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Be Yourself: How To Lead With Who You Are With Colleen Biggs – Real Estate For Women

 

“I’m rubber, you’re glue. Whatever you say bounce off me and sticks to you.” This is a strong famous saying that you would say towards bullies. This saying is in fact true because people who pass judgment on you are really just troubled people too. They project all their hate towards other people. All you need to do is to be yourself and be strong. Women have been labeled by society for too long and they need to work together to destroy those labels. Join your host Moneeka Sawyer and her guest Colleen Biggs as they discuss what it means to be a strong female leader. Colleen is the founder of Lead Up for Women. She believes that life is about thriving and not simply surviving.

Learn how to accept yourself and discover your inner strength.

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Watch the episode here

 

Listen to the podcast here

 

Be Yourself: How To Lead With Who You Are With Colleen Biggs – Real Estate For Women

Real Estate Investing For Women

I am excited to welcome to the show, Colleen Biggs. She strives to reach all women through influence to engage the understanding that in order to have and do anything in life that you desire, you must first show up. She survived in early childhood of chaos, loss and abuse. It was through these trials that she gained the clarity to understand the magnitude of loving others unconditionally and realizing the power of community.

She is an inspiration to others by helping them realize their worth, gain clarity and show up. She believes that life is about thriving and not simply surviving. She has extensive success and experience in Corporate America for over 30 years, coaching over 300 CEOs, franchising, voluntary, national and local community service and numerous project launches.

She has served as a director for her church and organized women’s retreats and local girls camps as well as serves on several advisory boards. She loves the successful business, Lead Up for Women. Lead Up for Women is an elite community of like-minded women driven by passion, power and purpose. She has a weekly podcast and interviews powerful leaders weekly to inspire, educate and motivate on Lead Up for Women: Speak Up to Lead Up. She is an author to the number one bestselling international book, The Anatomy of Accomplishment and publishes a biweekly magazine. Colleen, welcome to the show.

Moneeka, how are you?

I’m great. It’s nice to see you.

There is and there will only be one you. How you pioneer your future is up to you. Share on X

It’s very interesting when someone reads your bio because you get to hear about all your accomplishments, but then you think back like, “Yeah.” I’ve modified my bio and I’ve done all these other amazing things since then. It’s amazing to me when we listen to someone read back what our accomplishments have been and who we are.

I feel the same way. It feels like every week. There’s something new that I would have changed or added or adjusted, but it’s also fun to see where we’ve been and where we’ve come to. It’s totally awesome. Talk to me a little bit about why this topic is so important to you.

The topic for showing up for women really leaning into who they’re meant to be is huge to me because I have seen many women for so long, including myself hide behind these shields or in these cloaks that we put on. The problem is they’re heavy. Picture yourself in this shield or a cloak, and we lock ourselves in what we would call a cage of our disbeliefs of who we think we are based on the labels that we’ve allowed others to place on us. What we haven’t realized is a handle has been on the inside the entire time, and it takes our power to turn the handle and to walk out. For me, I struggled in Corporate America because I was a very dominant personality.

I’m a very atypical personality, but I love other people and I want to help other people. Even to my own detriment sometimes, and I couldn’t deal with some of the females as I was climbing the corporate ladder that didn’t feel that way. It was all about competition and judgment. I realized that if women are going to get ahead, we want to power through, create these paths and trailblaze for women that are coming behind us, and we want to be with the women of history that make change, we must band together and help each other show up.

 

What would you say all about this showing-up thing that you would want to share with women that we could make all the difference for them?

There’s only one you. There will only ever be one you. How you pioneer your future is up to you. No one is coming to give you permission to be who it is that you want to be, and we all know who that is inside. We all know who we were meant to be and who we love to be. I say hang out with your most favorite girlfriend that makes you feel like the best you’ve ever felt.

The one that you can always be yourself around and figure out what is it about that moment that makes you feel free. Why are you holding back in the other areas of your life and not bringing her forward? Women already control the global economy. We have so much power, and I won’t even get into how much power we have over men because my husband looks at me and says, “Women have so much power over men. It’s ridiculous.”

We all know why we have so much power over men, but we just need to believe in ourselves. By women showing up, she’s raising the next generation. If she’s not giving herself permission to authentically show up as herself, she’s not giving that gift to her children to authentically show up as themselves. That’s going to be a domino effect if we’re not working on the women now to helping them show up and shine their lights bright.

You said something that was like, “We’ve got this door in our way, but the handle is on the inside.” I love this imagery of, “I can walk through, I can bring my children through, and I can bring my other women friends through.” We each have the power to open the door for ourselves, also aid those around us that we care about to open the door for and lead them through because there are no closed doors. Figuratively and for the most part, literally, there aren’t closed doors. We do have a path through if we are willing to show up.

I believe it is our responsibility to be a leader in our families, communities, businesses and careers. If we’re not leading, then who’s leading?

We’ve talked about this on this show a lot that there are a lot of women that don’t feel like they’re leaders. We all have different personalities, and some of us are very definitive leadership types. Some of us are much happier being in the backseat or the passenger seat. That’s just the personalities that we have. The truth is no matter where you show up socially or where you’re most comfortable, you are the leader of your life.

You determine if you walk through that door, when you wake up in the morning and when you go to bed, and all of these things. If you think you’re not a leader, it’s not true because you do lead yourself. I don’t want to be over-generalizing here, but women do lead in our families and in our communities. That’s a place where we shine. It’s a place where we naturally are drawn to, and it’s a place where we’re looked to for leadership. Just that idea of being the leader, leadership can show up in a lot of different ways but being the leader that you are meant to be is important. Don’t you agree?

Hang out with your most favorite friend that makes you feel like the best you've ever felt to bring out your best. Share on X

Agreed. I met a woman named Tammy in a leadership class I was in, in my community. The first thing she said was, “I’m not a leader.” She didn’t have a job, so she didn’t think she was a leader in her family because she didn’t work in the workforce. We were all like, “What?” She has become this amazing leader in our community. She’s leading her family. She’s helping lead classrooms volunteering. She didn’t understand the definition of what it was to be a leader, so she automatically assumed she wasn’t. You’re right, we lead our own lives and we need to understand how we do that without asking for anyone else’s permission because it’s our life.

Talk to me about a challenge that you’ve been through and what helped you through that?

One of the biggest challenges that I went through was trying to identify where I fit. We all go through this at one point in our life. For me, it came at that point where I became an empty nester, and I had identified as being a mom my entire life. I got married at nineteen. I started having babies at 21. I was a very young mother. I preferred it that way to this day. I still prefer it that way because I have eleven grandkids. I love having this large family and being a very young grandmother, but I identified as a mom.

I had a career. I loved my career, but I didn’t allow my children to pass through me. I allowed them to be me, like identify with me. What that caused was I had this identity as the mother, then when my children grew up and didn’t need me as much, that’s what caused a little bit of the friction because they were off getting all of their friend’s advice and all the other advice, then they grow up and move out. I was super happy when they were growing up and moving out because that’s what I prepared them for, but I do remember sitting on the couch and I looked at my husband and said, “I don’t know who I am anymore.”

It’s because I’m used to being with my kids and taking them places and identifying with my children, and I didn’t know where my place was. I think we all struggle with this. We’re not sure where to show up. I was showing up for my family every day, but we need to remember that we have to show up for us, and I neglected that for a long time. Even though I would run marathons or do things for me, I didn’t know what my favorite color was or my favorite food was. I was eating fish sticks when the kids moved out still. I don’t even like fish sticks.

I’m thinking of all of the things I was doing. I remember my kids when they were younger, I drop them off at daycare, and I would drive the whole way to work listening to Barney. I never even switched it to listen to something I wanted to on the radio, and that’s when you know you’re going that. You’re homie with your kid. Who listens to Barney that long, if anyone can do that from that long ago?

It is crucial because our children watch this more than they listen to us. The more that we’re identifying and sharing that we are an individual, “I am this woman and I’m leading in my family,” they identify that and that will help them as they get older. We need to realize that’s not being selfish. That is about showing up for your children and showing them what a leader you are.

We do model. I think that sometimes, we confuse love with a lack of boundaries. If mom becomes completely identified with me, now we’re the same person. That’s what love looks like. That’s when you take out into the world. It’s instead of I’m my own person with boundaries, a capacity to love, but that capacity to love is filled up by myself because I take good care of myself.

Those are things that a child doesn’t learn unless it’s modeled for them. Then you go out into the real world and you have adult relationships and you’re like, “I wasn’t trained in this. Love looked like this to me.” I love what you’re talking about. It is funny. We think we’re taking care of ourselves. We’re working out, we’re going and getting our spa treatments, or we’re doing our stuff. It’s not all about that stuff, although that’s fantastic and please don’t stop doing it, but who I am is the biggest key to creating that ability to show up fully.

 

The one thing that Tammy, my friend, that I said did the best thing for herself was to be part of that leadership class. It brought her the opportunities to be a leader in the community to meet other people to get more involved. That was something that she did to develop her own skills.

Tell us some advice that you got as a younger woman that you wish you had gotten and had to learn the hard way.

You talked about it a little bit in my bio. I had a pretty chaotic childhood. I didn’t get a lot of good advice. I remember my parents once said to me, and maybe you would remember this. I don’t know if your parents shared this with you. Do you remember kids at schools saying, “I’m rubber, you’re glue. Whatever you say bounces off and the mean sticks back on you?” We would use that for bullies on recess for us to say, “Whatever you’re name-calling me, it doesn’t stick on me. It goes back to you.”

As I got older and I started doing a lot of self-development studies, I realized how true that was, that as women, we need to believe that whenever anyone has judgment toward us as anything to us, it has nothing to do with us. It never had and it never will. It’s all their own self-reflection. It bounces off of us and sticks right back on them, but yet we allow it to stick on us. We walk around with labels of what we think other people think about us forever, and it just breaks you down. When in truth, that person is struggling with something going on with themselves and they’re projecting that to you.

One thing you can remember walking around that, “I’m rubber, you’re glue,” whatever you say. Whenever anyone says anything bad, you’ve got a review on your book or review on anything online, if someone shouts out a cannon because there’s a lot of keyboard warriors out there, they’re so brave. There’s no need to shoot back at them. Be the humble and the graceful one. When you notice that what they’re saying is about them, you look at the situation with a different heart and a different perspective. Now you feel full of emotion and love for that person versus feeling like they attacked me because that’s how they feel about themselves. It’s very interesting.

When someone says something about us, they’re reflecting what’s going on for them. It’s also true for us. When we are consistently saying something about other people, other things, or the way our life is working, that’s reflecting what’s going on inside of us. It’s as if our life is a movie of what’s happening inside of our mind and our body. Yes, allow people to just be themselves and not take it personally. How easy that is to say and hard it is to do, so I get that. Also, because then it releases you from the responsibility of what they’re putting on you.

The other piece is if you start to consistently see patterns in yourself. For instance, I might go through a period, and this happened as I was early in menopause. I was very irritated with rude people. There was something that was coming out of my mouth a lot, “Why was that person so rude? I can’t believe that person was rude.” I’m like, “I’m practicing my bliss practices, but they were rude.” Once I had said it 3, 4 or 5 times in the same day, I noticed, “I think everybody is rude. Maybe I’m being rude,” and so I’m like, “That’s not the person that I want to be.” It goes both ways.

You have to take responsibility for all of those things that you’re projecting on to other people too, and it’s not that you have to. It’s that you get to because then you get to be a person that’s happier. You get to see what’s going on for you and what may not be working. If you’re always saying, “That person was so great. I got such great service.” You’re walking around and everything you say is lovely. It doesn’t necessarily mean that you’re naive. It means that what’s going on inside of you is all of this joy. I think that that can go both ways and benefit us in both ways.

Don't allow your children to pass through you. Allow them to be you and identify with you. Share on X

Words are very powerful. Women are the worst at this and how we talk for ourselves. We need to be kinder to ourselves, we need to give ourselves grace, and we need to talk very sweet to ourselves. I do an exercise at one of my retreats where I have them write down everything that they hate about themselves. It was all the negative stuff, then they don’t know what I am going to do. I have them get up and line up, and then I say, “I want you to tell the person across from you, and you’re going to say you are, and you’re going to go through your list of every single thing.” They start crying because they would never talk that way to another person.

One of them, the first thing she said was, “You are fat.” She was like, “I’m so sorry,” and she started crying. That’s how horrible we talk to ourselves. We need to recognize that because that right there has a lot to do with how we don’t show up, how we do show up, or how we don’t give ourselves permission. We need to be kinder to ourselves.

In EXTRA, we got more, ladies. Colleen and I are going to be talking about what she does to juggle her work and family life. I know through COVID, this has been such a big issue as we’re moving out of it. It continues to be, and it’s always been an issue for women. This has never been an issue, but we’ve seen a lot of evolution also in how we look at ourselves around this.

It’s always great to have some tools to do that. She brought this up and I thought, “We haven’t had someone talk about this in-depth.” We’re going to be talking about that in EXTRA. I’m excited about that. Colleen, before we move onto our three rapid-fire questions, could you tell everybody how they can reach you?

I made it very easy for everyone so they can never forget. It’s LeadUpForWomen.com. You can find us on @LeadUpforWomen on Facebook and Instagram. I have a Lead Up for Women community that you can join. You can connect with me as @ColleenBiggs on LinkedIn, but we’re everywhere. We’re on YouTube or all over the place. We have videos constantly going, tips and tricks and workshops, and you name it. We’re constantly out there promoting our members, promoting their messages and promoting women.

Tell us about the wonderful gift you’re offering to my ladies.

I love our magazine. We do a bi-monthly magazine, and it’s written by our members for women. They write about business, leadership, lifestyle, philanthropy. Our members write the magazine, and all of the articles are from them. They’re not only giving you practical, tactical tips for you to be able to use and apply, but they’re sharing their heartfelt stories and the struggles that they’ve had through their business or their personal lives, and how they’ve overcome that. It’s very cleansing for them to write these articles.

