Stop Buying Single-Family Rentals? $5B Developer Reveals the Real Path to Wealth...

The time and energy it takes to run real estate, whether you're doing a 200 unit deal or a one unitit deal, is really not that dissimilar. Everybody markets it as a passive income business. Like that's the biggest croc. Was that the hardest deal you ever worked for? No, that's I mean it's easy compared to what we do today. If anybody can do it, there's rarely value. Can you expand upon that? Welcome back to another episode of the Roots Podcast. I'm Tyler Engel joined by my co-host Max Moore. Today we have Tad Miller on the show. Tad is a co-founder and CEO of Milhouse, a $5 billion plus real estate firm reshaping urban neighborhoods. He's recognized as one of Indiana's top business leaders and named ULI's 40 under 40. With deep expertise in infill, mixeduse, and opportunity zone projects, TAD has played a huge role in driving growth and revitalization in cities like Indie. We met Tad through Tyler's dad at a high school hustle event uh Milhouse HQ and his storytelling. We were just like, we got to get this guy on the podcast somehow. So, had to call in a favor to uh Mr. Scott. Shout out Scott. Scott got it done. We got Tad in the room. So, welcome to the show. Happy to be here. We like to start every uh episode with kind of a similar question, which is if you had $50,000 and you were starting over in Indianapolis, what would you do with that money? I mean, of course, it's very personal to what you're trying to accomplish. Um, I think if I was trying to kind of build a platform like what we've done at Milhouse, I would go get a really good job at, you know, one of the strongest real estate companies I could get to take me and I'd use that $50,000 to support my lifestyle, even if I didn't have to take income. or if I could get the job with income, I'd probably use that capital to, you know, go really get the best, you know, education I could in addition to the job I had, whether it be at IU real estate or IU Law or or whatever else. I think that would be how I would spend that money. Using it to pay for your lifestyle expenses while you like build sweat equity essentially and experience. Yeah. Yeah. I think so many people try to do it themselves and buy buy a business by something that's too small to really learn on. And I feel like uh the real experience is actually being where the real action's happening, not trying to make it up on your get in those rooms where those discussions are happen. Yeah. Be in the room where it happens, right? I mean, that's kind of like where the real value is created. Nobody does anything by themselves and you can't teach yourself what you learn in those rooms. So you'd be better off taking a negative cash flow and working for whether it's a Kiter assignment or a Buckingham or a Milhouse or a you know whatever the right kind of sophisticated real estate group is. I guarantee you your long-term value will be much greater than going out and trying to start from nothing yourself with that kind of money. The biggest thing I think I took away from your chat to high school hustle was single family investing and what you're doing. They're completely different skill sets. And if you think you're going to it's a linear and you're going to like stair step, you're not. It's like you you might as well just sell them all and restart and go work for a developer. Do you That's what I had to do, right? I mean, that's what I I did. I started as a single family guy and finally was able to convince um uh to kind of get in the room where it happens with another group and started realizing how it really worked. And I literally I didn't take a loss, but I definitely like liquidated at like a profit that would have made sense in any general situation because I realized that the whatever 50 plus units that I had bought on that basis was just an anchor to my future success. Mhm. Um, so I really had to I mean I took losses on a couple houses just to get rid of them. Even though if I would have taken time and waited I would have made some money. I you know undercut pricing of what I could have made on those houses. Man, that was by far the best decision I ever made. Um because you know the time and energy it takes um to run real estate whether you're doing a 200 unit deal or a one unit deal is really not that dissimilar. Mhm. In fact, I would say you can spend less time on a 200 unit deal as an individual than you can on a single unit deal because you can actually afford the team and the staff that it takes to do a lot of the work. Whereas like you you just lie to yourself about how much time you're spending on it and you don't charge yourself at an appropriate rate. Story whining every day about a tenant he has to evict or this. It's not the tenant piece. It's the fact that I bought a franchise GNC at 20 years old and thought that I was doing something great and just got into the operations of it. And when I was working for somebody else, it was easy. I didn't His balance sheet was not as good as it looked. Right. Right. Um so you learn that and you you take L's but Yeah. It's the the cost of education and the experience. Yeah. Um if you [clears throat] had one free billboard in Indie for a week, what would it say? Be nice. Love it. Be nice. Any rationale? Like why? because nobody is anymore. [laughter] It just I don't really understand kind of why especially online. Yeah, especially online. But even it bleeds from inline online to kind of personal lives and professional lives and everything else. And it's just amazing how much time I spend just trying to get people to be nice to each other. Um feel like that's almost more of a job than like, you know, the productive stuff. But I feel like if you're passing that on the interstate and you read it, it's like a good good reminder to to go into the next conversation. I hope people at least smile. Yeah. The last guest uh said a uh like laughing emoji was his