Create and Grow Real Wealth with Michael Episcope

In today’s show, I am joined by Michael Episcope. Michael is principal of Origin Investments, in which he co-chairs the Investment Committee and oversees investor relations, marketing, and company operations. He brings 25 years of investment and risk management experience to the company and believes that calculated risk-taking in inefficient markets is the key to building wealth. He also regularly contributes to Forbes, Entrepreneur, and Huff Post, and frequently speaks on real estate investment panels and podcasts.

We first talk about Michael’s background story and how he got into real estate. At a very young age, Michael was exposed to the investment side of real estate by his grandfather, who was in real estate at the time. He used to spend his summers with his grandfather, who was very hands-on when it came to his business. These experiences gave Michael first taste of the real estate world and allowed him to see the lifestyle it can provide, without even realizing what a profound effect that was going to have on him later in life. After college, Michael started working for Chicago Mercantile Exchange, where he spent the next 17 years building his career as a commodities trader. After 17 years, he decided to retire from this career and this is when Origin Investments was created.

Michael then goes on to explain in detail why he decided to retire from his first career as a commodities trader. He explains that when he first got into trading he had nothing to lose, so he could take all the risk that he wanted. But, as he was moving up the ranks in his company, he realized that he was headed to a point where the risk was simply too big, where he had far more to lose than to gain. So, he retired in 2006 and in his words, it was the best thing he ever did.

We then discuss what it is that Michael is actually buying, when it comes to real estate and the two funds that they are operating at Origin Investments. Michael shares that they buy class B or better apartment buildings and they also do preferred equity, meaning they lend to certain projects. Their fund has many different products that they can invest in within the capital structure, but it's mainly class B and class A apartment buildings. Right now, they are operating two funds at Origin Investments and their IncomePlus Fund is for the income-oriented investor. The advantage of that fund is that people can invest all of their capital at once into a diversified portfolio of assets that's made up of preferred equity, common equity, and also 20% of the fund is dedicated towards ground up development. So they are investing immediately into assets that are cash-flowing assets. Their QOZ Fund is a qualified opportunity zone fund, that is meant to deliver high-risk adjusted returns through development, but the real benefit is taking advantage of the tax benefits.

We then talk about the scope of Origin Investments. They have about $600 million in equity and the assets under management are $2 billion. Michael believes that their biggest strength is that they have a lot of skin in the game and they're investing side-by-side with investors. They also have a great Investor Relations Department and understand the service side and the psychology behind the individual investors. They currently have 30 members in their team divided into five areas: marketing team, investor relations team, investment management team, acquisitions team and corporate operations (accounting and legal).

Lastly, we talk about the marketing strategy that Michael uses with Origin Investments. According to him, there is no magic bullet. The most important thing is to be consistent and put yourself out there. The first step to having a good marketing strategy is to have a good product. Only then can you think about the ways to market it and put it in front of people and show your competitive advantages.

Don’t miss this highly educational episode of the Just Start Real Estate Podcast with Michael Episcope that is all about creating and growing real wealth!

Notable Quotes:

“When I was 36 years old, I had a great career but I was also young. I didn't want to retire, I wanted to do something and I think it was that early exposure to real estate that really interested me in that asset class.”

Michael Episcope

“The reality was, it was a family office. We were two guys buying real estate, putting our money to work and then we ended up bringing in friends and family, syndicating and growing a fun business, and just doing more deals and generating returns and providing people with great service.”

Michael Episcope

“Our belief is that you buy great real estate and you take care of the downside, the upside takes care of itself.”

Michael Episcope

“When I started trading I couldn't rub two nickels to my name. So, I went and traded, and decided to take that kind of risk, because I had nothing to lose.”

Michael Episcope

“What I was really good at is reacting to the information at hand and doing it faster than anybody else around me.”

Michael Episcope

“The market is the market. What you do and how you react, and how you pivot or adjust your approach, is really what makes all the difference.”

Mike Simmons

“We have very flexible capital because, in times like this, you have to be able to navigate across the risk spectrum when you don't see the kind of risk-return that you think is appropriate with the money you're putting out.”

Michael Episcope

“That's what real estate is about - it's about taking advantage of the tax efficiencies.”

Michael Episcope

“You don't buy, fix and sell a great asset. You buy, fix, and hold a great asset for a long duration. That's how the most amount of wealth has been created in this country.”

Michael Episcope

“The only thing that matters is what you get after paying the manager and Uncle Sam.”

Michael Episcope

“1031 exchange, depreciation, and the ability to refinance. That's the trifecta of real estate right there.”

Michael Episcope

“If you have a great product and you put it in front of enough people, they're going to buy it.”

Michael Episcope

“During COVID when the world just kind of blew up all of a sudden, we didn't know what was going on, but we knew that we had to communicate to investors.”

Michael Episcope

“Tell them the truth right away. Everybody understands the risk of what they're doing.”

Michael Episcope

“Nobody likes a black hole. Over-communicate, tell them what's happening - good and bad.”

Mike Simmons

“The best thing you can do is be consistent and put yourself out there.”

Michael Episcope

“In order to be good at marketing, you have to have a really good product. Period.”

Michael Episcope

“If you can't quantify your competitive advantage, then you don't have a competitive advantage.”

Michael Episcope

“We really go above and beyond to get people comfortable. And it's not just for their benefit, it's for our benefit as well.”

Michael Episcope

“The best investors to us are the ones who downloaded the information, they read, they come to the table ready with questions, understanding what they want to invest in or at least talk about.”