That is LeadUpForWomen.com/claim-free-magazine.

 

On the homepage, you scroll down and you’ll see our magazine, and click Claim My Magazine.

Are you ready for our three rapid-fire questions? Give us one super tip on getting started investing in real estate.

Getting invested in real estate to me is purchasing your first rental home. That would be for me. That’s how it started for us.

What about a strategy in being successful as an investor?

The strategy of being wealthy and being an investor would be to utilize the line of the money that you’re investing to create more wealth, then take that wealth to invest to create more wealth. Not spending it, but taking that line to invest to create more wealth, and that is one of the biggest secrets.

What is one daily strategy you do that you would say contributes to your personal success?

One daily strategy that I do that contributes to my personal success is giving myself an hour of time every morning to sit down and write my gratitude, read, and educate myself no matter what that book is. I take that time for myself, and we need that every morning. That has changed my world for my personal gratitude because if you feel that you’ve already achieved something, then you achieve it. If you can think it, it must exist. That’s just how the world works. Believe it or not.

This has been so much fun. Thank you for all of you.

It’s been my pleasure.

Ladies, thank you for joining Colleen and me for this portion of the show. We are going to be talking about some good yummy stuff in EXTRA, so stay tuned. We’re going to be talking about her strategies on how to balance work and family and live a blissful life. Stay tuned for that in EXTRA. If you’re not subscribed but would like to be, go to RealEstateInvestingForWomenExtra.com. You get seven days for free, so you can check it out. See if you love it. For those of you that are leaving us now, thank you so much for joining us, and I look forward to seeing you next time. Until then, remember, goals without action are just dreams, so get out there, take action and create the life your heart deeply desires. I’ll see you soon. Bye.

 

Important Links

• Lead Up for Women
• Lead Up for Women: Speak Up to Lead Up – Colleen Biggs’ Podcast
• The Anatomy of Accomplishment
• @LeadUpforWomen – Facebook
• Instagram – Lead Up For Women
• @ColleenBiggs – LinkedIn
• YouTube – Lead Up For Women
• LeadUpForWomen.com/claim-free-magazine
• RealEstateInvestingForWomenExtra.com

 

About Colleen Biggs

Colleen Biggs strives to reach all women through influence to encourage the understanding that in order to be, have, and do anything in life that you desire, you must first Show UP!

Colleen survived an early childhood of chaos, loss, and abuse. It was through these trials that she gained the clarity to understand the magnitude of loving others unconditionally and realizing the power of community. She has extensive success and experience in Corporate America for over 30 years, coaching over 300 CEO’s, franchising, voluntary national and local community service, and numerous project launches.

She currently has a weekly podcast, Lead Up for Women: Speak Up to Lead Up, is an author to the #1 Best Selling International Book: The Anatomy of Accomplishment, published two additional Journals in 2020 and publishes a bi-monthly magazine.

 

• Here’s How »

• https://blissfulinvestor.com/
• LinkedIn
• Twitter
• Facebook
• Instagram

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To listen to the EXTRA portion of this show go to RealEstateInvestingForWomenExtra.com

To see this program in video:

Search on Roku for Real Estate Investing 4 Women or go to this link: https://blissfulinvestor.com/biroku

On YouTube go to Real Estate Investing for Women

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Investing In Self-Storage To Generate Passive Income With Stacy Rowles-Rossetti – Real Estate For Women

 

Nothing smells of passive income better than investing in self-storage units. This isn’t your everyday job where you’ll wake up at 6:00 in the morning and manage your facilities. This can be done remotely, anywhere in the world. Get into self-storage with your host, Moneeka Sawyer and her guest Stacy Rowles-Rossetti. Stacy is the founder of StorageNerds and REI USA. She teaches people to invest in self-storage so that they can earn passive income. Her mission is affordable financial literacy. Join in the conversation so that you can start investing in self-storage. Do you want more time for yourself or your family? Listen in and learn how to change your lifestyle with self-storage.

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Watch the episode here

 

Listen to the podcast here

 

Investing In Self-Storage To Generate Passive Income With Stacy Rowles-Rossetti – Real Estate For Women

Real Estate Investing For Women

I am so excited to welcome to the show, Stacy Rossetti. She invested in self-storage, teaches people to invest in self-storage and owns StorageNerds and REI USA. Her mission is affordable financial literacy. Stacy, welcome to the show.

Thank you so much for letting me come on. I’m honored.

We’re so excited to have you. We’ve had nobody come on and talk about self-storage so far. I know that this is a hot topic and my ladies are going to love this. Thank you so much.

Anybody that wants to hear about self-storage is a friend of mine. That’s why I call myself a storage nerd.

Stacy, tell us your story. How did you get into self-storage and why?

I’ve been investing in real estate since 2010. When I first got started investing in real estate, I was wholesaling and rehabbing, if anybody knows what that is. What happened is in 2015, I got pregnant. What had happened for the first five years, all I wanted to do was rehabs. I was one of those crazy people that did like fifteen rehabs at a time. I was really crazy. I was like running around like a crazy person, stressed out. I got pregnant and then, of course, as a woman and as a mother-to-be, I started thinking to myself, “How am I going to take care of fifteen rehabs at the same time, take care of this little tiny baby? There’s no way at all.”

I was already working 100 hours a week. I basically told my husband I was like, “That’s it. We’re done with rehabbing.” He was like, “Okay. What are we doing?” I said, “I don’t know. We’re doing something that has to do with passive income.” I wanted to focus on passive income and up to that very point, I had not focused on passive income at all.

Essentially, I was always about like, “Let’s just get this rehab done and get to the next rehab.” When I got pregnant, I talked to my realtor and I have a realtor that I’ve had for years, the same one. I was like, “Can you get out there and start looking for passive income for me?” He was like, “What do you want to look for?” I was like, “I don’t know, whatever.”

Self-storage is a lifestyle investment. Share on X

We looked at portfolios of houses. I was like, “Maybe we could roll this money over into a portfolio of 10 or 20 houses.” We looked at multifamily. This is back in the day. Remember when nobody multifamily wanted to buy multifamily? Everybody was focusing on rehabbing and that’s it. All the multifamily deals that I looked at, they needed huge rehabs. At that point, I was like, “I’m done with rehabbing. I can’t do it, because there’s no way because I have to take care of this baby.”

What happened is my realtor was like, “What about storage?” I said, “What about storage?” He said, “There’s a facility at 15, 20 minutes from your house. Would you be interested in that?” I was like, “Yeah, possibly.” As I drove up to this facility, I already knew I was going to buy it. The reason why is when I drove up to this facility on the left side, it’s like an industrial area.

It was very run down. For me, anything run down doesn’t scare me because I’m a rehabber. I drove up to this facility and on the left side near where the keypad was to get into the gate, there was a huge pile of tires that had been sitting there for years and years. I had already known. I was like, “This is going to be a good one.”

Anything that’s ugly and scary looks like money to me. That’s what happened. I called my realtor and I was like, “Let’s meet the owner. I want to figure out what’s going on with this thing.” It had been sitting on the market for five years and nobody wanted to buy it. We can get into why, if you want to do that.

I knew when I drove up to that thing that it was just so dumpy and ugly looking, but I could tell that it was going to be a good deal if I could get that at the right price. I instantly fell in love with storage and been focused on storage ever since. That’s basically my story is that I got pregnant and then all I cared about was figuring out how to make passive income so I could stay home with my daughter. That was it.

I got two questions for you. First of all, why was it sitting on there for five years?

This is back in the day when property used to sit on the market for five years and nobody would buy it. 2015 was still coming in the upswing. You would have a property that was sitting on there forever. One of the main reasons why, so the name of the storage facility was Big John’s Storage. I told my realtor, I was like, “I want to meet Big John.” He was like, “All right, let’s go meet Big John.” I went over there. I already knew it was going to be a good deal, so guess what I did? I invited my lender. I invited my husband and then my realtor and then me. We all went over and met Big John. John was his name.

John was a little tiny old man, like 88 years old. I was like, “Why are you called Big John?” He’s like, “Back in the day, I used to be called Big John.” He was ready to retire. His wife wanted to move to Florida and been complaining about it for years, but nobody would buy this facility. He had to sell it first so that he could take that money and go to Florida.

We started walking around the facility and as we were walking around, essentially the way this facility looks, it’s a long skinny facility made out of metal, like a metal storage facility. It had 64 10×10 units. It was on three acres of land. It was a huge piece of property. What he did is parking around it. Remember that there wasn’t an industrial area. He was parking like big rigs and like tow trucks and stuff like this, but he had no rhyme or reason to how he was parking. He was just like, “Go find a parking spot, wherever you can find one.” Parking was all over the place. The place was super dumpy. The tires that you saw in the front of the building also were everywhere else.

 

In fact, in the end, there were thousands of tires that we found once we bought the place. We walked to around and what my husband and I did is we tried to figure out how much money we could make on that thing. What we did is we talked to John and he gave us the story that he built it in 1980. For the first twenty years, it was awesome, and then the last ten years or so, he didn’t want anything to do with it. He ran it into the ground. This is very typical. This is what we call a mismanaged facility, so it’s very typical, and I only buy mismanaged facilities. The reason why is because I’m a rehabber at heart and I want to buy ugly properties and fix them up.

We walked around and we both counted. We figured out that we could probably have about 60 parking spaces in that area, and then we would have the 64 10×10 units. We asked John, I said, “How much money are you making?” He said, “I’m probably making around maybe $2,200, $2,300 a month.” If you calculate up 64, 10×10 units at like, let’s say $70 a month, and then another 60 units of parking at $70 a month, you come up to almost $8,000, $9,000, $10,000 a month. He was only making $2,000, $2,300 or whatever he said. Anytime they ever tell you a number, it’s always the wrong number.

I was like, “John, why are you only making $2,000 a month when you could be making like $10,000 a month?” He’s like, “I’m just tired of this thing.” He’s like, “It’s paid off. I’m making $2,000, whatever.” We basically got into, I said, “I want to buy this place.” I said, “I’m not buying it for $500,000.” He had it listed for $500,000.

If it was full 100%. It could have been worth $500,000 plus if he was actually having customers paying and stuff because the thing with commercial real estate, it’s all income-based. Essentially, if you say, “It makes $5,000 a month,” it’s valued at this much money. He was making $2,000, so he was making like $2,400 or whatever. He made $25,000 a year. It’s only valued at like $200,000, $250,000. That’s it.

That’s when I told him, I was like, “Nobody’s going to buy thing, John, because first of all, it’s a dump. Second of all, you’re not making enough money to value it at $500,000. It’s valued at $200,000,” so my offer is $200,000. He was like, “No. I’m never going to sell it at $200,000.” I said, “Okay. Just think about it. Actually, my lender is right here. He’s going to lend the money to me.” I said, “Rick, is it okay? Do you want to buy this?” He said, “Yeah, let’s buy this.” I said, “I offer $200,000.” He was like, “No. I’m not doing it.” “That’s okay. Just think about it. Let me know.” The next day he called back and he said he would do $250,000.

We picked that thing up for $250,000 and it took us a good couple of years to figure out what we’re doing with that. It was our very first facility, but we fell in love with storage. It’s really given us the life that we want now. We’re buying our 10th facility right now. That thing is making almost $100,000 a year. We got an offer of $950,000 on that facility.

How long have you owned it?

Five years in July 2021. Isn’t that crazy? That’s why I love mismanaged facilities and it took us a good year and a half to figure out what we are doing to get into how to automate and systematize everything. We bought four this year already, and we’re on track to buy ten for the year. Once you figure it out automated and systematize it, it’s like doing wholesale deals or rehab deals. You get into making it truly passive income. When you can make it truly passive income, then you should be able to manage it from anywhere in the world and that’s what we are focused on now.

Anything that looks ugly and scary can be made into money. Share on X

How much time do you spend to manage those properties?

We’re buying our 10th one now. We’re completely vertically integrated. We have 1,000 doors, essentially. We have my husband who manages the facilities and then we have our office manager, who’s the operations manager and does all the phone calls and things like this. We have like a boots-on-the-ground person to go around and overlock people and clean up the trash and all that stuff.

That’s it. There are three people to manage all that, and the two of them, the office manager and the boots on the ground person, can really do most of the work. Eighty percent of the work is done by both of them. My husband does the high-level stuff. He does the QuickBooks and the numbers and that stuff is what he does.

That’s the one thing I love about self-storage as well too. Everything that you hear about self-storage, it doesn’t take a lot of time. It doesn’t take a lot of effort. It really truly is like that, unless you become a mismanaged facility. All of the facilities that I’ve bought, essentially, the owners get up every day and go to their office and sit in their office and run their facilities.

For me, that’s a waste of time and money. I was like, “Why not automate that?” We’re completely electronic, completely virtual. Essentially, they just go online, book themselves, get their code, go in and do their thing. In fact, we haven’t even met any tenants in years. The first one that we bought, the very first one from Big John, that one, we were out trying to figure out what to do and meeting tenants and try to figure out how to automate and systematize everything.

By the second one, we were like, “We’re not going out to meet anybody. We’ve got to figure out how to make this electronic.” When COVID happened, we were already virtual electronic contact list. We didn’t have any issues at all. All the ones that get up every day and go and have the tenant sign a contract and stuff like this, those are the ones that were hurting. We didn’t have any issues at all.

Do you have any issues with people stopping paying and abandoning their unit or any of that stuff and what do you do?

The way it works is like, just think of the 80/20 rule. Eighty percent are going to pay on time, 20% are not going to pay on time. You put in rules. If you don’t pay by this day, you get a charge. If you don’t pay by this day, you get overlock. If you don’t pay by this day, you go to the auction process. You implement all these rules.

Most of the time, by the time the auction process comes up, we have very few. In fact, we haven’t even had any auctions because everybody’s paying, but there are those people that they get to the auction and then you’re like, “Come on, you better pay now. Otherwise, we’re going to do it.” There is that, and our office manager handles all of that.