we've got too positive. He was saying it sarcastically like this is just so effed up the world laughing emoji, right? Yeah. Um, actually he said that because of wholesaler deals, like them covering up, they'll say like $20,000, we'll flip this house, and it's like a gut job, right? And he just comments laughing emoji on all these Facebook posts, right? Yeah, that's his uh his thing. Yeah. Third kind of starter question. If you could describe India in one word, what would it be? Um, I should probably have a much faster, better answer than this, but I mean, stable. I mean, I mean, it's been a market that's been great to us, been ups and downs, whereas some of the other, you know, especially kind of southeast coastal markets are very much a roller coaster, both from a personal life and from a um personal life and a professional life. It's just, you know, there are certain places that are great to visit and there's other places that are great to like have a foundation. And for me, like Indiana is such a strong foundation for both my personal life and for our business that, you know, we definitely vacation and play and actually like work and invest in a lot of different markets from California to DC and like in some of the businesses even in Canada and Mexico. Um, you know, every city and every state has a great story and has great things, good for it and bad for it. And I just feel like Indiana is such a strong foundation, such a great place to, you know, start a business, grow a family, kind of get the best of all worlds, but, you know, you're only a couple hours from New York and if you want to go and, you know, it's like top 10 income to price ratio for like cost of living housing. Yeah. versus income. It's right up there with Arkansas, but who wants to live in [laughter] Arkansas? No offense. Yeah, I'm sure they have a great great story as well. No, it's beautiful. [laughter] Um, but yeah, it's a great foundational great foundation. Stable seems appropriate. Yeah, I I think when you talk like any type of recession since and the way that we've not been ter like gotten steamrolled, right, it's kind of like we just stay Yeah. Yeah, we stay steady. Steady to the right up. Right. Yep. Right. Yep. Much more consistent. Yeah. You shared a story uh when we were there at Milhouse HQ for High School Hustle of your high school hustle. Uh could you take us through a little bit of that? Um, I mean, I had I had um probably several things that are considered high school hustle, but you know, the big one that really kind of transformed everything was I was working for um a couple of great guys um who were running a construction company all through central Indiana and they for some reason decided to split up and kind of left a bunch of unfinished you know, jobs and whatnot. One of them moved to Texas, another one kind of moved to county over. Um, and so I just kind of went around to the people who didn't have finished jobs and just said, "Hey, I've, you know, basically been running a lot of the crews and doing most of the work and understand kind of the accounting and everything of this stuff. You know, why don't you let me finish the jobs?" And so that really kind of was kind of the first transformational one. of course, you know, always had other kind of newspaper routes and, you know, selling pizza school and everything else, but like that was really the transformational that power to say, you know, I'm going to do this as a high schooler cuz I would say nine out of 10 high schoolers would be like, uh, that's a grown-up decision, grown-up job, like you know, running payroll. I don't know how how involved this this operation was. Where did that come from at that stage? Well, I mean, I don't think it was that I think times are a lot different today than they were whatever. It's been a long time ago. 30 years ago at this point in time, 20 years ago, yeah, actually almost 30 years ago when kind of that I do think there's a difference in kind of what life was like back then and kind of the independence um different kind of independence like kids had to make those decisions back then. Um, I'm sure some of it was our, you know, just the way I was raised. I was always, you know, my family was very much a like, um, we're here to support you, but like you have to make you have to make it happen type, uh, family. Um, and so I think it was probably just a bunch of stars aligning like that. um from kind of having a family who was always supportive of like whatever you wanted to do to be the best at it to go make it happen. Um combined with just being in that situation where I already was kind of doing it anyway. It actually wasn't that big of a deviation. It was more just like the two partners split. I didn't really change my job. Yeah. Right. It just you just leveled up. It just I all of a sudden was doing the same job but now I was doing it directly instead of a middleman in between. So kind of the opportunity had something to do with it. Um and then I do think it was just a little bit different culture um kind of when I was growing up, you know, just it seemed like and I it might be my situation or or whatever, but it just seemed like people were closer to kind of the real source when I was, you know, 25 30 years ago, you know. Um there were very few people who I always joke about like you shouldn't eat meat if you haven't butchered a cow. Um that was probably even that situation probably was relatively common when I grew up, right? Very few kids had that had much separation between that. Now it's like you're born in the 1800s, right? Yeah. Yeah. [laughter] I mean it's amazing. 