Interview with Mike Ayala
The Power of Investing in People with Mike Ayala
Building a thriving business and having enough time for family is difficult. Many hard-hitting entrepreneurs believe it’s impossible to have both.
Today’s guest, Mike Ayala, is a living example that you certainly can with the right mindset and people by your side.
Mike’s been through some adversity from a young age. An alcoholic dad, hanging with the wrong people, and even spending time in prison. That experience led to him finding what he values most in life: Family, freedom, and loving relationships while also having the wealth to fund that lifestyle.
He sketched out his vision for what he wanted out of life and business, and he turned it into reality through sheer determination and help from the right people.
By age 24, Mike founded his first construction company and has been involved with over 2,000 projects totaling over $1 billion. He scaled one of his companies to more than 100 employees and sold it at a $12 million valuation.
Today, he helps other people find financial freedom and use that freedom to live life on their terms.
In this episode, we dig into the importance of mentors, being clear on your values in life, the power of investing in people, and so much more.
Featured on This Episode: Mike Ayala
✅ What he does: Mike Ayala is the managing partner at Four Peaks Capital Partners and Park Place Communities, which currently has 35 manufactured home communities in 13 states. He’s an investor, speaker, podcaster, and founder of Investing for Freedom who helps busy professionals and entrepreneurs find true freedom to live a life by design, not by default. Mike has over 22 years of experience in finding freedom by building teams and streamlining operations. By age 24, he founded his first construction company and has been involved with over 2,000 projects totaling over $1 billion. He scaled one of his companies to 100+ employees and sold it at a $12 million valuation, making it an Inc. 2,500 Fastest Growing Company.
💬 Words of wisdom: “Everything you need is on the other side of a person.” – Mike Ayala
Key Takeaways with Mike Ayala
- Growing up with positive role models is important, but you also need to learn from negative examples.
- The importance of being clear on what you want and having someone to share the journey with.
- Mike’s experience in jail and how it led him to transform his life.
- You’re the average of the five people you most associate with. Choose wisely.
- To change your habits, change your environment.
- Mike’s experience in plumbing nearly broke his spirit. But, it was also the domino for building wealth in all areas of life.
- In business, always focus on creating value for people first.
- How not to become a slave to your business.
- The importance of mindset in building successful passive income businesses.
- Hire the best people and get out of their way.
- The importance of recession-proof assets and cash flow.
- Instead of growing separately with your spouse, find ways to grow together.
Mike Ayala – Stacking Assets and Investing for Lifestyle Freedom
Mike Ayala Tweetables“You can learn as much from the negative things in life as you can from the positive influences.” -@themikeayala Click To Tweet “I believe that any business that’s scalable can be scaled with or without you, as long as you have the right mindset around it.”- @themikeayala Click To Tweet
- Investing for Freedom Podcast with Mike Ayala
- Mike Ayala on Instagram | LinkedIn | Twitter
- Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones by James Clear
- Front Row Dads
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Read the Full Transcript with Mike Ayala
Justin Donald: All right. What’s up, Mike? I’m so glad to have you on the show.
Mike Ayala: Dude, I’m so excited to be here. You’re one of the people that I really look up to. I love your show, and I just love what you stand for. So, thanks for having me.
Justin Donald: Well, thanks for the kind words. And really, the relationship is mutual. I feel the same of you and of all the cool things that you’re doing in the world. And it’s a blessing to be friends with you and have so many relationships that we share, friendships that we share. And so, yeah, I’m just excited to explore all the stuff that you and I talk about sometimes behind closed doors or sometimes with small groups of people.
Mike Ayala: Yeah, super excited to do it too.
Justin Donald: So, you have a really cool story, and part of the reason I’m excited to have you on the show is because at a young age, you were able to figure out this whole thing of really the game of money. How do you make enough money to cover your cost of living? And how do you do that passively so that you’re not trading time for money?
And early on, you figured that out, but not before, as I recall, you kind of entered into the realm of being an entrepreneur. And so, I’d love to hear your story on how you got from where you were because my understanding is this is not a normal path. It’s not like this is something that all your family members have figured out and you just followed in step. But really, you had this journey where you figured it out, you obtained financial freedom, even, I guess, probably, you kind of had this opportunity. My understanding is that you could have just kept scaling a business, having a ton of cash coming in but wanting better lifestyle, wanting better quality of life. And that’s exactly what this podcast is all about. So, tell us how you got started.
Mike Ayala: I love just the way you even set that up. And I’ll kind of begin when I finally decided to sell our business, which I’ll circle back and tell you how it all got started, but when I finally decided to sell our business in 20– it actually started, the year, it was like 2011, 2012. Kara had made a comment. She said, “Hey, when our daughter graduates,” which is 2022, it’s this year, and she’s our youngest. Kara said, “I want to take a year off.” And so, that’s 10, 11 years ago.
And I started looking around at my business, and even though we built a lifestyle of freedom, I knew that there is no way I was going to be able to take a year off the way that that business was structured. And so, I didn’t think she was serious at first, but then when I figured out she was, I started thinking through like, how do you structure this? And will my business partner 10 years from now let me take a year off? And the answer to all of that was no.
And so, I think just getting curious about what lifestyle by design looks like, which is why I love your book and what you stand for and teach in your mastermind and everything else. And again, I went to the end, but if I go backwards, I’m a strong proponent of I think you can learn as much from the negative or the things you don’t have in life about what you want and how to get them as you can from the positive influences.
And so, my story is one of growing up with a dad that was an alcoholic. He was in and out of my life, abusive. When I was little, I didn’t really know what was going on. But he’d disappear for large periods of time. And so, that was one thing that taught me what kind of dad I wanted to be, number one, and Kara and I had a lot of conversations. We got married at a really early age. She was 19, I was 20. Don’t show up a year and a week later almost to the day.
Kara and I would talk when we were dating in high school about what we wanted life to look like. So, my dad taught me what kind of dad I didn’t want to be. But then also, growing up, my mom is a gem. She’s just such a sweetheart and she was such a hard worker. And she really bounced back from a lot of situations that could have been bad.