How did you find your office manager and your boots on the ground person?

Just on Craigslist.

All of your units are in one location. You’ve got one boots on the ground person that manages all your units.

We’re only in Georgia, but we’re all over. We’re Southern Georgia. We’re all over Southern Georgia, but maybe within 30 minutes to 1 hour from each other, so he rides around and manages all of that is what he does.

Define mismanaged facility. Why don’t you define that and the definition between the two, mismanaged and income-producing?

Those are the two most popular types of facilities. Mismanaged is exactly what I said. They’re like 50% full or less. The owners are maybe only taking cash. They don’t have their books. Big John, when I asked him for his books, he opened up his drawer and pulled out his ledger. I have a student right now that’s buying a facility that has almost 300 units in it. Just imagine this, that’s 300 units and the owner does not own a computer.

 

You find this all the time. Those are considered mismanaged facilities. The thing with mismanaged facilities is that you cannot go to a bank and get a loan for that. In the commercial real estate world, you have to prove income. If you can’t prove income, then the bank’s not going to give you a loan. That’s why you have income-producing properties. Those are really easy to fund and banks love storage facilities because you have very few defaults ever.

An income-producing property, then you could go to a bank and get a loan and you put 20% down and you can just go buy a property. Whereas a mismanaged property, they don’t have proof of income. They don’t have a P&L. They don’t have balance sheets, tax returns, rent rolls or anything like this. You have to find money from some place. Either you have to pay cash for it. You have to partner with somebody, you have to get a private lender to lend you the money, or you can get them to owner finance it to you.

Mismanaged facilities are a little bit harder to fund than income-producing properties. The question that you should be asking yourself is, if you want to get them to self-storage, it’s like, “Where can I come up with the money? Can I come up with a couple of $100,000 or not?” If I can’t come up with myself, if I have to borrow the money to get it, then I should be focusing on income-producing properties.

If somebody, or if I have a couple of $100,000, you could go and find a mismanaged property. What I love about mismanage is that you can double or triple that value within the first two years that you own that thing. That property that we have that we’re selling it now, we got an offer for $950,000. We’ve been full in the first 18 months to 2 years. It only takes a little while to get those up and running.

You did say that with Big John, your lender said that he would lend against it, but basically, he chose the value based on what the income was. Is that true?

Yes.

If you pay cash for it, can you refinance it once you’ve gotten it up to snuff?

Absolutely. That’s exactly what you want to do. Once you get it to where it’s 100% or 90% plus full, then you could just go refinance it out and just get a bank loan on it.

For the bank loans, these are commercial loans, so they’re based completely on the value of the property. They don’t worry too much about personal income. All of your personal information that you would normally give for a single-family home. They do pull credit. Is that true?

They do look at credit, but it’s asset-based lending. That’s why I love commercial real estate. It’s really asset-based lending. That’s what you tell your sellers when you talk to them, it’s like, “You think it’s worth $500,000,” but the truth is, is that there’s no bank that’s going to fund this for $500,000, if you can only prove that you’ve made $2,000.

That’s how you get the sellers to say, “You’re right. I need to either prove that it’s worth $500,000 or I’m going to have to drop the price.” A lot of sellers don’t understand that concept because it’s like on the residential side. They’re like, “It’s worth $350,000,” but it’s really only worth $250,000. You have to be able to prove it and that’s what I love about commercial lending.

Through COVID, we’ve seen that there’s a big outflux from the cities. More people are moving a little bit more to the burbs. Not a little bit more, but quite a lot. I’ve always thought of self-storage as being really good in the city space where there’s not a lot of space. People are in condos or apartments, and so they need this self-storage because they don’t have a garage or they don’t have their own little storage in their backyard. Now, as people are moving out more into the burbs or have done that, have you noticed any changes in how your self-storage units are doing?

Every storage facility that we own is either in a secondary or tertiary market. There are three different markets, primary, secondary and tertiary. Primary would be in the city. Those cap rates of those facilities are super low, and then you have tertiary markets where it’s a mid-range cap rate. Those are burbs. Then you have tertiary, which is like country.

Storage is based off of migratory patterns and everybody is moving out. Especially huge, big storage facilities, companies like U-Haul and Public Storage, they’re looking at the migration of people and trying to figure out where are the trends. Where is everybody moving to? What cities are they moving to? What plays a key role in learning to invest in self-storage is number one, the population of cities.

Is it declining or is it growing? Is there a growth market or declining? You want to pay attention to that. If it’s declining, then it may not be a good area. Also, what you want to look at is you want to look at total square footage of a radius of maybe 3 to 5 miles, depending on if it’s a primary, secondary or tertiary market.

In life, everything follows the 80-20 rule. Share on X

If you wanted to go and buy a facility in a tertiary market, out in a city that has 15,000 people or 10,000 people, essentially, what you would do is like, “Within this five-mile radius, how many storage facilities are there?” You would take the total square footage of that and you would divide it by the population of that area as well too, and your number should be between 6 and 8 or something like this.

If the number is 6 and 8, then it’s a thumbs up, but if it’s on the outskirts of that, and it’s probably not a good deal. When you’re looking at investing in self-storage, you want to look at the population of a town, population of the area, total storage square footage, competitors, and look at the market and see if it’s a good deal or not.

We pretty much own most of our facilities in tertiary markets. Some of them are in secondary but most are tertiary. We’re 100% full in every single one. We bought one in January that was a mismanaged property in a small town in Georgia. It was like 50,000. It’s not super big, like 50,000 people. That one, he said it was full, but it was really just full of people’s crap and nobody was paying.

That one, we’re still trying to lease-up, but other than that, all the other ones that we have, they’re all 100% full. I have one that’s in a town of 300 people. It has 60 units and it’s 100% full. The need for storage is so great right now that even if you wanted to build, which is another way to get into self-storage investing, I highly recommend it. The material prices are a little bit higher, but that’s not going to last forever. We’re thinking about building as well too. We’re definitely going to be building.

Obviously, it’s within your space. Can people do this virtually?

What I tell all my students is, “If you are going to get into self-storage investing, you need to be making this truly passive income.” There’s no reason for you to be getting up every day and going and managing your facility. That would be considered a job, not an investment, so you want to make it passive income and you want to build passive wealth, and self-storage investing is exactly the way you can do that.

We travel 6 to 8 months out of the year and we’ll be traveling the entire year. We just bought an RV and we’re going to be traveling. We’re gearing up to be able to do that and try to figure out how we can do that. I want to prove to my students that you should be able to manage your facilities from anywhere in the world.

During COVID, when everybody was freaking out and staying home and hiding, essentially, what we did is just hit the road. We went to almost every state. We visited every state. We did sixteen national parks in sixteen weeks. We went to Florida and hung out there for a month. We went up to Maine and hung out there for two months.

You can manage and all of our facilities are in Georgia. We weren’t even in Georgia for eight months out of the year. We weren’t even there. I tell my students, too, it’s like, “It’s probably better for you to buy something that’s further away because then what it does is it makes you automate and systematize that business.” Whereas if we have one facility that’s probably twenty minutes from our house, my husband’s like getting up every day and just going out there and hanging out and doing whatever. All the other ones that we have are way in South Georgia, 4 to 6 hours away. He can’t do anything with those, so he has to let our boots on the ground person manage those. He has to let the operations manager manage those. Whereas the one that we have right around the corner, he always getting up and going over there because it’s just a habit.

Buy stuff that’s a long way away and learn how to automate and systematize it because that truly is passive income when you can do that. I think the best-kept secret in the real estate investing world is self-storage. I honestly really don’t understand why more people don’t invest in self-storage. It’s a lifestyle investment. You can truly make your life the way that you want to with self-storage investing.

I invested in a syndication for a self-storage where they were building a 500-unit facility in Pennsylvania. I invested but I haven’t done it myself. I wanted to get into it. I’ve also done a syndication into a mobile home park. I’m investing into some of these things I’m hearing so much about, but I just don’t know enough about them to look at it as a possible primary investment where I focus my time on it. Ladies, in EXTRA, we’re going to be talking about how to buy your first storage facility in the next 90 days. If you want to do that, at least get more information.

Definitely, we’re going to be talking about that in EXTRA. The other thing is I wanted to say that Stacy, I don’t normally do this, but I’m so delighted by Stacy’s knowledge that we’re talking about this topic, which many of you ladies have asked about. Also, I’m a little bit surprised. Stacy has a self-storage course.

When I’m out there looking at coursework for real estate, it’s huge. $997 is nothing in my book and it sounds like you can do this truly passive. This isn’t something I’ve tried, but you can do this truly passive lifestyle. I feel good about saying you really take a deep look at that because I’m watching Stacy. She’s walking the talk. In other words, when we first got online and we were in the green room and we were talking, she’s like, “I’m on the road,” but she’s got this great backdrop. She’s got this big great backdrop. She’s got this lighting. She’s got her mic, she’s got this whole set up.

Most people who are traveling when they come on the show, they’re crackly. Their backdrop looks terrible, but she’s got the whole setup. This means she’s actually on the road and she’s setting herself up to travel for a year, running this business. If that’s true, then it is really passive income and she’s proving it. To me, that says quite a lot on so many levels. I’d encourage you to connect with her. Her course is $997, but she does also have some freebies for us. Why don’t you talk to us a little bit about that?

 

If you’re interested, we’ll give you a link to go and get what’s called Stacy’s Six Step System to Storage. It’s a template. It’s like an eBook. It will take you step by step on the way that I teach, and which is I teach in departments. If you think of your self-storage investing world, and it’s like you have six different departments.

That is your office admin, setting up your office. Doing your marketing, getting your acquisition stuff done, getting the financing, managing the facilities and then possibly liquidating them. I go through each of those departments in the Six-Step System. It’ll take you step by step and it’s a process. You can get that for free with the link that we give you.

We’re still figuring out that. If you don’t know where to go, go to BlissfulInvestor.com/stacy. The reason it’s really important is I know a lot of you connect with my guests and then you just go directly through their link, which is fine. What happens is then I don’t know that you were interested in that topic or that person.

If you use the links that I post, then I know you’re interested in this topic, you want to hear more. You’re interested in that person, so maybe I bring her on more or we do some partnership, which then gets you better deals, but it’s great for tracking to figure out what you ladies want. You know I’m all about serving you.

I’ve talked to so many of you like, “I signed up with that person,” and I was like, “Did you use my link?” They’re like, “I’m so sorry.” It’s about taking care of you ladies. Whenever you go to any of my guests, go take a look at the blog post on BlissfulInvestor.com. If you sign up for their program or you get a free gift, use the link that I put in there so that we’ve got some tracking. It’s not like I’m going to come back to you with any, I know some people are like, “I don’t want to be tracked.”

This is simply marketing numbers so that I understand what it is you’re wanting from me. I’m not just covering topics that you’re not interested in. Sorry for that big thing, but I’ve been hearing a lot of ladies lately where they’re like, “I didn’t use your link,” but then I just don’t know what you’re wanting. Please go to BlissfulInvestor.com/Stacy. Look up Stacy’s blog with the title where we’re talking about self-storage and use that link so we can track it. Did you have anything else you wanted to add, Stacy, before we move into our three rapid-fire questions?

I know we covered it all, but you did talk a little bit about lending and I wanted to just reiterate that as well too. You really want to get into self-storage. The truth of the matter is, is that if you’re super busy and you got other things that you’re working on, there’s nothing wrong with lending out just like you did.

The truth of the matter is, is you’re making money and you’re not doing anything right now just by lending that out. I always tell my students like, “Even if you can’t get in there, you don’t think that you can own a facility and manage it, because it’s just too much time of work.” Land. Get into a syndication or get into a fund or find somebody and partner, and you’d be the lender, and then that way you can still do it as well too.

It is a good way to test the waters and different asset classes to see what it is that you like, how does it work out? Someone else has the knowledge and is taking all the risks. Thank you for that. I have three rapid-fire questions for you. Are you ready?

I’m ready.

Stacy, give us one super tip on getting started investing in real estate.

Getting started in investing in real estate, I would say honestly, is like, “Just don’t be afraid to just take action and focus on marketing.” People do not market enough, especially in real estate, to find deals. If you’re not finding any deals, guess what? It’s because you’re not marketing enough. Take action by marketing and having a whole bunch of strategies for marketing.

What is one strategy for being successful as a real estate investor?

It’s the same thing. Take action. A lot of people don’t. You have to keep moving forward because guess what? In the real estate investing world, everything is 11th hour. It’s so annoying. I wish I had a deal that closed and it was just like easy peasy, lemon squeezy, but it’s not. We’re closing on a storage facility now that we are supposed to close. There are title issues and it’s so frustrating. You’ve got to keep moving forward because it’s just how it is in this industry.

What is one daily practice that you would say contributes to your personal success?

I’m a walker, so I’m exercising. My personal success is that I’m a busy person. I need a lot of energy because of all the stuff I do. I do the 12-3-30. It’s like when you get on a treadmill. It’s a twelve incline of twelve and like a pace of three miles per hour for 30 minutes. I do that 5 or 6 days a week, at least, and it gets me pumped up. I feel so much better mentally after I do my walk. Sometimes when I’m having a hard day, I’ll take a walk and it’s only 30 minutes of walking. I’m sweating to death. If anybody’s interested, check out the 12-3-30. It’s a great exercise.

This has been amazing, Stacy. You have me so intrigued. Thank you for everything you shared on this portion of the show.

I appreciate it. Thank you so much for me to hang out with you.

We had fun and I am so excited about the EXTRA, where we’re going to talk about how to get your first facility in 90 days. Ladies, if you are subscribed to EXTRA, please stay tuned. If you’re not, this may be the time to get subscribed. Go to RealEstateInvestingForWomenExtra.com, and you get the first seven days for free. You can get this one for free.

