Mauricio Umansky on “Rentvesting” a Bullish Real Estate Market and Where to Buy

20:58I guess eventually we can have robots driving us around, but like, do you really want that? I don't know. I mean, I guess the tech - I mean, my Tesla drives me around. Your Tesla drives you around for sure. But then, you know, yeah, I guess he can, you know, the new one, they can also tell you stories. So I can see it happening with that, but in the luxury world, it's a whole different.

21:14Nicole Lapin:We're watching one of the greatest wealth transfers about to happen right now. It's$124 trillion, which is such a big number. I can't even wrap my head around that. By 2048, what should you know about preparing for that wealth transfer if you're listening and hoping to get into the real estate market? Because not only is cash going to get transferred, but a lot of boomers are going to transfer their homes and their real estate holdings. There's major change, major, you know, AI, SpaceX, all, you know, tech. I mean, there's just major, major. And then there's going to be a tremendous amount of wealth transfer, you know, generational to generational.

21:58And we are starting to see different ways, you know, that people are enjoying their life. I think that, you know, one of the things that we're seeing is family compounds.

22:05Nicole Lapin:So what does that look like? Just multi-generational? So this is kind of the sandwich generation that we're not really seeing. Multi-generational, yeah. Yeah, you know, I might create a compound where my four kids have a home, you know, and they have their own family in my compound, but we're all together, right? They all have their own homes, right? And they all have their own life and their own everything, but yet we're still… On the same land. On the same land, right? Or together. Is that something you would do? I would 100 % do that. I would love to do that. I think it would be super cool.

22:36Nicole Lapin:And then have your parents. Yeah. So sort of this sandwich idea where we're taking care of our aging parents, but we're also taking care of our kids and everybody's helping out. Yeah. And by the way, in terms of taking care of them, eventually they start taking care of you, right? I mean, if they have their own home, then hopefully they're going to have grandkids and all kinds of other fun stuff. But we're also seeing a tremendous amount of investment occurring. one of the things that people used to love when they had money is to buy large homes today we're seeing not so much the volume and the size of the square footage but more about more homes more places to go to I think that you know COVID one of the things that it did is it changed the behavior about the way we work right so before you went into your office every day you lived in LA you went into your office every day you lived in New York you went into your office every day And then you had your vacation home.

23:34But today, because we don't have to go into the office every day, which sometimes I like and sometimes I dislike. But today, because of that, what's happening is that we can have multiple homes where we work out of. I can actually live in four different areas three months a year, right? Or in six different areas two months a year. And like it not just be my vacation home, but actually live there, right? And work there because you can work for money. And work there. I can live in Miami in the winter. I can live in Los Angeles in the summer. I can live in Aspen in the fall. And I can live in the Caribbean in the spring.

24:09I mean, I can do whatever I want, right? So what you're starting to see with the wealth is you're starting to see them buy more homes versus the big one, you know, one big huge home that they put up all their money in order to live in their home.

24:22Nicole Lapin:Well, as part of that, it's a trend. It's become so sexy on social media with short-term rentals. Yes. And you mentioned it briefly, but I want to double click on it. The Olympics, obviously coming to LA, yay, 2028. Right now, LA, you can't list your secondary home or investment property as a short-term rental. It has to be your primary home. So now there's, I believe, a proposal to allow short-term rentals through 2028 of an investment property. Do you think that's a good idea for the city? I think it's a great idea for the city, and I think the city is going to need it. And I think, you know, A, in order for us to host what we need to host in the Olympics, I mean, we're seeing it right now with the World Cup.

25:03And it's, you know, not, you know, and it's spread out over how many cities? I don't know, 20 cities maybe, plus or minus. But imagine all of it being here, right? We're going to need to host the people. And it's going to be an opportunity to bring in a lot of money to a lot of different people. So I think it's going to be great for Los Angeles. We need to do something great here. We're due.

25:24Nicole Lapin:Are you going to make it happen? I mean, I'm going to try. I'm going to move hard to make things happen. But yeah. But I'm not running for mayor yet. I was about to ask. Yet. Yet. You don't say ever. I never said ever. Will you? Maybe one day. I've thought about it a lot. Would it be for Republican Party? I'm a registered independent. And I believe in the middle. I think we've lost the middle. I think it's kind of gone, which is kind of sad. where everything is just so extremist right now. And I think that we need to start making a push more for finding balance and finding that middle again. Okay.