She’s very successful now. She’s got an urgent care now and a bunch of investment properties. And she bought a bar recently, which I was like, “What are you doing buying a bar?” But when I was growing up though, literally, after she left my dad, she ended up getting remarried. But my stepdad was working out of town all the time. She was working sometimes in one and two jobs and going to college.
And so, I was that kid during junior high and high school that was like a latchkey kid, but I was also a pretty big troublemaker, got into trouble early on. But along the way, Justin, I always and I think this was also from my upbringing, I mean, when I was little, I remember going to this town called Pocatello, Idaho with my grandma, maybe once every six or eight weeks. And we’d go shopping. And going to McDonald’s and getting a Happy Meal, that was like an experience for me. And I remember getting the little Lego toy because my grandparents and my mom, they were working hard and everything else, but they didn’t have anything.
And so, I think a couple of things, number one, I knew I wanted to be president, I knew I wanted a different type of family, but I also knew I was going to work hard. And even I started working at an early age, I was cleaning a doctor’s office on the weekends when I was like 11 or 12. And then, I got a job at an early age. I paid for my truck, paid for everything. I started selling suckers in junior high to make money. So, I was always kind of entrepreneurial. And then I’ll kick it back to you. But basically, when Kara and I got married, I don’t know where you want to go from here, but I found myself working a ton and kind of out of alignment with what we had planned as a W-2 employee. And that’s kind of launched us into business.
Justin Donald: Yeah, it’s interesting. First of all, I would have never guessed you to be a bad kid or a troublemaker. I mean, that is just so opposite and so far from who you are today. So, I like learning some of this dark side, this mischievous child that found his way into some trouble. But the other thing is, it’s interesting getting married as early as you did at 19 and 20 years old because at that point in time, you’re really just kind of learning who you are, let alone like how to be the man in a healthy relationship and a healthy marriage.
And so, it’d be interesting to hear some of the way that you navigated that because you two, and by the way, I think you just hit a grand slam with Kara. But I’ve got to imagine that there are times where you two kind of would potentially grow apart or there is the possibility of growing in different directions, but you both managed to do such a good job of growing in so many areas together that it’s cool even seeing today the work that you do together with other couples. So, I’m curious what that was like getting married very young or what most of us today would consider very young. My parents, by the way, got married at the same age, and it took me another decade to really be ready to get married.
Mike Ayala: I’ve got this thought thread going on in my brain right now, so just stick with me for a second. But I’ve often said if I hadn’t traction in EOS as an early entrepreneur, my first business partner and I probably would have done a lot better. And because I didn’t understand the language of me being a visionary and him being an integrator, what the heck does that have to do with me and Kara?
As you were asking that question, I was thinking about it like Kara and I, we’re both really clear on what we want and we communicate that often. And also, we’re really good at staying in our lane and appreciating each other’s gifts and talents. And I never once went back way out, but when we were dating in high school, we used to jump on the phone on high school nights and we’d talk on the phone to one, two, sometimes seriously, three o’clock in the morning. And this is when it was landlines. We’ve been married for 24 years. And I remember sometimes, my mom would wake up and get on the landline and she’d be like, go to sleep, how you could like, I don’t know.
Justin Donald: Oh, yeah. I totally can relate to that.
Mike Ayala: So, Kara and I would stay up late, just always dreaming. And even in high school, we just would always talk about the future and the vision. And I think that’s so important. Now, I will say, though, we separated for a while because, and I’ll tell you a little even darker side, I got pretty involved in drugs and kind of went off the deep end for a while, and we separated during that time. And Kara’s family had grown up, they were Catholic and then they started going to the more charismatic-type Christian church.
And I knew they were Christian, but I didn’t grow up in a church at all. Like, I remember my dad’s boss when we worked on a farm in Idaho, she would take me to Sunday school, and that was my exposure to God. But Kara, when I was kind of off the deep end, she started going back to church and really getting involved in the youth group and that kind of stuff in high school. And before that, she was partying, but she wasn’t doing the kind of drugs I was doing.
And to answer your question directly, though, when I finally got to a point where I decided to clean up my life, I was in jail for a while. A lot of people don’t know that. But I’m pretty involved in methamphetamines and the wrong group and all kinds of stuff. And honestly, it’s a pretty miraculous story because when I finally sat in jail for long enough and I decided that wasn’t my life, the other side of that, even when an addict decides that they want to come clean, they need a lot of support and help.
And it was one of the most beautiful things because Kara wrote me this letter in jail and she was like, hey, even though you’ve done all this, there’s a better way. And this is crazy, too, because her parents didn’t necessarily really like me, but they were like, when you have for obvious reasons, they’re like Kara tells me in this letter, she’s like, when you get out of jail, my parents said if you need any help, they’re willing to help you. And that just kind of shows like the grace that’s in their life.
And so, I got out and just started going to church. And this is kind of tying it together with Kara and I. And I think this is why we got married so young. I had such a transformation in such a quick period of time. And I knew that I didn’t want that life anymore. And I think that whole series of time just kind of showed me life is short and this is not how I want it to look. And so, I think I got really serious at a young age about having an extraordinary life that was by my design and not just me like sleeping and tore out on drugs and everything else. And so, Kara and I kind of quickly connected and dated for a little bit. And we got married early because I think we just got really clear on what it was that we wanted life to look like.
Justin Donald: Now, was there some skepticism at that point from her parents on you guys getting married? Because as a father of a daughter, I hear that. And I’m like, oh, my goodness. Wow. I mean, it’s amazing the grace that they were able to demonstrate, but there still probably had to be some nerves, some uncomfortable feelings, maybe stronger than uncomfortable.
Mike Ayala: I’ve thought about this so many times, and actually, I love Kara’s parents and family. They’re amazing. But the answer is yes. And I remember calling her dad and saying, “Hey, can I come talk to you because I wanted to get married with Kara?” And I go over there and I was nervous as could be, man. I’m like just this 20-year-old. And I’m thinking the same thing that you’re asking right now because it’s like I’m not that far removed from being a complete disaster.
