Outrunning Failures

From Surgeon to Syndicator: Dr. Mike McManus's Real Estate Revolution

• Vish Muni • Episode 22

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Today’s guest is Mike McManus.

Mike is a semi-retired urologic surgeon and entrepreneur who began real estate investing during medical school in 2009.

He transitioned from managing single-family homes to commercial real estate, focusing on multifamily, retail, and industrial properties.

With over 25 years of experience, he has navigated various market cycles and founded The Fortress Capital and the Surgeon Syndicate Podcast in 2023 to educate physicians on real estate investing.

Having exited full-time medicine, he now resides in Salt Lake City, where he continues to invest while enjoying the local lifestyle.

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Creator/Main Host: Vish Muni

Show Advisor/Editing: DBT Marketing

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>> Vish:

Well, today we have another awesome guest on outrunning failures, Dr. Mike McNamas. He's a full time urologist, biomedical professional. He's been a doctor for a long time. But one thing changed is, urge for urged to be a full time real estate investor. And his passion for investing are so strong he decided to go part time in his medical profession. And what he focuses is retail and industrial real estate. And not just that he's an entrepreneur, and he's a podcast host of award winning show called Surgeon Syndicate. With that, Mike, welcome to Outrunning Failures. Could you please tell the guests a little more about your background and how you got into real estate?

>> Dr. Mike McManus:

Vish thank you for having me. This is a great opportunity. I got into real estate initially, I think it was, it was during medical school I saw this opportunity that I could buy my own place. and by buying it decrease my cost. So I, it was kind of the original house hack. I bought the place, I added a bedroom and a bathroom in the basement which I moved into. I rented out my other two rooms and basically covered my entire mortgage and taxes with that. So that was kind of my first taste. did some other kind of flips in places we were living. Bought a place that needed remodeled, we'd remodel it, kind of did that during residency and then sold it for a nice profit. fell out of investing for a while because the first time we rented out, you know, a whole house to somebody was a total disaster. They didn't pay rent, we had to evict them. you know, they never even paid a full month rent ever. So then I kind of put it on the shelf for, for quite a while, came back into it. as I was realizing that I didn't. But I wasn't going to be a doc who worked till I was 70 that I started looking. I needed some other income stream. And so we bought a fourplex during the pandemic, We, we still have that fourplex. Actually. We looked to sell it and because we were moving and it wasn't something I could manage myself anymore. And it actually turned out that for. For what it really. For what we could rent it for versus sell it turned out to be worth keeping. And I turned it over to a property manager. The funny thing is, is, I thought I was doing pretty good keeping up with rents, but he, he's already made it more profitable than it was and he's only been managing it for a month. Probably should have turned it over to a professional property manager a long time ago.

>> Vish:

Well, that's good to know. So what is your asset class now? I see, you moved into retail and industrial real estate. And tell us a little more about what does an asset class retail and industrial real estate mean?

>> Dr. Mike McManus:

So, m. Retail. Most what we're looking at are, small neighborhood retail centers, or what some people call strip mall or retail strip centers. now the, the asset class could go anywhere from, you know, a single tenant small building to, you know, like a big mall that's all retail. But we're, we're mostly in the smaller neighborhood space. the other asset class, industrial, is a, Is another. A big one, which can go all the way from manufacturing plants, warehouses, distribution centers, and industrial storage.

>> Vish:

Well, that's interesting, Mike. And then, with that, did any of your co workers or medical professionals follow you? Or it was just you, the lone wolf?

>> Dr. Mike McManus:

It was pretty lone wolfish. I came along and I saw this and as I started learning, I thought, you know, this is really cool, and doctors don't know about it. And I thought, you know, my fellow physicians would, would want to jump on board and be like, wow. I was always hoping to find something different than just what I could, you know, get with the the standard, you know, stock and bond advisor. But in my immediate doctor circle there was really nobody else. It was too scary for him. Everybody had some sort of story of somebody who lost money in real estate and it was a very scary world. And so I kind of was out figuring it out on my own. Now the only one I could say is that in the exit from my old practice we had to cash out a pension plan with built and I had put a self storage syndicate in there and one of my partners in the end decided that he wanted to keep that rather than sell it. So I guess I did bring somebody in along with me. So.