25 years ago is not doesn't seem like that long ago. don't seem like that old of a guy, but but if you I mean 25 years ago is not that long ago, but when you think about it like culturally 25 years ago is a there's a very distinct like when I grew up we like well the coddling of the next generation is is it's an embarrassment for sure. I think it was also situational like I was born working on farm. I was like work worked on farms. I, you know, had family that had farm and like it was just a different kind of work ethic and expectation. How does it go from construction team to ownership and investing? Yeah. You know, I got lucky. Um, there was a guy named Jack Chris actually in Lwood, Indiana, where I grew up. Um, and he was a was a very interesting guy. Um, and he was one of the larger customers of the construction company that I worked for and he also went to my dad's uh church and so I knew him really well and you know I would always you know be on his jobs working and see him at church so I had a lot of conversation and he'd always like be like well you just need to start buying your own houses you can do all this stuff on your own which I'm sure had something else you know that was probably part of it as well like he was always kind that's huge Yeah, you know, he owned I don't know me how many hundreds of like mostly like section 8 and like kind of pretty rough and tumble stuff. It was like we were always cleaning up a fire or a meth lab or something as part of our construction job. But um you know that you know that was kind of encouraging. And so when I was in my first year of architecture school, which would have been maybe a year and a half after I had kind of stepped in and started finishing some of these jobs, um I was just like, "Hey, I've got to get a place to live for next year. Like, let me I'm going to go find some condemned burnout, you know, whatever, just like Jack did." Um and that's what we did. you went out and kind of found a, you know, pretty terrible place that needed a lot of work and went and got a 203k FHA first-time home buyer loan. Um, kind of got my uncle was nice enough to cash advance a credit card and my dad was good enough, dad and mom were nice enough to co-sign on the loan since I technically don't even think I was old enough to sign on a loan yet. Um, and I had the construction equipment from the construction job. Um, and it was kind of cool cuz like when I got back from the closing, I pulled up to the house and there was Jack Chris in his truck to congratulate me on buying my first house. So, um, anyway, I think, you know, there just lots of lucky instances of like the people I ran into and, you know, I think it was a combination of they saw kind of my work ethic and my kind of desire to do stuff right combined with kind of their interest and kind of seeing people do and be excited about what they loved and just kind of got lucky all those stars aligned. Mhm. I bet there was some curiosity from you to them in there that like if you engage it sparks their interest. Yeah. 10x. Right. Right. Was that the hardest deal you ever worked for? The first deal I bought first purchase. No, that's I mean it's easy compared to what we do today. I was curious. I wanted you to tell me it was harder to buy a first home than a you know artistry. No, it's too e I mean that's the problem with it is it's too easy. That's why there's no real value in it, right? You know, you don't really build value buying houses like that because anybody can do it. If anybody can do it, there's rarely value, right? Can you expand upon that? I mean, it's just supply and demand, right? If if it's easy to do stuff, prices get driven up. That's why the spreads on single family are so crappy compared to like the the delta you can make when you're buying like larger, more complicated things, right? Because you could I mean an 18-year-old kid can do it or sub 18-year-old kid can do it with zero experience, zero education, whatever. The barrier to entry is nothing. Anything where there's a low barrier to entry, it's going to be really impossible to actually make any sustainable ve value unless you can create a misperception and and sell it, right? Which is what they do with all the building shows, right? They lie about how much they use to like fix something up and then flip it and know the numbers are accurate. And so it's totally mis Yeah. So it's totally misperception. Um and they're making their money on the sales of their books or their TV programs or whatever else, not on the actual real estate. But like the reality is is like true value is built, you know, doing stuff that's [snorts] not everybody can do. because as soon as everybody can do it, the prices get driven up, the spreads get tight, um, etc. So, yeah, I that was that was hard because of what I knew at the time, but it really wasn't that hard. Um, you know, I controlled most of the elements. I did all the work myself. I worked on my own schedule. Um, I had all my own tools. Um, it was hard but simple. It was it was hard but pretty pretty simple. And it was really only hard because it was the first time, not because it was actually hard. Yeah, that makes sense. Um I was just really hopeful that you would tell me it was harder to buy a first home than to take a swing at what's your first big development? What did that feel like going through the process? Um I mean I think the first like I don't know it depends on how you define big. like kind of the first couple like million-doll deals were just kind of like subdivision that were like pretty, you know, complicated entitlements that we were able to get through and then kind of flip out to builders. um kind of first kind of call it 10 plus million dollar deal was the Clevelander downtown Indianapolis which was a very complicated like public private partnership with kind of city of Indianapolis that kind of had to transition a whole uh mayoral change um and staff administration change which made it really hard and kind of really messed up kind of the project uh but we were able to salvage it cycle somebody else got yeah it was like one of those deals where it's like Well, we won the deal under one administration and we won a really big deal and then a new administration came in and basically needed to take care of their kind