And even though we know God can change anyone, again, I have a daughter now, too, that’s 18. And I’m like, I don’t know if I could have been so gracious, but I went there and he’s kind of looking at me and I’m half stuttering and I’m like, “Hey, I’d really like to marry your daughter.” And he didn’t ask me anything like, what’s your plans? He said, “You know, I was wondering when you were going to ask.” That’s what he said to me.
And I was like, wow. That’s some faith if anything else is just like to be able to just put your kids in– and there are several times throughout life that we’ve had to do that, too. And Dylan, our first child, a lot of people don’t know this, but he was born with some really challenging things. And it was just an example of him understanding that our kids are just on loan to us. We don’t control them. And that’s kind of driven the way that Kara and I parent too.
Our kids are, like I said, our youngest is 18 now and our oldest is 22. Our middle son’s 20. And the way we parented is kind of through the same lens. And I don’t know that I ever correlated it, but really, the way that he treated that scenario was kind of the same way we parent it. It’s like they’re just on loan to us. We don’t control them and we can’t– so I think it was kind of through that perspective.
And her mom, actually, I was working in the kid’s church or whatever at the time, but her mom actually gave this message one time at a church before we were married and was just talking about how she was kind of arguing with God about meeting men. And she was just talking about just the grace there and how many mistakes that she had made and everything else. And that’s how she came to accept me. And so, I don’t think it was easy for them, but you wouldn’t know it from the outside.
Justin Donald: Wow. What a great example of in-laws. If only we could all be that lucky. That’s really incredible. And the way that they modeled parenting is something that you took that you’re paying forward to your family, to your kids. That’s incredible. I love that. I love hearing that. And I really want to hear even more, like was there a moment where you, I mean, obviously sitting in jail, there’s a moment, and you’re like, you know what? Things have to change.
But was there another moment where it was like this light bulb of like, holy cow, I’ve missed this. Why am I living this life? I should be living a different life. I know your faith is really important to you. And I’m just curious, what that eye-opening moment was?
Mike Ayala: It was kind of simultaneous. When I was in jail, Kara actually sent me a Bible. She dropped it off. And there’s not a lot to do in there. So, I started reading. And then when I got out, I didn’t know that Jim Rohn quote then, you’re the average the five people you spend the most time with, but I knew that if I didn’t break out of the environment that I was in, I was going to go right back into it. And I was recently just reading Atomic Habits.
I’ve often wondered how I kick the habit. And Kara said this multiple times. She’s like, “I don’t think you were actually really addicted to drugs.” And I’m like, “Well, you can think whatever you want.” I’m pretty sure that’s all I thought about 24/7 for a while. But in Atomic Habits, the talks about Vietnam soldiers is when they came back and they actually got out of that environment, a lot of them broke it immediately, it was heroin, and changing the environment, how important it is.
And I was like thinking back to that and that was what was so valuable to my progression. Obviously, I had this idea about faith in God but then just sitting in jail, just really having that time to contemplate what do I want life to look like when I got out and like I can’t hang out with these same people. So, I went back to work with the boss that had kind of mentored me along the way. He gave me a job back, which that’s the thing on the other side of addiction. I’ve talked to so many people about this because until that person that’s addicted is completely ready, there’s nothing you can do for them.
And I’m not saying that judges and courts shouldn’t put people in rehab, but the reality is we have to be ready to support them when they’re completely ready. And that was the thing for me. I was completely ready. I went back to work, but then also I started going to church and it wasn’t like this light bulb moment where I was like, oh, my God, I wasn’t coming out of jail that I knew that immediately. I started just going to church and changing my habits. And then all of a sudden, it didn’t take very long, it was a few months where I realized, like, okay, this old lifestyle, this old way of being me has to go, but I think it was kind of a progression of hating this former life.
Justin Donald: Yeah. Wow. What a turn of events. And you then, I guess, go work for this former boss, a mentor, and you eventually start your own business. So, what does that look like? When did you leave his mentorship? Or did he continue to mentor you? What was he mentoring you? And when did your business really evolve because you grew that thing to be a very big company?
Mike Ayala: Yeah. So, I didn’t stay there very long working with– the guy’s name is Ben, and I still talk to him today. I took another job, and this wasn’t a job of like, I wasn’t thinking at this point in time, like, what am I going to be when I grow up? I was just working to try to get my life back on track. And so, I started working at this place called Delta Rubber, which is somewhat irrelevant.
But there was a guy– I had worked at a plumbing and heating company in the summers in high school, and the guy that owned that company, as I was getting ready to graduate, kind of pre going off the deep end in jail, he started calling me and he’s like, “Hey, I’ve got this apprenticeship program. I’d really like you to come be an apprentice and learn to be a plumber.” “No, I don’t want to be a plumber.”
Then you fast forward two years or whatever the time frame was, and I’m like, okay, start thinking about what is my life going to look like? Kara and I weren’t actually married yet, but it was one of those moments, Justin, where kind of like sitting in jail, I’m like, okay, my life needs to change. I was working in this hydraulic hose shop, and it was one afternoon. And this idea just comes to me and I’m like, I’m going to call Doug, his name was Doug Snyder, and see if that apprenticeship is still available. Like I needed to do something more with my life.
And so, I called him up, and this is like a Thursday and he’s like, “Yeah, be here Monday morning, you’re ready to go. You can do the apprenticeship program, but I need you to know you’re going to be working out of town for the next eight months in Round Mountain, Nevada, which is in the middle of nowhere.” I’m like, “Great, whatever it takes.” I think I was making $7.35. He’s like, “I’ll pay you $9 or $10 or whatever.” I wasn’t even worried about any of that. I just knew that I needed it. It was one of those times where you just do the next right thing. And I knew that’s what it was.
Kara actually put a podcast out and was talking about how she tried to talk me out of it. She’s like, “You can’t go to work out of town,” like, “I’m never going to see you,” and all of this. But I just knew I needed to do it. We weren’t married yet, so it’s not like she had a huge voice in my life yet. But she talks about if I hadn’t done that, what would life look like?