>> Vish:

So you, you had quite an influence on at least may not be 100 doctors. At least you're starting at least a 10% of it.

>> Dr. Mike McManus:

And you know, there's a few others who talked about investing alongside me either in some of the deals from my network or in deals I was trying to take down And they just could never quite pull the trigger. It was still a little too scary. So I would bet eventually that some of them will continue down that road. They just weren't ready yet.

>> Vish:

That's so interesting. So with that, what kind of challenges you had in any of the deals? All I need to know is one challenge. We all had multiple challenges, but we just need to know one which has made you a better investor.

>> Dr. Mike McManus:

One of the challenges, trying to think because I've been thinking about this all morning, rather a lot of the biggest challenges in the last few years have been getting into deals, getting deals to work. I think the, you know the, the biggest challenge I had within a deal is you know, when it came, when we first bought our first it was really, truly fully investment property, the fourplex. Supposedly it was coming to us fully rented. which it was. And that was the deal we had that, that's a deal I never want to make again. Because if you tell a seller that you want it fully rented and they, and they lose a spot, they will put anything, anybody in there so that they met their end of the fully, the fully rented deal. so when we, when we took it over there was one brand new tenant who was supposed. Whose lease started the day after we closed and it was Jan. We closed. We barely got the thing done because it was 2020 by New Year's Day because the seller wanted to close within before the year changed over. And so the new tenant was supposed to move in January 1st. And this is in Marquette, Michigan, right on the shores of lake superior so January 1st is dead of winter. they showed up with their moving truck. And it was, the moving into the place. The people who've been there before had lived in that, that apartment for a little over 10 years. There had been minimal maintenance done during those 10 years. And so they moved when they. And the landlord, I don't know how much he really knew about the condition. When, they moved out, the place was, was kind of a disaster. Like, the. Half the shelves in the refrigerator were broken. some of the lights didn' of the heating ducts were clogged. And, I, none of this. I, I didn't know any of this. The people who moved in, were very needy. I think they, they'd come from being homeowners and moved and couldn't find a place to buy in Marquette because there was really nothing at that time in the market that there was almost zero on the, you know, available to buy. And so they thought, well, by renting, I, you know, if I have any problem at all, I call the landlord and it gets fixed today. So, so they were very high maintenance. And, so eventually we just, they were complaining so much. I, I told them, I'm like, listen, I. I'll give you two options. This, this is what it is, and you're going to have to accept that, or I'll give you all your money back and you can move out. and they were like, yeah, we'll take that. We're going to move out. And then they're like, well, we need to the end of the month. And I'm like, no, you want your money back? You got five days if you want, you want this rent, you're not going to live here free this month. And they decided they wanted the money more than they wanted to pay January rent. So, they packed up and they moved out. And then I had to come back the brand new landlord, thinking I was just going to collect rent. we had to do a pretty sizable remodel. new carpet, new paint, replace, the fixtures in the bathroom. We need a new refrigerator. So my initial cash outlay was significantly higher. And, yeah, that was the first step in.

>> Vish:

Well, that's interesting, Mike, because I've had similar experience like you, because I had a tenant for almost eight years and not even once he had called for any problem. And no delinquency, nothing. And the day he moved out, we take a peek inside for, to make ready, and it was a complete disaster. We had to put everything new. Okay. Literally. So, so that Was a big awakening call for me. Resident residential is good, there's nothing wrong with it but don't expect too much out of the tenants because it is not their property. And as they think landlords, we are going to be rich out of their rent. But it it, they don't really don't know what it takes. So even before renting that place I was down by$8,000. And so, but that was one of the motivating factor for me to get into commercial real estate where we do more of a B2B business to business. So we are dealing with business owners and the business owners can't afford to mess up the place. So it is their interest to keep the place lively and everybody is going to walk into their business. They can't have broken toilets, broken mirrors and any of those things. So that is, and that is all we met, right? That is how we met at commercial real estate. IBM.

