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Taking Your Syndication Deals To The Next Level With Chris Larsen

 

You need to take into account a lot of different things when doing syndication deals. As an investor, you must understand every single detail of the property before closing a deal. At the end of the day, real estate and syndication are team games. You won’t go far in your deals if you aren’t transparent enough or communicating clearly.

Join Moneeka Sawyer as she chats with Chris Larsen, the Founder and Principal of Next-Level Income, all about evaluating syndication deals. Chris breaks down a deal in real time to highlight the most crucial parts of the process and the essential lessons to remember. Be sure to take notes because you wouldn’t want to miss this episode! And if you love to learn more about this topic, check out Chris’ book, Next-Level Income.

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Watch the episode here

 

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Taking Your Syndication Deals To The Next Level With Chris Larsen

We have a webinar with Chris Larsen. We’ll be talking live about the biggest topic you ladies have questions about regarding syndications and how to evaluate syndication. It’s going to be a great conversation, so come and ask all of your questions. We’ll stay live as long as you need us to. To sign up, go to BlissfulInvestor.com/SyndicationWebinar. Also, what you might not remember is we held a webinar in 2022 with Chris where he did a complete detailed breakdown of a deal, he was real-time raising funds for.

It was one of the most interesting conversations I’ve ever had about syndications, which is why I wanted to bring Chris back for another webinar. He is so good at explaining how things work and is patient and thorough in answering questions. Join us for our upcoming webinar. Go to BlissfulInvestor.com/SyndicationWebinar. In the meantime, since many of you didn’t get to hear the webinar in 2022, here is a replay of it. Read it. You will learn a lot.

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Chris, I know you have a new deal that just went live. I want to hear all about that. One of the best ways to get to learn about these deals is to walk through one. This is super exciting. Do you want to share that with us?

Absolutely. I’ll share my screen here and I got a ton of stuff. If you were new to the syndication space and if you’re reading, first off, I’d recommend going to the website NextLevelIncome.com. I wrote a book about why I feel multifamily real estate is the Holy Grail of investing. To be clear, I was an investor before I started syndicating deals. I was buying properties. You and I talked about this when we were together on the show.

Multi-family real estate is the Holy Grail of investing. Share on X

I managed my own portfolio of real estate for 15 years, and then I was working 60, 80, and 100-hour weeks. I was on call twelve years out of my career and it didn’t interest me in doing that. Also, I’m an engineer by training, so I want to figure out the best way to do things. I’m always looking for a better way to do things and I was introduced to multifamily. After having this conversation many times, I decided to write a book about it. You can go to the website NextLevelIncome.com/book, and get a free copy of the book here.

Go to NextLevelIncome.com/bliss. We’ve got our page for my ladies. There’s a bunch of other things that are on there, ladies. Go to that website.

This is what we’re going to be talking about. We have even more stuff that we’ve added. You can always email me. We added five ways you can set your kids up for a lifetime of financial success. These are some tools you can use for five different things. Start a bank account, pay your children, teach them about investing, start a business, and teach them about the value and cost of college. I’m big on the why. As we get into tonight, it’s like, “Why do we do this? Why do you invest?” You invest for time, you invest for freedom, and you invest for the ability to do different things.

I’d like to talk a little bit more about the deal. Before I get into this, Moneeka, I want to talk about the process. If you’re new to syndication like, “How would I look at a deal?” If you sent me a deal and said, “Chris, what do you think about this?” By the way, this happens to me at least once a week. I had one of my fellow mastermind members set it up. He sends me this deal, and it was in this little town in Alabama, and he’s like, “What do you think about this deal?”

As investors, we look at the numbers. We’re like, “What are the returns going to be on this deal?” I looked at the deal and my first question to him was, “Why do you like this town?” His response was, “I don’t know if I like this town.” I searched for this town. It was 18,000 people. 11,000 of those 18,000 people in the population were students. If you look, you’d be like, “This town’s growing like crazy.” If you’re in a decent-sized city or town, 18,000 people is a small concert in some towns. That can blow that out.

One of the things you need to be conscious of is, “Why are you investing in a specific area? Why multifamily?” That’s what I talk about in my book. I’ll talk about that here in a minute but, “Why a certain geography of a country are you going to invest in?” I’m going to walk through a lot of that as I unfold this deal here. The first thing I’m going to talk about is why multifamily real estate. Why do I call it the Holy Grail of real estate? The reason is multifamily is very stable. People always need a place to live, and it waxes and wanes. It’s hot. It’s lukewarm at times but multifamily real estate apartments never seem to be cold because people always need a place to live.

 

We have a few trends as well, and I talk about these in my book. One of the big trends and problems we have this decade, 2020 onward, is that we have not built enough housing. If you’re anywhere in the country that’s even remotely desirable, you can’t get a house. It’s hard to find a place to rent and we haven’t built enough apartments. We haven’t built enough homes. The question is, “Why would we not do that? Isn’t this a capitalistic society? Wouldn’t money flow into that area?”

The problem is we didn’t build at all coming out of the Great Recession and the banks tightened up lending. My wife and I started building spec homes in 2012 and 2013. We called over 30 banks and there was one in the town of Asheville, North Carolina, which isn’t huge. Out of almost three dozen banks, there was only one bank that would lend to us to build a house and this was in 2012.

In 2013, 5 years after the Great Recession started, you almost couldn’t get money to buy or build a house. If you think about that, we have to make up for that law, and then you have the Millennials. You have 20 million potential households or more living with their parents still. They’re all moving out and looking for houses. They’re looking for places to live. Guess who else is looking for places to live? Their parents because they’re downsizing. They’re moving to better areas of the country.

If you find an area of the country that is desirable, there’s a housing shortage already. We don’t have enough homes. Millennials, Baby Boomers, and Gen Z, 36% were the article I read that about a third of Gen Z say they want to own a home. It’s only a third. 75% of immigrants rent. You have all these trends that are pushing the multifamily market. That’s number one, the multifamily market.

Only 36% or a third of Generation Z want to own a home. Share on X

Number two, what areas of the country do you want to invest in? I’m going to show you this deal in Florida. It’s probably no surprise. Moneeka, I know you’re in California. I’m sure you don’t love the state tax rate as my guess. I have friends in other areas of California, and they don’t like the local policies. There have been stories in San Francisco about stores getting looted and these problems. There are people that say, “I don’t want to pay the tax and I don’t want to deal with this. By the way, I’m remote now. I can live wherever I want.”

They move to places like Idaho, Colorado, Oregon, Texas, Florida, and the Carolinas. All these states are in the top ten of the country. I can dive deep. I don’t want to get too into this. I’m an engineer. I can get nerdy about all this stuff but I can go through all the statistics of how you look at this. If you listen to those states and most people nod their heads and say, “I’d rather live in an area with a lower cost of living in a better quality of life,” although I do love California.

I love California, too. You’re right. In every place that you live, build or grow a business, there are advantages and disadvantages. I still love being in California but I know there are things that are not working here. We’ve never had someone do a deep dive on those numbers. Would you mind maybe going a little bit more high level? I would love to hear some of that.

I can do this probably in a pretty succinct way without getting too crazy here. The easiest thing to do is look at census data. You don’t have to go and look through all the US census data, although that’s where this comes from. I was doing a presentation, as I mentioned, and showed this slide. These are the fastest-growing states in 2021.

I searched and looked for the fastest-growing states in the United States. Again, I’m not saying I like or don’t like states. This is just data from where people are moving. The darker the states, the more people are moving to these states. On the West Coast people are moving typically out of California to states like Idaho, Nevada, Utah, Arizona, and Colorado.

Texas, I joke around and call Austin the least expensive city in California, and then also the Southeast. The Southeast is so dark here and that’s because people are moving out of the Northeast. This goes down here, talking about the fastest-growing states in the United States. This is with a little bit of a grain of salt. Idaho has a population of less than two million. If you’re going to be buying properties like big apartments or multifamily, you want to be buying in areas where there are a lot of transactions. We like cities that are typically 250,000 or above.

Even a million are nice-sized cities because a lot of transactions occur there. A state like Idaho, maybe that’s not a good fit for us. Arizona, for instance, has over 7 million. Nevada, Utah, Texas, and South and North Carolina, I’ll show you down in there. Montana and Delaware are other one that is fairly small states. If you look down here, you see those states I mentioned, North and South Carolina, Florida, Colorado, and Washington. Washington State is growing but there are some issues with some of the cities in Washington that make me shy away from it. Also, Texas, Utah, Arizona, Nevada, and Idaho all are great states to look into.

What is it that about Washington, for instance?

You know this because you’re a landlord. When you’re looking at states to invest in, you want to be in states that have landlord-friendly laws and also are business-friendly. I ran into a neighbor down the road and his business. He lives in Asheville, North Carolina. They’re based in Seattle. He was like, “I got back. I was in Seattle for three months.” I said, “What were you doing there?” “I’m shutting down our office.”

 

I said, “Why are you shutting down your office in Seattle?” He goes, “They drove us out of the city. They don’t want businesses there. They didn’t force us to leave but it doesn’t make sense for us to do business in Seattle anymore.” Amazon is divesting from cities like Seattle as well. You also have to be considerate of that, and you have to look at what the businesses and the trends are doing. When we look at crime, when it comes to neighborhoods, it’s okay if the crime is within a certain range but you don’t want crime to be rising.

You don’t want state taxes to be rising. You don’t want businesses to be leaving. A state that has less businesses but has more businesses moving in, is better than a state that has more businesses but businesses moving out and taxes rising because what you want is growth in an area. What we’re looking for is growth in an area and a state like Washington State may be growing but it’s very rural in some different areas. You have to be conscious of that as well.

You want to know that there are more businesses coming in. You want to know that crime isn’t going up, that it’s maybe stable or going down. Is that the stuff you can find out online also?

Absolutely. Again, this is a whole hour and an hour half.

It’s its own thing.

Given it a level but if you’re an investor, I don’t think you have to go and pull all this data. I would be conscious of you can go and search like, “Chris has shown me this deal in Fort Myers. Let’s look up our businesses growing there.” You can search and see that, and I can show you some stats on Fort Myers. Even more importantly, when we get into the analysis of a deal at a high level, you ask the operator, the syndicator or the general partner and say, “Chris, tell me about the situation in Florida with businesses or what this city is doing to draw in businesses.” You don’t have to have the answers as an investor but certainly, whoever you’re investing with, if we’re talking about syndication, that person should have the answers for you.

My husband is an engineer like you. We had a deal come across our desk and the numbers that were put in the deck were wrong. He was saying things like, “These numbers are a little bit misleading. I still like this deal because of this. They have a lot of business but businesses are going down that’s not stated.” For him, he was able to go do that deep dive and the syndicator was not forthright, forthcoming on that stuff. Maybe they found their numbers a different way but we lost our trust in that dealer or syndicator.

Details are important in this business because the math and the multipliers are big in the multifamily space. This is another article I pulled up talking about the two generations that are clashing. They’re both battling over gaining housing in these different markets. I’ll talk a little bit more about that. I’m going to show you this deal in Fort Myers. You’re an investor and you search and you’re like, “Why should I be interested in Fort Myers?” It’s the number one, fastest-growing city in the US. This is one of the reasons that we were interested in this market.

Now, it’s a smaller market. In a market that’s less than 1 million people, I’m wanting to see a lot larger growth rates than a market like Orlando, where we bought two properties. I don’t expect for Orlando to grow as fast because it’s a much larger market. It’s going to take a lot more to move the needle. I’m going to want to see faster growth rates there. I was talking about that deal in an 18,000-person pound. You might see some impressive growth numbers but 1,000 people one way or the other are going to move that fast and that’s almost too small.

I’m going to get into all those different subjects as we get in here and stop me and we can discuss this. First things first, when you’re an investor and you look at a deal, don’t get distracted by the pretty pictures. We like pretty pictures. Investors like pretty pictures. It’s appealing. The property should look nice but you want to look at the meat of the presentation. You want to look at what’s inside the presentation. That being said, I mentioned details matter. I’m not going to say we’ve never had a typo in our presentation.

When looking at deals, investors must not get distracted by pretty pictures. They must always look at the meat of the presentation. Share on X

We’ve transposed some numbers and done different things but you want to make sure that your operator or your syndicator in a deal like this is buttoned up. I said a big word, syndication. If that intimidates you, if you’re reading this, syndication is simply finding a deal. My partners and I go out and find a deal and we partner with investors and bring those investors together.

To purchase a deal together as a team is syndication. It’s buying a property as a team. Like on a baseball team, you have management, the pitcher, the catcher, and people in the bullpen. Although I heard, we can’t say bullpen anymore. Somebody got upset about that during the World Series. I’m not even kidding. You have people that don’t even play. You have the staff, the assistant coaches, and those things.

Syndication is a team sport. I talk about how real estate’s a team sport in my book. That’s a great way to think about syndication. It’s a team coming together to buy a deal and everybody has their place. Investors like the players on the field are important, even though they may not be the management staff. This picture driving into the property here in Fort Myers. Let’s talk about some of the high-level points here. We are buying this property in Fort Myers, Florida, and a lot of these numbers, if you haven’t seen these before, can be intimidating like, “What’s a cap rate?” We can talk about that.

Expense ratios, occupancy, and this occupancy number are not even correct because when we put this together, it’s 67% almost a few weeks ago. Now it’s about 75%. We’re leasing up very rapidly. It’s 100% leased and it’s 75% occupied the day we’re having this interview here and the day we take ownership of it. This is a $109 million deal that we’re raising $38 million. I can talk about the structure. One of the things that are unique about our group is that some other groups have been doing it as well.

We have a two-tiered structure. We have what’s called a Class A structure, which is a fixed return. Those Class A investors get a fixed return. They get paid first. It’s a very secure position. It’s not guaranteed but very secure. The Class B investors, get the actual cashflow from the property, which is typically less than the Class A investors get from a cashflow perspective. The Class A investors don’t get any upside. The Class B investors get all the upside on the deal. If you see this here, that’s why we have the two-tiered structure there.

I want to comment on that. That’s the way Chris does it, which is very interesting. It’s also different than the way many other syndicators do it. A lot of other syndicators that I’ve looked at are Class A. The first people who come in, they’ve only got a few units or this many units at Class A because they commit sooner. That’s often for the purchase of the property. They’re trying to get into the deal. They’ll offer a sweeter deal. They still get some of the upside and stuff like that but in a situation like what Chris is talking about, he’s giving everybody the same opportunity so you can choose Class A or Class B. It’s not a limited time only. There are benefits to both of those.

There are, and it depends. A lot of people are like, “If you’re retired, you’re on a fixed income.” I’m in my early 40s. I have a good friend, a former business partner. We’re the same age. We’re two months apart, and he called me a few months back. He sold the business and said, “I have $1 million. My goal is to generate $100,000 a year in passive income. Do you have anything that can help me achieve that?” I said, “You’re looking for a 10% return. We have a 9% fixed return.”

I’ve flipped the page here to show this. If you look down here, the Class A partnership structure varies. Sometimes we raise 10%, sometimes we raise 30%. The Class A structure varies based upon the structure of the deal. It does two things. It provides that opportunity for investors because we had investors that wanted a higher cashflow like my friend, and then it also lowers the leverage on the property, so we’re not having to borrow as much because it almost acts like a second loan in effect.

Our loan-to-value ratio goes down, which makes it more secure for all investors, and then also if you’re a Class B investor, it raises your overall return because the Class A investors, while they’re getting higher cashflow, they’re not taking the equity on the backend. In this deal, maybe you’re starting at a 5% or 6% return in the first year or so. If you’re a Class B investor and it goes up in year two. These are all performative projections but on the back end, your returns are higher.

We’re able to provide something for investors that want to hire cashflow upfront that maybe isn’t as concerned with growth. We’re also able to provide higher growth for those investors, even though we’re in an asset class that has had returns that are shrinking to a degree. It’s been a way that we’ve been able to provide something to investors on both ends of the spectrum when it comes to that.