And so, anyway, long story short, I went to work for that company. I graduated from the apprenticeship program at the age of 23. I won’t go into the weeds on this, but I ended up running a job way earlier than I should have because the guy that was running the project in Wendover, Nevada, was a big casino remodel, a $3.5 million remodel with 16, 18 guys. He ended up having to get moved to another job, and I took over the job, and they were supposed to send me a foreman. That foreman never came.
So, to answer your question on how did I start the business, I was out of alignment. Kara was pregnant with our third child. And I’m working 100-plus hours a week. It was seven days and we get this casino done. And then I’m working at night in the hotel room out of town, missing my two boys growing up, missing my daughter’s pregnancy. And I’d literally drive home Sunday night at seven o’clock, wash my clothes, have a cold dinner, and head back Monday morning at three. Kara and I had this conversation, and it was kind of like, again, I’m like, this isn’t what we signed up for. And a couple of things that happened, and I just teamed up with a partner, and we left and started a business at the age of 24.
Justin Donald: That’s amazing. And sometimes, it is that just totally intense, nonstop work that pushes you to, you know what? If I can work this hard for someone else, I can do it for myself. And maybe, I don’t even have to work this hard, but I at least know I can work this hard. And that’s how it was for me, where I just recognized I have the capacity for the work ethic, but I don’t always want to work that way. I want to know that I can do it. I have a lot of confidence in my resourcefulness or in my ability to work hard for whatever the project is, even if I don’t have the know-how.
So, I’m so glad I have that. But I learned really quickly that that was not sustainable and I did not want that for the long haul. And ultimately, that’s for me really where I became an entrepreneur and where I became an investor. And I did that kind of simultaneously. And I know you have a very similar path and a very similar story with that.
Mike Ayala: Yep. Let me dive into that.
Justin Donald: Yeah, let’s get into it because you’ve got not only a unique backdrop, and for those of you listening, those of you watching that don’t know Mike’s story, he also got into mobile home park investing at an early age, which is cool. So, there are so many similarities I feel like in our story, although I would like to point out that I never went to jail. But beyond that, there are just a lot of similarities. And so, yeah, talk about what it was like with your own business and scaling it and why you ultimately sold it because you and I subscribe to the same recipe of wanting freedom and desiring freedom. And so, we speak the same language, but I want more people to learn it and to understand it and to pursue it.
Mike Ayala: Yeah. Well, and I will say first on going to jail, if there are any young entrepreneurs listening, it’s much easier for your later life. You would not believe when I started my company at 24 how much I had to go through just four years, five years later after getting out of jail to get my contractor’s license. I had to get stacks and explanations and character, stay out of jail, I mean, that was my point.
Justin Donald: I’m sure, man.
Mike Ayala: And that’s so far behind me that it doesn’t affect me anymore, but it is challenging, so.
Justin Donald: But if you’ve been to jail, look, you’ve done it and other people have too. And so, regardless of what your past is, what really matters is what you do today, the action steps you take, and the way that you move forward, just like you did, Mike.
Mike Ayala: Yeah, well, I mean, at this stage, like I said, it’s so far behind me. I mean, I have passed every background check needed and everything else. So, you can get past it, but it’s a lot easier to just not have to do that. So, when we launched the business in 2004, all of our competitors literally in the market that we were in, every single one of them had started in the 70s and 80s.
And so, some of this is luck and timing, and some of that is just the hard work ethic and everything else that you said. We launched, and I launched that business wanting to perform a better service because working for this other company, I had seen customers frustrated over things that I couldn’t control because I wasn’t in the office. I didn’t create the process.
And so, we did some things right. One of them was just putting customers first. Also, we hired a lot of the best of the best because I also had been on the other side of the employee equation, and some of the best employees in that town – managers, dispatchers, technicians, all came to work for us. And so, it was like I didn’t even know what was happening honestly. I’m 24 years old. We started in ‘04. In 2009, we were on the INC Fastest-Growing Companies in America. It was just this trajectory that was insane.
And the thing that I’ll tell you, we were growing so fast, I had no choice but to delegate and I was always looking for the best coach. I wasn’t in masterminds then, but I looked for the best HVAC coaching company. I looked for the best accounting company that could teach me how to set. I looked for the best accountant. My accountants, like you guys, are making so much money, you need to go buy real estate. This was like in ‘06.
Literally, I hired this company called Business Development Resource and I had a head coach, my service manager had a service coach, and my accounting team had an accounting coach. And I went to this annual business planning in ‘05, and my head coach was speaking on stage and he said, “If your business isn’t helping you achieve your personal goals, you just don’t need a job.”
And that entire first day of that three-day planning event was all about your personal goals. And they had sent us a workbook, and Kara and I, this was the first time that we had really sat down other than, hey, we want a new couch, this chair, a new car, and thought about the future. And they really told us through that frame, like, if money and time wasn’t an issue, what would your life look like? And Kara and I said, we set this goal of two income-producing properties a year for 10 years. And that was partially because of that company and partially because our accountant was saying, “You need to buy real estate.”
So, I came back that year and I bought a single-wide mobile home on two and a half acres, and then I bought a distressed house because we had a plumbing and heating company and a little construction division. That first year, we hit our goal, and then the next year, the 72 Space Mobile Home Park deal falls in my lap. And I’m scared, I’m like mobile home park, 72 lots, like what am I going to do with this?
I’ll keep a long story short, one of my mentors, I went to him, I said, “Hey, can you look at this deal for me?” He was like, “You’re lucky you’re my friend, or I would take this deal from you.” He was joking, but he’s like, “This is such a good deal. Go lock it up.” And the thing was the owner was in a situation where she needed– like she was a developer out of Vegas, this was ‘07. And she’s getting into some trouble.
She had a first position note for $390,000 on the part and she needed $85,000 cash. The note was assumable. I called the guy, he said, “Yeah, no problem.” I still deal with that guy today, by the way.
Justin Donald: Cool.
