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Exclusive Interview With Michael Eisenga - President of First American Properties

Originally published on ideamensch.com

Michael Eisenga is a successful commercial real estate investor with a banking and finance background and is the former mayor of the City of Columbus. As a President of both American Lending Solutions, a mortgage lending company (he founded and operated from 2000 to 2018), and First American Properties, he has a track record of creating and operating successful businesses. Mr. Eisenga is also devoted to property development and construction, primarily serving smaller local communities. Especially in the senior housing sector.
 

Where did the idea for First American Properties come from?

Back when I was in my mid-20s, I wanted to get into investing and especially investing in real estate. As a result, I found a fairly large apartment complex in Madison, Wisconsin. It was 88 units. I put together a deal and purchased it, and that is when First American Properties was founded. It was the limited liability corporation that owned that piece of property. Then over the years, as I bought and sold other properties, First American Properties has really been the umbrella company that owns all the other properties and investments that I have with regards to real estate.
 

What does your typical day look like and how do you make it productive?

My typical day can go in a number of different ways. Typically, I’m taking calls and sending e-mails pretty much all day. I’m handling things more at a corporate level, where I have top-level management that reports to me. Also, I’m talking to commercial brokers, commercial leasing agents when it comes to leasing properties. I usually have meetings with my managers at the facility. I have a formal meeting once a week where we all get together and have an in-depth agenda of specific items that we go over. But aside from that, I’m always looking at different things we’re doing for marketing, approving things on a daily basis, and working with tenants and members of the management team daily. I’m also always using my time to strategically find new opportunities through current investments and new ones.
 

How do you bring ideas to life?

If I’m looking at making an investment, I first get the idea, but after that, I like to get some confirmation that my idea is going to work.

For example, if I’m interested in building other assisted living facilities, I will contact a company that does market studies for assisted living facilities. I do this to know that there’s a sufficient need within a community to make that investment.

I also work with the company doing the feasibility or business study as well, because sometimes they have some good ideas. So we come up with a profile, and then they search the geographic area. Once we find a market that meets the criteria, I start exploring, finding a piece of property, securing financing, and moving forward with the project.
 

What’s one trend that excites you?

Commercial real estate is going through some major changes. I had owned some retail property, and retail is getting hit very badly right now. There’s going to be a downward trend in retail in the upcoming years since people are ordering more over the Internet—myself included.

I would say some trends that excite me in commercial real estate are warehouse and industrial space. I think there’s going to be more need for them as time goes on.

Also, we are seeing more manufacturing moving back to the United States. Now, with the new administration coming in that may not be quite as pro-business, we may see some manufacturing moving back to other countries.

I would also mention senior living. There’s a large trend in baby boomers who are getting older—many of them are now in their 70s, some are approaching 80—who are in need of senior housing. The options senior living that were acceptable 20 years ago are not the type of scenarios that baby boomers are interested in. They want to be in a facility that feels home like. They want to have activities. They want to be able to go on little day trips, which is something we do. They want to be able to live almost like they’re in a hotel and have full services. So that’s, I think, where assisted living is going. It’s as much of a service industry as it is anything else.
 

What is one habit of yours that makes you more productive as an entrepreneur?

Successful entrepreneurship is usually the combination of several habits. A couple of ingredients that are necessary for somebody to be a successful entrepreneur is, first of all, for lack of a better word, you need to have some “street smarts”. You have to be able to solve problems. Because when you own a business, the buck stops with you and you really need to have skills in problem-solving. You know what they say, business is what happens in between the plans you make. You need to have the ability to solve problems by identifying things that need to be addressed and addressing those or finding the people that can help you.

The other thing is something a lot of our entrepreneurs have a hard time with. They can start a business and have a very hard time delegating to other people and finding people that they can successfully delegate to. You will never grow and scale a business if you can’t successfully delegate authority and responsibility to people you can count on. That takes talent. It takes talent to recognize that, and then it also takes talent to find the right people.

Another thing that entrepreneurs fall into is we always tend to want to be the smartest person in the room. But when you’re delegating and you’re hiring people to do a certain function, you want to hire people that are essentially going to make you obsolete in kind of a funny sort of way. You want people who are smarter than you in the areas of what you are hiring them to do. That way, you’re not going to need to be doing a bunch of oversight. You always want to make sure that you’re providing oversight to the expenses and what’s happening in your business, but you also want to hire people that you know are going to be able to rise to the occasion and successfully do the specific duty and responsibilities that you’re hiring them for.
 

What advice would you give your younger self?

When you’re a young entrepreneur and you have a lot of success at a very young age, which I did, you tend to start to think that you’re pretty much indestructible and that you can just make things happen. Well, that’s not necessarily true. Sometimes, there’s nothing wrong with saying, “Hey, this isn’t something that’s going to work out. And it’s time that I exit this and move on to something that’s more productive.” I think if I was giving myself some advice to my younger self, that’s what I’d say.

For example, I owned a mortgage banking company for almost 20 years and I made a lot of money in that industry. However, I probably should have exited that company when my intuition told me that I should, which had been about a year to a year and a half earlier than when I did. Had I done that, I would have been able to sell that company for far more than I did in the end when I exited the industry. I would have saved myself a lot of frustration and a lot of time and energy. When I started that company, the industry was very much a niche lender. And toward the end, the mortgage industry has become nothing more than a commodity business. Everybody in the industry is selling the same government agency mortgages to the same group of consumers. They’re all looking on the Internet, finding the lowest rate they possibly can. So what’s happening is the margins are continuing to contract. There’s really not a lot of money in it for the owner, especially when you look at the risk-reward ratio.