Again, these are projections. This is what we like to gravitate towards as investors. I would say flip through all this, and the first thing you want to look at are the details of the property itself. You want to say, “How many units does the property have? What’s the current occupancy? What’s the rent per square footage? When was it built?” You can then start to get an idea of what the general partners and operators are going to do. I’m going to go out of order here.

 

Why Fort Myers? As I mentioned earlier, we want to be invested in areas of the country that are growing. Fort Myers and the county, it’s in 300,000 workers, 17% job growth since 2014. I like to see a small city and I say a small city with 250,000 roundabouts like that. I like to see 2% per year job growth. If you look at 2014, ‘15, ‘16, ‘17, ‘18, ‘19, ‘20, and ‘21, we’re looking in seven years, I’d like to see about a 14% job growth.

That’s way higher than the national average, by the way. Seeing 17%, which is even higher, that’s 20% higher than 14%. That’s a significant difference. I had a friend, who looked, and he’s like, “There’s not a lot of businesses in Fort Meyers are there. It’s 33,589 total businesses. Now, are they all huge businesses? No, you probably have a lot of small businesses there. 55% population growth in the past decade, and it’s projected to grow almost another 50% as well in the coming years. I got the title Fastest Growing City in America. We know Florida’s growing by about 15%.

If you look at the population growth since 2010, look at Fort Myers. It’s incredible. We bought two properties in Orlando. Orlando is 1 of the top 5 markets in the country, and Fort Myers is totally different. Again, this is what you’re going to see between a smaller market and a larger market. The next question an investor would be asking is, “Chris, why are you guys buying in a smaller market?” There’s been a lot of money flooding into core markets over the years. There are big markets like Austin, New York, San Francisco, Atlanta, and Miami around the country a lot of these big markets.

What we’ve seen over the years, a lot of money’s been flowing into the secondary markets. That’s what we focused on in the past years, markets like Atlanta, Georgia. Raleigh, Charlotte, Greenville, Charleston, South Carolina, and then Orlando. Now, as these secondary markets have gotten more and more investors and money flooding into them, again, a lot of international money is coming overseas as well.

We’ve started to look at opportunities in the tertiary markets. If you think about it, we’re not doing this because we’re running around and seeing what’s going on. This is where the population is flowing. People are moving out of the city centers, moving to the suburbs, and now they’re saying, “I don’t even have to live in suburbs. I can live somewhere that’s even nicer, smaller, a better quality of life, less traffic, and less taxes.” We’re following the population where they’re moving. That’s what we’re doing.

You mentioned something on the last slide where you said you’re in an asset class that’s shrinking a little bit. Could you explain that?

I touched on that. The more money that flows into an asset class, it does a couple of things. It provides a great opportunity for operators like us that are selling deals. We’ve had some tremendous exits here this 2022 in terms of returns but there’s more money chasing these deals. That means, as the demand goes up, the returns go down. If you wanted 20% returns a few years ago, maybe you were okay with 18% returns, and then a couple of years ago, 15% returns. Now, I’ve seen deals with 10% returns.

You have a lot of people that don’t have anywhere else to put all this cash that they have, all this liquidity and you have a lot of big players overseas that are coming. We look for deals that need a little bit more work because we’re okay. We have a team built to put in the work, and I’m going to walk through our strategy on this deal while we’re doing that. We also look for markets that aren’t as exploited yet. We’re looking at the next top market. It’s important to point out our group.

We are a private group but we’re buying institutional quality assets. Group like ours, there are not a lot of groups our size that can go and acquire a $100 million deal like this within two months. We’ve put together a team and a process. We can vet deals, we can have our team on the ground very quickly, and we have the capital to close on a deal like this in a fairly rapid fashion. We’re prepared to get in there and improve the asset. Some might say like, “Chris, this deal was built in the last year. How are you going to improve it?” I’m going to get into some of the ways we do that here in a minute.

It does look gorgeous, by the way. It’s beautiful right up front.

I’ll talk about what that leads to in terms of the quality of residents that we have but real quick, employment drivers. This is the next thing. After you’ve said, “This is the geography. This is the state. This is the city that I’m interested in investing as an investor,” you say, “What is driving this?” You have a diversity of employers. Let me give you an example. Back several years ago, Houston was dominated by oil. Now Houston has a lot more of an employment base. If we look at the Fort Meyers market, what we’re going to see is these employers here, we have healthcare systems with 10,000 plus employees.

We have local as well as state governments here. We have county and local governments that are employed and very stable employers. We also have private. We have a public supermarket, Walmart, and Arthrex, which is a medical company that I’m familiar with. I have a lot of friends that work for them. We have McDonald’s, another city here, US Sugar, Home Depot, Winn-Dixie, and Ritz-Carlton. I look at this list as an investor and I like this because not only do I have a lot of employers on this list but I have a lot of different types of employers on this list that is going to draw in different types of individuals from around there.

You can see the proximity. I have a better picture here of the map. If you look at where these employers are, you can see this property has easy access up to 75 to all these employers here that you can get around. I’ve worked for a six-month period down in this area. It’s very easy to get up and down. Number two here is Southwest Florida International Airport. It’s the fastest-growing airport in the country in terms of seats added. When an airport’s growing that fast, it means that there’s demand, and there’s a lot of travel in and out of the airport. People are traveling to and from that area.

Another thing you want to look at is the proximity to the employers that you have here. Forgive me for flipping back and forth through all this stuff but I told you I’d go out of order. I mentioned you have employers. Look at the average income. Now you’re in California, you’re a little spoiled out there, Moneeka, I got to tell you. Around the country, if you’re looking at $50,000 or $60,000 of average income in a property, that’s pretty good. We’re at $172,000 per unit. That’s literally off the charts. This area is very affluent area, $2.5 million net worth. 88% of the residents in this area have white-collar jobs. 79%, almost 80% are college graduates.

Those that are living in the homes, in the area locally are making almost $200,000 a year. These are strong numbers. It begs the question, “Why rent? Why not buy a home?” Homes in this area are $800,000 or $900,000 starting. 20% some of the residents that are here have relocated, and they might not have the savings built up yet.

They might not know if, “This is where they want to live.” They might have started working for a company. They may be retirees and don’t necessarily have the ability to buy a house in terms of financial means or there might not be a house available for them to buy. They want to live in this area. A portion of this property is townhouses. They’re very nice. It gives you a much more residential feel out there. I mentioned a few minutes ago, how do you improve a brand new property? We have acquired three properties already that are lease-up deals. They’re new properties.

The pandemic has driven a couple of trends that have benefited some of the choices we’ve made in the past couple of years that have also allowed us to utilize different strategies. If you listen to some of my interviews at the end of 2019, I said, “We need to be careful going into 2020 based on some of the research that we’re facing a mid-cycle slowdown.” When you come to this point in the real estate cycle, which typically is 18 or 19 years that’s a whole another episode that we can talk about. It goes back to the 1850s.

When you reach a mid-cycle slowdown in the real estate cycle, you must have higher-quality renters to buffer your downsides. Share on X

Again, I’m a data guy. I’m a nerd. I love this stuff and I can tell you all about it. The thing is when you get to this point, you want to have higher quality renters, higher quality residents that’s going to buffer your downside. My former partner and I were buying in Atlanta. Those properties had about a 90% collections rate of the properties that we bought over the years in these higher B plus. B plus was built in 1990 and after A quality assets were built in the last several years, 98% collections we had in 2021.

Collections, you mean they paid their rent. They’re collecting rent.

They pay the rent. You can be 100% occupied and when there’s an eviction moratorium and people don’t pay your rent, you can still only have 90% collections. We’ve seen a lot of that. That’s a good indicator of the stability and how robust this asset class is. Now the challenge is how do you create value if you have this nice asset?

First off, the new rent. We almost bought another property up the road from this property. I was looking through my notes here. You might have noticed here in one of the prior slides the average rents in this property are about $2,000 a month. That’s market rent. They’re lower than this in this property because they gave away some concessions but for the ones that are renting now, about $2,000 a month, renewals right up the road in a similar property are increased by $300.

People are coming out and they’re increasing rents by $300 a month. We’re going to be able to buy this property and as these leases come up for renewal, over the course of the next year, we’re going to have this organic rent growth that’s coming from the market. We normally underwrite 4% rent growth. In a property like this, it’s 4%.

Being able to get 15% rent growth from the market forces that are coming in because of the scarcity and the demand for this area is incredible. The nice thing for us is that if you’re selling a property, you can’t sell a property based on what it’s going to rent for. You can only sell a property for what it’s renting for, and then somebody might say, “Chris, why would the seller sell this property?” The seller is 1 of the nation’s top 5 builders. Their business is to build, lease-up, and sell the property as fast as possible. That’s their job.

I paid $4,000 to have my condo unit painted. I needed it painted in 48 hours. I could have probably had it painted for $3,000 this weekend but I needed it painted in 48 hours. I was willing to pay that extra money for it because I was going to make a lot more money by getting that renter a month sooner. That’s what’s important to me.

What’s important to the builder is they get out of the property, collect their capital, and can invest and start their next project. That’s how they make money. Sitting in this project for another year and maximizing the rent is going to cost them money because they’re not able to necessarily build another project that they may have.

That’s not their business model.

It’s not their business model. That’s our business model.

You said that you had 100% pre-leased, and 75% already full but you’re counting on this growth of the new rents. As you have renters in, you can’t increase someone who’s already in. You can’t increase their rent to the same level. Usually, with these, it takes some circulation. Some attrition and people moving around to make that happen. How are you addressing that?

We’ve underwritten that. We have the actual rent roll, so we know when all those leases are going to turn over. We’ve baked that in and we don’t assume that we’re going to get that full $300. We underwrite that and have a buffer in. I’ll talk about how our estimates are lower than what we typically actually see. That’s a great question. The new leases will start coming due, and I believe it’s March. That’s when we’ll start seeing these increases. It’s going to take us about eighteen months. If you look at the pro forma, you’ll see it starts to happen in year two.

We’re starting to see the full realization of these increased leases. We assume it’s going to take longer than it probably is in reality. That’s step one. Step two, running the technology package. In a property like this, people like to have Nest or Ecobee. I have a picture of the Ecobee thermostat here. It’s the same one I have right back there. If you’re renting a place of this caliber, we underwrote $1,250 per unit for all 300 units. We have a quote for $800 to do this. We try to be a lot more conservative when it comes to this.

DISH fiber is something that we’ve done over the years in these properties. Everyone is accustomed to having the internet these days. Most people, I don’t know about you, Moneeka, but we haven’t had cable TV in five years. It was the 2016 election. I was like, “I’m done watching the news. Things are crazy. I can’t listen to it anymore,” and I canceled cable but we still pay more for internet and subscription services. Instead of letting Charter, Spectrum, AT&T or one of these other companies come in and sell the internet, we bring in a company.

We’ve been working with a company called GigaFi. Now we work with Dish Network, which people are familiar with. They have a product called DISH Fiber. They come in and install it. We do a profit split on the backend, and the residents get a lower cost for their internet. We charge a technology fee for that. They get the base amount. They can also choose the mid-tier or the higher tier to do that. They get better economies when it comes to that for them.

This is showing increased clashflow of $136,800 per year. If you do the estimate of what we’re collecting per month, it’s going to be significantly higher than that but we don’t expect a full adoption rate. We usually estimate about a 50% adoption rate when it comes to that but we’re seeing 60%, 70% plus adoption, and for a property like this, it’s probably going to be even higher than that.

In private yards, a lot of times, you get less money for first-floor rent. You get more money for the top floor rent. We get more money for first-floor rent because we build little private yards. If you have a kid, you can let your kids play outback without them running away. If you have a dog, you can put your dog out back. Most of the time we use turf instead of grass, and then the dog’s not peeing back there like my dog did in our condo several years ago and killing all the grass in the front yard. We’re getting a significant premium.

This is showing $100 per month. We’re seeing more than $150 per month. These are all “value ads.” If you read my book, you’re going to say, “Chris, how on Earth do you do a value add strategy in a property finished in 2021?” Those are some of the strategies that we use to add value to a property that looks brand new. Most people would assume you can’t do anything to that property. These are some areas in which we’ve been able to find value.

What’s so interesting about this is over the last couple of years, anybody who has been trying to do value add has had all the problems that COVID brought us. Supply chain, lumber, and all sorts of materials are going way up. We’ve seen a lot of projects still be profitable but not have the margins that they have originally planned. This is an interesting way to do the value add without having to deal with a lot of those issues specifically.

There are a couple of things. When you have an older value add property, there are a few factors that you have to take into consideration. One, if you’re investing, say $5,000 to $10,000 per door, which is typical for a medium-value add property, you have to raise that much more capital. You’re raising significantly more capital. You’re not going to get the same quality of loan typically because the banks are going to require you to hold more in reserves. They know that the property and the residents are of less quality. They also know that your turnover is going to be higher. We can install DISH fiber and not kick anybody out.

 

We can install a technology package in a day while somebody’s at work. We can install a private yard outside their home and they’re still living there and paying rent. They don’t have to spend 1 month, 2 months, or 3 months with that unit vacant. We also know just asking the person, “Do they want it? Will they pay for it ahead of time?” and doing it that way. The other thing is with these value add properties, the cap rates are higher. If you invest $1 to get $2 out, if you have a 6% cap, so $1 divided by 6% that’s 16%. I’m trying to remember exactly what that is.

I’ll do the math quick. The multiplier is about 16. A cap rate is simply if you pay $100 for something, the cap rate would be how much you would get in cashflow. A 6% cap on the $100 purchase price would be $6. A 6% cap rate would be $6 of cashflow per $100. It’s a 16.7% multiplier. If you increase the cashflow by $1, you get $16 of value, $16.7. That’s pretty impressive. At a 4.5% cap, we’re buying this property and we’re assuming we could sell it at a 4.5% cap rate, which is a little bit higher than what we’re seeing in the market.

That’s a 22.2% multiplier. It takes us less money, and less time to produce. If you’re looking at this, we’re assuming, say $100, $190, that’s $200 per resident at a 22.22% multiplier. That’s times 200 times 12 months by the way. In this case, we don’t have to invest anything in Dish. They pay for that $2,000, $3,250. and the first year we’re creating $444 in value in doing that. That value persists in perpetuity. That’s blending all those things together. It’s an easy way to create a significant return on your money very quickly in these properties.

That’s some of the high-level stuff. We spent a fair amount of time on this. If you’re an investor and you’re looking at the unit mix, you don’t need to spend a tremendous amount of time on this. You don’t want anything that’s too crazy. If there’s a property, it’s all three bedrooms, is it all townhouses? Why is it all three bedrooms? It’s because three bedrooms, they rent for more but you’re not going to have as much demand for those.

If it’s all one bedroom, why one bedroom? What about people that work from home? What about people that can’t have two roommates in there and do that? If it’s all two-bedroom, maybe that’s okay. We like to see a nice mix of those. You want to see less 3 bedrooms, more 2 bedrooms, you know, more 1 bedrooms. This is a little skewed because this is high for one bedrooms.

A lot of these one bedrooms also have a den. There’s a difference here with that. We have 1 bedrooms, and 1 1/2 baths. Some of these 1 bedrooms, 946 square feet, that’s pretty big for a one-bedroom apartment when it comes to that. Several of these three bedrooms that are down here are townhomes, as you can see. There are 24 townhomes that are associated with this. We have this nice mix in this property of townhomes all the way down to 1 bedrooms, including 1 bedrooms with a den.

You could have a couple where they work out of the house. When my wife and I rented our first apartment, it was a one-bedroom but it had a loft. We were very comfortable in that space. This is a very flexible property that has a lot of diversity when it comes to the different unit mixes. This is a lot of the details of the property here. I mentioned it earlier, the property is one of the top five builders in the country with a terrific reputation. If you’re talking to an operator of the deal when you’re buying a property, you want to say, “Are there any structural issues? Does the roof need to be replaced? Is it slapped together?”

In a new property like this by a builder of this caliber, these properties or apartments are built like condos. They’re phenomenal. When you see the amenities in this property and you see some of the finishes, they’re well done, stainless, you have nice quartz countertops, and nice layouts in here. You see these two-car garages in some of these units. We also have one-car garages and some storage units here that also add additional rental revenue that comes in. These are some of the numbers. When you get into the finances, you want to know, “Does the financing line up with the hold period?”