Mike Ayala: So many years later. She needed $85,000 cash. I didn’t have the cash. So, I borrowed the cash from my mentor for the down payment. And he said, “Go buy this thing, lock it up. If something goes wrong, I’ll pay off the first position, and I’ll take it.” That’s how good of a deal this thing is. And so, I got into my first mobile home park that way.
Justin Donald: That is so cool. What a neat story. So, it’s interesting, though, because you’re kind of juggling or balancing this life of a lot of work, running a business, always on demand to getting into your very first asset that has a really low barrier to entry, and it doesn’t take as much time to run it. It takes very little hours to create cash flow or profit if you buy right, which I’m assuming you did based on the good deal that you got.
So, I’d be interested to know that transition. When did you go from this active income and working a lot of hours, trading time for money, even though it’s a better quality trade, having a business, having infrastructure, having personnel. So, you’ve got the leverage of, people and software and technology. So, it’s not an exact trade, but there’s still a large element of trade to being on the passive side of things, totally independent of the time you spend just making money to cover your life.
Mike Ayala: It’s interesting because I think it’s easier when you’re younger than it is when you’re older. And I’ve talked to a lot of people. I was speaking to the Emerge group at GoBundance recently, and they were asking me, “When you quit your W-2 job, how much prep went into it?” And I’m like eight minutes because I was so young, and so, I’m hesitant sometimes too. I think as we get older and our lifestyles are bigger, it gets harder and harder to quit. And I think it’s the same thing with our businesses.
So, even at an early age, the one thing that I’m proud to say, there were a couple of times that I got out of balance. And I could share those stories if we needed to. But even from an early age in that business, I figured out really quickly that I could hire out management. And I had a business partner that could take care of the business when I was gone and vice versa. I love partners, by the way, for that reason.
So, even from an early age, like my kids, we’d go to Indonesia when Dylan was one. And I’d take weeks off at a time. My kids have seen the world even though you’re growing that business. And we scaled that business to over 100 employees at one point. And all during that time, I could take a week off almost at any point of the year. There were, again, a couple of times where I got out of balance, but I learned that if I was going to do this, I wanted to scale the business to a point where I wasn’t a slave to that business.
And so, was it passive? No, but I believe that you can run a successful large business and also keep your freedom and your lifestyle and be a present father. It’s one of the reasons why I love Front Row Dads so much because I don’t think you have to have either/or. And again, from an early age at the age of 24 doing that, I very, very seldom got out of balance. And I could spend that time.
And so, with the real estate side, though, we went on and bought 45 single-families, five mobile home parks, and three commercial buildings. I was just stacking assets, and it wasn’t really for me about– it wasn’t this methodical process and approach as it is like as we get older. To me, it was just like, we’ve got this cash. I was buying no money down deals.
My technicians were bringing me deals from clients that were like, hey, so-and-so, because they would report in the service meetings like, so-and-so doesn’t want to move forward on this job because they don’t want to put $90,000 into a furnace. They’re going to sell the place. I’m like, give me their number. And so, I get all these leads and I just started stacking assets.
Also, I had a personal assistant that became my property manager, and then when things broke down or whatever, or broke into the house or we needed a remodel, we just save that for when the guys were slow. And so, I kind of had this perfect storm of opportunity that I just capitalized on, and I ended up selling that business in 2014. I kept all the real estate. My business partner bought me out, and that’s when I really jumped into thinking about real estate from a long-term perspective.
And the thing that I’ve often said to, though, is, like I thought, a lot of that real estate was actually passive to me because my team was running it, but I thought I was going to continue that way. And what I realized is that real estate can be passive, but also when you really start to scale a real estate business, it’s just another business, too, potentially. So, you got to watch that.
Justin Donald: That’s right. Yeah, you’ve got to be careful. The whole thing that gives you passive income can enslave you later on. And this happens so much in the world of real estate and in this transition. It’s funny, you talked about your personal assistant becoming your property manager. And same thing happened with me, my personal assistant that has worked with me for over 20 years now, in many different businesses, now runs all of our real estate, which is really cool. I mean, she oversees literally everything that we’ve ever purchased with real estate.
So, I love that you were able to do that and transition someone up into a role that provides more for them, creates more value for everyone, for you, your residents, for your personal assistant, now property manager. Super cool. But yeah, the danger is, how do you avoid becoming a slave to your business yet again? This is the trap. Ooh, passive income tastes so good. Let me just keep getting more and more and more of it. Oh, wow, now I’ve got a whole bunch of assets that I have to do all these different things. I’ve got to bring in a team. And if you don’t bring in the right people, you are very tied to the way that the business runs. So, I’d love to hear your story and thought process there with that. Have you been able to conquer that?
Mike Ayala: To me, it’s kind of an ebb and flow, and I think it’s also an evolution. The reason why I sold that business and I kind of alluded to this earlier. When Kara said she wanted to take a year off, I knew that my business partner was not going to allow me to take a year off. Would it have been possible in that business? Absolutely.
I started having conversations with him, and then following weeks, I’m like, “Hey, why don’t we bring in a general manager?” And he’s like, “Well, for what? What are you going to do?” That was like his mentality. And so, I think you really have to determine, and this is why I love your message so much like– and again, it’s an evolution, but I think you really have to determine what it is you really want because I think sometimes, we want this idea, and I know that everybody’s desires are different, but I think sometimes we think we want completely passive.
But I’ll be honest with you, I actually really enjoy building businesses, and I think I’ll probably do it forever. What I don’t want to do is have to be in that business every single day or have to be in that investment every single day. And so, I think just starting out from the beginning and understanding if I’m going to build this out, and that doesn’t mean we don’t have seasons where we’re working. I’m in a season right now where I’m working more than I’ve worked in a long time. But also my kids are all gone, and Kara and I are– so, I think the question is, do you enjoy it? And then making sure that you’re looking at it from the long-term perspective and making sure you don’t get pigeonholed, I think that’s the real key.