>> Dr. Mike McManus:

Yeah.

>> Vish:

I'm glad I met you there. So that is an interesting thing. Now how do you mitigate the risk going forward? Because retail clients and industrial real estate clients are a lot different.

>> Dr. Mike McManus:

Yeah, it's, it's more built into the, the risk in, in one. In knowing the shape of the building going in, a little better due diligence. And so being the first time with that, that I, I bought an apartment building, I'm pretty sure I toured that building. but I didn't really know what to look in detail of. Like you know, once you replace a bunch of stuff, you know what might need replaced. So I think you know, in, even in switching asset classes is, you know, it kind of changes a little bit because your little things like your carpet, refrigerators, that is typically stuff that belongs to your, your tenant and the lease. And so it's, that's not as going to be your concern depending on the lease, but big things, the roof and making sure that you know, your roof inspection I will only have done by a roofer. Now you know that, that I, that I know and trust. How long is this roof going to be good for? And m. What's it going to cost to replace your big ticket items like your H Vac and your air conditioning. What's the life on it and is it ready to go? So I think the parking lot, all those things that can really be expensive when, when you first purchase it and knowing what you're getting out of those is the big part from the building and from the other side, if it's already leased is really understanding the lease and tenant and landlord responsibilities within the lease. And because the great thing about non residential real estate is there's no laws that tell what you can and cannot put in a lease. The downside is, especially if you're inheriting a lease, is you gotta know what's in that lease. Cause, sometimes that lease, you know, the tenant may have an out. You think they've got a, you know, five or 10 years left on their lease and it turns out that, you know that they've got an out that if there's something they don't like. So you need to understand that and truly all the neat nuances at least. And there can be so many of them to make sure that you know you're getting paid what you think you're getting paid and that your responsibilities are what you think they are.

>> Vish:

So that is good to know. So it works a lot different in it. So it's more user friendly and then you're dealing with business B2B. And it is their interest to stay there for a long time. I mean they can't. Especially since they've done so much of improvements to your property. They can't leave overnight and.

>> Dr. Mike McManus:

Right.

>> Vish:

So they can't say, well, today is December 30th, I'm going to have a new year party and pack up the bags on January 1st and leave without telling the landlord. So yeah, that won't happen. At least we can be rest assured the tenant is not going to ghost. But everything comes at a risk. In other words, if they start stop paying you what type of tenant it is with it. So mom and pop or a regional tenant or a national tenant. So these kind of the risk. What comes with commercial real estate is a lot different.

>> Dr. Mike McManus:

Right? Absolutely right.

>> Vish:

So how do you go about finding your deals? Do you have a group of people you work with or is just you?

>> Dr. Mike McManus:

It's, well, the group of people, there's the, you know, as far as finding the deals, that's just me as far as vetting the deals. Part of that is the group where we met, where we have our group that we hammer through deals together. as far as finding my deals, it used to be that on some of the online platforms there was nothing there. But there's starting to be some stuff show up there. We recently moved to Salt Lake City, which the great thing about Salt Lake is it's an incredibly stable market. But it's had an, you know, kind of some bigger growth than it's used to in Recent years, so there's not a lot of easy deals to be found. so been working hard on developing broker relationships because the good stuff really gets fed to somebody that they feel it's appropriate for right off the bat.

>> Vish:

Well, it all. It all comes down to relationships, like, no matter what you do. And, I think relationships is everything, the key, because the basic human thing is people like to work with people whom they like and trust. And in your case or my case, that is no better. So that is why I think we all, as investors, we stress on how important is relationships.

>> Dr. Mike McManus:

So.

>> Vish:

So with that, you moved to Salt Lake City. Where did you move from?

>> Dr. Mike McManus:

From, Green Bay, Wisconsin. So that was. It was a great place to practice medicine. But I. I grew up in Colorado, wanted to get back to the mountains. Right.