Take a look at the membership, and if you love it, that’s great, and if you don’t, you’ve just got some great content. Go to RealEstateInvestingForWomenExtra.com. For those of you that are leaving Stacy and I now, thank you so much for joining us for this portion of the show. I look forward to seeing you next time, and until then, remember, goals without action are just dreams. Get out there, take action and create the life your heart deeply desires. I’ll see you next time.

 

Important Links

• Blissfulinvestor.com/Stacy
• StorageNerds
• REI USA
• Stacy’s Six Step System to Storage
• RealEstateInvestingForWomenExtra.com

 

About Stacy Rowles-Rossetti

As a real estate investing expert and coach, I have built my name on the results I have created – for myself and for my students.

Investing in real estate has changed my life, opening doors for me and my family and affording me an outlet for all my creative and entrepreneurial energy. Through scaling up a renovation company in Atlanta with hundreds of transactions to learning to invest passively through creative financing deals and storage facilities, I have not only overcome many trials and tribulations, but systematized and organized my days so that I can run several successful businesses.

Day after day, I work hard at what I do, striving to stay ahead of the curve by building on my knowledge and making shrewd decisions. This did not happen overnight, of course. My early days in real estate were slow, exhausting and hard, but little by little, I earned a sense of what worked and what I needed to do to achieve consistent results. Because I taught myself all this learning through experience and mentors, the process was gradual and required the utmost diligence on my part.

Today, I own and operate REI USA and StorageNerds. REI USA is an online education and networking platform that is exactly the tool that I would have wanted when I was getting my start, something that aspiring and established investors can turn to, a means to cutting your learning curve dramatically.

 

• Here’s How »

• https://blissfulinvestor.com/
• LinkedIn
• Twitter
• Facebook
• Instagram

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To listen to the EXTRA portion of this show go to RealEstateInvestingForWomenExtra.com

To see this program in video:

Search on Roku for Real Estate Investing 4 Women or go to this link: https://blissfulinvestor.com/biroku

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Cashflow And Tax Strategies: What The Wealthy Do With Stephanie Walter – Real Estate For Women

 

What do the wealthy do that makes them wealthy? We find out the answer to that and more in this episode. Moneeka Sawyer is joined by the co-founder of Erbe Wealth, Stephanie Walter. Stephanie talks about breaking away from corporate America and investing in real estate. She also shares insights learned from working with wealthy people, offering great cash flow and tax strategies that can give you the push towards their direction. Tune in to learn more tips from wealthy investors.

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Watch the episode here

 

Listen to the podcast here

 

Cashflow And Tax Strategies: What The Wealthy Do With Stephanie Walter – Real Estate For Women

Real Estate Investing For Women

I am excited to welcome to the show, Stephanie Walter. She is the CEO of Erbe Wealth and a legacy cashflow specialist, capital raiser, syndicator and real estate investor. She has been a financial educator for many years and a real estate syndicator. Stephanie’s passion is teaching people to unlearn what most of us have been wired to think about money and re-educating people on attaining wealth that can be passed on to the next generation. Stephanie, welcome to the show. How are you?

I’m great. Thank you so much for having me.

I am excited about this conversation because there are many myths, ideas and lies that we are taught about money. I hope that’s not too strong a word but it’s awesome to have somebody come on board that’s going to share some of their wisdom around this. Before we get started, could you tell us a little bit about your story like how you got to where you are?

I started like most people into the corporate world out of college and realized not too long thereafter, when I was continually getting these 2% raises that, “This was not for me.” I quit my job and started an insurance agency in 2006. I’ve always loved real estate. I never had much training to it, so I went out and bought a lot of single-family homes and learned by my mistakes and successes on how to do that.

I decided I wanted to scale up in 2016 and get some great education and learn more about possibly buying apartment complexes or commercial real estate. I got into RE Mentor, which is an education program, like getting your Master’s in Real Estate. I did that and completed my first syndication in 2016. After that, I started getting to know people and became a partner with someone who didn’t like to raise money.

I started raising money at that time. Ever since I’ve worked a lot with wealthy people, I and that’s learned a lot from working with them about how they use their money, unlearning everything we’re all taught as fact. I transitioned a lot of my assets, doing what they were doing. I sold my day business, which is insurance and I’m retired. Other than I’ll continue to raise money. I like to teach people about what I’ve learned because I believe my path is definitely doable for everybody.

Could you share with us some of these things that you learned from wealthy people? What is true about wealthy people is they do think differently about money and investing than other people. What’s also interesting is how we define wealthy. I want to give a little bit of my perspective also on this and that. I live in California and people are impressed with the income that we make and the net worth that we have, but for a Californian, we’re upper-middle class.

Wealthy people live in a pretty average house. They drive pretty average cars, but their net worth is pretty impressive. Share on X

We’re not the wealthy around here. The wealthy around here are more like Bill Gates, Bezos and Zuck. Even though I’ve had a huge education in building wealth, my dad was a great mentor even as a young person, but still, I don’t think that I even have that real wealth mindset because I’m not a wealthy person in my community. I’m eager to know about people that define themselves as wealthy. What are those things that they do differently than the rest of us?

What’s interesting about that and you probably know that from where you live is that you’re not always going to recognize a very wealthy person. A very wealthy person, a lot that I deal with, you would never know. They live in a pretty average house and drive pretty average cars but their net worth is pretty impressive. The thing that you noticed by going through their finances pretty clearly is that they invest largely in real estate.

That’s the bulk of their investments. They invest directly in businesses, not in mutual funds. If they invest in the stock, it’s usually, “I got this tip from so-and-so.” It’s almost like their fund money but what they’re very concerned with doing and what they would probably tell you is that cashflow to them is more important than net worth.

There’s a perfect example of what you’re saying in your community is that you’ve got a lot of people that probably have very significant net worth but yet they may be working paycheck to paycheck to keep that lifestyle where it is. Whereas someone who’s wealthy is very concerned with cashflow that the cash flow is building up enough.

It replaces their income so that they can do what they want and love to do to contribute to society. The biggest thing that I learned is that most wealthy people don’t talk a lot about their net worth, even though it probably is pretty impressive but cashflow to them is huge. I learned that lesson myself because I live in Colorado. Colorado’s changed a lot. I started investing here in 2005 and needless to say, the prices have gone up unimaginably.

On paper, I had a very good net worth but I still had to work and continue running my business because I did not have a cashflow strategy in place for this money and I wasn’t very concerned with what my money was doing. Wealthy people know what their money is doing for them. They want the money to be working at all times for them. They view money as a tool that is working for them. That’s a mindset thing.

Until I transition different assets around to see how they were performing and analyzing, “What is my money doing for me?” It was largely inequity and it had a return of zero. To transition that into assets that would pay cashflow, as well as have a good interest rate return, that doesn’t take long to do that to have the goal of having the cashflow for you to be able to be truly wealthy, whatever that looks like for you.

 

Talk to me a little bit about how that might translate for people that are not yet wealthy. How can they adopt those mindsets when so much of the time so many of us are living paycheck to paycheck and trying to survive but that wealthy mindset is available to us? Could you talk to us a little bit about that?

That’s another thing that I became pretty aware of when working with wealthy people is that they have a view that money is abundant. That sounds small to people but think about your view on money. Do you view money as, “There’s only so much of it and if I take some money from someone, then I’m making someone else less wealthy?”

They view money as a stream of water and that money is always flowing, abundant and coming. I didn’t probably have a mindset about money but once I did learn about the abundance mindset, I made a point of changing that. That sounds small but if you believe that money is flowing and coming, then it gives you a different perspective on money.

You say that’s small but it’s huge. That mindset tweak is huge. I was explaining this to a friend of mine and I got this image in my head that money is a little bit, rather than being like a stream where it’s inflow, it’s more like a fountain where it comes in, goes up and down, then it comes back in. It’s this circular thing. The power of the pump that makes that go is your willingness to circulate.

I donated to a woman I met $1,000. Everybody else was donating $10. Why did I do $1,000? To me, $1,000 is part of that pump. It’s more going out. That means that more will come in. The pump is stronger because there’s more circulating. Please forgive me. I hope that didn’t sound like a brag. Don’t spend beyond your needs. I’m not saying, “Go spend a ton of money.”

I’m saying that the circulation of money is imperative to creating wealth, community and to uplifting people. Unless money is going out, they are not jobs. Unless those people are not spending, there’s not a community. There’s nothing for us to do together. This is an interactive thing. All of us benefit from the spending and earning of money.

It’s not a zero-sum game this. Even for me, I came home and I was like, “That was such a great visual.” I want a strong pump in that fountain so that the circulation of that wealth is bigger, impacts more, stronger and more fun for me too. I like a powerful fountain. Does that sound right to you or do you feel like something is in there that doesn’t work?

Cash flow is more important than net worth. Share on X

That’s a great analogy. Something that offshoots from is that, granted there are stereotypes and all of that but wealthy people I meet that have been successful are very giving. It’s that same abundance mindset. There’s plenty for me to help you get. What I find very interesting about wealthy people, as opposed to the average person who does the 401(k), is they put their money into this because they’re told that’s what they need to do, a wealthy person invests their money teams of people and ideas.

Let’s use real estate as an example. They find a project that is compelling and interesting. They’ll do their due diligence but they’ll look for a team that has experience who has proven themselves to be successful. Then they’ll put their money into that team, step back and let the team do their thing. They’ll check in on the reports but largely, they’re passive.

Wealthy people invest in business plans and directly in the business. Whereas, us with a 401(k), who knows where our money is invested in? It’s invested in maybe thousands of companies that we know nothing about. They’ll invest their money directly in a business, someone’s business and, “What is this person’s business plan?”

It’s the same thing. They do all their due diligence but they invest directly to people and in people, more than a 401(k) or throwing your money out there and hoping that it grows but you’re not sure what you’re invested in. The wealthy are very conscious of who they’re investing in, where their money is and what it’s doing at all times.

Would you say that approach is true in real estate too for them?

Yes. I find that they don’t want to be the landlord and be managing. They want to understand the exit and business plan for this particular property and then they want to invest in it. They’ll sit back, review the quarterly reports, collect their monthly distributions of cashflow and do the same thing with another investment that comes along.

Talk to me a little bit about debunking these myths. What are those myths that you learned about from these people that we learn the opposite so much of the time?

 

I’ve gone over a few of them already but big one is 401(k)s. That might not be a popular subject but I believe that we have to take a look at why we do things and if these things that have been set up for us by I’m not sure who work to our advantage or not. The thing that brought my attention to that is I look over lots of wealthy people and their financial statements. Virtually none had 401(k)s.

That was eye-opening because I was like, “What? I didn’t understand.” It didn’t compute to me. That’s a large myth and then you have to look in more closely. It makes sense because wealthy people want to know what their money is doing at any and all times. They want to know the returns that they’re generating and also what they prepare more than we do for taxes. By not preparing for taxes, that’s a huge thing that the majority of people don’t do.

If someone tells you how much they have in their 401(k), do they have that much in their 401(k)? In twenty years, what is the tax rate going to be and how much of what they have is going to be taxed? To simply not address your tax and mitigate for your taxes, it’s something that the wealthy do all the time. I use the analogy of these two people playing a game of chess and the regular Joe investor is looking one move at a time.

He’s looking, “How are my investments doing? What is the return?” While the wealthy person is looking several moves ahead. They’re checking, “How are my investments doing? On the other hand, what is my exit strategy? How can I mitigate for my taxes?” They’re looking side by side for income and taxes. That is why wealthy people get wealthy.

The myth that I understand there was saving your 401(k), your taxes will be less when you are finally pulling your money out. Don’t worry about that piece. You’re doing a tax-deferred type of program and you’re going to defer it so that you’re paying taxes later. In your experience or from what you’ve seen from the wealthy people, is that true that tax rates will be lower later?

No. Any of us can see what’s happening in our country regardless of what’s happening politically. We know that we’re spending a lot of money and in a lot of debt. People may not know this but our tax rates are on the low side. Historically, they’ve been much higher than they are. We know that the tax rates are going to change in the future. Are you prepared for that?

The tax rates are going to change but I also think that people don’t want to live a lesser lifestyle when they retire. For example, personally, I’m not going to want to retire until I can have the lifestyle that I have now without the work. What does that mean for me? I’ve got this lifestyle with this house and car and this excitement and joy for travel.

Wealthy people know what their money is doing for them. And they want the money to be working at all times for them. Share on X

Now I’m not working, so I’ve got more time to travel more, hang out, hopefully take care of my parents more and my own health stuff. If I’m to look at my retirement, I’m going to say, “I need 50% more than what I’m making, at least, in order to continue to benefit from those many years of work.” I don’t want to have my lifestyle go down and be able to afford less.

Whatever my retirement vehicles are, if I’m pulling more than what I’m doing now, even if tax rates stay exactly the same, my tax rate has not gone down. It’s exactly the same. I’m not paying less taxes later but same tax. If the tax rates go up, now you’re paying even more. This whole idea of deferring taxes is an okay strategy.

Be aware that you’re not going to be paying less taxes later. You tell me what you think of this. You have money going in that’s compounding without being taxed, so it happens more quickly. You’ve got more on the backend, supposedly. That’s a compounding and a great investment strategy for growth, possibly depending on what you’re doing with it but it’s not necessarily a tax strategy.

I don’t want to tell everybody to get rid of your 401(k)s. A lot of people are into them but what I do say is be aware of what returns you’re getting. What fees are you paying? I ask a lot of people and they’re not aware of these things. You’ll look at the prospectus and what they’ve made over the last years. Sometimes it’s like 3% or 4% after fees.

I bring that to their attention and they were not aware of that. They’re looking at the long-term of what they think will be projected for them but it’s important to do things that will lower your fees especially, but also get the maximum growth that you can. People try to put off the financial responsibility onto whomever that is, whether that’s your Merrill Lynch person or the 401(k) administrator at your work.