And so, just like with my business partner, he’s still running that business. And every time I talk to him, he’s like, “I’m working 70, 80 hours a week. Like, how do I get–” he’s never going to change that because it starts with your mentality and surrounding yourself with the right people. And I believe that any business that’s scalable can be scaled with or without you, as long as you have the right mindset around it.
And so, for me, I want to work, I want to build businesses, I want to build investments and I want to be involved, but I don’t want to have to be involved. And so, I’m constantly trying to find that balance. And is it ever a perfect dance now?
Justin Donald: Yeah. It’s interesting. I love the discovery of new things, new concepts, figuring out problems. I like to solve things. So, to a certain degree, I always want something like that going on in my life. But here’s the big difference, and you can do this if you build it right with any business or with most businesses is that you get to work when you want to, on your terms as much or as little as you want, that’s the key.
So, it’s shifting from have to work to I get to work, I have the privilege to work, and I can work as many hours as I want because this project’s inspiring me. Or I can work no hours because I have the team in place to do it and I can go travel for two months, no problem. I think when you find that sweet spot, that is the magic of being an entrepreneur or being an investor and really getting to have your cake and eat it, too.
Mike Ayala: I love the way you put that, and as you’re saying that, I’m also thinking how many conversations do we get into where people want that, but they don’t know how to get out of the way far enough? I think a lot of times, it’s an ego problem. It’s a lack of knowledge and experience. It’s letting go. If I’m just being completely honest, my challenge is sometimes I let go too soon. That’s been my, I guess, Achilles heel, where I think a lot of people, they want that level of freedom, but they won’t empower people even if they hire a general manager or whatever it looks like. Whether that’s ego or the fact that we feel like we want to be needed or whatever, most people can’t get over into that realm where they’re not actually needed in their business. They’re there because they want to be. I have the opposite problem. Sometimes, I pull out before I should, but I’m pretty quick to come back in and fix challenges, so.
Justin Donald: Well, and I also subscribe to this whole notion, I mean, in a lot of places that I’ve worked, there have been a lot of micromanagers, and I’ve never cared for that. That really, to me, just rubs me the wrong way because I want people to trust that I can figure it out. And so, my management style in any business that I’ve ever been in is a lot more macro and it’s a lot more, hey, if you hire the right people, you talked about this early on, you hire the best, you hire the brightest, the sharpest, they will figure it out. If they’re the right person and they’re resourceful and they take initiative and they’ve got a great work ethic, they will figure it out. And they also crave that delegation.
And so, that’s where you can say, hey, if I did delegate too soon, no big deal because I have the right people in place. And I know that you’ve experienced that, but I also know as an entrepreneur and I’ve experienced the opposite of that, of hiring the wrong people, delegating too early, or maybe not even delegating too early, but it’s just the wrong person. And so, the delegation doesn’t work, and that can be quite the headache.
Mike Ayala: Yeah, well, and it’s definitely harder when you’re scaling and you need– this is horrible, the way I used to call it, but I used to call it stacking bodies, like we were just stacking bodies because we were growing so fast, and I was so young and I didn’t know any better. But it’s those times when you need people the most that you probably need to try to slow down and make that a process, but it is super challenging.
One thing that I’d like to just interject that I’ve been thinking about, and I think your audience will appreciate, it’s really interesting for us as real estate investors, like it’s easy for us to say, “Okay, if I take 100 grand and I invest it in this real estate asset and it brings me $10,000 a year, $15,000, that’s a great return.” But when we think about hiring and investing in people, we have a really hard time of saying, “Okay, if I invest 100 grand in this individual and it brings me back 10% or 15%, that’s a great return.” It’s probably going to bring you more than that if your business is set up properly, but we don’t think about investing in people the same way we do investing in hard assets. We don’t think those people in our businesses as assets the same way we do a portfolio of rentals.
Justin Donald: That’s powerful. I love that whole notion and the whole idea of leverage as many ways and as many times as you can. You buy real estate, you use leverage with the bank. You build a company, you use leverage of people. You layer technology and you use the leverage of technology. I think any time that you can layer in leverage and magnify that leverage, that’s just a great place to be. And so, you are spot on.
And it’s funny that you say that because I’ve recently hired and brought on several people to help with The Lifestyle Investor brand. Our mastermind, The Lifestyle Investor mastermind has exploded. It has grown beyond where I ever thought that it would and it’s exciting. But at the same time, I need to make sure I’m delivering just, I mean, value tenfold or greater to every single member that’s part of it. And so, it involves bringing on people that are going to help support them and help build out in a way that I can’t do myself or just alone.
And so, this whole idea of investing in people for the return, but there’s also the return that everyone else gets too – the customers, the clients, the culture of the organization, but then also, the return that you get, that you reap as the business owner. And so, I just think that when you can do what Michael Scott from the office says, create a win, win, win situation, then everyone is winning.
Mike Ayala: It’s such a great point too. And the thing that’s hard to quantify is, I mean, obviously, you get a financial return, but by freeing up 5 hours or 10 hours or 15 hours of your time, like how much more could you go out and do to do? And I’ll never forget the first example of this and I’ll make this really short. But I was a board member on the chamber and our CEO Chamber of Commerce or CEO wanted to hire an event coordinator because we were growing. And she was like, “But it’s not in the budget. We can’t afford it.”
And I looked over here, and we had this $450,000 savings account basically from chamber checks and we went and saw our legal, and I’m like, “Well, why don’t we borrow that money against the chamber checking account?” And we did the stats and only like 25% of that was ever pulled back out. And so, we borrowed $65,000 for a year against our own account at the chamber to fund the event coordinator. And revenue went up $300,000, and we made an extra $180,000 profit that year on borrowing our own money. And so, we think about using our line of credit to go out and buy a property or whatever, but we don’t think about it for humans. It’s weird.
Justin Donald: Yeah, that is such a profound point, and I’m so glad you shared that. And that’s so relevant to our audience here. So, awesome, awesome stuff. So, I feel like I have to ask you this. Being a real estate guy, being an investor, you’ve also been operations for a large mobile home park fund as well. And so, you have a lot of experience in the space dealing with large assets, dealing with really how to manage them, how to do property management, how to do maintenance, all these things. You have to have some idea of where you think the economy is headed and where real estate is headed. I’d love to get your take.