>> Vish:

Okay. So, so what do you do? Do you do a mountain biking? Do you do hiking, running or trail running?

>> Dr. Mike McManus:

I. I would say my big things are mountain and road biking in the summertime. I also, you know, do some hiking and other recreation, but then, and then skiing in the wintertime.

>> Vish:

That's awesome. You're in the right place then.

>> Dr. Mike McManus:

Oh, man, it's all right here. From where I'm sitting right now, I'm looking out the window at the Wasatch. it's amazing.

>> Vish:

So was this, one of your dream places to move, or has it been in the works for a long time?

>> Dr. Mike McManus:

it kind of came out when we decided we were going to move back west. We're trying to combine some place that had, we thought would have good, real good opportunity to be in the real estate market, but also offer the other things we wanted. We looked at a lot of different places, and Salt Lake was the one that came, out the winner.

>> Vish:

All right, that's good. what actually gets you going in the morning? Because we all have a challenging times, because we all have a different why. What is your biggest why and how do you keep yourself motivated all day long?

>> Dr. Mike McManus:

You know, my biggest why was. And it took a while that I really went through some serious burnout as a surgeon and tried to deal with it for a long time, you know, and just finally decided this is too big of a fight because I didn't want to get out of bed every morning. it was this battle to set my mindset every morning to anticipate all the things that were going to throw me off and how I was going to deal with them. Decided that just stinks. So my why now is with this move, real estate brought us To a place where, there was some financial independence and ability to walk away from an exceedingly profitable practice. But it's, it's a fraction of what we were making. So we've made some lifestyle changes that as we've gotten used to where we don't like being used to. So part of it is getting back to where my wife doesn't feel like she's constrained and we can do the things that we want to do. and so I feel that pressure, but it's also I've, and I think part of that was the end of, you know, towards the end of full time medical practice was that I was kind of bored. I, I wasn't learning as many new things and there wasn't as much to be learned. But you jump into a whole new world and you're pretty dumb and there's a lot to learn. And so it's pretty exciting now that I look at every day, like, who do I get when I wake up? I'm like, who do I get to talk to today and what am I going to learn from them? Because I get to talk to some incredible people. So I think that's the biggest part. Providing for my family and meeting amazing people that I get to learn from every day.

>> Vish:

Well, that's interesting. So you've been through everything. You've been through fame and you had a time pressure and which was indirectly affecting your health and relationships. Now with having, having gone part time and learning this new investing skill or diving deep into it more diving deep into it, I would say because since you started investing back in medical school, so you taking up this as a new career and also being a podcast host, how do you feel your life is now? Do you think you got back, the wheels and what's your quality of life now like?

>> Dr. Mike McManus:

You know, I'm just as busy as I ever was. But the great part is I have control over that so I can decide. I build out my schedule for the week and I've been working on doing time blocks and being better with that to improve productivity. But unlike with my m medical schedule, it's not set in stone. So I had a conversation this morning with somebody where we're getting ready to do a partnership and we made the decision to make the appointment yesterday. She had time right in the middle of my main productivity block where I usually won't have meetings. But I said, well, this one's important, we'll throw it in. It was supposed to be a half an hour meeting it turned into a two hour meeting. but we made some really amazing progress and really exciting progress towards what this partnership is going to be. So, and then I, I got the, I got this shoulder injury that I've been dealing with for a while and I just hadn't time to rehab. So now I say, okay, wait, last week I was out of town, I had these other things happen. I haven't been to rehab in a week. So I, I gotta go before it's the end of the week. So I scheduled an appointment today

at 4:

00. And so there's a lot of things I have to do, but I'm in control of when I do them almost all the time. So I'll have two or three hard and fast appointments on my schedule and a lot of work time that if something is more important to me, right then I can go do it. And this winter that something might be that Ulta just got two feet of snow overnight. And my more important thing this morning is three hours of powder skiing. But we'll we'll see, we'll see you in winter comes.