26:06Nicole Lapin:Well, I'm an L.A. voter. Love that. Why should I vote for you? Because I'm going to make L.A. great again.

26:20So perfect.

26:21Nicole Lapin:Did you just coin that? We're going to make L.A. great again.

26:27Well, look, we need to do a lot of things. We need to do a lot of great things for LA. So look, on the financial side, I'm definitely more on the Republican side. I do believe in still, I still believe, I mean, Reagan was an LA guy and an LA native. And I do believe in Reaganomics. Reaganomics are no longer, I think if you took Reaganomics today, they're certainly not a Republican side. And they're certainly not like, that's more of a middle thing, okay, in today's world. And that's what I mean by the middle. And what I mean by that, it's not about only the trickle down, but it's about we need to bring businesses back.

27:03We need to bring employment back. We need to bring innovation back. We need to keep Hollywood. We've lost so much of Hollywood. We need to give Hollywood incentives. I am not in Hollywood business. This is not benefiting me. But I can tell you one thing, that what put Los Angeles on the map was television and movies, was Hollywood. okay the reason we have people come from all over the world to visit la is because of the movies okay and if we stop filming movies and television here it's not only about the employment that's coming it's about the tourism it's about all of those things that continue to come here we we we've lost i can tell you just on the real estate world the international buyer that we used to have it's they're gone.

27:53We barely have that international buyer coming in anymore. And I'm seeing that early. But if we don't start fixing that now, that's going to affect us. One of the greatest things about the real estate market was that we had everybody buying here. We had Chinese, we had Russians, we had Europeans, we had Saudis. One of the most beautiful things about LA is that it was an incredible melting pot of everybody. We're losing that.

28:18Nicole Lapin:Why? many reasons bad pr that's something la needs to work on we need to work on pr um and what i mean by that is you know right now somebody you're even seeing it in the world cup uh people are coming out here you're seeing it all over social media like oh my god i've been reading the press on you know la the u.s and it's far from that you know all we read is crime and theft and burglaries and you know people are scared to come to los angeles right now because of the press that's out there, the PR that's out there. But if we can change the PR that's out there and not only change the PR, but actually change it, right?

28:54So that we are safe here. You know, we cannot have criminals, you know, get out of jail in three days like that. Like we just can't do that. Because what happens is that you just more crime happens, right? Because they're not scared of being in jail. They're not scared of being put away. They're like, oh, it doesn't matter. I didn't have a weapon i can go burglarize a house and worst thing that's going to happen to me is you know i'll spend 15 days in jail that that can't happen did you vote for spencer i did

29:30Nicole Lapin:and seeing him lose did that change your thoughts on running well it changed my thoughts on running and you know it didn't change my thoughts on running i haven't decided whether i want to run or not, it's a major commitment. And it's also very difficult to run against the Democratic Party in Los Angeles, which is also kind of sad because, A, it makes you wonder if it's... The problem that I see with the Democratic Party is that they're making promises that are unsustainable in order to win votes. And they're not good for the city just to win votes. and when the ULA measure, let's go back to real estate for example, the mansion tax, okay?

30:22I don't know if you remember on the ballot, but the ballot was pretty simple in terms of what you were voting for.

30:27Nicole Lapin:Yeah, can you explain it briefly? So$5 million. Yeah, so basically the ULA tax, the mansion tax is that you get taxed a percentage on any home that sells above five, I think it's 5.3 million right now or 5.4 million. It's gone up little by little. and so it's 5 % on the total sale. So on a$5 million house, it's$250 ,000. But if you bought the house for$5.5 million and you're selling it for five, you're still paying the$250 ,000 even though you're taking a loss. So this is not a capital gains tax. This is a transaction tax

31:06and it makes it...

31:08Nicole Lapin:There's no exception if you're taking a loss? No, you're taking a loss. You're paying your taxes. You make an investment into, and that's why we don't have, a lot of developers are stepping away and they're going elsewhere to develop. I have one of the best development sites for sale right now ever, ever. And I am struggling getting it sold and it's at a steal. It's at a deal, okay? And I am struggling getting it sold because the developers don't want to work in LA. That's sad. it's a great deal. And people don't want to work in LA. And when you think about that, that's a political move. Why do they not want to work in LA?

31:48Because of the politics of what's happening in LA. So we're losing that investment. So all of these developers that are national developers, they're buying in New York. They're buying in Miami. They're buying in Texas. They're buying in St. Louis, Missouri. They're buying everywhere. Denver, Seattle. But they're not buying in LA. And they're scared of it. That's a problem.