Mike Ayala: This is where you pull out the crystal ball, and it’s really murky. But I said this the other day in a conversation, I think, without getting too far into the macro view of all of this. I think that no matter what happens when you just come back, the very first podcast I was ever on was Buck Joffrey’s, and he talked about he brought up Maslow’s hierarchy of needs. And the basic human need is food, water, shelter.
And so, I think if we come back to the fundamentals, and you look at the fact that, okay, let’s just say that things continue trekking on. Interest rates are higher. Assets are obviously at an all-time high. It’s really hard to find good deals, all of the above. That’s one side of the equation. The other side of the equation is maybe things slow down, and hopefully, the long-term interest rates come down a little bit, maybe asset prices come down. I don’t think it matters which one of those scenarios we’re in.
I think it matters trying to see like where are the rental rates going? And are people going to need rentals long-term? I’ve been saying this for a while and they showed their hand during COVID. It’s getting super unaffordable. And I think the government is going to continue to step in and help at a certain level. And so, I think just making sure that we’re in the right asset class and we make sure that we can cover the spread between rents and our payment and we try to not get into a situation where we– and there’s a lot of this happening, and I won’t say that we didn’t even get into some of it. COVID really forced– I mean, we slammed on the brakes. But I’m trying to be a little bit more cautious at this point in time.
If we’re getting into situations where we have to refinance out in a year or two, it’s a challenging place to be in because we don’t know where interest rates are going to be in all of that. And so, I think we just need to be really careful about the assets that we’re buying right now and try to lock in long-term debt, even if it’s at a higher interest rate compared to what? I mean, we’re at 5%, 5.75%, 6%. You talk to people all the time that we’re doing this 15 years ago, and they’re like it was 18%, 20%.
So, as long as you have that spread and you’re comfortable making it through a period of three to five years, I think we have to start looking at a little bit longer perspective on some of this. And if you’re in some short-term deals, then we’ve got to be doing everything we possibly can to figure out how to restructure that. That’s actually what I’m working through over the last year and a half. It’s been head down for me trying to figure out. Some of these things that we were talking and thinking it was a long game, we had to shift and say, “Okay, how do we make this a short game?”
And then also we’ve got all these empty lots and everything else and supply chain issues. I mean, you can get crushed under the weight of this. And I think just being a wartime leader is super important. That’s the other side of that. I’ve really realized that as hands-off as I am when things are good, I’m really good at jumping in and fixing when it’s time.
So, I don’t know if I directly answered your question, but I don’t think any of us know exactly where it’s going. So, I think we just have to be careful about overpaying for assets and making sure that the rental costs, and if we have some vacancy, if things get worse, though, I think our occupancies are probably going to go up in the mobile home park space, probably in the lower class apartments and all of that. So, I think it’s just balancing and making sure we can ride a period of cash flow out through a downturn.
Justin Donald: Yeah, so true. I really think that it is so important to have some recession-proof assets. What are they? How long do you need them for? I mean, figure these things out. But if you have recession-proof assets and if you have the cash flow to cover the debt service and all the expenses, then you don’t ever have to sell. That’s the beauty of cash flow.
And so, that’s why I like to buy assets, the cash flow day one. And that’s why I like mobile home parks. And there are other assets I like too, but mobile home parks are great in a recession. We tend to have higher occupancy in a recession. You get more government assistance in a recession. There are just so many positives.
Now, the danger here is that you buy at too high of a value, you buy at too low of a cap rate when you have too high of interest rates. The big thing that I always look for is that spread. What’s the spread? You talked about the spread of covering your expenses and what the rents are. And I think that is an incredibly important spread.
And if we look at it from the financing standpoint, you just want to make sure that the cap rate you’re buying it at is a big enough spread. I like three points where it’s getting a lot harder to have a three-point spread compared to that cap rate versus interest rate as interest rates are ticking up. But if you can at least get two, I think that that’s going to cover whatever you need from a cash flow standpoint to own those assets.
And yeah, I think, when you have cash flow, when you’re in an asset that’s going to appreciate because rents depreciate, occupancy appreciates, so the value of that asset appreciates not because it’s speculative and it’s based on other comps, but simply because the net operating income increases. That’s a great place to be. And I know you know all about that.
I just put another park under contract last week, and it’s right next door to one that I have, and I’ve bought three this year. And December 31st of last year, I bought five. So, I think it is just so important that we are planning for the worst but hoping for the best.
Mike Ayala: I love it. Yeah, I love what you said about that when you spoke at our couple’s mastermind. You’re expecting the best, planning for the worst, and usually, it’s somewhere in between. I love that. That stuck with me so long.
Justin Donald: Oh, thanks for sharing that. And speaking of that, your couples’ retreats are incredible. I’d love to have you share some of what you’re doing there because I had the privilege of speaking at your event and getting to know the people that you’re bringing in, that you’re pouring into. And they’re just an incredible group of people. But I see how much you and Kara pour into your attendees. So, share a little bit with that because I know this is your big passion right now.
Mike Ayala: Yeah, this is probably one of the favorite things I’ve ever done. Kara and I take five couples. It’s for an entire year. We won’t go more than five. We’re starting to scale that out now where we’re doing a next-level couple. So, there’s a couple that we’re going to take every year and just kind of mentor them through the process so that they can kind of do their own mastermind because I don’t think there’s enough of this.
A lot of times, the husband’s out doing the mastermind or the wife’s out doing a mastermind or growing, learning, coaching, whatever. I don’t think we do enough. We can go to a marriage seminar or whatever, but our whole purpose of the couple’s mastermind is to take high-performing couples that just want to grow further together. We say it like this, a lot of times, there are six, seven, eight, and they want to go to a nine and ten.
And so, we just do two events a year. They’re kind of these over-the-top events. We rent luxury vacation rentals in these awesome markets and just do the things. We do the things that Kara and I have always wanted to do with couples that a lot of times, we’re too busy. You got all those amazing couples around you and you’re like, “Hey, we should go to Miami for three or four days.” And everybody’s like, “Yeah, let’s do that,” and you never do it.