Be more interactive with what’s going on, know what your options are. If you want to take part of your money from your 401(k), there are ways of investing some of that money, setting up a self-directed IRA and investing in real estate. There are other things that you can do and I honestly don’t have a preference but I want people to know that you should be in control and you probably know more than these professionals that are managing your money.

I want to do a deep dive into the analysis of a 401(k). Would you be interested in doing that with me on EXTRA?

 

Sure. Thank you.

I want to dive deep because we have been trained. You’re so funny. You’re like, “I don’t know where that comes from,” and we all know that it was marketing. Somewhere along the way, this marketing trend started but we should not be subject to marketing only. We have the opportunity, with all the financial education that we have out there now to take a look at that. I’d love to do that in EXTRA. Do you have a way for people to reach you?

I get a lot of the same questions asked of me over again. I set up a group of question and answer videos. I keep adding to it every week. Hopefully, I’ll get up to about 100 of the most commonly asked questions. You can go to AskStephanieNow.com and you can get onto my website and look through some of those questions and answers. My actual website is www.ErbeWealth.com. There are tons of content. I find it very rewarding to be able to educate people. I’m constantly updating the content because I view this as my purpose in life. There’s plenty of reports, eBooks and all that great stuff.

I wanted to mention that there is a gift if they go to your website. That website is ErbeWealth.com. Tell us a little bit about one of the free reports people can get.

I have a report. It’s the Investment Report: Five Reasons Passive Investing Might Be For You. It’s a great dive into all the reasons that you may consider an investment that gives you a passive income every month.

Thank you for that. Stephanie, I have three Rapid-fire questions. Give us one super tip on getting started investing in real estate.

A wealthy person invests their money in people. They invest in teams of people. They invest in ideas. Share on X

The biggest tip I can give you is probably a mindset tip that you can do it and not be afraid to get educated. There’s so much information out on the internet about learning these investments that used to be reserved for very wealthy people, banks and insurance companies that are now available to us average people. The only reason that is the case is because of the information available on the internet. Don’t be afraid to dive in, educate yourself and learn that there are other investments outside of the stock market.

What would you say is one strategy for being successful in real estate investing? If you’re already in it, how do you be successful?

It’s setting goals. That’s a simple answer but it is true. When I started, I envisioned, “How could I retire?” I reverse engineered that back to, “How much do I need to come in every month?” From that, then I viewed money that I had and, “What is this money doing for me?” From that, I was able to eventually get enough money to replace my income.

Just having goals, maybe they don’t have to be that big and it’s, “I would like to do one and become alternate investment a year to see how this changes our lifestyle in terms of the passive income and the tax savings that you would get.” Be consistent. Whatever you’re doing, keep at it. I remember when I started investing in real estate, I was like, “I’m going to invest in one single-family home a year.” Have some goals and direction of what you see for your future and then act on it. I see lots of people that talk about it and don’t ever act on it. You go to act on it.

What would you say is one daily practice that you do that contributes to your personal success?

I blocked time for myself. That sounds very simple. Especially if you’re a mom or you’ve got lots of stuff going on. If you can block yourself time, let’s say, “I want to accomplish these three things,” or whatever they are and you know that you get that done every day. That’s going to move you ahead towards your goals.

This show so far has been amazing. Thank you so much for all that you’ve contributed. I can’t wait to get to EXTRA.

Thank you. Me too.

Ladies, stay tuned with Stephanie and me for EXTRA. We’re going to do a deep dive on 401(k)s and why that may not be the best investment for you and for a place to put your money. We’re going to talk about that. If you are subscribed, stay tuned. If you’re not but would like to be, go to RealEstateInvestingForWomenExtra.com.

You get seven days for free. Check it out and then you can stay on board or not. It’s up to you. For those of you that are leaving Stephanie and I, thank you so much for joining us for this portion of the show. I appreciate you and I look forward to next time. Until then, remember goals without action are just dreams. Get out there, take action and create the life your heart deeply desires. I’ll see you soon. Bye.

 

Important Links

• Erbe Wealth
• AskStephanieNow.com
• RealEstateInvestingForWomenExtra.com

 

About Stephanie Walters

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Scaling A Multifamily Portfolio With Liz Faircloth – Real Estate For Women

 

Investing in real estate is a learning process. From buying your first property to scaling a multifamily portfolio, investors learn many lessons in between. In this episode, Moneeka Sawyer sits down for a discussion with Liz Faircloth, a social worker, entrepreneur, co-founder of The DeRosa Group, and co-founder of The Real Estate Investher community. Liz shares how she got into real estate investing and talks about what she learned about investing in many types of real estate. She shares why they settled on multifamily and what you need to do to become successful in the real estate game. Tune in to learn more on what it takes for real estate investing success.

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Watch the episode here

 

Listen to the podcast here

 

Scaling A Multifamily Portfolio With Liz Faircloth – Real Estate For Women

Real Estate Investing For Women

I am so excited to welcome to the show, Liz Faircloth. Liz Faircloth co-founded the DeRosa Group in 2005 with her husband, Matt. The DeRosa Group based in Trenton, New Jersey is an owner of commercial and residential property with a mission to transform lives through real estate. DeRosa has vast experience in bringing properties to their highest and best value, which includes repositioning single-family homes, multifamily apartment buildings, mixed-use retail and office space. The company controls close to 1,000 units of residential and commercial assets throughout the East Coast.

Liz is the Co-founder of The Real Estate InvestHER Community, a platform to empower women to live a financially free and balanced life through over 25 Meetups across the US and Canada, and an online community and membership that offers accountability and mentorship for women to take their businesses to the next level. She is the co-host of The Real Estate Investher Show, which I will be on too. They published their first book, The Only Woman in the Room: Knowledge and Inspiration from 20 Successful Real Estate Women Investors.

Liz has been interviewed for many articles and top-rated podcasts, including mine. Including being a two-time guest on the top-rated BiggerPockets Podcast and the Best Ever Show. On the personal side, Liz is an avid runner, has completed several triathlons and marathons, has two adorable children and is a New York Mets fan. Hello there, Liz.

Thank you so much for having me.

You and Andresa do so much cool stuff with the InvestHER Community. I love what you’re doing together but I haven’t really gotten to chat with you about what you’re doing. Liz, why don’t you give us a high-level version of your story of how you got interested in real estate and what your path has been?

It wasn’t a linear path. At the time, my now husband and I had started dating. Before we started dating, I was in graduate school for Social Work. I got my Master’s in Social Work. I want to open my own practice and help people. That’s been always my passion. During that time, my brother-in-law who was the only entrepreneur I ever met, grew up in a great family but middle-class family. My dad was a teacher. I was never introduced to entrepreneurs or investors, that just wasn’t in my sphere of any context growing up. Hard work ethic was there, but certainly the business piece of it, I was not familiar with or didn’t have a lot of exposure to.

Until I met my brother-in-law, who was an entrepreneur, started a business and handed me Rich Dad, Poor Dad. I’m 23 at the time and he’s like, “You have to read this.” I’m like, “All right.” I like personal growth books. I started in college reading different books and I always enjoyed them. I like learning and growing. Long story short, I read that it. My eyes were opened to this idea of passive income. I honestly never heard of that before. It’s like, “I can have money working for me, not me working for money.” It was a whole new, open-my-eye concept, which I know a lot of people have said.

What got us involved was

I then started dating my now husband. We lived about two hours from each other. Every weekend, we go to all the REIA meetings and start learning. We’re in our twenties, didn’t know anything. We didn’t have any money to invest, but we said, “Let’s give this a go.” We started taking courses. This is before Facebook Marketplace. This is literally open the newspaper, go to ads and call tired landlords. That was the million-dollar tip we got at one of the events. That’s what we did every weekend, literally knocking on doors, right outside of Philadelphia, where my husband lived and when I visited him.

One day, we got someone to say, “That’s interesting. Let me think about that.” Then we called them back and struck up a deal. A year into us taking courses and door knocking and cold calling and bootstrap whatever we could do, we struck up a deal and bought our first property. It was a duplex about $150,000. We learned everything on that property. We’d go with the people. When you buy a property, the tenants that are there may not be your tenants ongoing because there’re a new sheriff in town. The whole multifamily opened our eyes. There are only multis in this neighborhood. It wasn’t like we chose a duplex. It just so happened because it was like older homes right outside of Philadelphia. There were only duplexes and small multis. We got our start there and then we moved to New Jersey and then started our business focused on New Jersey and buying properties there. We sold that property and did 1031 into a four-unit, then that started our trajectory in New Jersey.

Over the fifteen years I’ve been doing this, we had lots of twists and turns. I wish we just focused on multi but we didn’t. We got involved a lot of different things early on. People would get distracted as we usually do. We were probably a little naïve and young. We flipped houses, we got into tax liens, we bought a commercial building, we bought raw land. Every random thing you could possibly think of, we probably have done it, until we doubled down on multifamily. Our business now is focused on multifamily. We went from a 2 duplex to a 10-unit. We grew very steadily. We didn’t go from a 2 to a 200-unit. We did, but over time.

Now, we focus on larger multis and we’re starting a fund where we’re actually investing with other operators. We’re diversifying a little bit outside of multi but more like from a funding perspective. I’m involved in that, not day-to-day, but more from like a strategic level and helping build our team out. It’s exciting to be able to invest in different sectors of real estate, not just multifamily. We do love multifamily. We have a letter of intent on a property in the Southeast, which is where we are focused on now.

Tell me a little bit more about this fund. Let’s dive a little deeper in that.

You want to make sure you're mitigating risk for yourself, but most importantly, your industries. Share on X

It’s something that we’ve talked about over the year and then COVID obviously happened. COVID happened, the pandemic and everything. You’re in California, I’m in Pennsylvania. We’re in the thick of shut downs. I know things are opening up, which is wonderful and people are getting along. All the conversations we had were like, “How’s this going to affect our buildings?” I have to say with our multifamily, any loan that came out, we took advantage of. We didn’t know how it was going to affect. We didn’t know who’s going to be able to pay. We didn’t know what’s going to happen with tenants and everything like that. Our buildings, knock on wood, the ones that were doing well are stable and have thrived during COVID.

We had a building in North Carolina that was 40% occupied. It was literally a turnaround building. It was 200 units. We got it up to 90% during COVID. Some of these buildings thrived. Other buildings that were having some issues prior to COVID continued to have some issues. While that was a stable sector for us, we’re all in on that sector. My husband and I talked a lot about as we grow our businesses, what do we want to do? We want to diversify and the importance of that, and what does that look like? The fund is an opportunity. We’ve always focused on raising money and then putting it specifically into a building, into a project.

With regards to the fund, we talk to people all the time. People are like, “This sounds like a great opportunity to pass an investor.” Then you’re like, “I don’t have a building. I don’t have anything under contract right now.” We refer them. We know a lot of people we like and respect in the business. We have no problem with that. There are a lot of good syndicators out there. We wanted to have another flavor of ice cream, if you will.

The fund will obviously be an ongoing rolling fund, and it will give investors what we’re going to actually invest in are all things that we know, and that we’ve vetted it. We’re not going to start investing in a business that we have no idea because that’s a whole other level. It’s like mitigating risk. We want to mitigate your risks. You want to make sure you’re mitigating risk for yourself, but most importantly, your investors. Hard money loans, that will be one. We’re going to start to work with maybe the hard money operators that we like and respect that we know do good business. We’re not the hard money loan lenders. They are, and we’re going to do that. Multifamily will be a piece of it. If we have a project that comes up, we’re going to almost invest in our own projects and that will be a piece of it.

Those are the two main pieces. I want to say even like self-storage and those operators, that might be another sector. They’re related to investing in real estate on some level, but it will be in a way that we are not the sole operators of everything. As we evolve, you don’t want to do everything yourself. You want to be able to do what do you do well. Once you figure that out, you have to focus on that. That’s what that looks like. We’re building out a team and that’s been in the making for some time, but that’s the goal.

I’m fascinated by that idea because I feel like, for me too, there’s something that I do really well. I do executive homes in the Silicon Valley. I’ve got my entire systems. It’s all built out. It runs itself. I don’t worry too much about it. I was telling you before that I’m taking all of my May off for my birth month because that’s where my birthday is. We’re traveling to Hawaii and I’m going to a spa in Palm Springs with my sister. We had our vaccinations, we’re all taken care of, we’re doing our tests, everything’s good. We’ve decided that it’s time to celebrate. That lifestyle is fantastic. I’m not particularly interested in working significantly more. I do get boards, we have construction projects, we have some other stuff going on so that my entrepreneurial mind doesn’t slow down or get bored.

 

What is happening is I found several different syndicators doing different things. I’ve invested in storage, multifamily and a variety of different things. I often wondered because each time that I invest, and I don’t know how this is going to work for you guys, but every single time I invest, it’s a minimum of $100,000. That’s great for us because we have that money, we’re looking to retire, we’re moving that way, but not everybody who’s reading this has access to $100,000 for this and $100,000 for that. They want to be able to diversify without spending that much money. What does that fund look like for you? Is there going to be a minimum investment? Have you worked that out?

I think we’re still working that out. One of the key team members that we knew that we needed, it’s not how but who. You can start to build out different businesses, you can’t know everything. I don’t want to know everything quite honestly, that just hurts my brain a little bit to know everything. We’re women, we want to know everything. Anyway, one of the people that is a key principle in this endeavor is a fund manager from Wall Street who has run funds. As we’ve talked to him, I think the minimums are going to, I’m not sure exactly. I will say though, one organization we’ve started working with is called Republic. Basically, what they do is they in essence have a similar type of approach, in that people can invest $10,000, even down to $1,000. Don’t quote me on that, but I’m not familiar.

What’s fascinating though for our last indication was a 336-unit apartment building. Our minimum was $50,000 on that project. Not everyone has that but they want to invest in real estate. We found this company and what they’re doing is they’re the investor in that project, but they’re the ones going out to the accredited investors to then say okay to all pooling all this money together. Then they are the investor in that project with us. They’re all pooled in this together in this company called Republic, then Republic is ultimately the investor, if that makes sense.