You can hold a property that takes less work for less time than a property that’s going to take a two-year project to complete. If you’re investing in a property and your operator says, “We’re going to spend two years executing our value add strategy,” and they only have debt on there that lasts for three years, what if something goes wrong at the end of that couple year period?

A property that takes less work can be held for less of a period of time than a property that will take two years to complete. Share on X

It’s going to take two years. You mentioned this earlier, you can’t just move people out right away. It’s going to take a little while before you can start to implement that two-year value add plan. You’re about three years out before you finish it and even start to see that revenue. If you’re done and have to refinance the property at that point, you may be bumping up against the problem.

In those types of projects, we’re putting ten-year debt on those properties. A project like this is different. We have a 1-year loan with two 1-year extensions, and it’s variable but we have an interest rate cap to cap our risk when it comes to interest rate fluctuations. We typically model our hold periods for five years. All of our exits have been significantly less than three years. We’re comfortable with a five-year loan on this type of property.

Our interest rate is 0.35% in the underwrite but we are looking at potentially getting that down to 3%. It’s a very nice property. We also get a nice quality loan when it comes to that. The other reason we’re choosing this is the exit fees on a loan like this are a lot lower. What happens is on some of these agency loans that you get from Fannie Mae, and Freddie Mac, you end up having to pay a significant exit fee that eats away at your profits on the back end. As an operator, we have to balance the loan terms, and the loan duration, along with the fees that we have to pay on the backend.

The other thing is, I wanted to mention it to the ladies because they read all of this. When you’re doing financing, a lot of times what happens is you either have to refinance it, turn it into a regular loan, or they do these rollovers. Every project that I’ve ever looked at, the rollover seems key to me because there’s a rule in real estate and it looks like you do a great job of keeping to your timelines, and doing expense lines. A lot of times they will say, “If you have a project and you have a budget and a timeframe, double the budget and double the up timeframe.”

That’s why our 5-year projects, we have 10-year debt. This project, when we were like, “This project is going to be stabilized in a couple of years, and if we exit it in 3 years, a 5-year loan is ample for that.

I like the rollover opportunity.

As an investor, you want to say, “Does it match up, and is there a buffer?” I’ve seen some projects with two-year bridge loans, and I’m not saying those don’t work but if you have two-year debt on a value add project, it’s worked out well in the past several years for investors certainly but there’s an additional level of risk when it comes there. This slide can take a ton of time. I’m going to point out a couple of things and then we can go into a couple of sections. As an investor, you want to look at the comparable rents that are out there. This doesn’t have the walk on here.

I mentioned that property that’s seeing those $300 rent premiums. We can only fit so many rent caps on this slide but I have a full accomplice on here. If you look at this, there’s something you want to look at as an investor. This property finished in 2021. It came online, average rent per square foot, $1.95. Now our actual rent per square foot is more like $1.75. This is not taking into account some concessions but I would note as an investor if you look at this, where are we in terms of the market? In some markets like California, you might say, “This is low.”

In some markets like the Carolinas, you might say, “This is high.” What you want to know as an investor is, “Where does the property fall on the market, and where there’s definitely room to move in terms of rent per square foot in this market?” Both are in terms of rent per square foot. Also, in terms of rents per unit, there’s only one property here. If you look at average rents per unit, are lower than this but if you look at the average square feet, they’re smaller. You want to know that you have room to move into the market. We also talked earlier in the presentation about the tremendous income levels in this property.

The rent per income was 27%. I believe it’s correct. There are plenty of rooms for residents in this property. Also, there are not a lot of other options to get a lower rent in the market. Now, Moneeka, you were talking about like, “When are you going to see these realized rents?” We are basing this year one rent over in-place leases that are there. People might be like, “63% increase, that’s insane.” That is coming because if you note here, over the past year, this property has been leased up, so there’s been a huge loss that gross potential rent.

This is a lease-up deal. It’s a little different than a stabilized property. That vacancy loss, it’s a fake number because that number’s like, “What if all these units were rented?” It takes a while to rent those up. Also, there are a lot of concessions that were given away. If you notice, we’re going to have to burn through some of those concessions going into our first year but they’re going to come off, and that’s why these concessions are going to drop pretty substantially here as we go into year two.

Year one, it’s not an anomaly but it’s hard to judge anything. This 17% rent growth in year two, that’s where we’re looking at, “What are the comps in the area?” That’s revenue growth. That’s not total growth. That 17% is coming from rent growth. We talked about all the other income that we were bringing in in terms of the technology package and the dog guards. You can see that the other income is going to be growing to $966,000 almost $967,000. That’s not a 17% rent increase that we’re looking at. It’s a combination of burning off the concessions, other income, and rent increases as well. We’re only baking in an organic 4% rent increase into those numbers is what we’re looking at. You can see that in years 3, 4, and 5.

Some people may look at that and say, “17%, that’s insane. You can’t get a 17% rent growth number.” We think that number is quite realistic based upon the fact that that’s coming from three different buckets of income in here. The other thing I would point out, operating expenses. These are our total OpEx budgets for our properties that are older than this which are usually about 36% with our property management company. Seeing OpEx budgets of 39% and 40% for Operating Expenses, that’s pretty high for us. We have two other properties with the same management company in Orlando that are of similar quality.

As you can imagine, the higher the quality of the property, the lower the operating expenses. You’re going to have a lower turnover. You’re going to have less issues going back and forth, and less maintenance. Also, we use a big regional operator. FCA is the management company that we use, and they know this market well.

We are basing our payroll and our numbers on all this. You’ll notice the payroll here. We’re stabilizing this at $398,000. This is a lease-up payroll, so it’s going to be a little bit different. We’re stabilizing this based upon the Florida market numbers that we’ve seen in our markets as well as that FCA is providing us that operates in that market. The other thing of note, if you’re buying a property, if you look at it, there’s a huge jump here in our operating expenses and property taxes. This builder bought a piece of land. They’re paying significantly less taxes. We’re going to be paying more in taxes on a monthly basis than they’re paying on an annual basis.

That’s something you want to know as an investor. Look at the taxes and make sure that they’re adjusted, and ask your operator, “What’s the tax situation and how’d you figure that out?” We know what the tax rate is. We’re assuming it’s going to be 85%, which is the discount rate. 85% of the purchase value going into this market is how we’re calculating that.

Investors who are buying a property should look at the taxes and make sure that they are adjusted. Share on X

We also have some soft insurance quotes that we’re using to get these insurance numbers. That’s also another great question. If you’re looking at a coastal market or Florida, people are like, “Why aren’t you worried about hurricanes?” We’re always worried about natural disasters but we’re not worried to the point where we’re not going to invest. We’re worried to the point of how are we going to ensure ourselves and our investors against those risks.

Like in any market, you’ll be out there. Again, that’s a high-level overview of the pro forma and the numbers there. The questions to recap as investors as you want to ask are, “What are the assumptions you’re using to get your income growth?” If you say, “Chris, it’s not realistic to see rents grow 10% in year one,” I would say, “How did you get that? What are you seeing? If we’re seeing 15% rent growth in the market, then 10% is not unreasonable.” I talked to my partner. He’s down in Atlanta at a conference and he said they did a panel and the rent growth that they all shared on stage was 10% to 20% in the southeast year-over-year.

These are not just very specific markets. These are the actual rent growths we’re seeing in this market. Again, we’re not projecting that out for five years or worse. We’re assuming that they’re going to slow down significantly. These are sales comps, and then we get into the pretty pictures again like we were talking about with Fort Meyers. We covered a lot of this. This is why is it such a great place to live. This goes through a lot of the properties that we’ve had, some of the closings that we’ve had.

That’s the final question, which is should be your first question, which is, “Who are you investing with? Do your operator, your GP, and the partner that you’ve chosen to place your money with have a track record?” I should know this exactly. This is my fifteenth department syndication that I’ve been a GP on. We’re limited partners or owners in twenty different properties currently. We invest in every deal that we present to investors. That’s another great question, “Do you invest in your own deals? Why? Why not? How much?” When we profit from a deal, we roll that into the next deal. We believe in this strategy and like to buy properties that we want to own ourselves, and we see this as a way to share these opportunities with other people.

There was one other thing you said at the very beginning. You are able to do projects that are institutional size rather than the smaller ones. Could you talk a little bit about how that works out for you? Why it’s different for you than for other syndicators? Give me some perspective on that.

There are a few different pieces of the puzzle that you need on the front end. I mentioned I was on the mastermind call and we had two other syndicators. One had a deal that was falling apart. One had a deal that he is putting together. We had a deal that came through and we joked because it’s like a dance, the middle school or the high school dance.

On one wall you have investor capital. On the other wall, you have deal flow and it depends on who is on the floor at the right time. You have to have the right deal at the right time with the right capital coming through. If you have 2 people come off 1 wall and 1 person off the other wall, only 2 of those people can dance together. You could have three people dance together.

That’s where the analogy falls apart.

It depends on which wall they’re coming off of if you ask me but it’s overly simplistic. I crushed my own analogy. You have to have the right deal and the capital comes together at the right time for a long-term partnership. How about that? Maybe we can agree on that. You have to have the right mix on the dance floor at the right time. We have created a deal flow. We have five people on our acquisitions team. We’re constantly looking at deals. My team told me they’re going to underwrite 450 deals this 2022.

This young team is out there my main partner, and then we have the team underneath him. They’re out there. That’s two deals a day on average that they’re underwriting. It’s like looking at the matrix if you look at our spreadsheets. It’s deal after deal but the good thing is because of the number of deals that they’re looking at and I mentioned this deal, they knew. They’re like, “This property up the road that we almost bought is getting rent premiums of $300.” By the way, the reason that the seller didn’t sell was that he decided to hold onto the property and get those rent premiums.

They’re good that seller decided to hold onto that. That broker that was selling us that deal, because that deal fell apart, brought us this deal. We get deals because of our knowledge of the markets, our relationships with brokers, and the frequency with that we’re in there. The big pieces are reputation. We have a 100% track record of closing. We typically close deals the size of a very short timeline of 2 to 3 months because we know so much coming in. We don’t have to spend a month after we get the deal under contract or run through all this process.

This deal was under contract, and we were able to put the package together. Our team’s ready to go, putting everything together. I started reaching out to investors saying, “Heads up, I had some investors on a waitlist. We have a deal coming through. Are you still interested so I know how much capital and what we can move to get a deal done?” We’re always tracking those numbers. It comes down to communication.

It’s sharing information with investors, being transparent, and then also explaining the process so investors know that, “Our deal, our agreement on our end is we’re going to find you this deal. We’re going to share the details of this deal. Your part of the bargain as an investor and as part of the team is that you’re going to get 2 to 4 weeks to look at the deal and fund the deal.” We’re going to close about a month after that. Our last deal was oversubscribed. There are investors that didn’t fund on time and didn’t get into the deal. That’s why we had a waitlist.

 

The big part on our end is I’m sending out investor updates every month. Our investors get distributions every month. They get quarterly updates as far as financials that come in there. We try to be as transparent as possible when it comes to that. We have the deal flow. We have the investor relations and the capital side of things. On the backend, we’ve had four exits with the team this year. They’ve all exceeded our pro forma expectations by a significant margin. Our average returns are well into the twenties or are higher than that.

You can see our projected returns here. I certainly don’t promise those returns on every deal we do. I would look at every deal on a deal-by-deal basis but the bottom line is the 3rd piece of the puzzle or the 3rd leg of the stool, if you will, is the operations side. Our Head Asset Manager, Brian ran a portfolio of $1.5 billion significantly more units than we have now. It’s a factor of three. This is cute for him to run the number of doors that we have at this point.

You need somebody that’s comfortable. That’s the other thing you need to ask the operators that you work with, “What’s your track record? What’s your plan? Can you handle this?” We’re only going to buy 1.6% or 7% of the deals we underwrite this year. It seems like people are like, “You bought 7 or 8 deals. It seems like a lot.” When you have a team built to handle a portfolio three times your size, we’re very comfortable with that. We’re built to scale and grow. We’ve built a team to grow into.

Have you ever had a deal that went south?

It’s yes and no. Personally, I’ve not had a deal in that I’ve been a general partner that has not performed to expectations. That being said, if you asked me in the middle of COVID, “Are your deals performing to pro forma it?” the answer was no. If you look at them overall, I didn’t have any investors. I increased my investor updates to every week because we wanted to tell investors, “Here’s what’s going on.” That’s our pledge. We want to be as transparent as possible.

A lot of deals were gone south in 2021 but they were bobbing. They were bobbing up and down and all of our all-over deals stayed afloat. This is a great question to ask, “What’s the worst-case scenario?” It was one of the first deals I invested in, and it was the group that my original partner and I originally partnered with on our first deal. They bought a deal on Houston. I mentioned that Houston was one of those markets that had a lot of oil industry and they didn’t have a lot of diversity. This was several years ago. The oil was $120 some a barrel and it crashed to $50 a barrel if I recall correctly.

The oil market tanked, and the group I invested with had a third partner. Two of them, a third partner. They split. That third partner went a separate way. They were distracted. They switched the management company. Things were not great, in general. With the group, they weren’t great in general. With the economic market, the management team got switched out. At a local level, it wasn’t great and then the hurricane comes through Houston and blows the roof off about 20 units, out of 200 units. It was this perfect storm of events.

That deal still made money. I averaged about 5% returns on that deal. I didn’t lose capital but we had a capital call because they had made a big distribution early in the whole period, so I had to send a check-in. I’m like, “This isn’t fun. I’m supposed to be making money from this deal.” This is an important thing to ask the operators that you work with and also it’s a good example of one of these stable, high-quality, multifamily deals. They shouldn’t lose money. They might not perform expectations but if you don’t sell in a fire sale, they shouldn’t lose money. That should be your first question, “Am I going to get my capital back and how am I going to get my capital back?”

Stable and high-quality multi-family deals may not exceed expectations, but they shouldn't lose money. Share on X

If you read everything I said, you shook your head and said, “I don’t think that’s true. I don’t think the interest rates are going to be that. I don’t think the rents are going to be that. I don’t think your numbers are correct.” The next question is, “Do you still want to invest?” If you said, “Yes, I don’t agree with you but I still want to invest in this space.”

That’s why we have Class A because you can decrease your risk and say, “I don’t think I’m going to get this return, so I’m going to take a slightly lower return that’s more secure and get more of a bond-like return that’s 9% on a monthly basis was at 0.75% and take that.” I’m not going to argue with an investor that says, “I don’t like where the multifamily market’s going but I want to be invested.” We have an option for that type of investor as well.

Wasn’t one of your personal syndications that did this going south thing that the Houston story?

Not technically, but they’re friends of mine and they were partners in a deal in ours. Again, I have to temper all this with, if you look at the past years, it’s been a fairly easy time to be in multifamily. You’ve had cap rates compressing and if I sit here and I flashed up all of our deals and how great they did, that’s not worth anything. The track record is important comparatively.

Anybody reading this, I can show you all of our distributions to date as well as all of our dispositions so you can see our track record in real-time. We update that on a quarterly basis. That’s important. The past isn’t necessarily predictive of the future when it comes to the actual number. If someone tells you, “You’re going to get a 20% return on this,” run away.

If somebody says, “This is our best guess. This is what we’re striving to do. We strive to get 7% cash and mid-teens return. These are the things that could change that. It might be a little bit worse. it might be a little bit better but this is our plan to do it.” You need to be confident in the plan. If you’re confident in the plan and their numbers make sense, then to me, that’s an operator you can rely on if they have a consistent plan that they’ve executed. Everything that I walk through, we’ve done those yards, the first floor, the private yards.

 

We’ve done the internet service provider. We’ve done the technology package. We’ve hired the property management staff in the area. We know what that’s going to be. We know what the numbers are going to be. We know we can execute that plan. We can’t control the economic environment. We can’t control the cap rates. We can’t control interest rates and all that stuff but we can control the plan that we have and we’re very confident of that.