And so, we put together kind of a mastermind where we do that twice a year. We grow together, we have monthly calls, we have amazing speakers, like you coming to the event, and then come in monthly. But again, it’s probably now that the kids are older and gone, I kind of feel like this is one of the things that Kara and I will really put a lot of focus and energy on because again, I don’t think there’s enough environments or vessels or containers where couples can grow together in an extraordinary way. There’s a lot of couples counseling and trying to repair things, but what about if we’re doing good and we just want to do amazing?
Justin Donald: Yeah, so true. How do you next-level your relationship? And how do you do it together? You’re growing together and getting on the same page. And I love what you’re doing. I’ve had the privilege of getting to be a fly on the wall for the event that I got to speak at. And I’m just so impressed with what you all are doing.
And side note, I just want to give you a major shout-out that you went over the top. This was definitely not needed, not expected, but I got a package in the mail that I opened up, and it was this gorgeous Montblanc pen that you sent me as a gift to thank me for speaking at your events. And man, that was awesome. And for the record, I journaled with that this morning and I love it. It is my new favorite pen, so thank you for that.
Mike Ayala: Good. Well, it’s a small token of what I think your time and knowledge and experience and information is worth. Our couples loved hearing you. So, they didn’t want to let you go.
Justin Donald: Well, we hung out for a long time. That was great. And time just flies when you’re having fun and talking about the things you love to talk about. And you guys have a big launch coming up for the couples’ retreat and mastermind. Tell us a little about that.
Mike Ayala: Yeah. So, this was actually inspired by one of the guys in the first year. So, we’re working on year three now. So, one of the guys said, “Hey, once the couples’ mastermind is over, it’s just kind of over. Why don’t you guys do an annual reunion?” And so, we started thinking about it. And in November, we’re going to launch our first annual event and what that looks like, the previous years’ mastermind people, so year one and two, will come in on a Thursday night. So, they’ll be there Thursday night, Friday night, and all day Friday.
And then Friday night, we bring in new couples. And this isn’t for the annual mastermind. It’ll be an event where they get to meet all the previous years’ couples. We bring in speakers, and so, they’ll come in Friday night for a cocktail dinner, and then all day Saturday, we’re together masterminding. And then we have a dinner together Saturday night, and everybody goes home Sunday. So, we’re super excited about the event. If anybody’s interested in it, you can text me the word “event” to 480-531-7519.
Justin Donald: Amazing. Well, I have to imagine this is going to be right up the alley of many people in my audience and I’m excited for all the cool things that you’re doing, Mike. So, thanks for sharing that.
So, you assembled an incredible group. And I’ve got to tell you that I think your podcast is incredible. Your guests are incredible. I’d love for you to share a little bit about that and where we can find more about you, Mike.
Mike Ayala: Yeah, so the podcast is Investing for Freedom. And honestly, when you think about like how do you give back at scale, that’s how I look at the podcast. I don’t monetize the podcast, although people have come to the mastermind and many other things from it. But I’m probably not ever going to advertise. I shouldn’t say never, but for me, the Investing for Freedom podcast is really just about bringing on guests, networking. It’s a way to just create amazing content experience for the world.
And the thing that I didn’t realize when I was launching it, you can’t have a 45-minute or one-hour conversation with somebody and not learn so much about them. You can only go to lunch with so many people, but when you’re having one or two conversations every week on the podcast, selfishly, it’s been one of my favorite things I’ve ever done. And so, you can listen to the Investing for Freedom podcast wherever you find it. And I know that’s probably the place that I put out the most content. Instagram was one of my biggest things, but they just deactivated me saying I was impersonating someone else.
Justin Donald: Whoa.
Mike Ayala: Yeah, isn’t that crazy? So, we got to be cognizant that we don’t own our lists on these platforms. I’m having a heck of a time getting it back. And I had 25,000 followers or whatever the number was, and then it just rug out from under you overnight. So, you really got to watch that.
Justin Donald: Yeah, it’s interesting. I just had someone create a fake account that represented like it was me, all my pictures, all my guests, all my podcast’s info, and then they started soliciting these people. They built a huge following, and it took forever, I tried telling that, Instagram, like this person’s just fraudulent and impersonating me. And it took months to clear that up. Yeah, you got to look out, and sorry that happened. That’s such a bummer.
But I love the work that you’re doing your podcast. By the way, I think the same way I get people, I ask all the time to advertise on mine and I have said, no, I don’t want that, like my– I mean, who knows what the future holds, but I’m 99% sure that it is just going to be my content. I don’t want anyone to kind of direct or have influence or sway. So, I admire that you’re doing that. Any other place that people can look you up if they want to learn more about you, what you do, the couples’ retreats? I’d love to make sure that our audience can find you.
Mike Ayala: Yeah, maybe just text me at 480-531-7519. That’s probably the easiest now that Instagram is down. But also, Instagram is mikeayala2.0. I don’t know if I’ll have my other one back or not, but for now, it’s mikeayala2.0.
Justin Donald: That’s awesome. Any other closing thoughts that you have? This has just been an awesome session. I love hanging with you. I love talking and really just living life together. Any other closing thoughts?
Mike Ayala: I think, I don’t mean to be cliche, but it’s the who, not how concept. I’ve coached with Dan Sullivan for a while and I love that concept. And I think everything in that thread with leverage and I’ve said this for a long time, everything you need is on the other side of a person. They said it better. It’s who, not how. And I think that’s the thread with everything. And I just appreciate knowing you and just even being able to come share with your audience because, again, everything we need is on the other side of a person.
Justin Donald: Well, that’s awesome. Well, very well said. And I’d love to close today out the way I close out every episode. And that’s with a question, which is this, what’s one step that you can take today to move towards financial freedom, to move towards a life by design that’s on your terms, it’s not by default, but it’s something that you’re passionately and wholeheartedly so thrilled to be living every single day? Thanks, and we’ll catch you next week.