I had recognized this but I stayed in the industry because I had an emotional attachment to that company and I wanted to see it turn around. In the end, I just made the decision that it wasn’t worth it. But I think I should have acted on that premonition earlier.
 

Tell us something that’s true that almost nobody agrees with you on.

Over the years, there were people on my management team who weren’t able to see how specific people could stay in the organization for a number of reasons. I have had a few times over the years where I’ve wanted to try to find a place for someone in the organization, and it’s actually worked out.
For example, you may hire somebody to do a specific job, sales, or marketing, for example, and you find out that they are not good at sales and marketing—and not everybody is. From my perspective, if you have it to be sales and marketing, you just have it. It’s not something that can be developed. You either intuitively know how to be a good salesperson or you don’t. But that doesn’t mean that that person might not have another calling. They might be very good at doing accounting work or handling the regulatory side of things or a number of different jobs. I’ve had people not agree with me on keeping people on.
 

As an entrepreneur, what is the one thing you do over and over and recommend everyone else do?

I think probably the best thing to do as an entrepreneur is to collect your facts and make educated decisions on what you’re going to do. And I do that over and over. Even then we don’t always make the right decisions all the time. I’ve certainly made bad decisions in the past but I always like to look at things without emotion. Because I believe as a business person, if you start making business decisions based upon emotion, there’s going to be trouble ahead for you. When you’re talking about money and making money, it doesn’t come to you based upon emotion. Money goes out of the door based upon emotion.

So what you want to do is you want to be able to look at facts, figures, but you also want to be creative. So there’s a creativity part of this, too. I’ve heard it said that accountants are terrible business people. I think that’s too much of a generalized statement, but I really think that what people are trying to say is that sometimes you can also get too hung up on the numbers that you can’t see the forest for the trees and see the opportunities and the upside. It’s a happy medium and it’s a fine line that you have to straddle, so to speak. You really want to be looking at what the facts and figures are, get opinions such as market studies, things like that. But at the same time, really be able to identify what you’re putting together and what your foresight is of what that business can be or that project can be. Follow up on that as well.
 

What is one strategy that has helped you grow your business?

There are several things that are important if you’re going to go into business. Probably one of the first ones would be to hire a good attorney. Because the last thing you want to do is get yourself in trouble legally. Unfortunately, I guess attorneys are a necessary evil, so to speak. I say that tongue in cheek because I know a number of great attorneys and they do good work and are good people, but it can be expensive. But I’ll tell you, not having all the I’s dotted and the T’s crossed on a contract can also be extremely expensive, far outweighing the cost of hiring the attorney to review it. So I would say that is one of the things that I did early on, I got a good attorney.

Then I think the other thing is to find a business that you enjoy, that’s probably actually the first step. Do something that you enjoy and that you want to be a part of because you’re going to need to have a passion for that business and you’re going to have to want to be in the industry. If you’re doing something that you enjoy, the money a lot of times follows.

The other thing, once you’re in business if you want to grow that business, as I said earlier, you’re going to want to have the skills to delegate, manage and develop a team. So it’s very important to have skills in hiring and searching for the right people to fill positions. And then listen to what they have to say because if you hire the right people, a lot of times they come up with great ideas on ways to expand or grow the business and then explore those.

And always be open-minded because you never know what opportunity is going to come along. I would say unless it’s just a totally crazy outlandish idea, never say no to start with. Take at least a cursory look but don’t make quick, rash decisions.
 

What is one business idea that you’re willing to give away to our readers?

I can’t think of anything specific right now. But I would just say that if you’re looking for a business to get into, there seem to be so many opportunities with the Internet these days. There are some good options there.
 

What is the best $100 you recently spent? What and why?

I would say probably the best $100 I recently spent was when I took my kids and myself out for a nice meal. It was a little more than $100, though. But from my perspective, it’s great to be in business and it’s good to work hard, but you also want to keep your perspective. And from my perspective, my family is the most important thing to me, especially my kids. So having money and doing things with them and enjoying the time I have with them is the most important thing for me.
 

What is one piece of software or a web service that helps you be productive?

I use Microsoft Office. We have our own server for the assisted living facilities. And the software we use is specific to the industry. We also do some marketing on Facebook and Google.
 

What is the one book that you recommend our community should read and why?

The book is called “How to Negotiate Anything” by Herb Cohen. I read it several years ago in my 20s and it gave some excellent strategies on how to negotiate, especially at a business level and even at a higher level. If somebody is an up and coming entrepreneur, even if you own a company or even are an executive, I would recommend reading it because I found it very helpful. And the nice thing about it is it’s not a super long book. It is pretty straight to the point and it really gives some very good strategies on how to negotiate.
 

What is your favorite quote?

“Everyone says you can’t. Until you do. Then everyone wants the key to your success. And you say, The key is I don’t listen to everyone,” – by Jon Gordon.
 

Key Learnings:

  • Do something that you enjoy, and money will follow.
  • Collect your facts and make educated decisions.
  • Learn how to delegate, manage, and develop a team.
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