of people and so they came in and basically recut our deal and cut us out of a bunch of it and gave us a smaller piece of it which at least they like gave us a smaller piece of it instead of cutting us all but it was just a very complicated like political kind of process. Um but it wasn't like a complicated deal per se. Yeah, you alluded on the first deal going back to like the single family. You had control as was or I think you use the word control of the elements but in the bigger stuff you don't have as much control I assume. Yeah. I mean I think I had control of the dayto-day how the construction you know because I was doing it it in fact I shouldn't even say it was easier. It was more like I was the one wiring the house. I was the one plumbing the house. I was the one laying the carpet with of course my dad's help and you know other people but like I kind of was right there where you know I could see it all you know as it gets bigger you're really kind of it's as much about kind of leading an army who's executing the projects instead of you know just being able to like will it to fruition. So I think that's kind of like the hard delta too. As you're leading now more of an army doing um these larger, you know, syndicated type deals with, you know, you have a very large organization, I would assume hundreds of people at this point. Um what are the most important skills that come to the table on a daily basis and leading that army for you? I mean, I think the biggest thing is to be able to extract yourself from the emotion and to not get caught up in hype. Um, [snorts] and to just kind of stay steady and calm to gather the appropriate facts, make the appropriate analysis, and then communicate, you know, kind of the right direction from it. Um, I think I feel like kind of the biggest problems and the biggest mistakes I make are when I don't take enough time to like fully like get all the facts and data points in. So, I kind of take the headline or I react on a headline or a or I react on one conversation without getting the other sides of the story or uh whatever. Like, you know, that's always like a recipe for disaster. Um, you know, to kind of come out of a meeting and then go straight at an issue. Yeah. Before I've had a chance to like, okay, that's what these three people said. Kind of what's the other side um feel? Um, and do you feel like the interpersonal side of leading a developing company way heavier than the technical now? Oh, yeah. I mean, you can pay anybody to do the technical part, right? And you can pay at a much lower rate somebody to do any piece of the technical than you can the, you know, the coordination quarterbacking um, uh, in our kind of world. So um you know we have a lot of great architects and I love architects but you can you can buy architecture you could buy you can buy legal you can buy like the different technical components um it's not cheap or affordable um but at the same time compared to like what it you know kind of finding the unicorn kind of leader position that can bring the lawyer and the architect and the property propert management and finding people who can really bring the people together like that's where the like big value is created I think um replacing yourself is that something you've been adept at doing yeah I think you know the one of the top kind of three goals um when we started Milhouse you know it was you know build projects we're proud of you know don't work with jerks um and all and build an organization that we can replace ourselves in. So I mean it's been the kind of standing mantra in kind of every if you want to build a sustainable enterprise you h your number one goal has to be to replace yourself right um and so anything that that isn't the issue then you haven't built a sustainable organization and so for us yeah that's been our goal from the our goal from the beginning is to build something that we can both replace ourselves but also create you know significant opportunity hopefully for those that that do replace us. How quick does that rip cord get pulled to replace yourself? What does that phase out look like? Um I mean it depends on which kind of enterprise that we're kind of talking about. Yeah. I think I'm thinking of the systematic of like how Tyler and I operate. We're building a team of people. And there's elements of like Tyler's position that we've insulated and replaced, but there's still things that Tyler has to show up and do. Um, and they aren't different than what he had to before. Like they're not the next league up, I guess, is where we're stuck is like taking that if you go to a basketball team, I think it's a very easy way to think about it. We're still on the court coaching. We're not quite in the box yet. Yeah. Well, I guess some of it and I don't know the situation well enough to probably to speak to your specific issues, but um I would say more generically if we're thinking about a basketball team, a lot of it is how do you build the basketball team from the beginning um are you building a you know LA Lakers or Miami Heat where it's like you'll never replace a LeBron James because they only come once in a blue moon and and and there's just no way that'll ever be sustain like once you make that decision to go that rate, you know, you'll never have a sustainable organization because it only works because there's a certain person there or are you building a Pacers where you know you have a whole bunch of people that are none of them are, you know, a um at [clears throat] the level of a LeBron James or a Michael Jordan. Um and but they still are winners and they're incredible. Um, and you know, most the time uh uh with a little bit more preparation maybe than the last game of the finals, but uh if somebody gets hurt, they're still they're still going to be winners going forward. I mean, depending on which type of organization you're like, for me, I've always felt like I want to I would much rather be on