What is the minimum investment into winning projects?

Our minimum, it’s $50,000, which is on this page, we typically have a $100,000 minimum for the Class A investors because it’s a lot smaller equity slice, so it’s in higher demand but $50,000 is our minimum.

That was a lot of information.

I ran out of water. I should leave with my contact information, of course.

I don’t know if anybody who’s online with us has any questions. If you do, please let us know.

I’ll pop on here. We have a terrific team. This is my contact information here. These are my three main partners that live here right down the road. This is our terrific staff. They do a tremendous job here. If you have any questions, Tracy, I know you’re joining us here, feel free to throw any questions in the chat box or if you want to come on here live and talk. That’s great too.

Tracy came off of something that she was hosting. I’m sure her brain’s a little bit fried but she says, “No questions.” Tracy and anybody else who’s reading this, I will be sending this out. Remember that a lot of talking about a deal, why I wanted Chris to go deep into a deal is, part of the learning curve is to do something real and live. To talk about syndication theoretically, it’s not easy but that’s a lot of what we hear.

Chris, thank you so much for giving us an hour and a half time. When you go deep into the evaluation of the particular property and you get to see what’s going on in the mind of someone who’s good at this, who’s done a lot of this, then you can ask questions and you also learn through that process. This is 1 deal and 1 perspective. Chris has done other deals and we’ll do other deals. Thank you so much for going deep on that.

That was fun. Terrific questions. I’m glad we could go through that because we certainly couldn’t have done all the other presentations as well as that in addition. If you’re reading this either later on, you can reach out. My information’s [email protected]. We can set up a time. On the website, NextLevelIncome.com, you can get ahold of me. I can go through any of this and if you want to see our deals that come through, you can click on the investment link and put your information in there.

There’s a bunch of free gifts at NextLevelIncome.com/bliss, so you can get his book and get to know Chris even deeper and the way that he thinks about this. We got a ton.

I got plenty more. We got all kinds of free books up there. We got our awesome podcasts with you, Moneeka, that was on there. We keep trying to put more and more resources up there to help people out. Our goal, the first two tenets of Next Level Income are making money, keeping money, and then growing your money. We talked about how to grow your money in investment but it’s a great time of the year to figure out how to keep more of your money through tax strategies and those things. We have a ton of stuff as well that can help out with that.

Ladies, you can go to NextLevelIncome.com/bliss to get that book and get more of those freebies that Chris is so generously shared with us. Thank you.

Absolutely. Thank you, Moneeka.

Tracy, so I’m going to assume you don’t have any other questions. Thank you for joining us. Everybody who’s reading later or was here, always remember, goals without action are just dreams. Get out there, take action, and create the life your heart deeply desires. We’ll see you soon.

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Wasn’t that an amazing webinar? Chris does a great job, doesn’t he? Don’t forget to join Chris and me this Thursday for our live webinar on how to evaluate syndication. I’m so excited to share this with you. Bring all of your questions and don’t miss it. To sign up. Go to BlissfulInvestor.com/SyndicationWebinar. See you then.

 

Important Links

• BlissfulInvestor.com/SyndicationWebinar
• NextLevelIncome.com
• Show – Past Episode
• NextLevelIncome.com/book
• GigaFi
• Dish Network
• [email protected]
• Moneeka Sawyer – Next Level Income Past Episode

 

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

Learn how to create a consistent income stream by only working 5 hours a month the Blissful Investor Way.

Grab my FREE guide at http://www.BlissfulInvestor.com

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Next-Level Income: How To Get Ahead With Your Real Estate Investment With Chris Larsen

 

Are you ready to take your investing to the next level? In this episode, Chris Larsen, founder of Next-Level Income and author of Next-Level Income, How to Make, Keep, and Grow Your Money Using the ‘Holy Grail of Real Estate’ to Achieve Financial Independence, talks about how you can capitalize on the real estate market. He shares what’s needed to know about investing and how you can get started on your journey.  You’ll learn how to save money on taxes, invest in real estate, and make even more money faster than ever before. Tune in right now and learn what it takes to get ahead!

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Watch the episode here

 

Listen to the podcast here

 

Next-Level Income: How To Get Ahead With Your Real Estate Investment With Chris Larsen

I am so excited to welcome back to the show my friend, Chris Larsen. Hi, Chris.

Moneeka, great to see you again. Happy New Year.

It’s the first show I’m doing in 2023, so I’m so delighted to have Chris here to start my year off with me. You have met Chris before. He talks about syndication. We’ve had a webinar with him before. I wanted to bring him back because his business has greatly expanded, and he’s offering some new things to help you create passive income. I wanted him to come back and talk about all this new exciting stuff. For those of you who have not yet heard of Chris, let me tell you a little bit about him.

Chris Larsen is the Founder and Managing Partner of Next-Level Income. Chris has been investing in and managing real estate for many years. While still at college, he bought his first rental property at age 21. I love that because that’s how I was. From there, Chris expanded into development, private lending, buying distressed debt, commercial offices, and ultimately syndicating multifamily properties. He began syndicating deals in 2016 and has been actively involved in over $1.5 billion in real estate acquisitions. Chris is passionate about helping investors become financially independent. I’m so excited to have you back, Chris.

Thank you so much. It’s great to see you. I love the smile.

In this episode, you’re going to be talking about the Next-Level framework. Chris used to be a coach. Much like me, other parts of his life are now creating changes for him. He’s creating a framework, and he’s going to tell you all about that. Give us a high level of your story.

One thing I love about you, Moneeka, is our stories are very similar in terms of starting with residential, and I was fortunate enough to be introduced to bigger commercial projects later on. My initial passion earlier in life was racing bicycles, and that’s all I wanted to do. I talk about this in my book, which, if you didn’t get it the first time I was on the show, you can get it on our website NextLevelIncome.com/Book. Let me know if you get a copy there that you read me on Moneeka’s show. I talk all about this. That was my love. That was my passion.

My best friend, I met through cycling. I went to college for Biomechanical Engineering, but I just wanted to graduate, turn pro, and race my bike. Along that path, my friend passed away, my best friend, my roommate, and my training partner. It affected me in multiple different ways when you lose somebody. In my case, he was like a brother. After it sunk in, it made me realize something. It made me realize that I didn’t want to have any regrets in life. I wanted to be able to live life to the fullest. I’m a very analytical person.

When I looked at that, I said, “How can you do this? How can you take advantage of opportunities?” The thing is, this is the truth. You have to have money in this world to be able to take advantage of opportunities. Sometimes, that’s spending more time with your family. Sometimes, it’s taking a business risk. Sometimes, it’s spending time to volunteer. Sometimes, it’s actually giving money. Dan Sullivan, who runs Strategic Coach that I was a part of for several years, likes to say, “If you can write a check for it, it’s not a problem.”

You have to have money in this world to be able to take advantage of opportunities. Share on X

After my friend passed away, I quit cycling at the time and racing. I decided I was going to embark on a journey to become financially independent. I read book after book, over 250 books. I was investing in the stock market, but ultimately came upon real estate, as everybody’s figured out by now, I’m sure. After making a lot of mistakes over fifteen years, I ultimately started investing with other operators in commercial real estate, specifically multifamily. That was what gave me my path toward financial independence.

Now, I was making a lot of money. I was working as a medical device rep. It’s all different types of roles in sales in the medical device field. I was on call. I worked a lot of hours. I worked sixteen days. I worked seven months straight one time without a day off. I spent three days straight sleeping in the hospital. I worked really hard in my life, but I had a plan and a path. What I’ve done is I took the framework that I used that I was teaching my coaching clients one-on-one that would pay me $30,000 a year, and I put it into a course. I’m going to give everybody a high-level overview of what we teach in that course, a real CliffNotes version of what you can do to become financially independent in your own life.

I love that. That’s why you’re here. Chris is going to be giving us a high-level on this. We are going to do a deeper dive in a webinar on February 2nd, which is a Thursday. It will be our first webinar of the year with me. I’m so excited about that. Chris is going to be with me on that. It’s going to be Thursday, February 2nd from 1:00 to 2:30 PM Pacific Time. If you’re reading this later, there will be a replay. You can go to the same URL, which is going to be BlissfulInvestor.com/SixFiguresWebinar.

Preemptively, I wanted to tell you about that. As you’re reading this, if you’ve got questions, jot them down. He’s going to be live with us in a couple of weeks, so you could ask all sorts of questions then. Chris, go ahead and take it away. I just want to comment on the Make, Keep, Grow idea that I know you’re going to be introducing to my audience. I love that. It’s such a big piece of how I’ve structured my business, and how most real estate investors who reach a certain level of success start to look at things. Readers, I want you to understand that this is a little bit of an advanced concept, but it’s not only for advanced people. In other words, you can take these concepts right now, even if you’re a beginner, and build your entire business based on this concept of Make, Keep, Grow. Go ahead, Chris.

I have two young boys. I like to be able to teach concepts and talk about concepts that my boys can understand because I was explaining this to my son. We’re going to the bank, and I was depositing a very large check from a deal that I just sold. I explained to him how that large check started at $3,000. If you hear $100,000 or $1 billion in real estate transactions, and your eyes glaze over, or you’re like, “This isn’t for me,” I started with $3,000 for my first property.

These deals are still available nowadays. You can still find good deals. You can still find deals that are going to work for you. Whether you have $3,000 in the bank, $30,000, $300,000, or $3 million in the bank, all these concepts work. I know a lot of you that are reading are very successful. You’re making lots of money. A lot of you have careers that you love. I got to work with a lot of doctors and surgeons in my career, and I have a lot of investors from that. A lot of them say, “If I won the lottery, I would still go to work because I love what I do.”

If you’re a doctor and reading, God bless you because it has to be a passion that you really have to love what you do. It’s such a lifestyle. The first thing, and I talk about in the book and my course, is to find a way to make more money. The reason I say that is because a lot of the best investments out there are reserved for those that are accredited investors. That means you have to make $200,000 or more in annual income as an individual, $300,000 as a couple, or have a net worth of $1 million, excluding your personal residence.

 

There are a couple of little nuances there that you may be able to get in. The bottom line is if you can make more money and you’re accredited, a couple of things happen. 1) You have more money and more capital to invest. 2) You have more opportunities because now you’re accredited. The SEC says, “You’re allowed to invest in some carwash opportunities or the new RV and boat storage opportunity that we just launched that not all investors who are out there get to have access to.” That’s the big thing.

I was successful and I was making money, but I wanted to be more efficient so I could have more time with my loved ones. One of the things we teach in the course is how to set goals, figure out what’s your worth, and delegate or get rid of those little distractions. One of my favorite things is how to create 20 to 40 hours more a week to spend with your family, do things that you love, or start a side hustle.

If you’re reading and saying, “Chris, I’m not at $200,000,” if you’re at $50,000 or $100,000 of annual income, if I could give you 20 or 40 hours more a week, could you make another $50,000 a year? Could you make another $100,000 a year? Could you maybe start a business that creates some passive income for you? Where we start is, “How do you become more efficient with your time, more effective with your time, and ultimately grow your income?” If you’re reading, and you’re making seven figures a year already and you say, “I’m good, Chris,” you can skip right through that section if you want to.

We start with making money. There are a lot of different ways that we can think about making money, too. The richest people in the world say they have an average of seven streams of income to make that money. I’ve said this on the show before. Because you have seven streams of income does not mean that you’re working seven jobs. It simply means that you have seven different streams coming to you from decisions that you have made. If you have a job that you love, that’s one stream of income. If you are investing in real estate, let’s say you have a portfolio of investment properties, that’s another stream of income.

I can talk to you a little bit right off the top of my head about what they are for me. I am a real estate investor. My rental properties make a particular stream of income. I have a bunch of notes that have brought me a stream of income. My husband invests quite a lot in stocks. That’s the part that he manages for our portfolio. I have a stream of income there. His income is a stream of income. My sponsorships from this show are a stream of income. Notice that I’m not fully involved.

You have a book.

I have a book. That’s a stream of income. The show I consider myself a media personality piece, which includes being an author and speaker, that is that stream of income. This is a secret, and I’m going to talk to you about this later, but I have also gone into high-return investments, which include Forex, crypto, and NFTs. All of that high-return stuff is also a piece of my income, and I’m getting a huge residual on that, too. That’s a very high risk, which is why I don’t normally talk about it because high risk also means high return. High risk, in this case, it’s the same thing, and things can crash and burn.

High risk also means high return. Things can crash and burn. Share on X

As I learn more and experience more, I’ll share that more with you, but that’s my secret adventure. We’ve got all of these different forms of income. Here’s the thing that takes the most time here. I work 5 to 10 hours a month on my rental property. There are other things, but mostly this. The media personality piece takes the most time.

That easily takes twenty hours a week because I’m traveling and other stuff like that. That’s my choice. I also spend time doing charity work. I also spend time on lots of other things. I’m a caretaker for my parent. Because I’ve got seven different ways that I’m making income, I’m not so concerned if one’s not working quite as well as the others. I have an idea monthly of what money is going to be coming in because I’ve diversified my streams of income.

You underscored what I was saying, Moneeka. It’s the same with me. I was always looking for ways. I know we’re going to deep dive into that in the webinar, which is how you evaluate these deals. I’ll give everyone in that webinar how you can figure out in five minutes whether it’s a good deal, and then really have not only a framework but also tools that you can use to say, “How do we figure out how to create these income streams?” Be confident while we’re doing it. I’m an analytical guy, so there’s a spreadsheet involved with that.

There is. I am involved in syndications also. In my real estate portfolio, I’ve got three of those paths of income. I’ve got a fourth because I run a construction company also. That’s more active. Even in the real estate arena, I’ve got several different paths of income that come in. If one of my rentals goes vacant, I’ve still got all my syndications paying quarterly, whatever they’re supposed to be paying. Even in my paths of income, I’ve subdivided. What I’m saying is that you don’t need to work harder to make more money, you need to work smarter.

What I really love about what Chris was talking about is if you can get 20 to 48 hours back a week, what would you do with that? Could you learn more about different ways to make that passive or residual income that you’re looking for to increase that income, so now you’ve got more opportunities, and you can invest in things that people that aren’t making that income can’t?

What happens is it snowballs. You create another income stream or you create more time in your life, and that opens up space. If you have that capital like we talked about before, and you have the time, now, you have the freedom to choose to work with and do the things that you’re really passionate about. That’s where I’ve found your income starts to multiply. We’re going to dive into this a little later. There are three silent killers who are insidious beasts that will come, and they’ll try to attack your income. The second component of the framework is how to keep your money.

I like to say, “Let’s put some more people in the boat and start rowing.” That’s make more money. What if your boat has a bunch of leaks? Working with dozens of coaching clients, some that are making seven figures a year, very successful, I found one thing in common, Moneeka. No one does all of these things properly. Those three things are proper insurance, proper liability protection, and proper tax strategy. What we talk about in the course is how to make sure you have all of these things in place. My father died when I was aged five. A death or major illness can rob you of income, especially if it’s a major source of your family’s income, as it was in my family.

 

Number two, a lawsuit. You own these properties, and I know a lot of high-income earners and probably a lot of readers of the show. I was guilty of this early on as well. You own real estate, you own it in your own name, you don’t have a proper LLC set up, or you may be co-mingling funds. My attorney talks about a story where his friend lost $3 million because he didn’t take a few hours and $1,000 or so to set up a proper entity. These are things that can come and get you.

If you have liability in other areas of your life, you certainly don’t need more liability from our investments. My attorney provided all of his resources inside my course when he found out what we were doing. That comes inside of there. We even have a checklist. It’s the ultimate estate plan checklist. If it’s daunting as it was for me, you can go right through that checklist. You can say, “These are the steps I need to take,” everything from writing down where your passwords are, where your heirs or partner or spouse can find all the information for your properties, and accounts, and do those things to, “What about tax strategy?” This is low-hanging fruit.

Typically, my coaching clients are saving somewhere between 5% and 10% off of their taxes. What I mean is they’re paying 30% which drops to 20%. For most of our coaching clients, we can get them with the tax strategists that we work with. That’s not something that I do specifically, but I’m not an accountant, not a CPA. I don’t do that, but we have vetted CPAs that we work with, but they’re able to get most people’s tax rates, even W-2 income earners, a lot of time below 20%.