32:09Nicole Lapin:I've heard Spencer talk about the idea that reality TV has both helped him and hurt him. And I've heard you say the same thing. Yeah, it's both. Not one more than the other? No, I would say for me, it's probably 50-50 in terms of help and hurt. And there's a lot of sacrifices that come with reality television that you put out there. And it helps with a lot of different things as well. I mean, you know, but if I looked back and I had to do it all over again, it's very difficult. There's days where I would say I would not have done it. And there's days that I would say I would have done it again.

32:47Nicole Lapin:Which days would you not do it? Just depends on the way I wake up and the way I feel about it. It's literally a 50-50 thing. It's not leaning towards one or the other. So it's literally just the way I wake up. And I'm like, why did I ever put myself and subject myself to, you know, to. because a reality tv one of the things that happens with reality tv which is different than television is that reality television people actually think they know who you are and they build opinions about you if you're on television you're i'm acting as spider-man i'm spider-man like they're not you know nobody thinks they know me right like they might recognize me but they don't think they know me in reality television people actually think they know you um and that It's weird for you?

33:31Well, it causes a lot of problems because, A, imagine somebody gets to know you based on an edit that's occurring that you're filming, oh, my God, I don't know, 30 hours of television, you know, and then you get edited down to eight minutes. And then that's what they put, you know, everybody bases their opinion on, and that's how they know you. Kind of a weird way to know somebody.

33:58Nicole Lapin:So it hasn't helped your business. More people have wanted to work with. Oh, it has definitely helped the business. But that doesn't mean I would choose the money over privacy. So is it money or fame for you? That's right. Well, money and fame come in that particular one on the same side. Right? So is it money, fame, or privacy? What is it for you? 50-50. why do you think there's such an access between influencers who are now becoming real estate agents or real estate reality stars and how much of that is real like the deals that we're seeing on real estate specific reality tv those big numbers slashed on the screen um they are somewhat real.

34:52They are somewhat not real.

34:57They like to flash out the big numbers. They never flash the struggles and how we got there and all of that stuff. And as real estate's become more and more difficult, there's been some commission compressions. We don't talk about that. They don't talk about the split with the company, all kinds of different things. So it's a little bit fantasy. It's a little fugazi? Fugazi, yeah.

35:25Nicole Lapin:Why has real estate specifically become such a draw for people who had been on reality TV or influencers? I think that because the – well, first of all, one of the beautiful – when you talk about real estate, you're talking about real estate brokerage, right? and I think that one of the neat one of the things about real estate brokerage is that with a small investment you can make a lot of money and in order to be a great broker you need transactions lead generation if you have influence if you have people that know you if you have people that want to be with you then your lead generation becomes a lot easier and so therefore it becomes a much easier job to become a real estate agent than somebody starting without an influence, without being on television.

36:15Some of the best real estate agents in the world have never been on television. Let's be clear. We've got, I mean, how many of us have been on television and have reality stars? A handful of us, right? I mean, there's a million, 300 ,000 real estate agents, right? And if you look at the top agents in the country, first of all,

36:35Well, if you look at the top 20 agents in the country, maybe four are reality stars or five. The other ones did it on their own, right? That's number one. Secondly, I'm not 100 % sure about what I'm about to say, but I think that most real estate agents that aren't reality television made their career because of reality television. and did not have the career prior to reality television. I think I'm the only one that was the top. I think I was number three agent in the country before I ever got on television. And then I got on television. So you don't need the television to make you an amazing real estate agent.

37:18Nicole Lapin:Oh, so you're a great test case for how much more lead gen you get. So what was your lead gen pre-reality and then post-reality? So post-reality, I changed my business. I actually created the agency. and so I used television and reality for the agency versus for myself. I became more scale. So it's very difficult for me to give you that exact answer because I stopped chasing being number one. Before I did the agency and before I did reality, I became the number three agent in the country. I was two spots away from number one. And then I did reality and I decided to start the agency and I stopped chasing number one.

37:54Who was number one? There's a guy out of Texas. His name is Ben Caballero. He's been number one forever. Never.