a team with a bunch of people that are smarter with than me, equal to me, like ultra supportive that um than, you know, trying to be like the person. Um, and I don't really think there's I mean, if you look at history, there's just not sustainable organizations that have less have lasted that have been built around a single person. Yeah. It might have gotten started like with a single person, but like hopefully that single person was, you know, understandable enough of the future in a good degree. That's like level one leadership is like the the only skill required is charisma. you can just like win people to your side with like good charisma, but like level two and then level three is like sacrificial leadership. So, it's like it's literally the first level is being the superstar. I'm gonna do everything right. You It's like you said, it's unsustainable. Yeah. You have to develop a lot of I think humility um and getting out of your own way, which I think you've probably done very well, better than you're you're even claiming that you've done to to get to where you're at, I would assume. Um, I do want to ask, do you think as we we sat in on the uh presentation you gave at HQ, I keep referencing that. That's a baseline for my understanding of kind of what you're all about. Um, and you I asked a question which was like, hey, you know, I'm investing in single family homes, doing this, doing that, and you know, trying to grow that equity snowball. like maybe I'll buy a single family home, then I'll sell it and buy a quad, then I'll buy the next quad, and then I'll sell those and get to the apartment building. I was like, logically, that makes sense. Essentially, the answer you gave was sell them all tomorrow. I walked out crying. No, [laughter] I'm joking. I I texted him and I said I said, "Get wrecked." But I did talk to Derek Christie on the way out. We both had to cut out early and he was like, "Interesting answer, right?" And he actually uh basically he he added some nuance. He kind of disagreed a little bit with that stance. So, I'm just curious. Do you think in like the average person take Max here shouldn't go buy, you know, a duplex ever? Yeah. I mean, I'm not sure who Derek Christie is or what kind of his business model is. So, I'm not sure how to He's a mortgage lender. He's done single family, two apartments. Yeah. All of the above. Got it. Um, yeah, mortgage lending business is a lot different. um you can make a lot of money mortgage lending business in a much different way than you can in like actual real estate. Um but um [clears throat] I guess from my perspective you can't apply the corporate ladder to entrepreneurship and for some reason people try to compare the corporate ladder of like hey I start as an associate and then I go to like they compare yeah they get like all these promotion. I'm kind of like, wait a second. Like entrepreneurship is not a is not a corporate organization that just, you know, has a roadmap. You know, entrepreneurship is a um you're taking a real risk to try to accomplish something significant. And you know, th it just those two those two don't don't align. um you know, if you want to if you want to climb a ladder like that, go get a job at a place that has like a clear path and whatnot. Um and then I guess there's a whole lot to this kind of question that's probably way too long to get into for today, but a lot of it's personal like what do you want to be, right? I mean, if you want to be a lifestyle guy that you know is going to make a good living and you can build a little bit of wealth and you're okay with the responsibility of buying single family homes, you can make some money building single, you know, buying building whatever single family homes and building a portfolio. But like I would argue it's almost impossible you'll ever make generational wealth. Um, if you're really trying to be an entrepreneur and really trying to either change an industry, change a platform, or really build, you know, generational or transformational wealth, like you've got to take some risk and do something different that not everybody else can do. Um, and so, you know, is there if if somebody thinks like they really love buying single family houses, they love doing construction every day, they're okay like, you know, non-monetary essentially. Yeah. And they and they're okay with that. Um, and they don't really meets purpose meets generational wealth. Yeah. And they do they really, you know, they want to work till they're 60 and, you know, not really have a lot of vacation time and when they're on vacation be slave to the phone and like it's just it's really hard. Real estate is an operating business. It is not a everybody markets it as a passive income business. Like that's the biggest croc to figure out how to make it passive. There is no way to make it. It's not a passive. Even that requires a little bit of Yeah. Yeah. You got to go chase down the guy foreclose on a house cuz Yeah. And because most likely you're not going to have a balance sheet. Is it because of the scale? So like I know operators that are 100 plus doors that I would I can understand the generational wealth piece even if they had all payoff. We're still talking 100 homes 200k a piece. Like yeah it's not that. I mean it's good money but it's not like transformational wealth, right? But if that was 100 200 unit apartment buildings, well, you got to think about like a single like a single promote on a 200 unit apartment building is, you know, could be five could be $20 million by itself, right? And I would argue like again if you've spent you know whatever seven to 10 years working in the industry for a whether it be a Simon Milhouse bucking whatever like a quality a quality developer owner operator where you really understand the business and have built in institutional relationships. You know, you're probably going to do a 200 unit deal with less effort than buying one to five houses or with similar