If you can save that money, that may be your first $50,000 for passive investment, for instance. That’s why I like to say it’s like a boat. If you can plug all the leaks in your boat, now you start rowing faster. When the money’s coming in, it’s not going out in the form of taxes, it’s not being lost. You can sleep at night because you’re not worried about losing it to one of these other things that are lurking in the shadows out there.

Savings is like a boat. If you can plug all the leaks in your boat, you can start rowing faster. Share on X

I love that. We’ve talked about this before, and I know Chris has said this before. The more that you keep, the more it can compound. People will say, “It’s okay. I’ll deal with this later. I don’t make enough now, so I don’t need to worry about this.” The thing is that the sooner you get a handle on holding onto your money, the more that particular money will compound. Compounding is the magic of finance. The more that you can utilize that money to invest and grow it, the faster it will grow and the faster you get to that place of wealth. Keeping your money is very important.

I had a webinar and show about the Abundance Group Trust. Trust is another way that you can utilize to do these tax strategies, have your legacy things to pass down in case of death or health problems, but also how to mitigate your exposure to lawsuits because it gives you anonymity. I have chosen that route to go through trust. I know that Chris is introducing some other options.

That is a part and should be a part of most people’s estate planning.

Exactly. Chris, I’m going to send that show to you so you can listen to it because I’d love to hear your feedback on that. Readers, go back to that. It was on October 2022. It was Gina. I think you remember that. What I love also is that Chris gives you this checklist of all of these things because sometimes it can feel very daunting, which is why a lot of people don’t do it, but you miss a big opportunity. If you have to work less to get more money, that’s the golden grail. Let’s say you make $1,000 a year and pay 30% in taxes. Now, you’ve made $70,000. If you can cut that to 20% of taxes, you just made $10,000 more without working a single hour or minute more for that money.

Here’s the amazing thing, Moneeka. I’m going to pull my calculator out. If I was making $70,000 and I saved $10,000, I get a 14% raise, essentially. That’s a big difference. This isn’t tax fraud. You’re not evading taxes. You were literally taking the rule book of the IRS, and you’re following the rules that the IRS puts out there. I like the expression when it comes to taxes, “Be aggressive but document thoroughly.” If you have the right structure set up and you do that, that’s fantastic.

 

In the member’s section, I’m also talking about my million-dollar secret. This one secret will literally save you $1 million over your investing career. It’s incredible. If you look at these small numbers and these small amounts that seem small, through compounding and the difference when you go up in terms of how much you can save and keep versus giveaway to the government or other people, these are seven-figure secrets that you’re learning.

It does take some time upfront to do some research and find out what the right structures are for you, what it is you’re trying to achieve, what your assets are, what are your obligations to the family later on, the upside or the downside, my parents versus maybe children, or my nephew or whatever, where you are feeling your obligations are going to be, how you want that legacy to be transferred, and those sorts of things. It does take a little bit of thought. I understand that it can be daunting, but it’s a very important piece of the financial picture.

Don’t just assume that you just have to work harder to make more money. You don’t. You can work a little bit more for a little while, but it’s not a twenty-year commitment. So much of the time, you ask for a raise from your job. Are you going to get 14%? When you get that raise, often, you’re going to have more responsibilities. You’re going to have to work harder, more hours.

Pay more taxes.

My husband will move to another job. Now, he’s got two years in raise like, “I got to prove myself,” to make that extra 5% increase and income that he made. It’s not necessarily what I’m suggesting. It’s a path. That’s great. My husband loves his job, but you can make more income without doing all of those other things.

That’s what we’re trying to do. They’re not secrets. With all this information, I’ll give you all the resources and the path to do it. We do it in about 30 minutes a week. It’s 8 modules, 30 minutes a week. You can knock this thing out. You can do it on a weekend for sure. You can go through it 30 minutes a week for 8 weeks. You’d be done it in two months.

We talked about the make and keep. Let’s talk about the really fun one, grow.

Grow, it’s sexy. This is investing, and we’re talking about it with our friends at our Christmas or holiday parties and cocktail parties and those sorts of things. I’m glad that we started with the other pieces because have you made time for what matters in your life? Have you plugged the holes in your boat? Do you have just an ironclad plan so that you know you’re safe? You can sleep well at night. You don’t have to worry that after you’ve made this money, it’s just going to get sucked away by one of these little silent killers that are lurking out there, or not so silent. If you’re about to get your tax bill, it’s pretty loud when you got to write that check.

You then get to the growth part. We’re going to dive deep into the webinar about how to evaluate passive deals and syndications. Before you do that, there are a lot of active investors I know that are reading. I started as an active investor. I’m still active in investments, but I also have passive investments in about 40 different passive investments. We talked about how to decide, “Do you want to be active or passive in terms of your real estate portfolio?”

Maybe you’re like your husband, Moneeka, and you say, “I love what I do. I make great money.” I would like to know how to be confident in finding passive deals or marry a wonderful person like yourself, and that you handle some of that stuff. That’s a fantastic way. We also give you the tools to figure out when you will become financially independent. We have a beautiful spreadsheet that’s part of this, and it’s going to allow you to plug in your numbers at the end to figure out when you can be financially independent.

This isn’t some magic bullet. I’m not going to wave a wand. I’m not going to make you some promise. If you’re accredited and making a good income, I find that pretty much everybody has a path to become financially independent in about seven years. It can be a little bit less or more than that, depending on where you are in your journey, but I find that to be a very realistic number if you’re out there, and you have a family like I do like most of you do that are reading, going to do that.

The first step is active or passive, then you have to decide, “If I’m going to be active, what strategy am I going to do? Am I going to do fix-and-flips? Am I going to do notes? Am I going to manage my own rental portfolio? Am I going to do short-term rentals?” My wife and I have two short-term rentals here in Asheville, North Carolina. We participate a little bit active, but it works very well because we also have places for our family and friends because people like to come to Asheville, North Carolina, so it works well with us.

We decided we didn’t want to do more short-term rentals. We would rather do stuff that is more scalable. We go through what your right strategy is. A little active, a little passive, maybe none of one, and 100% of the other. Maybe you decide you want to go full-time into real estate, and that’s great. However, even if you say, “I’m going to be full-time in real estate,” that’s not scalable. I talk about everyone should have a strategy for passive income. Once you got those big flywheels turning and all that excess cash that you’re kicking off, where are you going to put it? What type of deals are you going to put it in?

More specifically, what is the framework, both qualitative and quantitative, that you can evaluate those deals so that you can be confident that you’re putting your money in the right place? It can be daunting when you look at something like a $50 million or $100 million apartment complex that you’re investing $50,000 in. Is that just like a house? It’s not just like a house. There are a lot of other different factors. It’s more complicated in some ways. It also can be simpler in some ways. We break down all of those qualitative issues, the right questions to ask, and the data.

If you’re a data person like me, we have stuff that you can go through to learn, “What are the right questions? What is the local population growth?” We talk about sponsorship fees, and you can dive deep into all those different areas. You can go to the high level and figure out, “These are the questions I need to ask. These are the deals that I’m going to be in. This is how much cashflow it’s going to kick off,” and then you can calculate your freedom number. We call it your path to financial independence.

I love that it talks about qualitative as well as quantitative. You have read at least easily 25 syndicators on this show. These are all people that have become fairly good friends of mine. Not all of them, but several of them. Even though I’m close to them and trust them, I get overwhelmed looking at their deals. There’s the piece where how you build trust. I’m very lucky because I have this show, so I get access to a lot of these people. These come across my desk all the time.

For those of you that are not in my situation or a much simpler situation than me, you need to find ways to find the syndicators that you’re going to trust. Hopefully, you’ll investigate the people that I have had on my show, but there’s also really good stuff that you can do on the internet to look up people. That’s qualitative, who are you going to invest with? The quantitative is, what are you going to invest it with? Both of those pieces are really important, and they’re both big pieces of the puzzle. Please go ahead, Chris.

The qualitative comes down to what are the right questions to ask. Anxiety comes from fear of the unknown, and how can we know if we don’t know the right questions to ask? We give you the right questions to ask, so you can have a measure when you talk to other syndicators who know that, just like anybody that goes in, whether it’s a car mechanic or a doctor. A lot of people are overwhelmed when they go to the doctor because they don’t know what questions to ask, especially if there’s an illness or something, and they’re in a very emotional state.

I remember my mom when she had cancer. They’d sit down and record the conversations, but my parents didn’t know what questions to ask because they weren’t medical professionals. They would come out of there, and a lot of times, they were even more confused than when they went in. If you’re confused and are not comfortable, you definitely should not invest. If you don’t feel good about something, don’t invest. If you have the right questions and the right knowledge, if you then say, “I’m confident,” that’s what we want to do. I want to give you confidence, and then you can say, “I’m on the right path.”

That’s why we want to put it also in that quantitative portion, so you can have a score, you can have numbers, and say, “I’m moving towards this.” I tell you what, you make that first investment, you get a check for a few $100, or $500, or $1,000, it’s cool, but that’s not going to move the needle enough. When you can see, “It’s going to start with a few hundred dollars this month,” and then a couple more months down the road, that’s going to grow, and then a deal sells. We were talking about when we started this show. We’re going to the bank with my son, that $3,000 is now hundreds of times larger than that.

That allows me to go and reinvest that money. It takes time, but I knew it would come over time because I knew I could look at my spreadsheet with a degree of confidence, I can go and say, “Now, I know what I can do with that for the future.” That’s what this is all about. Real estate is a get-rich slow game, and we want to give you the framework and the roadmap, which is why we call it the 6 Figures of Passive Income Roadmap, to get you where you want to be, which is on that path to ultimate freedom.

It keeps you focused. So much of the time when you’re in it, you need that focus. I was on a twenty-year plan on how I was going to retire. Every once in a while, I had to remind myself, “Why am I doing this?” You have something that came up with a rental property that made me crazy, “Why am I doing this?” Spreadsheets and numbers really help keep you very focused on why you’re doing what you’re doing and where you’re headed, and why this is a good idea.

“Honey, why are you talking to the real estate agent on our honeymoon?” “This is why, because twenty years from now, sweetheart, we’re going to be financially independent.” True story. Fortunately, it didn’t take twenty more years, but on our honeymoon, I was trying to figure out how to get a place rented out. It was a mess. I will never forget that.

I’m so with you on that. I want to go into our EXTRA portion. Here are a couple of things I want to close the show with. First of all, we are going to be talking in EXTRA all about a deep dive more into the three secret killers of wealth, which are death, health, lawsuits, and taxes. That sounds like four, but I think death and health are the same.

We’re going to be doing more of a deep dive on that in EXTRA because I really want you guys to start thinking about that stuff. They’re not fun and happy and sexy things, but very real. There are things as you’re building your wealth that you need to think about, take into consideration and plan for. We don’t have a lot of people that are talking about that. I trust Chris to give us a lot of really good information. I asked him to do that for us in EXTRA. We’re going to be talking about that there.

If you are really excited about Chris’s course already, and I would be if I were you, you can go get it right now at BlissfulInvestor.com/EvaluationCourse. I know those are long words. I’m sorry. I was trying to think of what I could make this, but it’s the best description that we can get. Here’s the thing. It just released. It’s brand new on the market. He normally charges $1,497 for it, but my audience gets 30% off. Go to that link, and then put in the code BLISS, all in caps, and you get a 30% discount, which is huge. That takes that down to about $1,000.

Yes, it’s right about $1,000.

If you want more information before you invest in the course or if you just want to talk about syndications and ask Chris more questions, because as you can see, he’s an open book, he’s very transparent and loves to talk about this stuff, we are going to be having a webinar. Mark your calendars, Thursday, February 2nd, 2023 from 1:00 to 2:30 PM Pacific Time. For those of you that are reading this later, you can still go to that URL and re-read. The URL to go to sign up or re-read is BlissfulInvestor.com/SixFiguresWebinar. Those of you that can join us, please come and ask lots of questions. I’d love to see you there. I’d love to say Happy New Year.

Happy Groundhog Day on the 2nd, I just noticed.

Is it? We’re going to be celebrating lots of things. Put that all on your calendar and mark down those URLs. Did you want to close with anything, Chris, before we say goodbye and move into EXTRA?

Thank you so much. It’s always good to talk to you here. When we do that course, come ask me anything. As Moneeka said, I’m an open book. Unfortunately, I made a lot of mistakes in my life. I’ve had some unfortunate incidents like losing my father and my friend. I’ve been through these things. Hopefully, I can help you with some of the tools that I’ve put together and the lessons that I’ve learned, so you don’t have to make the same mistakes that I did.

I love that. Thank you. Always 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.

 

Important Links

• NextLevelIncome.com/Book
• Strategic Coach
• BlissfulInvestor.com/SixFiguresWebinar
• Gina Gaudio-Grace – Previous Episode
• BlissfulInvestor.com/EvaluationCourse

 

——————————————————

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

Learn how to create a consistent income stream by only working 5 hours a month the Blissful Investor Way.

Grab my FREE guide at http://www.BlissfulInvestor.com

0

How To Thrive In A Crowded Market With Airbnb With Rachel Gainsbrugh – Real Estate Women

 

Everyone wants to experience what it feels like to generate income while having plenty of free time to spend on whatever they want with. Many see potential in the real estate industry to make us experience that. But how can someone thrive in a crowded market? In this episode, Rachel Gainsbrugh, the owner of Short Term Gems, shares her secret on how you can thrive in a crowded market with Airbnb. She explains that the Blue Ocean Strategy helps set you apart from this market’s feeding frenzy. So if you want to set yourself apart from the crowded market and save yourself from financial pains, don’t miss this episode. So, choose financial freedom, choose bliss, and hit that play button NOW!

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Watch the episode here

 

Listen to the podcast here

 

How To Thrive In A Crowded Market With Airbnb With Rachel Gainsbrugh – Real Estate Women

Real Estate Investing For Women

I am excited to welcome to the show, Rachel Gainsbrugh. Rachel was born in Haiti with the drive to make a difference and not take her parents’ sacrifices for granted. She was raised in Miami, worked hard, became a doctor, and was left with over $500,000 in student loans. She ground hard to pay off her loans. When she found Airbnb investing, it became a game changer for her. She was able to make fifteen times on short-term real estate rentals over long-term rentals.

Now, she’s a healthcare professional by day and a rental investor by night. She’s the owner and manager of eighteen luxury short-term rentals with a lucrative cashflowing rental portfolio. She’s a mom, wife, and real estate coach that has been featured on Netflix TV, showcasing one of her luxury rentals. Rachel is passionate about helping professionals create a life they don’t need a vacation from through Airbnb investing. I love that. Rachel, welcome to the show.

Thank you so much. Thank you for having me and for taking the time to put out all of this valuable content to the community. I appreciate being here with you.

Thank you so much for that. Rachel, I’ve been waiting for you, and we’ve had to reschedule a couple of times. I do luxury home long-term rentals. I call them Executive Homes, and people do not talk about the luxury rental market often. I feel a bit alone in that industry. It’s so much fun to be having this conversation. I’m excited about it. Could you start by giving us a high-level of your story? I read your bio, but what brought you to real estate, and why short-term rentals?

What brought me to real estate was looking for not necessarily an exit strategy but an additional revenue stream outside of punching a clock and the whole W-2 thing. I love helping patients. That is my passion. Outside of that, I wanted to have savings set aside. We’d overcome a large amount of student loan debt. When I looked around, I looked at all the investing strategies out there. Crypto was making its way to the forefront as well. I just didn’t quite understand it. I said, “Let me just stick to real estate. I can see it. I can touch it. It’s real to me.”

I went to look into real estate investing. I consumed maybe a year and a half of the show and determined that short-term rentals were going to be the right fit for me. I felt that if I could position myself correctly and build a system around it, not only would I generate a significant amount of revenue compared to my counterparts that were investing in long-term rentals or syndications, I felt as though I would be able to do in a fraction of the time that most would be doing investing. Having a bit of a project management background and being able to leverage that, I figured that it was worth a try and the juice is worth the squeeze. It worked in my favor for sure.