38:00Nicole Lapin:And its number one is based on transaction house? Strictly volume. Yeah. It's transactional volume. When I was number three, in order for me to do that, and now today, everybody's got teams, so now you're separating large teams, small teams, medium teams, blah, blah, blah. Back when I did it, it was individuals. There was no individuals. But in order for me to do that, I did$640 million of volume by myself, which is pretty So you were number one in California. I was number one in California, number three in the country that year. Ben Cavalier was number one. Do you know him? So I never met him, but I'll tell you a funny story about that.

38:38He loves to put it on his podcast. And Sarah Broadman, Serena Broadman from New York was number two. And she beat me by like$5 million. I was so upset. It was like a half a transaction or one transaction or whatever it was. But I called up and I was chasing Ben forever. He's in the Guinness Book of World Records and all that stuff. He put himself in there. but I picked up the phone and I called up Ben and I said hey Ben it's Mauricio I go you may not know me but I just want you to know I've been chasing you for 10 years and I'm number 3 and I also just want you to know I'm done chasing I'm starting my own company I go so congratulations but I just wanted to talk to the guy that I've been chasing before I stop chasing you and I just wanted to say hello and he loves that story

39:21Nicole Lapin:and what did he say? oh he was just great he was fantastic we had a great conversation and it was funny I mean, you've grown your business so much since becoming on reality TV and it makes it so smart to scale yourself because you would have so much more publicity. Being in the public eye, how has that obviously been good for business, but what about relationships? I think it's more complicated to have not enough money. So have you not had enough money and had too much money and which one do you prefer? Well, I definitely have not had enough money. I mean, I started with nothing, and that was very difficult, and I don't think I have enough money yet.

40:05Nicole Lapin:What's enough money? I think enough money is when you can live the lifestyle that you want to live, that is what you like to live, without having to work anymore. And so therefore, it's different for everybody because some people spend$10 ,000 a month. Some people spend$5 ,000 a month. Some people spend$200 ,000 a month. Some people spend$2 million a month, right? So some people spend$20 million a month. So it's very different for everybody what enough money is. How much do you spend a month? You laughed the most at$200 ,000. So I would clock it around there. You're not far off. Like what's your FU number where we're never going to hear from you again?

40:59I think it's got to be in the neighborhood of maybe 200 million.

41:06Nicole Lapin:And at that point, do you just peace out? I don't think I'll ever peace out. Money is not my driver. What's your driver? Competition with myself and the game, the chess game. I love the game. I love making moves. I love being disruptive. Right now, I'm starting something that is a, I just started something that is super disruptive but will not make me any money. It's the American Real Estate Association. It's a non-for-profit. I'm not taking any salary. I'll never take a salary, et cetera, et cetera. It's not about me making, but man, is it disruptive. It's disrupting the National Association of Realtors like crazy.

41:45They're going bananas with me. They have 1.3 million people. We're up to now approximately 100 ,000 people. And we're growing, and we're growing fast. But it's innovative. It's disruptive. It's fixing a problem that needs to be fixed. And it's one of my favorite things to do, even though it literally, when I tell you I don't make a cent on this thing, I don't make a cent on this thing. But it's one of my favorite passion projects I'm doing.

42:21Nicole Lapin:So money is your driver just to keep the scoreboard for yourself. So what are you at now for sales? Five billion in real estate sales? So that number has been the number. I haven't measured it. That number has been a number that's been thrown. I don't believe that. I have not. I got to measure it. That number has been a number that we came up with about three years ago. And it was accurate three years ago. And I probably have done 300 million every year personally. So let's just pretend I'm around six billion now. Okay. Okay. What's another billion amongst friends? So the agency has offices in - But by the way, those numbers, that's what the problem, I want to talk about that.

42:58That is exactly what the problem is with these reality shows. And that is exactly what the problem is with the way that we measure volume in real estate. Because$6 billion sounds like a hell of a lot of money, doesn't it? Right? But I certainly didn't make$6 billion. And that was not my revenue.

43:18Nicole Lapin:No, that's so important to say that because when people see headline numbers like that or when a founder exits a company, they're like, oh, you have$100 million in your bank account. You have investors. Do you guys have investors? Well, but it's not only that. Here's the thing about real estate sales and all of these reality shows. And then all of these real estate agents that glorify themselves based on how much they sold a billion dollars this year. Who cares? How much did you make? What was your gross commissions? A lot of these people, you know they do a typical number is i just use a hundred million dollars okay that's not a typical that's a great real estate agent a hundred million a year this is gross gross gross gross gross gross gross but now they take that hundred million they multiply that by two percent okay what is that two million right okay but they're probably not taking all of that there you go you're splitting it then they split it with teams there you go okay what is what is real estate so they throw out this number of$100 million or a billion, okay?