>> Vish:

So, so your priorities have changed a little bit and you are able to do a lot of things which you could only plan of doing in the past or you may or may not have a time and that, that is indirectly affecting your, your mindset and your quality of life.

>> Dr. Mike McManus:

Ah, absolutely. And other times I get stressed out because I'm not accomplishing as much as I thought I would. And that's kind of the battle between, especially after you first leave a highly structured life like being a surgeon, that you go into this, you know, void of having to schedule your every day and a lot of back and forth that I'll schedule too much and get too busy. And then I'm like, man, what am I doing? I'm working too hard again. And then don't schedule enough or take too many spontaneous breaks. And the end of the week you're like, I didn't accomplish anything this week.

>> Vish:

But you mean.

>> Dr. Mike McManus:

But yeah. So I really, I go back and forth on, I'm still figuring out this, this whole new world. But it's it's fun, it's, it's new and exciting.

>> Vish:

That's interesting. So now you, how long have you been a part time urologist? One year, two years?

>> Dr. Mike McManus:

I, let's see, I first cut back my schedule. January of 23, I changed, I just started going home early and being done at, I forget what time it was at like 2 o'clock. It didn't work out well with my partners. That was when I thought what would happen with that is it would have a huge impact on my quality of life and a small impact on my production, on the dollars earned for the practice. And it turned out to be the opposite. It had a small impact on my quality of life and a huge impact on my productivity. So we, that didn't work well. We switched that up. October of last year, I went to just working two days a week in the practice. and then the end of May this year, I left that practice and now I just do some contract work, or as we call in the medical world, locums work, as my part time urology. And that I can schedule or not schedule. I can be like, nope, I want to go to a conference that, that week. We're not doing any locums this month.

>> Vish:

So, so that's, that's on you now. Being a locum, it's up to you. You set a price, you fix a time, you say yes or no to a job.

>> Dr. Mike McManus:

Exactly. Yeah.

>> Vish:

But it's on your schedule now. coming from a medical background, you see a lot of parallels between being a doc, being a surgeon, and being a real estate investor. if you ask me, I've been into fitness all my life. Fitness and personal development and investing in technology has been my passion. Now I see so many parallels between all the four. You need structure, you need discipline, and nothing happens overnight and it's boring job. But that is what gets interesting. What, what do you see those parallels between being a surgeon and being a real estate investor and also fitness.

>> Dr. Mike McManus:

Right? Yeah. you know, I think the biggest one, but the one that's hardest to see for doctors, for surgeons, I'm going to say, because doing a real estate deal is, is a lot like doing surgery in that you, you need to have structure, you need to have a plan, you need to know what you're doing as you go through it. And, and this is where then docs get disconnected because they, they feel lost in the wild when, when all of a sudden they don't know what's going on. but once you start a surgery, you know, especially when you're operating in the belly and in the pelvis, nothing the way it's supposed to be is the oddity. The, you know, the, the way the anatomy was drawn up in the book. You see like once a year and you're like, wow, dude, that was just like the book. That surgery went just like the way it was the way I learned it in resonance, the way it's supposed to go. And the rest of the time, like a real estate deal, once you get into it, everything starts to change and become more fluid, and you got to make decisions on the run of, okay, that didn't work, or that's not working out, what do I need to do differently to still make this deal go? Or sometimes, like, a really bad surgery. And if you're. If you're doing big cancer cases, there's a point where you got to pull the plug and say, we're not going to get this done. This looked. Looked like a good idea to start with. From what we knew ahead of time, this deal looked like it could be done. this surgery looked like it could be done, but once we got in the belly, there was too much scar tissue or too much cancer, and it was inoperable. And so it's this big gut punch because you're like, I'm a great surgeon. I don't have to stop. You know, and sometimes you have to say the best thing for the patient is to stop. And same thing with a real estate deal. You put a ton of work into it and something you really, you know, you thought was great. But then you got to do the. Sometimes you got to do the gut check and go, you know, this isn't a good deal. I got to let it go. I got to let all the work go. Go.

>> Vish:

It's a bad patient, or you qualify the wrong patient.