Talk to me about short-term rentals versus long-term rentals. How do you see them, and why you chose this particular route?

I even niche further into short-term luxury rentals, but I will talk to you about short-term rentals versus long-term rentals. Fortunately, we live in a lower-cost-of-living area in Georgia, I was looking around at properties that would fit into my budget, and for that first purchase, I was looking at a budget of about $300,000 for a property.

I looked at some long-term rentals in some rural or remote areas in Georgia, and I found a 20-unit for $300,000. I was like, “This is going to be amazing and my research,” and I realized the rent rolls were about $160 a month. I was like, “I want to live there.” The rents were low, and with those lower rents, you are going to have challenges. I had to think about twenty individuals who may be needier than most with these types of rents. Is it worth it for me? Am I leveraging my revenue in a way where I’m not punching a clock or am I buying a whole new job?

For me, at that point in time, even though it was a long-term rental, which is going to be a little less hands-on than short-term rentals, it wasn’t worth it. I looked around at more long-term rental opportunities and I saw an average of anywhere from $300 to $400 a month, net revenue after all expenses were paid, and net operating incomes were not the greatest for long-term rentals.

We’d spent many years paying off student loan debt. I wanted this next opportunity to be the most profitable as I could make it. Short-term rentals were it for sure, and we saw anywhere from $10,000 a month gross revenue to start, and properties that could net about $6,000 a month are one of our first properties. We’re thinking that would be the route to go as compared to long-term rentals.

Is that your profit or is that before management fees?

That’s profit because we self-manage using our own systems, and that was part of the project management I mentioned a little earlier.

In one of the notes you sent me, you mentioned that you could do this even if it’s not like a vacation destination place. Could you talk about how that works for you?

What’s interesting is that it’s a strategy we stumbled across because we have a property that is in a suburban area. It’s on a nice piece of land about two acres or so, which is huge for some areas, and it’s in a better school district, a little bit of higher per capita income in this particular area. We came across families who were displaced from their homes temporarily due to either a natural disaster or some type of mishap.

If there’s a fire, a significant water leak, or a pipe that bursts these are families that fit our demographic. We have larger homes, so we do host larger families. These are families who are going to be placed in a hotel for some time, and they need to be in a home for the next 4 months to 8 months as the supply chain is behind.

Finding a workforce to repair homes is can be a bit delayed, and we’re still encountering that. Those families have been staying with us anywhere from 4 months to 11 months. We just secured a 12-month contract with some of these families, and these are paid to us directly by the insurance company. These are our midterm rentals, but it’s specifically the insurance policyholder strategy that we leverage.

Do you get those people through insurance companies? Is that the channel that you use?

They come to us through a third party. The insurance companies themselves don’t necessarily seek out housing. They work through a third party to find housing for them, almost like a scout to find homes. Once we had one book in our local area, it’s always creating those relationships. We know those relationships are everything. As soon as we start to evaluate the property, give the notice to vacate period and say, “This property’s going to be vacant in a few weeks.” We start reaching back out to those same individuals and we just want to be top of mind.

“Don’t forget, this property’s going to be available on January 2nd, 2023.” We just got an inquiry. We have one that’s available on January 2nd. We said, “January 2nd, we’re going to be open again.” We keep those lines of communication going. It’s not necessarily your insurance, but it is a third party that works with AllState, State Farm, Travelers, or all of those insurance companies.

 

How would you find those people?

The first time honestly, they found our listing through Airbnb. As of this date, they don’t use Airbnb anymore to source properties for their policyholders. However, the policyholders use Airbnb, it’s a two-pronged attack. Say, something happens to your home, unfortunately. The insurance is going to use that third party to start looking for housing.

They may tell you, “You may want to look for an option as well,” and if you determine there is this property that’s an Airbnb that’s within my school district a few roads down, then you can go ahead and let them know that we found a property and then, they’ll work with the host or the homeowner to facilitate that transaction. I do know the insurance policyholders, the insurance at temporary housing agencies is not leveraging Airbnb any longer. Another site that we use to garnish that relationship is a site called CorporateHousingByOwner.com. We list there and they found us there as well.

Do you find that you have much fewer vacancies? What’s your turnover time when someone leaves and then you’re trying to get somebody else in? What does that look like?

For our 5 properties in 1 particular region that do primarily this midterm rental strategy with the insurance policy holder, we’ve had 7 vacancy days over the last several months. If I’m going to do short-term rentals in a vacation market, I prefer a vacancy of 65%. That’s going to be the biggest difference between short-term and long-term. For long-term, you want 100% occupancy. For short-term, you do not want 100% occupancy, especially with the larger homes.

At 65%, it’s my sweet spot. We’re able to go in there and make all of the changes that we need, tweak things if the home needs more TLC, and we have the time in between to adjust. However, with long-term rentals, you’re going to have the same person in the long term. For short-term rentals, there’s more handholding. Our maintenance needs to come in. We press and rush all of those things.

If we drive a vacancy or occupancy with our short-term rentals, the struggle is that the property’s not going to be in tip-top shape for the next guest. If it’s not in tip-top shape for the next, you risk complaints and refunds and you start to lose money at that point, so 65% occupancy is perfect. We’re able to get a higher revenue and get the property in tip-top shape in between. However, for these midterm rentals, we can go all day long 100%.

If we drive up vacancy or occupancy with our short-term rentals, the struggle is that the property will not be in tip-top shape for the next guest. You risk complaints and refunds and start to lose money at that point. Share on X

With your short-term rentals, more like the vacation ones, you like 65% occupancy?

Yes.

How do you manage these properties remotely?

I use a number of technology tools to automate, eliminate, and delegate. As far as remote management, if the property is close to other properties where I want to make sure that the noise levels are kept under wraps. We use tools such as NoiseAware. Inside the properties, we will measure the decibels to make sure that there are no crazy parties happening. Other tools are channel managers that we use online to deconflict our calendars to make sure that we don’t get double bookings and the ring camera keyless door entry, those types of tools as well are primarily the automation or tech tools that we leverage.

Outside of that, our cleaning team, our maintenance, as well as our TaskRabbit runners pretty much run the whole business for us remotely. If there are any types of boots on the ground that are needed, they’re there to support, test this, and bridge any of those gaps. As far as guest communications, once we had our communications dialed in and created our SOPs, we were able to train someone to take over the guest communications. It’s important to have a system.

What do you mean by SOP?

Our Standard Operating Procedures. If a guest asks this question, here’s the answer. If they ask this question, here’s the answer. If something comes up that’s not a part of the script or our SOPs, then they didn’t escalate it to me. The last time I spoke with a guest, I had to intervene. I’m primarily responsible for bookkeeping and making sure the numbers look okay.

Do your cleaning team and your handyman come from TaskRabbit, or do you have people that you call when there’s a need, or how does that work for you?

I have three sets of cleaners. If something goes awry with the first, I have team B and team C. I keep those at bay, and then there’s an app called TurnoverBnB, if something goes wrong with all three. Many of my clients don’t have that to get started. That’s a great place to start. I like that tool as well. The handyman comes from various places.

For instance, Thumbtack is an app that I like to use. Thumbtack, for better or for worse, has some things there that people don’t love. What I do like about it is that it has a reciprocal system where you can rate the handyman or the vendor, and it’s like we all have to be on our best behavior. When you say you’re showing up, you show up so you’re not left high and dry. Also, I use another tool called NextDoor. It’s like a neighborhood tool to see who’s been suggested as a handyman. It’s living like a local. The NextDoor app is pretty cool as well.

Do you keep most of your properties close to you, or are they spread out? How far is the farthest one?

I’m in Georgia. I have some in the Poconos of Pennsylvania, but everything else is Georgia, Florida, and Tennessee.

I like this concept that you talk about, which is less is more, keeping fewer doors, but still making the same income. This is something that I’ve touted a lot. When you’re in the luxury market or the executive home market, you can see it. People have asked me many times if you’ve got a vacancy, it’s a much bigger deal than someone who has a lot more properties, which is true. Like you, I keep my properties in the highest condition. My vacancies are very short. I might have a vacancy of 1 to 4 weeks every 5 to 7 years. It’s very little, but could you talk to me about how you see that and what’s your approach to that?

It’s a very valid point. People want to hedge and make sure that they’re not putting themselves out there. It does require being proactive, especially for short-term rentals and midterm rentals. I mentioned earlier the importance of marketing, and we don’t move forward without collecting at least email addresses from our guests. We have the mechanism by which to do and you want to make sure you’re doing it all in the proper way.

With that being said, we add them to an email campaign, and we’ll send them an email once a month or once a quarter, just reminding them of how they were helped by being at our property if they know someone who can benefit from our property, for those who are staying with us for mid-term rentals.

If it’s short-term rentals, we remind them of what a great time they had at their birthday party at our property. Thus, by collecting information such as the purpose of your visit, as well as who stayed with us, we can then market them as well. It’s important to be more proactive and it’s worth it. You do have that higher touch that can allow you to demand a nightly read that you desire.

 

Talk to me about your Blue Ocean Strategy and how does that differentiate you? I don’t even know what that means. What do those words mean? Can you tell me about that?

The Red Ocean is when you’re in that feeding frenzy with all the other properties, the sharks, and everyone’s going after the thing. The blue ocean is a wide ocean and you’re on your own. You’re like that unicorn. You don’t want to be a Me-Too. We call it like a Me-Too drug when you have another statin. It’s like, “Why do we have an eighth statin on the market?”

You’re like me-too drugs. You don’t want to be me-too, because when you’re me-too, that’s when you face oversaturation and those types of issues. Whereas when you’re unique, when you’re set apart, when you have identified who you are as a host and who the guest avatar is, that’s when you can have them see that you see them. They see your property and you’re marketing to them, and it says, “I see you. I know you.” Whether or not you’re priced a bit higher than what they would expect, they’re going to book with you they know, “Why hedge and stay over here when this particular property has everything that I need?”

That’s the power of operating in the Blue Ocean. You’re going to set yourself apart from the feeding frenzy or from the race to the bottom. When individuals are similar to others, the only differentiator is the price point. I’m going to keep dropping my price until I get there. When you’re operating the luxury and set yourself as a unique provider of hospitality, then you’re not going to be like the others.

For you, you chose to niche into the luxury market. Is that what you did?

Yes.

Knowing what you know now, if you were talking to somebody who was getting started, what would you tell them to do to get the fastest results?

I would say, “Start.” Here’s the deal. You can overanalyze your life away. Surround yourself with the right folks for doing the thing that you’re looking to do who have achieved the goals that you are looking to achieve, and then just start.

What were some of the challenges that you had to overcome in starting this business?

It’s almost like you don’t know what you don’t know. Some of the challenges are being in the right rooms, having those conversations, and group learning. Even listening to other people’s situations, you’re like, “Maybe I’m not going to do that.” You never know what will come out of you hearing what others are saying in a group setting. Also, attending the local REIAs. Had I engaged and gone all in in that group learning, I would’ve probably avoided the HOA situations that we encountered. I would’ve not lost a whole lot of money on a deal due to not understanding things with taxes. I don’t love taxes, I am laser-focused on tax implications and tax opportunities.

That was such an amazing amount of information and so quickly. Thank you.

Thank you so much for having me. This is fun.

It has been fun. Thank you for that. Tell the audience how they can reach you. It sounds like you do coaching and you help people get started in this business. Is that true?

Absolutely. The best way to reach me is to grab my free list. I do have a free gift. For those who are always approaching me about short-term rentals and saying, “Where should I invest?” I have my top 75 cities for the highest profitability for short-term rentals in the US. If you go to 75 Gems, that’s 75Gems.com, you’ll grab my list and I’ll definitely have free training there and how to get in touch with me as well.

Thank you. I’m going to download that. That’s amazing. Rachel have things coming up in EXTRA ladies? I’m excited. Rachel and I are going to be talking about, “Financial Wellness is Wellness, too.” Ladies, you know how much I believe that your financial independence offers you a choice. Choice offers you options. Options allow you to have happiness. It goes both ways.

Your financial independence offers you a choice. Choice offers you options. Options allow you to have happiness. Share on X

Our financial wellness is a big determinant of how much bliss we can feel. I want to qualify that by saying that you can be very blissful even if you’re broke. It’s an inside job. That’s how I teach what I teach and how I believe. Financial freedom makes it easier. Any pain that we experience in life makes it harder for us to focus on being blissful. It creates more challenges for us. Whether it’s physical pain, mental pain, emotional pain, or financial pain, any of those kinds of pain are going to make being blissful harder. You’re going to have to work harder at it.

One of the bliss strategies is to help get past those pains. Self-care is important. You want to take care of yourself. You want to take care of your emotional self. You want to make sure that you’re feeding yourself right, exercising, and all of those things in my book called Choose Bliss. One of the pieces that’s important that people don’t tend to bag and talk about is true. Financial pain needs to be handled.

We get to a point financially where it’s not financial pain anymore, and then we can get to the next point where it can support our bliss by allowing us to do more for our families, more in the world, and live more freely doing the things that we value most. Financial freedom is an important piece of bliss. That’s why I do this show. When Rachel was talking about, “Financial Wellness is Wellness, too,” I was all in. We’re going to be talking about that in EXTRA, and I’m excited about that. Before we do that, Rachel, are you ready for our three rapid-fire questions?

I’m ready.

What is a super tip on getting started investing in real estate?

Surround yourself with those who are doing what you want to do. That comes with everything, not only investing, but health and wellness, and all the things. Be in the right rooms and don’t go at it alone.

Be in the right rooms. Surround yourself with people who are doing what you want to do, and don't go in and don't go at it alone. Share on X

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

For me, it’s measuring my goals. You don’t pay attention to what you don’t measure. You pay attention to what you measure. Every month, we’re looking at our portfolio. We’re assessing what we’re doing well and what we’re not doing so well. We make adjustments along the way.

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

For me, it’s prioritizing. There’s a lot of noise out there. First thing in the morning, I want to write down my top three and make sure that it aligns with my big rocks. If it does, then that’s what I focus on because there’s a lot of noise, emails coming through, alerts on the phone, and all the things. Focusing on my top three and determining what those are ahead of time has been my daily habit that contributes to my success.

I love that. Thank you. This has been so much fun, Rachel. Thank you so much for all you’ve contributed so far.

What an honor. Thank you so much for having me.

Ladies, we have more. In EXTRA, we’re going to be talking about, “Financial Wellness is Wellness too.” If you’re subscribed To EXTRA, please stay tuned. If you’re not, but would like to be, go to RealEstateInvestingforWomenEXTRA.com and you can subscribe there. For those of you that are leaving Rachel and I now, thank you so much for joining us. I love hanging out with you ladies. Thank you so much. I appreciate you, and until I see you next time, always 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.

 

Important Links

• Rachel Gainsbrugh
• CorporateHousingByOwner.com
• TaskRabbit
• TurnoverBnB
• Thumbtack
• NextDoor
• 75Gems.com
• Choose Bliss
• RealEstateInvestingforWomenEXTRA.com

 

About Rachel Gainsbrugh

It was from my earliest real-estate investment, and my mind was BLOWN. At that moment, I realized that if I could make 1 dollar doing this… then I could easily make thousands more. I immediately saw the potential this lucrative industry had for job and income replacement. And that’s how I was able to change the game and get the odds in my favor.

This was huge, especially for a woman like me. Why? I was born in Haiti—the poorest country in the Western Hemisphere. I was driven to make a difference and not take my parents’ sacrifices for granted. I was raised in the inner-city of Miami where I worked hard, got straight A’s and went on to get my doctorate.

 

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

Learn how to create a consistent income stream by only working 5 hours a month the Blissful Investor Way.