44:19And like, what are these people bringing home? They're probably bringing home a million and a half, a million, okay, which doesn't suck, don't get me wrong, but you're bringing home a million and a half, then you gotta pay Uncle Sam and your taxes and you live in California, that's$750 ,000. And then your business expenses is probably another$250 ,000. You're down to$500 ,000. That's what you're living off, 500 grand. Don't get me wrong, that's a pretty nice lifestyle, but it's not gonna let you spend$200 ,000 a month.

44:46Nicole Lapin:So to be clear, you don't have$6 billion. I do not have$6 billion. I would not be chasing$200 million if I had$6 billion. But I'm really glad that you talked about that headline number being so misleading. It's misleading. And the way we measure in real estate drives me bananas. We should not be talking about that. We should be talking about gross revenue just like every other business does. We should be talking about our volume. The way we measure should be based on what our gross commissions are, what our gross revenue is. Or net, either one. I mean, because again, but a company does not measure net profits or net revenue.

45:23They measure gross revenues.

45:24Nicole Lapin:They measure EBITDA. They measure, at the end of the day, they measure EBITDA, right? But in terms of like your revenue, like Walmart, you know, whatever, or Amazon, they have a revenue, whatever their revenue is, right? It's not their net revenue, it's their revenue. Their net revenue is a different number. Or GMV, like gross portion. Great, that's how we should be measuring real estate companies. I mean, you look at these companies and they say, I did$30 billion last year. They didn't do$30 billion. They probably did$600 million. Still a huge number, but let's measure it off the$600 million.

45:58Nicole Lapin:But the$600 million is not what they're taking home either. No, but that's the revenue that they generated. I see. Right? So whatever. Let's just take the agency, okay, for argument's sakes. Okay, so lead by example. So let's change the website. Oh, well, let's change the website. I'm in. I'll lead by example. The problem with that is, and I've talked about this all the time. And by the way, I go to all these conferences and I talk about this. And I talk about it in the real estate conferences. Like I am vocal about this. The problem with that is that if you're in a competitive world, okay, think about this.

46:38I'm competing for a listing. I'm competing for somebody. and somebody says, I did 2 billion. And I say, I did 200 million, right? Like I did 250 million, right? That's more than their 2 billion, okay, in reality. But they don't see it that way, right? So the consumer is going to be like, well, I'm going to go with the person that does 2 billion. Why would I go with the person that does 250 million, right? So unless I can change everything and talk real numbers.

47:06Nicole Lapin:Change it all. So what's the goal with the agency? You have the agency in 14 countries at this point. 16 now. 16 countries. Yes. You have potentially 6 billion in sales. Top, top, top, top, top number. Would you take it public? Okay, so when you were talking about 6 billion in sales, that's my personal sales in my history. That's Mauricio Umansky. So the agency we're doing, and again, I'm the worst at this because I actually would tell you the gross revenue. But the agency is doing something around 15 billion a year. in terms of sales. So what's the end goal? End goal there. So right now, again, we're in a three.

47:49We began the show by me telling you we're in a three and a half year low of transaction volumes. I can tell you that right now, we have set up the agency for growth, and we have no EBITDA, okay? That is not the goal right now. As soon as this market changes and we start having profits, okay? Because right now, if you look at every real estate agency, every real estate brokerage on the markets, the stock markets, nobody's making money. Okay? As soon as we start seeing money being made and capitalizing, I feel like we've grown it to a great place. And we're budgeting for that. Like, I've planned for this.

48:27Okay? Then I'd like to take the company public.

48:30Nicole Lapin:When we go back up. When we go back up. On the way up. So somewhere within the next year, maybe. You heard it here first. We end our episodes, Marisu, by asking all of our guests for a final tip that listeners can take straight to the bank. We talked about short-term rentals. We talked about rent investing. We talked about buyer-sellers market. What's one final tip that our audience can take away from the real estate market today? Real estate is a great wealth preservation. It's a great way of investing and saving money. Even if you look at all of these people that are making fortunes in AI, tech, et cetera, et cetera, once they make their fortune, they put it into real estate.

49:08It's just a great place to invest. And there is no right or wrong as to where to invest. It's whatever makes you happy. Always optimize for happiness.