>> Dr. Mike McManus:

Yeah, you opened up that building and found it was full of cancer, and you really don't want to buy that.

>> Vish:

Right? Yeah. So, that's interesting. Now, tell us a little more about. I see a sign out there. The Surgeon Syndicate. What is that about? Tell us a little more about that.

>> Dr. Mike McManus:

So Surgeon Syndicate is my podcast. We air Monday, Wednesday, Friday, every week. typically, we'll have, two of those shows will be, an interview, typically with the same person. So we do a couple episodes out of every. With every person just to help give the people are gracious enough to share their time a little more exposure, and then one solo episode with me. The whole point of the show is to educate surgeons, doctors, about investing in commercial real estate, because I saw all the knowledge gaps and hurdles I had to get over. So I'm just trying to help speed up that learning curve for other docs who might want to look at this as a way to enhance their finances.

>> Vish:

how long have you been doing that?

>> Dr. Mike McManus:

So we've been doing it for a little over a year, I believe. We're now on episode 165. We recently just crossed over the hundred thousand downloads.

>> Vish:

Wow, Congratulations on that. That's a lot of work you put in.

>> Dr. Mike McManus:

Yeah, it's a little mind boggling.

>> Vish:

Well, momentum, I think you got it now and all you need to do is keep going. So with that, what is your next big goal for next one year starting now. This is September and. But next. Yeah.

>> Dr. Mike McManus:

Yeah. So the big things we're working on right now is we're looking to do an outdoor industrial storage project here in Salt Lake City. There's a huge need. The reason for the huge need is appropriate land to do it on is hard to come by. So there's some other people out trying to do the same thing. but that's our, that's our big goal because, because it's, I've never developed one. It seems like there's not a whole lot to it. You know, it's a, it's a fence with some stuff in it, but there's actually a bit more to it. So we're partnering with a group called Long Yards who have done a bunch of these and done them very successfully and bring their systems in to assure that once we find the appropriate space that it all goes well will bring some investors in. And we're going to make sure that this cash flows and is a very safe investment with some, with some good long term cash output. we're also getting ready to start a fund and then we had a meeting today with one of my financial partners. because what we've seen lately is there's a lot of great deals that come along that the person is looking to sell it at a great price because they want to get their money out of that property. sometimes it's due to personal situation, a broken up partnership or broken up marriage, or they want to move on and put that money to use in their business in another place. And they're looking, you know, to close in 30 days. And so we're going to be launching a new fund that with our financial partner will give us some places to park the money that produce good solid interest income. 5 to 10% range, but keeps it liquid enough that when these great real estate opportunities come around we can, we can move quickly with that cash on some great deals.

>> Vish:

Well that's, you got a lot of big plans coming up, Mike, that good luck with that, and, and how can, how can the audience reach you?

>> Dr. Mike McManus:

What is the best, the two best places to reach out? You, can go to surgeonsyndicate.com which is the podcast website, and you could book a call there. or thefortress capital.com, you can also connect with us there. We're getting ready to do a series of webinars that are going to, for education, and those should be available to sign up for on either website also.

>> Vish:

And now you being in real estate full time for the last few years, do you have any other, any of your co workers or people from the medical profession having, wanting to start a group with you partner to educate more doctors?

>> Dr. Mike McManus:

less than I thought there would be. you know, most of the great connections I've been making have actually been outside of the medical field. there's a few docs that I've worked with on some educational stuff that have been on the podcast who are pretty, already pretty deeply entrenched. so we, we share ideas within, you know, with those guys when I talk to them. But, for the most part my partnerships right now are with some developers, finance, people and, and kind of filling the gaps of things that I don't have.

>> Vish:

All right, so that's that's good, Mike. And once again, thanks for joining us on Outrunning Failures podcast. And I know your time is important and I really appreciate you taking time. Let us not forget setbacks or only opportunities in disguise. And let's keep pushing forward and let's enjoy the journey. Thank you, Mike.

>> Dr. Mike McManus:

You're welcome. Thanks for the invite.