effort because you're gonna that project can afford the the cost of the professionals. Becoming the type of person that can do that requires a lot of effort and a lot of time and relationship, but then the actual leverage point itself. Yeah. I mean, signing that contract versus those five homes is no no different. Obviously, consult your lawyers, whatnot. Agreed. But there's a lot under the iceberg. Is it vanity goals that people have that it's like I want to hit a million, I want to hit 10 million. Is that why people get stuck in the single family realm? Like you liquidated and went straight towards what you believe to be the the leverage point and building development projects. Um, yeah, I think I kind of didn't have this experience necessarily, but I think you see like people who go through business school and actually start doing the math and are forced to do the math in their, you know, IU Kelly School of Business or their, you know, Wharton School of Business. They see the math pretty quickly going through there and be like, "Wow, this makes no freaking sense." And so you don't see those guys going out and doing single family unless they're buying a thousand units at a time and they're basically treating it like a multifamily platform and they're doing it with institutional capital. Um I think one of the big things you've got to remember when you're trying to like process the analysis of like what you should do and again it's very personal like there are some people where probably it makes a lot of sense to do um for them based on they want full control. They don't work well. They may or may not work well on teams. They may like [clears throat] controlling every facet. You know, they're okay with a limited amount of wealth. They just want to be local. They don't want to travel. There's all valid factors why it might make sense for somebody. I think for me, the question was like, you know, why would I not do it? Or if you have the opportunity to not do that, what would be the reasons too? Like, you know, if you want to be able to like disappear for 6 weeks and not answer your phone periodically, like you're not going to get that in that type of a business model, you But you can get it if you build an organization with scale and everything that can fund it. It's going to take a lot more than 100 homes, though. Oh, it's going to take thou I mean, it's going to take 10,000. I mean, it's [laughter] substantially more. Um, I would say so anyway, a lot of it's personal and life factors, I would say. A lot of people just don't know. I think it's more a lack of like they just don't know. Yeah. They just It's kind of to what I talked about earlier like the hardest thing of leadership or ma is making good decisions by getting all the data. I don't think people mo most people know all the realities and I don't think people do enough homework to find out all the realities and I think pe most people you know are media social media everything else like even as somebody in the space who doesn't really use social media much you know the inundation of the Grant Cardones and like all these different like rich dad poor dads and stuff where you're just like man I heard something that he doesn't own anything. I have no idea. Um, [laughter] but I'm sure he I mean just based on his sales of book volumes, I'm sure he's done just fine, but it's Yeah, I I would guess it's not from real estate based on like Right. And maybe that's the comparison they were making is the seminars and the Let me ask you this. Let's just say someone's like, "All right, Todd, I'm bought in. I want to do generational wealth. I want to do 200 development buildings. I want to kick it into fifth gear. I got these single family homes. Uh what's the first move? Cuz I think the analysis paralysis of even and I haven't discerned exactly what I want to do. Um we got some cool stuff I'm working on with my dad in Danville that we're just passionate about and I don't think I want to get into multif family personally. I've I've gone through that. I think I it's for the right reasons, not just cuz I'm scared, right? I'm not passionate about multif family. Couldn't give a crap about it to be honest. I think it's cool from a balance sheet perspective. Anyways, I digress. What should that person is it networking? Is it getting hired by the right development firm? What do they need to do? Where they start? Yeah, I mean I I would my push would be to get go work for, you know, whoever is the best in class, highest quality caliber group you can find that will take you in whatever kind of product type or genre or theme you want. Like if it's industrial, you know, go talk to Jason and Oafet Ambrose who are like best in the business or you know um the Scanel or somebody and get a job at a shop like that. If it's retail, you've got Kite, you've got a million guys like Kershman Partners and everybody else just people who really understand and get it and been doing a long time that you know I would go get a job working for someone like that like full-time. um even if it was less than I wanted to make and I would go, you know, register for, you know, law school if I already had an undergrad or I'd go to, you know, IU Kelly or real estate or, you know, something on in at night and I would do that for five to seven years within the back of my mind trying to like process and think through how am I going to get to where I want to get and what's the math take to get me to like my it's 100 million or 500 million or whatever you want that to be in wealth and what you know I think combining that professional expertise with the educational expertise and getting all the facts bringing it in you might some people look at as they're losing five years of their life I would argue you're actually like probably gaining 20 years of your life because I think the compound interest of that versus going out and you know trying to do it on your own without that um will cost you