It was cool because that was the first time we had ever done that. If you think about it, we have a 336-unit apartment complex. We had close to 80 investors. It’s a lot of people, even with a minimum of $50,000. We had some people who put $500,000 and some people put $100,000, any amount. There’s a lot of money. I’m the cheapest person, I’d be putting $1,000 at anything. That’s me. I know, I get it. We were really pleased to see that. It’s a neat approach. I think that’s the future to be honest because I love that concept and I was really intrigued by it. As we do other deals, we’re going to be working with them. I’m not sure the relationship exactly how that’s going to play out in the fund, but that was just a neat example for our last indication that gave everyone the opportunity.

Are they more of crowdfunders or are they syndicators? Do you have any idea on their structure?

I’m not too sure which level they are. I just heard about it conceptually and was intrigued. I know that they’ve been around and they’re not just at the start of their company. There are a lot of different pieces around it to ensure how you do it. Some funds are accredited, not accredited, and all that plays as well. There’s a lot of legal stuff, a lot of money to see attorneys and all that stuff. Because it’s a project, you can’t solicit. It’s illegal to do that. There are other projects from friends and family. I know that with this particular project it’s because we only accepted accredited. It’s a neat approach and I’m happy to get more info.

Don't get distracted, focus on a niche and go all in on one thing. Share on X

Let’s put our heads together. I’d love to hear a little bit more about that. I’m always looking for ways when I get phone calls from my ladies, when they say, “I’ve only got this much.” What can we do with that to benefit them in the biggest way? That would be amazing. Another topic that I’m getting a lot from my ladies is this idea of out-of-state investing. Especially here in California, there are a lot of markets where people feel like, “I can’t really invest in my backyard,” and they’re scared to go out-of-state. I know that you do a lot of multifamily out-of-state, so let’s talk a little bit about that, your perspective and how to look for projects and stuff like that.

For our first seven years, we invested locally. We had a rule where we don’t invest more than 30 minutes away. We did a team. We did a leasing agent. We had our bookkeeper who did all the accounting. We have a tenant relations person. We had a maintenance person. We had four people on our staff besides me and my husband, helping us manage our local properties. We bought a property in Philadelphia which was an eighteen-unit and that was 35 minutes, so we went, “We could still do it.” Then the market shifted. I’m in the Northeast, and New Jersey is not the most favorable state on taxes in this country. Even in Philadelphia, the projects that we were looking at were getting outbid, it was getting more expensive. We raise money, we work with investors. The returns are important to ensure that we’re going to get into the right projects. We’re not just parking millions of dollars from a relative.

We’re constantly looking at how we’re going to get into the right area for our investing goals and our investors. A broker had brought the same broker and that’s the first thing I’d say as a good tip is start building relationships with commercial brokers. Sometimes it’s tough, especially now. Think about a hot market, everyone’s calling commercial brokers saying, “I invest in multifamily, do you have anything for me?” “Yeah, you and 90 million other people.” You’ve got to differentiate, keep that in mind too.

We had closed that eighteen-unit with the same broker who called us about a property in Lancaster, Pennsylvania, which is about an hour and a half from where we were living at the time. He said, “Are you interested?” We’re like, “Cool, like an hour and a half. We’re not going to send our leasing agent there. We’re not sending our maintenance person there. We need to look into property management companies.”

After vetting the deal, and that’s a great story that ended up itself. The first domino always is a good property management company. You’re going to need that. Some people successfully invest in properties and they self-manage the properties. I’ve heard of it. I know a lot of women who do it successfully. We knew at a 49-unit, that wasn’t going to be our best strategy. We knew it was going to be important to have a good and local property management company. Why I say that’s a great person to have on your team? Say you’re sourcing an area in Alabama or wherever you’re sourcing deals. Before even looking for a property, start getting to know the property management companies there because that’s going to follow. If you cannot find a property management company in a geographical area, that might be a sign for a lot of reasons that something is off.

Even with Airbnb, which is very hot, vacation rentals and luxury vacation rentals, whatever the people are interested in. If it’s a hot area, there are people managing in that hot area, and that’s a great source and a great team member to start to talk to. Number one, they know the area. What streets are good? Which streets aren’t good? What areas are up and coming? What areas are too hot and expensive? Because we know that’s the case. We’ll wait in an exuberant way now. Everywhere is like, “Hold on, what do you want?”

 

I called up my way to Target. You’re a real estate investor, you never turn it off. I saw a sign that said ‘For Sale’ and it had a handwritten phone number. I’m like, “That’s a good sign.” Great area, Bucks County, where I live and I’m like, “That’s an interesting area.” I texted the person, guy, gal, I don’t know who it is. I said, “How much is the lot and what’s the size? Is it with sewer?” all the things you ask. We’ve done a bit of new construction a lot of times but we could probably pull it off. “$250,000.” I don’t even know if you’d get $500,000 for the property. That’s just for the lot. People are nutty with their prices right now.

Going back to out-of-state, I think property management companies are helpful to have on your team as an initial team member. What commercial brokers care about is if you’ve closed deals. They do not want to work with people who are going to get to the finish line and not be able to pull the money together because they want their commission. That’s what they care about. Beyond everything else you want to talk about with them, they care about if you’ve closed with them or with anyone. If you or someone on your core team has closed deals that you’re looking for. If you’re looking at a 100-unit, you better have someone that you’re bringing to the table that’s like, “This is the kind of team we have, the kind of team we’ve done and this is what we’ve closed.” That is what they’re thinking right now when you call them.

This broker brought us this project and we started to talk to property management companies in the area and vet the area. What really helped, and I always say this, if you have somebody in your family or in your network who lives in the area is really helpful. They don’t need to have a degree in real estate. They don’t have to have ten years in investing. If you have some boots on the ground and feet on the street, people that aren’t just property management because remember, property management company is a vendor.

We always like to offer our property manager company’s potential ownership in the building. Every time we buy a building, we say, “We’re syndicating this, would you like to own part of it as well?” It’s not the best sign if they’re like, “No.” Even if they put $25,000, maybe they think that’s like chump change. Most of all the property management companies we’ve worked with have invested in our deals and that’s a good sign as skin in the game, so to speak.

I would say the second thing is to start to look at, “Is this an up-and-coming area? Do I know anyone in my network that can help me? Is there a reason to go there? Do I want to go there?” If you’re going to invest in an area, those are questions to ask, “If I have to now get on a plane, is that on the way to my aunt or my parents? Is this an area that my kid can go to college for the next four years?” Make it make sense. Versus an area that literally you know no one. That can work but if you can blend a few things in there and it is an up-and-coming area, you’re going to want somebody that’s 10, 15 minutes from the property, whether it’s a realtor, whether you have to pay them hourly. If you can’t get there, someone needs to get there because fires happen, things happen.

We have a cousin in this area, Lancaster. When we’re looking at it, we’re like, “What do you think?” He’s an investor, which was even better. He was able to be our boots on the ground. He’s part of our general partnership. We had a fire there years ago. We want to make sure everyone’s okay. We also want to see what’s going on. In an hour and a half, the fire is probably going to throw a little more damage than ten minutes.

Don't give up. Your mistakes are going to propel you forward and you're going to learn and grow from them. Share on X

A couple of things that I want to highlight is that people think that you hear about an amazing market and you should go invest in there. I remember in the mid-2000s, everybody was in Henderson, Nevada, right outside of Las Vegas. I had close friends who all invested. There was also Florida, there was also Chicago. Those were some big hubs where they were really marketing to investors from out of state, especially California. Californians had a bunch of equity and it wasn’t working for us. Everybody could get loans by just stating things.

There were these pockets that were trending. People were making money hand over fist. For me, I always play the longer trend. I don’t play the short-term trends. I would admit, I would probably be a lot richer if I got that right more often, but there are many people that get that wrong. Part of it is that they didn’t do some of the things that you talked about. It wasn’t a place that I would ever want to visit. It wasn’t a place on the way to anything. Las Vegas, it is. Chicago, it is. Florida, it is. A lot of people didn’t have that mentality of, “Would I want to go there? Would I vacation there? Would I want to live there? Would I want my kids to go to college there? Is there any reason for me to go there?” Even in Henderson, it’s not like people were like, “I’d like to have something in Henderson because I like to go to Las Vegas.” No, it was, “I’m investing in Henderson because everybody else is investing in Henderson.”

I love how you talk about this, especially in your first few deals, I think this is hugely important is as you’re getting to know what this is like. The very first time you step out of state, you don’t want to be in a market that you completely don’t understand, that you just get a bunch of numbers from someone that’s a vendor. They’re interested in selling these properties. They’re not going to lie to you, but they’re definitely going to paint a pretty picture.

We had a friend that moved to Henderson and we went to visit them one time when we went on a trip to Las Vegas. He was like, “There are all these crazy investors coming in here.” All around town, people were like, “This bubble is going to blow,” because there weren’t as many people in the restaurants anymore. There were things that were closing down. We’re like, “How is it possible that all this expansion is happening but the actual economy is shrinking?” There’s no way to have known that if we hadn’t had this conversation with our friends that had just moved there. There’s all this hype about Henderson, but they just closed down the local Whole Foods or whatever market it was.

I love what you talk about is we don’t have to have boots on the ground all the time, every time. Eventually you do develop a skill in getting to know markets or you focus on certain markets. Especially in those first few deals that you’re going out, that is all such good advice, Liz. Make sure that it’s someplace you would want to go. It’s like basic, intuitive, common sense stuff that we don’t think about because we get whisked away by the excitement of what’s possible. Those basic stuff, “Would I like to go there? Is there anything there I appreciate? Do I have someone that’s relatively close by, maybe within a half hour?” Even if they’re not going to be boots on the ground, just have the conversation once in a while. See how things are going in that market.

Thank you so much for that because normally people are like, “You need to look at the colleges, the employers or the average income rate.” Yes, you do need to do all those things, but it’s not the end of the story. Especially when you’re starting, it’s not necessarily going to give you the comfort that you need to actually get out there and do it. Here’s the thing, nothing happens for you until you take action. If it’s just the numbers and that’s not inspiring you to take action, then nothing is happening for you.

 

Many people do get caught up and there are many important numbers as you’re analyzing markets and analyzing deals. Even just the idea of what COVID taught is the importance of diversity of jobs. Are there different jobs that people can actually be employed by? They’re all in on the tech, all in on the government or all in on whatever industry. The idea of diversity of jobs is to me, even more important than job growth, they’re both important. To know that people can get different jobs, there are jobs that can do positive things. There are many markets that don’t have that. Even high-priced areas don’t have that. We probably invest more in the workforce housing, more up and coming areas, not areas that are on any hot market list. Those are the too expensive areas. We’re like, “We don’t want to invest in an area that’s on any list.”

I love that, it’s much more practical advice. My ladies here have a lot of good advice from very smart people. Sometimes, we just got to ground it. This is how you make yourself comfortable with that. Ask yourself some real common-sense questions because so much of building a real estate business is common sense. There’s a lot of fancy languaging. There are a lot of people that say things that sound smart, but in the end, it’s a common-sense business. Thank you so much for grounding that for us. It was helpful. We are going to do EXTRA. We’re going to be talking more about building your team, finding partners when you’re in state or out of state. She likes to say, “Who’s on the bus?” and then team building with all those people that are on the bus. I love that picture because you’re all going out on a field trip and you’re all on this bus. Where are you going to go? How are you going to get there? Is it going to be fun? Is it going to be profitable? We’re going to talk about that with Liz in EXTRA. We have that to look forward to. Before we move to our three rapid-fire questions, Liz, could you tell everybody how they can get in touch with you?

In terms of some of the active multifamily projects which are fun to learn more about some of the day-to-day real estate projects, you can go over to my husband’s nice business called DeRosa Group, DeRosaGroup.com. My husband spent a lot of teaching as well. We both love teaching and helping, so you’ll see a lot of YouTube content and things of that sort from him. In terms of women who are interested in getting more support from women and getting connected, check us out TheRealEstateInvesther.com. From there, you can learn all about our Meetups that are across the country, and our Facebook community and membership, and things we’ve got going on with helping women. You can check us out there.

Thank you for that. Liz, tell us one super tip on getting started investing in real estate.

Don’t get distracted, focus on a niche and go all in on one thing.

What’s one strategy to be successful as a real estate investor?

Don’t give up. You’re going to lose money. I hope you don’t lose money, but you may lose money like many of us. Fifteen years, I can tell you a lot of interesting stories. You’ve had money like a Bernie Madoff situation where literally hundreds of thousands of dollars were stolen from us. We don’t give up. That makes anyone that successful in any line of business or anything in life. Don’t give up. Know that your mistakes are going to make you propel you forward, and you’re going to learn from it and you’ll grow from it. If you don’t have that attitude, then everyone gets stopped after they lose money and something bad happens. Don’t give up. That’s the key.

What would you say is one daily practice that you do that contributes to your personal success?

Something that I’ve always done and then go back and forth and don’t really do it consistently is I do a daily prayer. I read a little spiritual prayer. I think about it. I’ve been doing ten-minute meditations. I’d like to increase that eventually. For me, it’s been super helpful. I focus on whatever I learned in that prayer. I focus on that in my meditation. If I miss a day, it’s rare, but I have maybe missed 1 or 2 days for four months, but every day I usually get that in.

My meditation practice gently worked its way into my life to where I don’t even think about it. It started to just happen. I missed three days and my husband and I were on edge. I lost my temper at a restaurant. I didn’t yell at anybody but I didn’t have the patience to wait. Nobody saw it but I felt it like, “What is going on with me? Who is this person?” My husband was like, “Are you really stressed out?” I was like, “I think I haven’t been meditating. I haven’t been taking Moneeka time.” I have been taking Moneeka time. I got a pedicure. I still do, but that piece that starts my day has been so important. I’m glad you mentioned that.

