a nurse up until last year. So, you know, we’ve been investing in real estate since 2021.

and we primarily focus on out-of-state real estate investing.

Scott Bursey (03:16)

How exciting. Well, this is going to be awesome. Let’s dive in, Michael and Grace. What is the single biggest real estate market trend that MWGM is actively focusing on or adjusting to right now in your eyes, guys?

Michael And Grace (04:19)

Good question. you know, for us, we do out of state investing and, you know, people, especially real estate investors who are new, the main goal for us is always find a property where we have multiple exit strategies. So it can work either as a flip or it can work as a rental where we can do a burr. So, you know, when it comes to us under underwriting, know, analyzing deals is the most important thing.

So I feel like that is, know, in order for you to be successful as an investor, you need to learn how to underwrite. Yeah. And then with trend, guess it’s really about, I was going to say what the trend is looking at where the market is going in that specific market that you’re investing. And so we’re looking at, you know, are there new businesses coming in? Do we need a shift from short, more short term to a medium term rental strategy?

Scott Bursey (04:52)

That is.

That is some very good insight. Thank you for that guys. And I’ve got to ask you, this has been on my mind since we booked you. When you look at new opportunities, what are the top three non-negotiable criteria that a property or portfolio must meet to earn investment from MWGM?

Michael And Grace (05:29)

non-negotiable.

Scott Bursey (05:30)

What criteria, guess, qualifications, something of that nature.

Michael And Grace (05:31)

Good question.

So the one thing for us is that we do have a buy box. Whatever city we go to, need to buy. We are very strict when it comes to what neighborhood we’re buying, like specific zip codes. We need to look at what is the ARV of the property so that we know how much our maximum allowable offer is. lastly, I guess the…

I guess the last, the third non-negotiable, do think?

So neighborhood, offer. I think the multiple exit strategy is, that’s all I guess Ananagush was, we don’t allow it to just work for one type. So if it’s a flip, it can’t just work as a flip. We need to be able to make it work as a rental, long-term, short-term, so that we’re minimizing the risk. Right, because the market is so unpredictable nowadays, especially with what’s going on in the world.

Yeah, we can only do what we can to control that.

Scott Bursey (06:33)

Absolutely, makes perfect sense. And I guess I should ask you first, what market geographically are you ⁓ tackling guys?

Michael And Grace (06:40)

Yeah, so, you know, we are located in California, but we primarily focus in Oregon and South Bend, Indiana in particular. Our first real estate investment property we ever did was in Springfield, Oregon, I’m sorry, Eugene, Oregon, because we lived there for a couple of years. So we kind of knew the area. Just because California is just so high risk, there’s so much competition.

So it made sense for us to go into markets that are just not as competitive, but also the entry is much lower priced. Buying a million dollar home with a high holding cost, this high risk where you can buy $400,000, $200,000 is much easier to bear.

Scott Bursey (07:22)

Absolutely. And guys, considering the current climate of high interest rates and fluctuating capital costs, what’s the biggest operational or financial challenge that MWGM is navigating today?

Michael And Grace (07:36)

For us with the rates, we don’t really care or worry about where that is. We look at it as like, where do we need to purchase and acquire the asset at for that number to work for us? And so we’re always looking at what is it right now, because we can’t predict what it’s going to be like later on. So that’s something that we look at. And again, it’s really like, we look at it as, this work at the flip?

can this work as a burr? Because, you know, let’s say the market goes down. you know, knock on wood, hopefully it doesn’t. But let’s say a crash happened. We can easily hold our properties long term to watch the market recover. And at that time we can, you know, use it as a temporary rental. And we won’t be struggling and we won’t be like deep in, you know, deep in a hole financially because we did the numbers correctly.

in order for us to do a successful birth if necessary.

Scott Bursey (08:34)

I appreciate the candid answers guys and I must ask as well for our listeners who are aspiring or current commercial investors. What’s one piece of non-obvious advice you’d give them about negotiating, let’s say better deals in the current cycle.

Michael And Grace (08:52)

You know, honestly, it’s just knowing what your MAO is, your maximum allowable offer, and not veering away from that. You know, it’s in the beginning, you know, when we first started real estate investing, we get emotionally attached to getting our, getting that deal that we would maybe try to work the number to get it higher. But when you do that, you are creating more of a risk for yourself, especially when you don’t know where the market is heading. And so.

Just knowing what the master can offer and if it’s too low for them, you just move on. know, it’s best to find a better deal than to find a deal that doesn’t work just because you needed one so badly.

Scott Bursey (10:05)

Michael, that is a golden nugget right there. And guys, the market is saturated with investment groups. How does MWGM properties specifically differ itself from the competition? And why should an investor choose to partner with you?

Michael And Grace (10:22)

Yeah, so you know for us when we first started real estate investing, know, we we were very green. We did not have any knowledge other than you know watching HGTV watching all these renovation shows. And so the thing that we did was, you know, we joined a mentorship group where they taught us the foundation of real estate investing. You know the basics as in like how to analyze the property, how to do a scope of work for construction.