far more than that kind of whatever 5 to 10 year kind of period of learning. Um, you know, you got to remember like not in a bad way, but like scale gives you almost like a tax on every property and every that comes back to you versus like when you're doing anything on your own, it's only your value per hour. Yeah, that's a great it's a great way to sum that up. The other party that I'm curious on, we help represent a lot of people buying single families. Mhm. Who have full-time jobs, very passionate about what they do. Think doctors and uh engineers, not going to go run a development firm. Mhm. Would they be better off just writing notes or private investing, betting on a horse? Yeah. I mean, it's hard to make that kind of money like in a public re investing as a doctor, but but yeah, I mean, there's a bunch of guys um and I'm thinking syndication instead of me buying another 150k single family in Little Flower in Indianapolis going and raising 150K and taking a swing at something bigger or raising way more than that. Yeah. Again, I I don't think that helps. Um, again, personally, it goes back to kind of what you are trying to accomplish as an individual. If you're trying to create generational wealth, you know, if you're like doctor, lawyer, whatever, knocking down, you know, really good income and you're saying you're going to reallocate plus or minus 100 grand a year or something into like projects, you'd be way better off investing in a, you know, divvying that up amongst a few sophisticated developers and investing in their LP and GP than you're ever going to be buying real estate directly. Yeah. um what I would argue is right 90% of the time, especially if you factor in the time and energy. You can go on vacation and have Yeah, you can go on vacation or well even just the um yeah, I mean work an extra four hours at your hourly rate as a lawyer and you're going to make more than you know you would with the kind of principal appreciation stuff of that home. And to define for our listeners because I don't think not all of them will understand LPGP limited partner versus general partner and limited partner is just only capital right only they have a limited downside limited upside the necessary equity portion of a deal. Well they shouldn't have limited upside they should only have limited downside but fair. I thought they had limited upside sometimes too. sometimes maybe, but like they I mean they went to the wrong people if that's the deal they struck. So yeah, call dad call dad's private money people. But um where I was going with that is do you think now in this environment is a good environment for you know I have 100k I'm going to put it into you know BAM capital milhouse where name your pick you think is now a good opportunity in the market. This is where you have to do your homework, right? Like I think doing your homework is what the biggest thing we've lost uh kind of in culture compared to when I grew up is like the lack of people doing homework and kind of like the focus on the headline. like that just it was that's probably the biggest difference cultural shift um I feel like uh since as I've grown up is just how little data and f like we have more data than we've ever had and people use it less than they used to. Um, and so I would say there is a there are a lot of great operators um, who and there's groups like Milhouse that aren't doing capital calls and there's a lot of other groups like us. Um, and I think down the road go to Yeah. I mean, Scott and I have talked about it. um we're [laughter] like you you you've got to do your homework and just because the package looks great and they tell you what the return is doesn't mean you should be question stuff and it's sticker it says 15% R they could pull that out of their butt most of the time they do right I mean most a flashy packet yeah I would I would say most of the time the packages I see like they know like what the targeted yields that people will buy at are so they play with all the assumptions to get there and then nobody really steps in and checks like, hey, are these rents really legitimate? Is this great? You know, that's where like people get caught up. Like that's what was so frustrating, you know, for us at, you know, at kind of the Milhouse team for the last kind of 10, seven years, whatever before kind of it started adjusting in 22 was, you know, we would always like we were ultra like disciplined on projecting rate increases. And we still missed stuff too, but like we were very diligent on that stuff. And it was kind of like if it didn't work as a deal, we didn't try to force it to work. And then like we'd go get beat out by some of you know kind of these groups where it's like you know they were somehow marketing a 22 when we were only marketing an 18 on deals that we had actually they had overpaid like we had been the bridesmaid on and we'd always be like what the heck like I don't understand how they're getting to a 22. Um [snorts] but the investors bought it they ended up winning the deal and then now they're doing capital calls. um which is I think kind of sad and disappointing, but I would say you still have to do your homework. Um whether you're investing directly in an LP or you're actually self-executing. Um, but if you can do your homework and you can find the groups that aren't just kind of flash in the pan, um, who've actually like lived through a cycle and, you know, are projecting like good returns, you're always going to be better off than the time and energy and complexity that you're taking by kind of self-directing. It's the reason I invest, you know, with the high alpha guys in technology. It's why I invest with the oxo guys in the private equity and industrial space. almost why a lot of those guys invest in me in real estate is because I know they know what they're doing and they're going to always cut a better deal than, you know, I would going and trying to do those industrials. And I know