You have to practice it. It’s like going to the gym. You can’t do it once and you’re good.

I always say in all of our Bliss practices, you can’t just brush your teeth once in your lifetime and hope your teeth are going to be good. You’ve got to brush it every day. You’ve got to keep doing those little things. Liz, as always, I’ve loved our conversation. Thank you for everything you’ve shared in the show.

Thank you so much for having me. This was amazing. I hope I was helpful and gave some content that your audience will help them.

Ladies, Liz and I have more to talk about. We’re going to be talking about building teams and who’s on the bus, all of that really good stuff. Stay tuned for the EXTRA. If you are not subscribed, go to RealEstateForWomenEXTRA.com, and you get the first seven days for free. Check it out. See if you love it. If you don’t, that’s totally fine, but do check it out. For those of you that are leaving, Liz and I now thank you so much for joining us for this portion of the show. I look forward to seeing you next time. Until then, remember, goals without action are just dreams. Get out there, take action and create the life your heart deeply desires. I’ll see you soon. Bye.

 

Important Links

• DeRosa Group
• The Real Estate InvestHER Community
• The Real Estate Investher Show
• The Only Woman in the Room: Knowledge and Inspiration from 20 Successful Real Estate Women Investors
• BiggerPockets Podcast – Liz Faircloth episode
• Best Ever Show – Liz Faircloth episode
• Rich Dad, Poor Dad
• TheRealEstateInvesther.com
• Facebook community – The Real Estate InvestHer
• RealEstateForWomenEXTRA.com

 

About Liz Faircloth

I’m Liz. I was born and raised in a middle-class family in New Jersey where my home was filled with love but going out to dinner was a big deal. From an early age, I have always wanted to serve others and even went to a graduate school program to become a social worker.

While studying to become a social worker, my brother in law who was the only entrepreneur I had ever met, handed me Rich Dad Poor Dad. This changed the trajectory of my life forever. Over the next couple of years, I started learning as much as I could. After a year of taking courses and hundreds of attempts to get an offer accepted, my boyfriend at the time (now husband) purchased our first investment property a duplex with none of our own money since we did not even have the money. 

I started in my 20s not knowing anything about investing, business, and no money to invest. Now, 16 years later, our team owns and manages millions of dollars of real estate. What most people don’t know is that this evolution came with a lot of lows, loss, heartache, and challenges.

As someone who was not handed anything I have today, I have learned a ton of lessons from not giving up to managing the balancing act of life as a woman. I am constantly working at balancing all the priorities of my life from being a mom of young children to a wife & biz partner with my husband to taking care of myself. It has not been easy so that is why we created our InvestHER community.

 

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Fundamentals Of Investing To Achieve Financial Independence With Chris Larsen – Real Estate For Women

 

We have our own choices every day, especially in your funds. How do you handle your expenses, and what do you do to achieve financial independence? Join Moneeka Sawyer and the founder and Managing Partner of Next-Level Income, Chris Larsen, as they delve into controlling your cash flow, creating a structure that would enable you to grow as an individual and professional. Chris is passionate about helping investors attain success in their field. He enlightens people and shares a couple of his mistakes to take the fast track towards financial independence, which took him almost 20 years. In this episode, he talks about investing, infinite banking, loans, mortgage payments, tax strategies and more. Learn how to grow your portfolio, practice financial literacy and make the best choices in your professional life.

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Watch the episode here

 

Listen to the podcast here

 

Fundamentals Of Investing To Achieve Financial Independence With Chris Larsen – Real Estate For Women

Real Estate Investing For Women

I am so excited to welcome to the show, Chris Larsen. Our guest is the Founder and Managing Partner of Next-Level Income. Chris has been investing and managing real estate for many years. While still a college student, he bought his first rental property at the age of 21. I love people that get into this industry young. Ladies, if you’re young, get in. From there, Chris expanded into development, private lending, buying distressed debt, as well as commercial offices and ultimately syndicating multifamily properties. He began syndicating deals in 2016 and has been actively involved in over $225 million of real estate acquisitions. Chris is passionate about helping investors become financially independent.

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Chris, welcome to the show.

Moneeka, thank you so much for having me. I’m excited to be here.

I’ve been looking forward to this show. You’ve been patient with me with all the rescheduling. Thank you. I’m glad we’re finally here. Chris, give us a high level of your story. I know it’s very exciting.

First off, I love that you bring up, “Get started early,” now is early, whenever you can do it. I was 21. I was in college and to rewind a little bit, my passion at the time was racing bicycles. I went to Virginia Tech for Biomechanical Engineering. I did well in school and was told, “You should be an engineer like your grandfather.” All I want to do is race bicycles. Cycling is like a real engineer sport because it’s all about numbers and power to weight ratios. That was the end of my story in a lot of ways because I didn’t want to do that.

Along the way, at that same time, when I was at this turning point, trying to decide what to do as I was looking towards a professional career, my best friend, roommate, training partner passed away. He had a massive brain hemorrhage between my freshman and sophomore years in college. I poured another year into this sport. Then realized even after I was winning more and more races, I wasn’t happy. Even though my team went professional, I stepped away from the sport and went back to school. As a junior in college, I thought, “What am I going to do with my life?” I don’t want to be an engineer. I was going to go race and then figure out what I wanted to do.

While I was racing and even when I was young, the first thing I remember is I hop on my bike and I have this tremendous sense of freedom. Probably if you’re reading, you think the same thing. I wanted the freedom to live life on my own terms, not only to respect the life I was given but also the life of the friend that I lost. I turned towards investing. I was introduced to it by the same gentleman, Clint Provenza who introduced me to cycling. My father passed away when I was five and he was a real mentor to me.

I started looking into investing. I was day trading and one of those nights/mornings at 3:00 AM when I was lying there in bed, thinking about what I should do with my trades, I thought, “Do I want to be doing this twenty years from now?” The answer was no. I looked at other investments. I read over 250 books on money investing and settled on real estate because you could control it. I bought my first property at 21. I built and managed a portfolio of single-family rentals for fifteen years but ultimately transitioned into commercial real estate. That’s what we focus on now. I try to enlighten people and share my mistakes so they can take the fast track to get towards financial independence, which took me almost twenty years.

I have a very similar story that I wanted to be a dancer. That was my thing. I came to investing for a similar reason. I wanted a life of choice. I think that freedom of choice is our true wealth. That’s what I wanted and real estate allowed that. It takes me fifteen years before I could say that my husband and I could retire but I couldn’t do it with the lifestyle that I wanted in California. We would have had to move. We continue to grow our portfolio but it was at the same thing. After about fifteen years, I was like, “We are doing everything now that we’re doing because of choice and we want to do that.” There’s nothing more liberating than that.

I teach a Financial Literacy course for high school students. They’re coming out of underprivileged homes. Most of them are living below the poverty line. We had a conversation that at some point, income is important but it’s the freedom to choose. I cited in a study that shows the janitors that have freedom in their day-to-day choices are happier than the CEOs that are making 10,000 times than they are. They’re not happy because they don’t have freedom.

Don't be afraid to ask questions and understand the numbers, the strategy, and why an operator is going into the market. Share on X

My TED Talk is about this. There’s a lot of research where money does buy happiness to a certain threshold.

What’s that number?

The original number that came up within 2010 was 75, but a study that was done in January 2021 said 100,000. It’s gone up because of inflation, obviously. Basically up until then, the number of dollars that you bring into your household does relate directly to the level of happiness or satisfaction in the household. After that, we’re looking at we have freedom, excess income is taken care of and we can focus on joy or bliss. I’m glad we’re on the same wavelength around that. Talk to me about this concept of infinite banking. Tell me what you mean by that.

Next-Level Income was born of this desire to curate information around financial literacy and education. As I built it out, we have three main areas. We talk about how to make, keep and grow your money. Those are the three steps. I have coaching clients and that’s what we work through, “How can you maximize how much money you’re making? How can you keep more money?” That’s typically around entity structure, tax strategy but also this concept called Infinite Banking. If you think about what your biggest expenses are in life, most people know that taxes are one. If you are reading this, making a lot of money, you’re at those higher income levels like 20% or 30% in California, even 40% or 50% is not uncommon.

That’s a big expense but the next biggest expense that a lot of people don’t think about is financing. Think about how much money you spend on interest for your house or on cars and if you have a business, business loans, infrastructure, equipment. If I said to you, “What if you could take that financing dollars that you spent on interest, put them back in your own pocket and you could become the bank?” That’s what Nelson Nash talks about in this concept of becoming your own banker, which infinite banking was born of.

On average, when you pay a mortgage, it’s fully amortized, you pay a lot of interest in the front end, it goes down to so and so, and when you look at the very end, you were to finance out for 30 years, what amount of money relative to your principal do you end up paying? Isn’t that something crazy like three times as much?

It’s 2 to 3 times. Interest rates now are lower. It’s more like two times but historically, it’s about three times. Let’s not pretend you’re in California because you’re probably paying $3 million. Your average home in America is $300,000, so you’re probably paying somewhere between $600,000 to $1 million for that home. That doesn’t take into account when you refinance. A lot of people refinance. They reset the clock and you pay more interest. A lot of people never get out from under that.

Ladies, I want to give you a little clarity on that. What happens on a fully amortized loan is not what we call simple interest. A fully amortized loan means it’s heavy on the interest on the front end. Let’s say like 2/3 of your mortgage payment goes into interest, 1/3 might go into your principal and then it moves over your 30 years. At the end, you’re paying significantly more in principal. I don’t think it doesn’t exactly flip but you’re paying a lot more in principal and significantly less than interest. Every time you refinance, you start that clock on the heavy interest side.

In the past, ladies, I talked about I like interest-only loans. That’s because I don’t stay in homes very long. I refinance them to take money out so I can buy something else. I’m always high on the interest side. This is a way for me to control my cashflow and doing what I would normally be doing. When he’s going to talk about infinite banking, understand that you’re paying 2 to 3 times your principal. He’s talking about how you can put that to work for you rather than you paying that off.

That’s a great way. I co-hosted a radio show in college. One of the financial advisors advocated for a fifteen-year mortgage. I said, “No, you want 30-year. You want to have the money in your pocket and the ability to pay off your mortgage because, one, ask yourself, ‘What is your return on equity?’ It’s zero. The money’s sitting there. It’s not doing anything for you.” You can go out and use that money. You can finance, buy another property and leverage that. You can use the bank’s money to do that. If you have your home paid off, you have to pull that money out with the permission of the bank.

 

What’s interesting is whole life is very similar to owning a home. The term life insurance is very similar to renting. You build up equity in that policy but here’s the thing that’s great. When you have a properly structured life insurance policy and you build up that equity, you don’t have to ask anybody’s permission to take that money out. You own that policy. The collateral is your policy on your life. The insurance company has to lend you the money before it lends out to anyone else. They have to lend that money out to earn a rate of return because the other neat thing with life insurance, and this is unlike your home but similar, your home goes up in value. Life insurance does too because they pay dividends.

The insurance company invests that money. If they invest it well, what happens is they earn a return on that and give it back to the policyholders. This is important with this concept. You have to have the right insurance company that you’re working with and a properly structured policy. You can go buy the wrong mortgage for your home. There are multiple types of mortgages for your investment property. You have to make sure you buy the right policy with the right structures. Sometimes, there are multiple structures within that so it can be quite complex.

I was on the phone with one of my ladies and she was saying, “I’ve got something with State Farm.” I don’t know how State Farm is structured.

I do. I work for State Farm.

One of the other ladies that was on the same call with me said that she ended up trying the infinite banking structure. I don’t know how it all worked for her but over time, she wasn’t going to end up paying taxes on the money and was horrified. What I’m trying to say here is there are lots of different kinds of insurance companies and whole life structures depending on your goal. This is like with anything else, whether it’s investing, getting married or having a job. You have to know what your outcome is that you’re looking for. “Is it what is going to be paid to my family when I die? Can I use this money? Is it, I would rather not pay taxes or is it growth? What is it?” Once you make a decision, you have to find the policy that is structured to reach that goal in the best way possible.

You have to work. The unfortunate thing is there’s a limited number of companies that can do this. You want to optimize the company for your certain circumstance. If you are a 50-year-old woman, the company you might work with might be different than a 30-year-old man or 80-year-old woman. It depends on what your certain circumstance is. The other thing is if you work with an insurance agent that’s going to structure this policy, they’re paid less commission to structure the policies this way. When you maximize the cash value, you’re optimizing the insurance level. When you optimize that, it means you a lot of times lower it. You’re lowering the cost of insurance.

A big portion of that in the initial years is the commission. It’s paid to the agent. I’ve been in sales my whole life. I don’t think there’s anything wrong with paying somebody for the service you provide. That’s part of the thing. If you’re reading, you may have heard things like, “Life insurance is a bad investment.” I don’t call it an investment. I’ve used it for over several years now. This exact type of policy structure is like a super-charged savings account. It’s a tool that you can use along your investment journey. If you’re a small business owner and you say, “I own a small business,” what’s cool is you can also structure it for retirement. You can use it like a Roth IRA, but what’s nice is unlike a Roth or 529 plan for your kids, you have a lot more flexibility. You can use this money for whatever you want along the way.

The other thing that I love about these is that depending on how it’s structured. You were talking about different ages. If you’re 20 versus 80, you can put together a policy where you’re doing a monthly installation. You could also put together a policy where you have one installation. Your business did good and maybe you put $200,000 in, then you let that ride for a while. There are different ways to structure it. You don’t feel like in the old world where, “This was going to be a payment every single month and I don’t want another payment every single month.” Especially if you run your own business, you don’t know what next year is going to look like. These newer policies are interesting because there’s so much flexibility and new opportunity in structuring to create other ways of using them.

We have a whole page to it at NextLevelIncome.com. We have a banking page. You can check out some of the resources, videos, white papers there that talk more about this as well.

