Creating Enduring Wealth Through Real Estate with Paul Moore

My guest today is Paul Moore. After a stint at Ford Motor Company, Paul co-founded a staffing firm where he was a finalist for Michigan Entrepreneur of the Year two years in a row. After selling the staffing firm to a publicly traded company, he began investing in real estate, founded multiple investment and development companies, appeared on HGTV, and eventually completed 85+ real estate investments and exits, including a large multifamily development. Paul is the author of The Perfect Investment – Create Enduring Wealth from the Historic Shift to Multifamily Housing and Storing Up Profits – Capitalize on America’s Obsession with Stuff by Investing in Self-Storage. He is also the Founder and Managing Partner of Wellings Capital, a real estate private equity firm, and he has contributed to Fox Business and is a regular contributor to Bigger Pockets.

Paul first shares his background story and how he got into real estate. After getting his engineering degree and his MBA at Ohio State University, Paul worked at Ford Motor Company. Soon, he decided to start his own staffing company that was doing really well for the next few years. Eventually, he decided to sell it to a publicly traded firm. Paul found himself at 34 years old, with a couple of million dollars and absolutely no sense of investing. He moved to the Blue Ridge Mountains of Virginia, started a nonprofit organization, and started flipping houses and waterfront lots as well as ground-up construction. In 2010, he got involved in commercial real estate that led him to write a book on multifamily investing, and then later expanding into doing a number of commercial real estate funds for people who want to invest in commercial real estate but don't have the bandwidth to do it full time.

We then move on to discussing some of the struggles that Paul faced in 2007 that led to him being 2.5 million dollars in debt. In 1997, Paul had a million and a half in the bank. Exactly a decade later to the month, he had two and a half million in debt. He explains that they were able to give their way out of debt. Following the premise of one of his heroes, George Müller, who was a 19th-century Christian evangelist with radical views on generosity, Paul and his family started to donate their money pretty radically on January 1st, 2008 while they were facing bankruptcy. Four weeks later, Paul found a loophole in the law that allowed him to split one of his waterfront lots and sell the parts individually. He sold four in the fall of 2008, and the fifth eight months later. After that, he was debt-free.

Next, we talk about how Paul got into multifamily and the benefits of apartment buildings with 80+ units. Paul shares that he first got into multifamily with a four-unit building and a couple of duplexes. He then hired a business mentor who convinced him to only do apartment buildings with 80+ units. Paul explains that it is much easier to own an apartment building with 100 units than owning 100 different houses. With a 100 unit building you only need one property manager, you have one location, you have more control over your tenants, you can get a 3%, Fannie or Freddie loan, and you can get an FHA loan with a 35-year term.

Paul then shares his opinion on real estate investing at the moment. He explains that currently 93% of multifamily above 50 units are owned and operated by corporations who have typically run the value out. The problem is that if the value has already been run out, then you're going to be running on a thin margin, hoping and praying for inflation. And if inflation doesn't come or if there is a bump in the economy, that thin margin is going to go to zero. Paul's advice is to invest in assets that have a mom-and-pop ownership base, like self-storage and mobile home parks. Paul also goes on to say that if he could invest in only one thing today, it would definitely be mobile home parks.

We then talk about Paul’s books: The Perfect Investment: Create Enduring Wealth from the Historic Shift to Multifamily Housing and Storing Up Profits: Capitalize on America's Obsession with STUFF by Investing in Self-Storage. Paul explains that he wrote his first book five years ago after he went through his mentoring program for multifamily housing. He discovered that there were actual mechanics of how it all works and that there was a value formula, and he wanted to share that with the world. He wrote his second book in 2020, based on his experience with self-storage and the number of benefits it offers.

Eventually, we dive into discussing Paul’s thoughts on inflation. Any of us who grew up in the 60s, 70s, 80s, remember the horrors of inflation. Paul explains that inflation paired with high-interest rates was disastrous, and can create stagflation. But he also believes that inflation in the face of low interest rates can be a goldmine for real estate investors. If you have inflation and you can create a fixed cost in your company or your property, then that margin increases a lot over the years and your largest cost is fixed even though utilities and maintenance might go up with inflation. So, if you can lock it for a long time, whether it's in your private residence or in an apartment building, or a bunch of single-family homes, you can make a ton of money.

Lastly, we talk about the importance of finding your WHY. Paul shares that he woke up on October 7th, 1997 in Troy, Michigan realizing that he’s got a couple of million dollars in his bank account, but he doesn't feel that much different than he did yesterday or last week. He felt like there has to be more to life. So now, he encourages people to start doing something now, no matter where they are in life.

Don’t miss this incredibly fun and knowledge-packed episode of the Just Start Real Estate Podcast with Paul Moore, who is all about giving back and helping others!

Notable Quotes:

“If you don't know how to tighten the doorknob on your own house, you probably shouldn't build a house.”

Paul Moore

“I thought I was a full-time investor, but I was a full-time speculator.”

Paul Moore

“If you play double or nothing long enough, you're going to end up on nothing at some point. And then what will you have left to double?”

Paul Moore

“Good investing is a little bit more predictable, a little bit more boring.”

Mike Simmons

“The perfect Investment is not perfect if you can't buy it at a good price.”

Paul Moore

“That's the best question anyone has asked me on a podcast in a long time.”

Paul Moore

“It's the only asset class I've ever seen in my life that has a shrinking supply, but an increasing demand every year.”

Paul Moore

“Those closest to the money are the ones who benefit most from inflation. And those closest to the money are the Federal Reserve and Big Government.”

Paul Moore

“You can get wealthy if you think like they do. And that is: getting low-rate debt, locking it in for a long time, and letting inflation do its work.”

Paul Moore

“I like to encourage people to start doing something now, wherever you are - at age 20 or 50 or whatever - that you want to do, to leave a mark on the world for the rest of your life.”