Grab my FREE guide at http://www.BlissfulInvestor.com

0

Build & Protect Your Wealth Through Apartment Investing With Ronnie Shalev

 

Being a doctor can be exhausting, especially when you have to work 12 hours and your family relies on you financially doesn’t help in helping to reclaim your life. This episode is dedicated to everyone who wants to reclaim their life and remain financially stable. Today, Ronnie Shalev, a board-certified ER physician turned real estate investor, shares her career shift and how you can build and protect your wealth through apartment investing. Ronnie’s mission to help people with their financial wellness led her to provide some more insights on why investing in apartments is more relevant than other asset classes. Choosing the right market is part of risk mitigation, which Moneeka and Ronnie dive deep into. So if you want to free yourself from the job holding you down, tune in to this episode now! Learn how you can live a life on your terms!

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Watch the episode here

 

Listen to the podcast here

 

Build & Protect Your Wealth Through Apartment Investing With Ronnie Shalev

Real Estate Investing For Women

I am so excited to welcome to the show, Dr. Ronnie Shalev. She is a board-certified emergency physician turned real estate investor. She was a practicing ER doc for sixteen years, but her job sucked the life out of her, leaving her drained, burnt out, and unable to enjoy her family and kids. She wanted to reclaim her life but didn’t know where to start.

She was making great money. Her family was relying on her financially, so she was trapped by the golden handcuffs. That’s when she started exploring the world of real estate investing and found a way to make recurring income without having to be physically at the hospital or with her patients. After some time, the income she earned from her real estate investments gave her the freedom to quit her grueling emergency medicine job and transition to a medical device company. Ronnie’s mission is to share her knowledge with other women who are feeling trapped and want to free themselves from their jobs and live life on their terms. Welcome to the show, Ronnie. It’s so nice to have you here.

Thank you so much for having me.

I know we were talking a little bit about this in the green room, but it’s interesting to me how many doctors have come onto the show talking about either how they are evaluating syndications, or they are actual syndicators. What’s fascinating to me is my mom is also an MD. I know what kind of income you guys make. Especially as an ER doc, that’s some crazy difficult stuff, and they pay you well for that.

It’s fascinating to me to see how syndications and being a syndicator can replace that kind of income. It’s such an inspiration. This is something to think about. We wonder, “Can I replace my income?” Think about the six-figure incomes that are being replaced with real estate. It’s awesome. Thank you so much for coming to share your story on the show.

I’m so excited to share my story. I know that a lot of people can relate to wanting to design their own life.

I’m one of those people, too. That’s what bliss means to me. It is a choice. It is not being a slave to the expectations of the world around us, whether it’s our job, our families, or whatever it is. We want to be able to live life on our own terms. It’s awesome. I read your bio, but why syndication? Why did you take this particular route?

I was not ever planning on being a syndicator. Ever since I was a little girl, I have wanted to be an ER doctor. I wanted to help people. I wanted to help people with their health and their life in their times of need. I remember a shift where I was alone. I was the only doctor in the entire ER. There was no scribe, no mid-level, no physician assistant, nothing. It was around 10:00 PM, and I was treating two stroke patients at the same time. I also had an asthmatic who was having severe trouble breathing. I had someone having a heart attack. The waiting room was full. There wasn’t an empty chair. You could see the pain and frustration on everyone’s faces, the patients and the families.

On top of it, there were several ambulances lined up waiting to get checked in. I looked at the clock to see, “When is my relief coming?” It was eight more hours. The stress was unbearable. I couldn’t breathe. I was responsible for all of these people. The administrators had cut all of the physician hours and assistance hours, leaving only one doctor responsible for everyone who walked into the ER or was already there. I’m faced with this situation. What did I do? I put my head down, and I did it. I took care of everyone at the expense of my own health. I didn’t eat, drink, or pee during that shift.

For eight hours?

Twelve. I came home, and I was so exhausted. I collapsed on the bed. I went to sleep in my scrubs, which is unheard of because you feel disgusting after the hospital. I slept the rest of the day. My husband and my family didn’t understand why I was so tired. They didn’t understand that I’d taken care of over 50 patients that night with extreme stress and liability. It’s hard to fathom. How could they?

I started to think about what else I was supposed to do. I was like, “What else is there? I’m a high-paid hourly worker, and I’m tied to my job. I have to keep it.” I was told by my administrators with no medical education how to practice medicine and how quickly to see the patients. They made sure to tell me that I was dispensable and could be fired if they didn’t like my numbers. I started to think, “Why did I love this job in the first place? Something has to change.” That’s when I started looking at other options and what else was there. I was like, “How can I free myself from this job?” That’s where I found real estate.

It was about that time that a friend told me that he was passively investing in real estate. I didn’t understand what that meant. He was like, “I own a piece of 100 7-Elevens, and I receive a check every quarter. I get passive income.” I’m like, “Passive income? What is that? That’s weird.” For years, I had been working per hour. My time was not passive at all. My money was never passive. I thought to myself, “This sounds weird. This sounds fishy. Is it a pyramid scheme? Is he lying to me? It sounds like it’s too good to be true. Maybe you could lose your money. I don’t know.” I was very paranoid.

I started thinking and remembering what was going on in the hospital and with those administrators. I was so frustrated about trading my health and my well-being for money. I decided, “Why not? Let’s give it a shot. It’s not like real estate goes to zero. It’s almost impossible for that. There are hard assets. There’s land.”

My husband and I decided to dip our toe in and do a small investment first. It worked. We started getting checks every quarter. I said, “This is interesting. Does it work again? Let’s do it again.” We did it again. We started seeing results. That’s where we started investing. We’ve been part of over 26 deals. We’re always looking for new ones. We did a reassessment and said, “I could leave medicine. I can go to something that’s way less stressful with this passive income that we’ve generated.” It took many years.

How many?

It took eight years. That’s the thing. This is not a get-rich-quick scheme or something like that. This is a long-term strategy where you know what the outcome is. It’s predictable. After I was able to do that, I still see all of my physician friends and colleagues as miserable. I’m telling them, “This is what I did.” They’re like, “How did you do it? Did you win the lottery?” I’m like, “I didn’t win the lottery. This is the actual strategy that I did.”

Apartment investing is a long-term strategy where you know what the outcome is. Share on X

They still have fear. They were like, “I don’t have time to learn it. I don’t have time to study it.” I said, “That’s perfect. I’ll do it for you. I’ll do that. You can leverage my expertise. You can leverage my time. You can leverage other people’s money through the banks.” I went and studied how to do it actively myself. My husband and I took a mentorship program and learned how to do it. We started our own company, where we are syndicating apartments specifically and bringing along other professionals.

Do you ever miss the helping people aspect of medicine?

I help people all the time. What I didn’t know when I was looking at being a physician as a career at that time, I thought, “This is how you help people.” Now I have a better perspective that you don’t have to help people with their health. You can help them with their financial wellness. I’m still helping, which is huge. On top of it, I’m also able to still use my medical knowledge. I work at a medical device company. It’s not because I have to work there. It’s because I want to work there. We’re helping thousands of patients every single day. I get to use my medical knowledge. I get to use my investing knowledge. I get to help so many people on a grander scale. I’m still feeling that drive to help people. That’s that feeling.

You don't have to help people with your health. You can help them with their financial wellness. Share on X

It’s so interesting because I don’t have to work either. I’m like you in your situation. I’m, by nature, a coach. My mom was a psychiatrist. She and I are so similar. My heart is to help. I found a very similar thing when I was coaching. I was trading time for money. I gave up on so many other things that were important to me. It’s certainly not comparable to you, but there’s that feeling inside me of wanting to help.

As I’m trying to redesign my life, retire, and have more time for my husband, my family, my nephew, and my parents as they’re aging, I’ve got the financial wherewithal to not have to do anything. My way of helping is by doing this show because this way, my ladies are elevated by my guests and whatever little knowledge I can offer. It’s an opportunity for me to give back so that I have that peace inside of me fulfilled. The biggest things in people’s lives that we need an abundance of are our health, our wealth, and love. It is our relationships. It is the three biggest things, and you’re handling two of them. That’s unbelievable. That’s awesome.

I love that you’re helping so many women and bringing on powerful people to motivate. How does someone know that they can do it without hearing that other people have done it, too?

That’s right. Thank you for sharing your knowledge with my ladies. Talk to me a little bit about why you chose apartments.

We passively invested in a lot of different asset classes. We’ve done self-storage, retail centers, mixed-use buildings, industrial warehouses, and assisted living. There’s a lot that I’ve done, but I like apartments the best because they make sense to me. I feel like housing is a basic need. Everyone needs a place to live. If they’re shopping online on Amazon, they’re at home. They’re not going into the office. They’re working remotely. They’re doing it from their homes.

With the interest rates going up and the supply shortage, people can’t afford a house. They can’t afford a down payment. There’s a whole population of renters that have to be renters. There’s also a whole population of people that want to be renters. There are the Millennials that don’t want to be tied down. They don’t want to be having these roof leaks, plumbing, and all kinds of deferred maintenance on their home. They don’t want that. There are seniors. These are people that are trying to buckle down and live on fixed incomes. They don’t want surprise expenses with their homes.

That’s a good point.

They’re downsizing. They move out, so they become renters. There are all these people going to rent, and there are not enough places. That’s why rents are going up crazy all over the place. I’m going into apartments, but I’m not just going into any apartment. We focus on recession-resistant assets. We’re looking at Class B and Class C properties. The reason I’m looking at that is that what happens when you’re in a recession? It is what people might say we’re in. You’re living in a Class A building, which is a high-rise. There’s a bellman or a doorman. It has all of it.

Maybe you have a pay cut, or you get furloughed, or you’re let go. Why do they move? They move into Class B. It is the same thing. The people living in Class B move to Class C. I’m right in that demographic that whether we’re in an economic downturn or not, people are looking to live there. I’m taking those communities, and I’m making them better. I’m doing value add. We’re putting in dog parks and solar panels. We’re including internet in our packages. We’re doing a lot of nice things for the residents, making it a community where it’s a nice place to live. What we’re doing is we’re adding value. We’re making the residents a great place to live, and then the investors make money. It’s a win-win.

Tell me about how you pick your markets. I know you’re doing Class B and C, but how do you pick the markets you want to go into?

I’m focusing on the Sunbelt states because I want people to be moving to where my apartments are. I’m looking for landlord-friendly states. I want to be able to evict if I need to. I don’t want a tenant that has lived there for two years and doesn’t pay rent. I’m looking for landlord-friendly states. I’m looking for growing markets. These are sub-markets where people are moving into. Why are they moving? There are jobs. I’m looking for where there’s job growth.

I don’t look for only one employer or one type of employer. The last thing you want is to have this robust factory, and then the factory closes, and everybody loses their job and moves out of your apartment. I’m looking for markets where there are multiple diverse employers in energy, entertainment, device, biotech, or whatever it is. There’s a lot of variety. If one goes out of business, they’re not all going to go out of business.

You can’t completely reduce risk, but you can start thinking and pre-planning if you have a safety plan. I’m looking for recession-resistant assets. I’m looking for places where you can evict tenants that aren’t paying. The goal is to bring income. We want to make sure that people are moving there. We want to make sure that there are different types of employers. There’s a lot of thought into the market selection.

 

In EXTRA, we’re going to be talking about how to mitigate risk. My belief, and correct me if I’m wrong, is part of the mitigation of risk is how you choose a market. Is that true?

Absolutely.

We’ll do a deeper dive on that, so we get a little bit more conversation around that in EXTRA. I’m super excited about that. You talked about passive investors versus active investors. Give me your perspective on it because, as a doctor, it’s going to look very different than it does for the rest of us. Go ahead and define for me what you were looking for as far as a passive investor versus an active investor.

Personally, I love passive investing. It is the ultimate way to explode your wealth. The biggest reason because of that is because of leverage. You are leveraging other people’s expertise. I’m not going as a passive investor to go and fly into every city, drive around, see what the best areas are, and then do research on which companies are moving there, who’s moving their headquarters, and what’s happening in the city design planning. Someone’s doing that for you. You’re not spending your time doing it.

You’re also leveraging other people’s relationships. You’re not having to forge relationships with brokers and tour properties and show them that you’re serious. You’re also not having to sign on for any loans. When you’re a passive investor, you’re not having to find the financing, the debt, and all that stuff and meet all these bankers and mortgage brokers. You don’t have to do all of that. You also don’t have to be finding the deals and analyzing them. You’re leveraging other people’s expertise. You’re leveraging other people’s time.

You have a life. You’re a busy professional. You have a family. You want extra income, but you don’t want to be tied to a new hobby where you’re like, “I wasn’t planning on being a landlord,” where tenants are calling you about termites and how there’s a leak or a fire. Passive investors don’t have to deal with any of that.

Active investors, on the other hand, are the people that want to do work. They’re the ones that are finding the properties. They’re the ones that are doing the market analysis. They’re like, “Is this a good market? Is this a good property? Does this make financial sense? What is the business plan? Is this a buy-and-hold? Are we holding it for a long period of time and waiting for it to go up, or are we renovating it? Are we raising rents? What are we doing?” You’re the one that creates the plan. You’re in charge of it. You’re also in charge of executing that plan. It is making sure that the contractors are coming, that the property managers are renting out the units, and that there’s marketing to the property.

You’re doing a lot of that stuff, and then at the end, you’re the one that does the exit plan. You either refinance it or sell it. Active people are doing active work. It depends on what you want as a person. How do you want to design your life? That’s what I love about real estate. Anything you do in real estate, you’re going to do well. Is it active? Is it passive? Is it commercial? Is it residential? There are so many things that you can do, and you’re going to do them well. As long as you have the right team and the right education about it, anyone can do it.

 

It’s available to anybody. That’s what I love about real estate. That’s not true in other parts of the world, but here in the United States, we are so lucky. The government even helps you do it and rewards you for doing it. They want people to own their houses. They want people to feel committed to their communities. They want that, so they encourage us to do that.

It’s interesting because when we look at passive versus active, there’s a whole spectrum of passive versus active. The ultimate passive is investing, for instance, in REITs or syndications. I’d love for you to address that. It is all the way to fully actively being the syndicator doing all of those other things. Personally, I have an active model, but I only 5 five to 10 hours a month. It’s active, but I consider it passive. For me, that’s what I consider passive, but you’re right. It’s not fully passive.

I’m my own acquisition person. I have the exit strategy. I’m calling the tenants for rent raises. I’m doing all of those things. It doesn’t take me a lot of time, so it seems much more passive than a 40-hour-a-week job or a 60-hour-a-week job, which is what I had before. It’s still very passive. It’s more active than what you’re talking about. Could you tell me a little bit about your perspective on REITs versus syndication?

A REIT is very similar to a stock. You are buying shares of a company that is owning and managing properties. You’re not owning the real estate itself. A positive with a REIT is that your money’s not locked into a property. You can buy it. The stock, you can sell it. It’s like the stock market. You’re liquid. You can go in, and you can go out.

What I don’t like about REITs is that you don’t own the real estate. You’re investing in a company. If the company is spread thin or something happens in the company, those shares do go down. It’s not a for sure thing, not that anything is for sure. Real estate is getting the depreciation from the real estate. If you are owning part of a company, you’re not getting the depreciation. In syndication, you are an actual owner of the property. You get a depreciation. You get the tax benefits without having the headaches of home ownership.

 

Thank you for that. That was awesome. I love what you’re sharing. I’m so inspired by your story and what you’ve been able to do. Could you tell us how people can get in touch with you?

I have an email account. If someone wants to email me, it’s [email protected]. You can email me. I’m happy to hop on a call and talk to you about what you want, how you want your life to look, how active you want to be, or how passive you want to be. Picture a day when you go to work because you want to go to work, not because you have to go to work. Picture a day when your spouse tells you, “You seem healthier. I love the freedom that we have now in our life.” Picture a day you can travel if you want to travel, relax if you want to relax, or serve others if you want to serve others. That’s what real estate investing can do for you. That’s what it did for me. That’s why I’m so passionate about real estate and helping other people. Email me. I’ll be happy to connect.

I love that. Tell us a little bit about your free gift.

I offer a free masterclass about passive real estate investing, what it is, what are the different asset classes you can invest in, and the difference between active and passive. It is a lot more in-depth than we’re talking about here. We’ll talk about what syndication is and what returns we are looking for. You can find it at Invest.ShalwinProperties.com.