⁓ how to find a financial like a hard money lender just the basics of you know built-in investing and so You know for us we are you know, we pride ourselves and Just like being very educated and we’re very conservative when our numbers so we don’t like to we like to under promise and over deliver and So that’s I feel like we’re strong at yeah, and it’s

The big thing is really treating it as a business. Sometimes I feel like when people want to go into real estate, they get attracted by like they would see HGTV and they’re attracted by, I want to design the house. But that’s, that’s what people see, but they don’t see the real work, the difficult work involved in it. And so really understanding it is a business. We run it. And for us, like why people want to partner is we have a proven track record.

Scott Bursey (11:15)

Thank

Michael And Grace (11:39)

So when we’re looking at, if we’re partnering with somebody, we wanna see a track record of successful exits and really dig into how are those successful and not just what people are posting on their social media.

Scott Bursey (11:55)

That focus right there guys is so powerful. Thank you for sharing that. And on that note, is there any golden nuggets or takeaways you’d like to give our audience today?

Michael And Grace (12:06)

Yeah, so you know if you are someone who just starting in real estate investing, you need to start off with education. You need to start off learning from experts who’ve been doing real estate investing for many many years. You know finding a group that can help you kind of like go from the basics to the advanced. Because right now if I were to

start all over again, the first thing I would do is I’ll take the first six months learning about everything from like again the basics of real estate investing to learning about how to raise private money because those two together will help you not only you know find deals but make you find multiple deals and be able to fund them.

So surrounding yourself with very successful knowledgeable people is the first thing I would do. You know for us

When we first started, we started with a mentorship program where we spent $15,000 using a credit card to join this group called Homeschool by Tarik Omusa. And the first six months, we just took it, absorbed as much knowledge as possible. And then when we found our first deal in Oregon, we made how much was our profit in our first deal? $70,000. So we basically paid off that $15,000 mentorship plus made profit.

And then we found another group called Rating Private Money with Amy Majore and she just elevated our business by, of course, the network, the people that were in her group, but also just learning about how to raise capital. So that way we’re not using our own personal money. We’re not using our HELOC. We’re using people who want to invest themselves and do private lending.

and we can buy multiple projects at multiple properties at a time. And that way we’re scaling more and more every single year. education and drowning yourself with successful people is the best way to go.

Scott Bursey (13:57)

It sounds like those rooms were so beneficial. Those groups were so beneficial for you too.

Michael And Grace (14:03)

100%. Definitely.

Yeah.

Scott Bursey (14:04)

That’s awesome, guys. And looking ahead, you know, 12 to 18 months, what single sector strategy do you believe represents the biggest opportunity for sharp real estate investors?

Michael And Grace (14:15)

translating months. For us or for like people out there?

Scott Bursey (14:19)

really for any advice that you’d give as far as 18 a month, 12 to 18 months, or even a little further down the road. Any insights on what would be some good advice for investors.

Michael And Grace (14:30)

Yeah.

That’s a tough one just because you know the market is so unpredictable. We don’t know what’s going on. You know, there’s a war going on. We don’t know how the market would be affected by that. You know, I wouldn’t say like outside of the market to look at is because there’s so many strategies is pick one strategy and learn it really well. And if you later on decide something else makes sense, that’s okay to go into.

Scott Bursey (15:20)

Sure. Yeah.

Michael And Grace (15:42)

But if you start off with too many things, you’re never gonna get skilled at a strategy to at least even figure out if that’s something you wanna do. So that’s what I would say, like you’re starting out honing on one thing. And learn everything about it as much as you can. Right, because I mean, that’s what we did. When we first started, thing in my mind was blips. We would buy property and flip it right away.

And then, you know, once we hit kind of like a little roadblock and we weren’t finding any deals, we started learning about medium term, short term rental. And when we learned that, you know, course we tried to absorb as much knowledge as possible. And then we found, you know, our amazing market in South Bend, Indiana. And so we’ve been now focusing on medium term rental along with flip because again, we have multiple exit strategies. We can do both at the same time.

But the flipping gave us the foundation on how we conceptualize deals. And that’s been like still the basis of how we look at all our deals now.

Scott Bursey (16:42)

Excellent guys that is tremendous advice. Hone in, become exceptional and then take off and prosper from there. But the main thing is become very proficient at your foundation at the core. That is just outstanding advice. And guys, I know there’s going to be people that want to pick your brain and follow your journey. How can they reach out to you?

Michael And Grace (17:08)

Yeah, so you know, I’m on Instagram and I’m on Facebook. On Instagram, my handle is Michael.DC.Santos. What’s yours? And then mine is Grace.K.Santos on Instagram. yeah, you know, usually if they want to DM, I’m like an in person. So if you’re local and want to be for a coffee or a donut.

That’s the best way in person if you ever want to network. Her account is actually private though. So mine’s actually public. So if you do want to reach out to me, I’m more easier to reach out to. But yeah, like for me, like I’m all about like helping others because you know, there’s been so many people that helped me out to be where I’m at today that I just want to pay it forward. So if anybody has any questions or I’m open.

Scott Bursey (17:34)

Yeah

in

Michael and Grace, this has been more than a pleasure. Thank you for joining us today.

Michael And Grace (18:05)

Yeah, thank you for having us. Yeah, thanks for having us.

Scott Bursey (18:07)

The Santos everybody. And for our listeners, we appreciate you. If you got value out of today’s episode, please subscribe. We have more conversations coming up with exceptional operators, just like Michael and Grace. Until next time, keep your standards high and your vision clear. We’ll see you in the next episode, everyone.