From Lawn Mowing to Real Estate Mogul

Steven Weinstock (00:01) Welcome back to the Wealth Clock podcast with Steven Weinstock. I'm Steven Weinstock. My background is single family homes, multifamily, and recently private credit debt investing through a fund, mostly in the first position liens on properties in New Jersey, where I am enjoying the non property management aspect of that investment. We are sponsored today by Cable NOI. Cable NOI will help properties that have 20 units plus get revenue from cable companies, Spectrum, Charter, AT&T, Verizon, etc. There is no wiring. There is no cost. There is no tenant interaction. They will pay you a per door fee, sometimes up to $250 per door, plus a revenue share. There is no cost ever. All you need is the address and the unit count. They will tell you if you are approved. CableNOI.com. Today we have the legend, Stewart Beal. He is the president of Beal Capital. He is a serial entrepreneur who began investing in real estate at 19 years old. He has founded multiple companies, managed more than 3,000 units, and helped deploy over $100 million through multiple funds. Stewart, thank you so much for joining. Stewart Beal (01:20) Yeah, thank you so much for having me. Steven Weinstock (01:21) Okay, 19 years old. I thought I started young. How did you get into real estate at 19? Stewart Beal (01:28) Well, I actually started a company when I was 13 mowing my neighbors' lawns door to door. When I was 16, I got my driver's license and we made it an official company. We had as many as 400 customers in Ann Arbor, Michigan. When I was 19, I sold that business for $250,000. I got $50,000 down and $1,500 a month for about 10 years. I was going to Eastern Michigan University Business School in downtown Ypsilanti. I met a man who owned 11 properties. He wanted to sell one. I evaluated all of them and bought a five unit across from the business school. I moved in and house hacked. I learned about real estate through reading. In the 90s, there was no internet or crypto. It was real estate and building businesses. Steven Weinstock (02:50) How long did you own that first five unit? Stewart Beal (02:54) I still own it. I paid $262,000 in 2002. During the foreclosure crisis it dropped to about $75,000. Now it's worth over $500,000. Real estate comes and goes, but time fixes most mistakes. Steven Weinstock (03:14) Most mistakes in real estate are fixed with time. Were your friends landlords too? Stewart Beal (04:05) No. Everyone else was focused on college and football games. I was more of a lone wolf. Steven Weinstock (04:35) Did people question why you were buying real estate? Stewart Beal (04:45) I grew up around educated professionals. My mom was a lawyer, my dad a contractor. I saw hard work and the rewards of it. That mindset pushed me toward entrepreneurship. Steven Weinstock (06:08) Were you cash flowing even living in the building? Stewart Beal (06:19) Not at first. I had to evict two tenants. The first year was bumpy. But once stabilized, it cash flowed well. I've refinanced it multiple times and owned it for 24 years. Steven Weinstock (07:10) How long until your second property? Stewart Beal (08:49) I bought a former adult bookstore seized by the city. Partnered with investors, combined buildings, built 20 lofts and commercial space. My dad was the contractor and I ran construction. Steven Weinstock (09:58) Foreclosure crisis timing? Stewart Beal (10:01) 2008 to 2009. It hit hard in Michigan. Banks dumped inventory and I had cash. Steven Weinstock (10:38) How did you structure early investor deals? Stewart Beal (10:49) Everyone owned based on cash invested. I earned fees for management and construction. Later I did syndications with GP and LP structures. Steven Weinstock (11:44) Are you buying cash or using debt today? Stewart Beal (13:03) I'm buying an office building this week. 66 percent LTV. Rates are high, so we use cash carefully. Steven Weinstock (14:05) Were you nervous raising investor money? Stewart Beal (14:10) Not really. I had run property management for years. Some investors are great, some are difficult. It's a numbers game. Steven Weinstock (16:12) Have you done ground up development? Stewart Beal (16:16) No. I am purely value add. I've acquired over 130 apartment complexes, all value add. Steven Weinstock (16:57) Do you ever avoid rent increases? Stewart Beal (17:01) Yes. Turnover kills profits. Sometimes stability matters more than increases. Steven Weinstock (18:36) What markets do you invest in? Stewart Beal (18:43) Michigan, Ohio, and passive investments in the Southeast. I like population growth states. I also invest in senior housing. Steven Weinstock (19:33) How are syndications structured? Stewart Beal (19:38) 7 percent preferred return, 70 30 split, acquisition and disposition fees. Steven Weinstock (20:46) Any markets you avoid? Stewart Beal (20:48) Certain Michigan cities due to crime and courts. New York and Los Angeles are impossible from a return perspective. Steven Weinstock (23:48) Biggest mistake you made? Stewart Beal (23:55) Not insuring a vacant building. It burned down. Insurance is non negotiable. Steven Weinstock (25:24) What do you do for fun? Stewart Beal (25:27) Fishing in all 50 states. I'm at 48. I spend time with my daughters. Steven Weinstock (25:49) TV or books? Stewart Beal (25:52) Netflix and business biographies. The Snowball about Warren Buffett is the best. Steven Weinstock (26:43) How can people reach you? Stewart Beal (26:55) Facebook and LinkedIn under Stewart Beal. Website is BealCapital.com. Email is sbeale@gobeale.com. Steven Weinstock (27:36) Thank you Stewart.