Scott and um Mike and Eric and everybody are going to cut a way better tech deal than I'll ever get doing a tech deal direct. And then on the inverse, I think they know and trust me and they get me their money on stuff that's real estate related because they know I'm going to drive a better deal and do a better execution on that. I heard someone say on a podcast recently, once you get to a certain level, you realize everyone at that level is kind of jerking each other off just sending money around the circle. Um, [laughter] I mean, I would say I would paying the lawyers, they're they're invested in your deals and then maybe frame it up a little bit differently than that, but that's what the Yeah. [laughter] Yeah. Yeah. Just quote just quoting. Yeah. I think I mean I think that's true. I think that's true at every level. I think there's some of that that goes around. I do I would say like the diligent groups uh tend to hang together and I think they're like at least for me um you know we manage a lot of wealth for you know some of the wealthiest people in the country um between kind of the hundreds of individual investors we have and then the institutional investors both foreign and domestic um I would say what you find is like in any level. You know, I grew up ultra poor. Like there's always a certain certain groups even within those groups that kind of play loose and play tight. Um, and I would argue that the people I've seen do really well long term, and again going back to general racial wealth and sustainable businesses, they're the groups that are doing the research. They're doing business with people they know do the research. Um, and it's not just like kind of a kind of pass the hat type thing. I would argue, and I mean, you kind of brought it up earlier, there are some groups even here locally that I think very much have done a lot of, you know, kind of pass the hat kind of um, perceptionbased marketing kind of to kind of build build stuff up. That's that's costing some people today. M um but I do think I do think people understand who people are over time and that last Yeah. time vets it all out cycles and I think you're seeing some of that today. You know you're seeing certain groups like us where you know we've only really done a single um capital offer. It wasn't even a demand for capital. is more like, hey, we're going to put up a bunch of extra capital to support this deal, and to be fair, we're going to let anybody who was in it already participate with us, but we're willing to put all of it in because we believe kind of in where it's going long term. Uh whereas, and that was only on one kind of situation, whereas I know there are a lot of groups, in fact, I would say a lot most groups right now are actually capital calling. And I would argue a lot of those capital calls are never going to get repaid. I mean, the deals are underwater because they went out and they adjusted the assumptions to get to the 22 or the 18 that we could only get to the 15 to the 18 and they raised the money against that and the market went against them. Yeah, I think transparency matters. I can see that that's important to you. Yes, very much. Well, we wrap up every show the same way. So, let's get to our three questions. First up, what is your favorite date night spot in Indianapolis? Favorite date night spot? Um, actually, it's 45 minutes south. My wife and I disappear for a day and get on the boat and putts around and get out of the city. And Lake Lemon, Lake Lemon is is our is our spot. Looks like Tennessee. My my dad just uh bought a home down there and kind of flipped it. And my mom is always like, "Hey, I thought we were going to sell this like capture. I thought it was an investment." It was never an investment. Just wanted a place to go. [laughter] It's great though. That's fair. Can't blame them. That's right. If you can do it, do it. Yeah. When's the for sale sign going in the yard? Yeah. I'm not getting the listing. I'm like, come on. What's one habit that changed your life? a habit that changed my life. Well, I think I don't know if it's specifically a habit, but I do think just kind of the education quest. Like I've always been a like learning's like key to success in my view. And I think just the habit that I learned from my dad um who was always a you know big reader, always hugely supportive of education. I think the knowledge and not just the knowledge of uh but also the relationships are like gamechanging and using education. Focus and relationships the two things that will change your life. Uh last question for you. What area of your life are you currently focused on growing right now? H I think you know for us we're in like a big transition um kind of as a family and as a business uh as we tr transition more uh to kind of next generation of leadership you know kids going off to college um you know my partner and I are starting to get to that age where we have to be really conscientious about the sustainability of the firm and kind of where we go and then we've also made some pretty sizable investments in other operating companies that you know are kind of at the point where we really got to figure out what their long-term vision is plan is. Um so kind of I mean like right now it's kind of going from the like single business and raising a family to family leaving the nest and uh businesses now starting to need to be able to leave the nest. And so I think there's just a real focus on kind of what's what's kind of the next the next uh kind of iteration of life with those changes going on. The next chapter. The next chapter. Yes. Yeah. That's exciting. And probably just like every other chapter, a little intimidating to figure out. Yeah. Yeah. It's not intimidating. It's just kind of it is what it is. Circle of life. It's just a new adventure. Yeah. Well, thanks for coming on the show. Yeah, this has been another episode of the Roots Podcast. Make sure to [music] like and subscribe.