Income is important, but the freedom to choose is even more so. Share on X

Do you feel complete on that topic? Did you want to move to the next one?

I’m good. I edited my book, added a chapter and didn’t mention it but that’s the other thing we have on the website. If you want to learn more about it, you can also get a copy of my book for free. If you go to NextLevelIncome.com, you can click on the Book link. I’ll send your audience a copy if they put their address in.

Thank you so much. Talk to me about your perspective on multifamily. This is a hot topic with my ladies.

I’m trying to figure it out. When you say that, I’m like, “How can I figure something else on my podcast that I can say, ‘My ladies.’” I don’t know if I’m ever going to figure that out or not, and that’s probably a good thing. I don’t think that’s not going to be my tagline. I call multifamily real estate the Holy Grail of investing. If you look at my book, it says, “How to Make, Keep, and Grow Your Money Using the Holy Grail of Real Estate to Achieve Financial Independence.” I’ll send you a copy for free if you go to the website.

I’m high on multifamily. I was the person that managed my own portfolio for fifteen years. I was a person that got a phone call on my honeymoon in Costa Rica and paid $40-some in collect call fees to deal with the problem tenant. I was the guy that stayed in too long and didn’t get a great return on my properties. I was fortunate enough to run into somebody that introduced me to this space. Several years ago, I started to investigate multifamily real estate. I’m a demographics guy. I spent eighteen years in the medical device industry. That’s how I made money to invest. I got into a medical device and moved to Asheville, North Carolina because we have great demographic trends.

When I started to investigate multifamily being an engineer, a day-to-day guy, analytical, I found that multifamily was supported by these terrific demographics by what we now call the Millennials. They’d rented, and guess who’s supporting multifamily now? It’s their parents, the Baby Boomers. They’re selling their homes. They’re renting. Gen Z is renting as well. We’ve turned into this nation that we like to own. That’s the American Dream but we also like flexibility. I jumped into multifamily. It was because of the demographics, analytics, my MBAs and portfolio management. What I found is something that Ray Dalio calls the Holy Grail of investing, which allows you to increase the Sharpe ratio. Don’t let your eyes glaze over. I’ll simplify the Sharpe ratio. It increases the returns of your portfolio and decreases the risk. It’s like a boat that goes faster and has less bumps when you’re on it. I thought, “What is better than that?” Ray Dalio calls that the Holy Grail of investing. I call multifamily the Holy Grail of real estate because it allows you to increase the returns in your portfolio and decrease the risk.

I know that in EXTRA, we’re going to talk a lot more about multifamily and a high level of why he loves multifamily much. We’re going to go deeper into the pros and cons of multifamily and then he’s going to do some number breakdowns for us. These are things that I get asked about a lot. It’s not my strong suit. My husband and I have not been involved yet in multifamily. The commercial evaluation of the numbers is not his strong suit. He hasn’t had to do it yet. This will be fun. Why don’t you give us a high level on why you like multifamily? What’s exciting about it?

There are a few things. If you’re reading and are like, “I love real estate but I don’t want to be the person that has to go in and fix toilets, find new tenants, screen people and do showings,” I get that because I’ve done it. The big thing is if you invest in multifamily with an experienced operator, somebody that is pretty good in details, it’s 100% passive. You can invest, be a direct owner, get the income and appreciation. The depreciation has great tax benefits, especially if you’re a high-income earner but you don’t have to deal with it all yourself. That’s fantastic. It’s scalable. You could buy a 100-unit multifamily building for $10 million or a $1 billion multifamily portfolio. Whether you’re investing in your first deal or for twenty years and you’re looking to place $1 million or $10 million of capital, you can use the same strategy.

It’s very scalable but there’s something that I like even more. It is control. You might’ve read me talk about laying in bed at 3:00 AM, feeling like things were out of control with my money. I like real estate because you can control it. We’re acquiring a property in Greenville, South Carolina. We live in Asheville, which is about one hour away. We were down in South Carolina for my son’s Lacrosse games and took them to the property. We drove around. It was built in 1997. It’s a little beat up in the stairs. Some need to be replaced and new paint. We can control all of those things. If you own a business, you get this. Apartments are valued like a business. They’re valued by net operating income.

If you live in your home or have a rental home, it’s 1,000 square feet and sells for $300 a square foot. It’s worth $300,000. The bank figures that out because they say, “The home on your left is worth $295 a square foot. Yours is about $300 a square foot.” You don’t control that. The market goes up and down. If we go and buy an apartment building for $10 million and have $1 million of net operating income, that’s probably not a great metric. Call it a $20 million apartment building with $1 million in net operating income. We increase the net operating income to 50% from $1 million with a $20 million valuation to $1.5 million with that new valuation. You’re probably thinking to yourself with your calculators, $30 million. We control that when we’re able to move the rents by the renovations, operations, more efficient and bringing in better management. It’s passive and scalable but most importantly, it’s controllable.

We’ll break down more of this in EXTRA so we can take it a little bit slower. Did you feel like you already covered what are the important metrics? What exactly should we be looking at?

 

We can unpack this a lot more in the EXTRA section. If you’re thinking, “This sounds interesting,” which I look out for as an investor. I started as an investor in these deals. I was what’s called a limited partner before I syndicated these deals and became a general partner. If you’re a limited partner and you say, “I’m interested in this,” you need to look at three different things. Number one, the Geography. Are you investing in an area of the country that people want to move to? I wrote a whole blog post about this. I talked about how you can identify these. It’s very easy to see with reports from companies like United Van Lines. You can go on our blog at the beginning of 2021 and read the post I put on there.

You want to be in large cities where people are moving that are growing faster than the national average. Where are these cities? A lot of these are from the Southeast. Remember I said, “I moved to North Carolina for the demographics,” the Carolinas, Florida, Georgia, Texas, Phoenix, Colorado, Boise, Idaho seems to be a big one here. Why are people moving here? They’re moving out of California to places like Colorado, Texas, Idaho. They’re moving to the Southeast from places like California, LA, New England, New York. Places that are cold don’t have a great quality of life. Taxes are going up. I have a coaching client that is like, “We’re looking at South Carolina to move. Taxes are going up. We don’t want to live here anymore.”

Number two, the operator. Are you working with an operator? This is somebody that’s going and finding the property that’s going to buy the property, bring you in alongside them, they’re going to operate it and increase that net operating income. Have they done it before? Have they done it in the Geography that you’re invested in and what is their experience there? You want to ask them some tough questions like what’s their strategy. You look then at the metrics in the deal. That’s complex. We looked at over two dozen different metrics on the deals that we’re in. There’s a lot of different variables that come into play.

If you’ve ever invested in a business, business owner or professional, you can read a financial statement. If you call me and say, “I’m interested in this deal.” As an owner of these properties, you’re entitled to all the same information you would be entitled to if you go into a single-family home. You can go through those, call the operator and say, “Walk me through this. What am I seeing here and there?” Don’t be afraid to ask those questions and understand the numbers, the strategy and why an operator is going into the market.

Talk to me a little bit about ROI. Different operators do this differently. Tell us about how you structure your deals for your investors?

What we do is called syndication. It is very simple. It is an operator going out and bringing in investors alongside them to invest. What’s important is how that syndication is structured. We do what’s called, typically, our preferred return. If you look at deals, 6% to 8%, what does that mean? That means investors get the first 6% to 8% of the returns coming from that property. Investors are preferred in front of anybody else. They’re going to be subordinate to the lender. The other thing that’s nice about these properties is it’s called nonrecourse debt.

I work with a lot of doctors after spending eighteen years in the medical device profession. They don’t want more risk, debt and a bank to come after them for something. They have patients that are out for them if something bad happens. That’s a nice thing about these properties as well. After the lender, the investors get that preferred return and then there’s an equity split. A large part goes to investors and then the partners that organize these deals get the minority position in there but that’s the incentive. You want to work with the group, in my opinion. How we do it is we give the investors the first big portion of the returns, about a half of the returns upfront and the other half comes from that split on the backside. We, as partners, get a piece of that split.

We’re incentivized to maximize the profit of that property on the backend. You asked a question there and I’ll address this. There’s typically a couple of different ways to look at this. You can look at a total return. You’re going to get a 10% return comprised of half cash and half appreciation on a property. There’s also an equity multiple. Another way to look at it is you’re going to double your money over a certain period of time. There’s also the IRR, the Internal Rate of Return. We can dive deeper into the EXTRA portion of the show or you can go ahead and check out my book, which goes deeper into this as well. You can always read on a site like Investopedia, which dives deeper too. It depends on what type of investor you are. Maybe cash or the total return is important to you and it all depends on what type of investor you are.

Do you pay investors immediately? When they first invest money, are they guaranteed a certain return each year while the project is happening or how do you structure that for your people?

One little red flag, we never say guaranteed because these are investments that have a risk associated with them. If you ever heard me say, “Guaranteed,” you should either slap me on the face or stick a paper towel or something in my mouth. We have a couple of different types of investments. We have investments that we pay investors a fixed return based upon the performance of the property. Our group typically pays out monthly. We like it. There are groups that payout quarterly. It’s not necessarily better or worse but personally, I like to get money in my account every month.

People who have freedom in their day-to-day choices are mostly happier than the CEOs making enormous amounts of money. Share on X

You get some stuff on the backend, depending on how the project goes.

Typically, in multifamily syndication, you’re going to get regular cashflow, monthly, quarterly or annually. Think about it as a rental property. You’re getting rent. If you’re renting it out for $1,000 a month and your expenses are $900, you might get $100 a month. When you sell it, if you bought a property for $100,000 and you sell it for $150,000, you get that $50,000 profit on the backend. It’s very similar to that.

Do you guys do the whole refinance structure piece too or you go for the sale?

When we model out the returns on our property, which is called a Proforma, we don’t assume we’re going to refinance the property. If you’ve ever owned a rental property or have a property of your own, what’s nice is if you have HELOC, Home Equity Line Of Credit, and you pull money out of your home or an investment property, you don’t pay taxes on that when you pull that money out. You might pay taxes when you sell it but you don’t typically pay taxes when you pull it out. It’s nice. It’s very similar to what we do. A lot of times, we look to do that if the property is performing. We don’t tell investors that’s part of the plan because we want to be a little bit more conservative than that. That is a very optimal way to pull investor capital out in a tax-efficient manner.

We dove pretty deep into all of that stuff and I know we’re going to get even deeper. Ladies, definitely stay tuned for EXTRA. We’ll be talking more about the fundamentals of multifamily investing, the numbers around that and why or why not to do it. Before we move towards the end of this show, Chris, could you tell everybody how they can reach you?

If you want to dive deeper and learn a little bit more, check us out at NextLevelIncome.com. We have a podcast, which hopefully we’ll be sharing Moneeka on in the future. We have a blog and you can also get our book for free, which dives deeper into all the different aspects that we talked about. Go to the website, click on the Book link, put your address in and I’ll even send you a copy for free.

Thank you for that. That was so generous. Chris, we have three Rapid-fire questions. Tell us one super tip on getting started investing in real estate.

The best tip I can think of is to find somebody that has gone down the path you want to go down, and either ask them for advice or hire them to help be a mentor.

What would you say is a strategy to be successful in real estate investing?

Success in general is habits. Whether you want to be successful in real estate, in life, losing weight or whatever it may be, you need to focus on your daily habits. If you want to be successful in real estate as far as syndications or passive investments, that may be reviewing a deal every day and every week. If you are going out and buying your own properties, that may be contacting brokers, making phone calls and getting options out there that are coming in towards you on a regular basis.

What would you say is one daily practice that you do that contributes to your personal success?

 

I’ve learned a lot over the past few years. I bought my older son The Five-Minute Journal for Children and I use The Five-Minute Journal to meditate every morning. The Five-Minute Journal is basically a gratitude practice. I know you’re big on this. Happiness comes before success. You have to get in that right and abundance mindset, which is you share. You know that success or money will come to you and there’s always a deal out there. You don’t have to worry or fight over these things. Share, help other people, and other people will help you get in the right mindset. That’s what I try to do every day.

This has been an amazing show. Thank you so much for all you’ve already contributed, Chris. This has been great.

It’s my pleasure. Thank you so much for having me.

Ladies, stay tuned for EXTRA. We’re going to be talking more about the fundamentals of multifamily. If you are not subscribed but would like to be, please go to RealEstateInvestingForWomenExtra.com. You get the first seven days for free, so check it out. Download as much as you can and you can stay if it’s for you. For those of you that are leaving Chris and I, thank you so much for joining us for this portion of the show. We appreciate you. I look forward to seeing you next time. Until then, remember, goals without action are just dreams, so get out there, take action and create the life your heart deeply desires. I’ll see you soon. Bye.

 

Important Links

• Next-Level Income
• Book – Next-Level Income
• Blog Post – Where Should You Move? 5 Ways To Take Advantage Of “Geographic Arbitrage.”
• Investopedia
• Podcast – The Next-Level Income Show
• Blog – The Next-Level Income
• The Five-Minute Journal for Children
• The Five-Minute Journal
• RealEstateInvestingForWomenExtra.com

 

About Chris Larsen

Christopher Larsen is the founder and Managing Partner of Next-Level Income. After 18 years in the medical device industry, he dedicates his time to helping others become financially independent through education and investment opportunities. Chris has been investing in and managing real estate for over 20 years.

While completing his degree in Biomechanical Engineering and M.B.A. in Finance at Virginia Tech, he bought his first single-family rental at age 21. Chris expanded into development, private-lending, buying distressed debt as well as commercial office, and ultimately syndicating multifamily properties.

He began syndicating deals in 2016 and has been actively involved in over $350M of real estate acquisitions. In addition to real estate, Chris has invested in equities, oil & gas, and small business lending, as well as being active in Venture South, one of the nation’s Top 10 Angel Investing groups.

Chris lives with his wife and two boys in Asheville, NC where he loves spending time with them in the outdoors and enjoying the food and culture that the region has to offer.

 

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