That is perfect. Thank you for that. That will be a great way for people to get started and get to know passive investing a little bit more. Thank you. We are going to be doing EXTRA, which is going to be about how to mitigate risk. We’re going to be doing a little more of a deep dive also on finding markets. We’re going to do that after our three rapid-fire questions. Are you ready for three rapid-fire questions?

I’m ready.

Give us one strategy for getting started investing in real estate.

The best way to start is to find out the different ways that you can start and figure out how you want to start. Do you want to be doing it all? Do you want to start passive and then be active later? Do you want to start active and maybe be passive later? Do you want to do both? The first step is to sit down and think about what you want to do and then do it. That’s my big thing. Taking action is so important.

I agree with you on that. What is one strategy for being successful as a real estate investor?

It’s important to listen to podcasts. This is an easy thing. Try to educate yourself by hearing people talk about stories about how they did it. Once you hear how they did it so many times, you start thinking, “I can do it, too. It doesn’t sound so hard.” Listening to other people’s successes and how they did it is important in being successful yourself because success leaves clues.

Listening to other people's successes and how they did it is very important in being successful yourself because success leaves clues. Share on X

It’s a personal self-brainwashing, isn’t it? It is building that confidence. It all starts in mind.

I believe that strongly.

Tell us one daily practice you do that contributes to your personal success.

We’re going to do mindset. I work on my mindset every single day. Stress is wired into me, whether I’m in the ER or doing real estate. My mind is always thinking. In calming my mind down, one of the big things that I do is meditate. I also practice something called reframing, where if you’re thinking one thing, you release, pause, and start thinking like, “Is this thought serving me? Is this helping me to think this way? How am I going to get where I want to be?” It’s certainly not going to be thinking this way. You got to start thinking the other way. Trying to manipulate how I’m thinking and trying to always reframe is a big thing that has always helped me.

Reframing is such an interesting thing because people are like, “You’re making it up if you’re reframing.” The thing is that you made it up in the first place. Any situation that’s happening could be happening to ten different people, and they would have ten different reactions. The situation is not the problem. It’s a story that we make up about it that creates our response. If you’re going to make up the story anyways, you might as well make up a story that’s more serving to your business, your joy, and your life.

There’s something in our minds that we have something called automatic negative thoughts. That is back in the caveman days when we were trying to protect ourselves. We’re like, “Someone’s coming,” and it could be a tiger or whatever it is. That is a preservation thing. Our mind does that. We have to stop. We don’t have to listen to every single thing our mind tells us. That’s something that is important for people to understand. You need to recognize when you’re starting to spin in a spiral of negative thoughts that might not be true.

True is an interesting word. There are some basic truths like don’t kill people. That’s probably a basic truth. In general, in our lives, truth is very subjective. What you’re perceiving is not necessarily true. I love that. Thank you so much for all that you’ve offered in this portion of the show. This has been wonderful, Ronnie.

Thank you so much for having me. I love talking to you.

We get to talk more in EXTRA. Stay tuned. We’re going to be talking about mitigating risk in syndications and picking markets. I’m super excited about that conversation. If you are subscribed to EXTRA, stay tuned. If you’re not but would like to be, go to RealEstateInvestingForWomenEXTRA.com. For those of you that are leaving Ronnie and me, thank you so much for joining us for this portion of the show. You know how much I love having you here. I look forward to seeing you next episode. 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 next episode.

 

 Important Links

• Dr. Ronnie Shalev
• [email protected]
• Invest.ShalwinProperties.com
• RealEstateInvestingForWomenEXTRA.com

 

About Dr. Ronnie Shalev

When I was an ER doctor, my high pressure job sucked the life out of me. I was left weary, burned out, and unable to enjoy my family, my kids, and my day-to-day life. Since I made great money, I felt hopelessly stuck in these “golden handcuffs”, and saw no end in sight.

Now I help others create PASSIVE INCOME so that they have the FREEDOM to do what they want with their time and not be held captive by their jobs.

SHALWIN PROPERTIES partners with investors who want access to real estate deals so they can get the benefits of real estate without the headaches of being a landlord.

Whether you want to diversify your assets, earn passive income, hedge against inflation, or maximize the tax benefits that come with real estate investing, Shalwin Properties helps you every step of the way.

 

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

Learn how to create a consistent income stream by only working 5 hours a month the Blissful Investor Way.

Grab my FREE guide at http://www.BlissfulInvestor.com

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Passive Investing: The Key To Achieving The 5 Freedoms In Life With Whitney Elkins-Hutten

 

Passive investing is one way to the five freedoms in life: freedom of income, choice, independence, location, and impact. When you get into passive real estate investing, you need to be sure of what you want, why you need it, and what you need to do to get it. Once you know those answers, you will be free financially and personally. Join Moneeka Sawyer as she talks with the Director of Investor Education at PassiveInvesting.com, Whitney Elkins-Hutten. Listen in as they discuss how you can achieve true financial independence in real estate. Learn why financial freedom isn’t the only freedom you need in life. Find out how to time block your calendar to make the most out of your time. Plus, discover how to get into real estate syndications. Tune in for more!

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Watch the episode here

 

Listen to the podcast here

 

Passive Investing: The Key To Achieving The 5 Freedoms In Life With Whitney Elkins-Hutten

Real Estate Investing For Women

I am so excited to welcome to the show, Whitney Elkins-Hutten. She is the Director of Investor Education at PassiveInvesting.com and a partner in $700 million in real estate, including over 6,300 plus residential units and more than 1,400 plus storage units across 8 states. She experienced flipping over $4 million in residential real estate. That’s an awful lot of real estate, Whitney. Welcome to the show.

Thank you.

Whitney is one of these patient beautiful people we’ve had to reschedule several times. I super appreciate that you are even here. Thank you so much for that.

My pleasure. I’ve had to reschedule myself.

Whitney, could you give us the high-end version of your story? Why are you in real estate? How did you start? Give us the short and dirty version.

I started in real estate investing in 2002 by accident. I started as an accidental landlord. I bought a house with a significant other. About a month later, the relationship fell apart and the house and everything were in my name. I was terrified. I was like, “What am I going to do?” I was young and didn’t have a family at the time so I stuffed the house full of roommates.

The house also needed a huge rehab. There were psychedelic flowers painted all over the walls from the 1960s that had never been taken down. Poor layout, you name it. A green sheet was covering beautiful hardwood floors. My roommates didn’t mind living in a construction zone. As a matter of fact, I paid them a lot for beer, pizza and sushi.

We turned that house around in about eleven months. When I sold it was probably my number one investing mistake because I didn’t realize the power of real estate at that particular time. I had read Rich Dad Poor Dad and got it all wrong so I had to go back to school. What I did realize when I sold that property is I made more in eleven months than I did in my day job working 60, 70 and 80 hours a week in public health and traveling all the time.

I hadn’t been paying for my housing at all because my roommates had supported the majority of the bills with rent. I was like, “How many more times can I do this?” That term is called live-in flipping. I did a few more projects by myself and then my husband eventually joined me. Not all projects went extremely well. Maybe some people here have heard of the story where the bus fell into the roof of one of my properties. Yes, that did happen. Most people are like, “How does the bus fall on the roof?” On a mountainside, it will happen there.

Fast forward to ten years, I found myself not able to leave my day job. I didn’t have any more financial independence than I had started with. I had buckets of equity but I couldn’t pay my day-to-day bills consistently with that type of income. It dawned on me. A friend of mine mentioned to me one day, “Why don’t you keep those properties and put a renter in them with that land?” I scaled to about 30 properties. About a year and a half, single-family properties in-state and out-of-state.

Another problem is that I was able to step away from my day job to be at home with my family and our young daughter but my husband couldn’t because we couldn’t pick up properties fast enough. We hit another ceiling of achievement and had to learn how to scale through the larger multifamily property. We did it both actively and passively.

I quickly learned that I’m more geared toward the passive side of investing. That brings me to where I’m at. I’m still a partner in all that real estate that you named. However, one of my favorite investment vehicles is how to get into passive real estate like multifamily, self-storage, car washes, hotels and even real estate debt.

That’s what’s been able to afford my husband and me to have the five freedoms in life, freedom of income, freedom of choice, freedom of location independence and freedom of impact. That’s what I get to do here every single day at PassiveInvesting.com. As the Director of Investor Education, I help people realize those same goals for themselves. It’s a journey I took.

 

It’s so interesting that you did read Rich Dad Poor Dad. That’s the book that seems to start a lot of people on investing. You’re still like, “I’ll get rid of this one.” I have to tell you that I made a similar mistake. I hadn’t read Rich Dad Poor Dad at the time because it wasn’t out. That’s how old I am. I sold my first piece of real estate too. Years later, I was like, “What was I thinking?” We bought it for $200,000. It is now worth $1.75 million. That’s the way things go.

It was the second book for me and Cashflow Quadrant. I know Robert Kiyosaki goes over the cashflow quadrant in Rich Dad Poor Dad. I wasn’t in the space to absorb what he was trying to say there. I knew I had landed on something with real estate. I still had this thought that I have to put in all the work. That’s the only way that I can be rewarded. I have to provide all the value.

That’s not necessarily the case. It was more about how can you shift your income from trading time for money into either building your business or learning how to invest in other people’s businesses. It was about ten years after that when I hit the first inflection point. When we decided to start holding onto some of these properties that we were flipping, I read that book. It was a slap in the head.

Tons of bricks came crashing down because how many flips had I done before then that we hadn’t held onto? I’m like, “That would’ve been amazing if I could have kept them all.” We were buying with a low down payment. We had low-interest rates. We were able to use 203(k) loans for construction because we were living on the property. We were using the 121 exclusion, which is the 1031 exchange for real estate investors to keep our capital gains tax-free. How powerful would that have been if I was able to keep all of those?

I love this conversation, Whitney, as we’re starting together because I would like this to land with people. Much of the time, people that are reading this show understand real estate and what leverage is to a degree. It is hard to switch from the mindset of trading time for money to having your money work for you passively.

You work on the front end but then you let it work for you after, in a way, like hiring an employee that you don’t have to manage. There are a lot of people that have W-2 jobs that have a hard time making that switch. It’s interesting that you mentioned that even as a flipper, you were in real estate and still had trouble making that mental switch.

I have a lot of properties where I have tenants in them. They’re mostly passive. We know that as a landlord, if you’re managing your property, it’s mostly passive, not completely passive. I make a lot of rent and appreciation on those properties by doing very little work. Relatively, the trading time for money is very low. My ROI is huge for the time that I spend.

I am trying to move to fully passive. It’s even hard for me to go there because once you’re used to being in a way of doing things, it’s hard to go to that next level. I wanted to say that so that the ladies that are reading can see that if you’re having trouble fathoming this and taking that next step, understand that all of us, from the people at the very beginning to the people that have reached great heights in real estate, do have trouble making paradigm shifts when we’re going to the next level. Sometimes we need to hear, “It’s okay. You’re not alone. We all do this,” but it is necessary to make that paradigm shift to get there.

You talk about paradigm shifts but for me, it was my identity. The initial shift of being able to step into real estate and allow it to work for me. Shifting my active income from my public health job into being a real estate professional. I spent how many years in school and training, studying for board exams and all of that. I know that if I want to have true financial independence, I have to let that side of me go. It’s not that I will never do public health ever again. It’s just that I’m not a public health professional, I’m an active real estate investor. I have a lot of controlled property that I own and I use property management.

If you really want to have true financial independence in real estate, you have to shift your identity solely to real estate. Share on X

As I started unwinding some of that portfolio and shifting it into truly passive investments, passive with your time and income, that was another identity shift. Those core 30 single-family properties, my babies, I had trouble letting those go because I was like, “I’m a single-family investor.” That’s what I do. I knew if I needed to go to the next level, that part of me, I needed to shift my identity yet again to be a real estate investor. You get to create more impact in the world too whenever you do that. For me, it’s those 30 single-family properties. At one point in time, we were up to 52 between Indianapolis and Kansas City.

If you think about it from how I was paying my real estate taxes, I’m only impacting 2 areas and 52 households. Now, I’m across eight states and multiple cities in those areas. The taxes that I pay in those areas and the thousands of families that we’re able to impact, it’s a greater impact that I’m able to create. It is like Marie Kondo. You got to give that old you a little hug and then step into the new you to realize that full potential.

It is interesting because we’re evolving beings and we have so much potential to evolve as human beings but then also financially in our impact on the world and those sorts of things. You’re right. Every single time we step into that new identity, it’s a complete transformation. What also can happen to a lot of people is this Imposter syndrome. “I don’t belong here. I got all those degrees. That’s where I belong. I’ve been doing this for 40 years. This is where I belong.”

The thing is that nobody defines where you belong except you. I have often said, even about Imposter syndrome, that if you’re not failing it, you’re not going big enough. You’re not pushing yourself to that next level. When you push yourself to that next level is where you start to feel that doubt but you’ll get there. You did it the first time too.

To become the identity that you are now, you pushed. You did this education and all these hard things to become that person. Ladies, I wanted you to know this. Maybe it’s time for that identity shift so that you can go to that next level. You have 5 different kinds of goals that you look at in life and 5 areas of financial freedom. Talk to me a little bit about your perspective on goals, not financial freedom but five kinds of freedoms.

These aren’t concepts that I’ve created. These are things as a student of history. My dad was a History major and I rebelled against every museum he ever took me to. It wasn’t until he took me to Custer’s Last Stand in Montana that I was like, “I need to get this. I need to start studying the past.” Studying these great people so we can learn.

The reason is not that we will never make mistakes ever again, but so we can collapse time and get through those obstacles and mistakes faster. I know that was a little bit of a tangent but stick with me here. When I started hating those first levels of achievement, even with that first house, I’m like, “The first house went swimmingly. In the second house, I did everything wrong. What was happening?”

I essentially repeated the same thing but here I barely broke. My neighbor tenant who was living in a bus fell into the roof of the property the day after it sold. He’s pulling a shotgun on the police. I’m like, “What? I went off the rails somewhere.” It was because I hadn’t taken to heart the lessons that I could have been learning. I don’t have to learn them all myself. I can learn from other people.

Long story short, it was like, “Success leaves clues.” That’s one of the quotes that I love by Tony Robbins. Who can I learn from and start piling all these different pieces together? When I heard about the five freedoms in life, I was like, “That’s it.” When people said I’m pursuing financial freedom or financial independence, I’m like, “That’s one but there’s something else there for me to pursue.”

It can’t all be about money. I landed on choice in time but there’s still something else there for me to pursue. When I heard about the freedom of location and independence but more importantly, the freedom to create an impact, I was like, “That’s it. That is what I’m after.” Every time that you talk with an investor or a client and you start to uncover what they’re trying to achieve in life, it’s going to boil down to one or multiple of those freedoms.

That’s step one. What do you want? Which of these freedoms are you truly going to go after? Step two isn’t about re-engineering the math behind how to hit that freedom. This is where a lot of people sell themselves short. They’re like, “If I want to have financial freedom, time freedom and be a location independent, I need 20 houses to go hit $10,000 a month.”

That’s not the question you should be asking yourself. You need to understand how you want to feel when you hit whatever X goal is, financial independence or freedom of choice. You’ll always move the goalpost on the number of houses and the amount of income that you want to create. That’s how people go through life unfulfilled if they continue to move the goalpost. We all do it.

 

Whenever they can define how they want to feel, that’s when they understand what enough and fulfillment is. You can always do more. There’s always room to do more but you have to understand for yourself, “How do you want to feel whenever you do attain your goal?” Understanding, “What do you want? Why do you want it?”

We can start re-engineering, “What kind of mindsets and skills do you need to acquire? Whom do you need to have in your world? Does it have to be you that does things or can you hire it out and shorten your path even further?” Those are the three centering questions that I challenge anybody when they’re working through their goals.

As we decide on a goal or land on a goal, for this conversation, we need to decide on strategies that are going to help us to get there. How do you recommend people do that?

That would be in that third question. Who do I need to become to achieve the goal? Do I need to let go of an identity? Do I need to shift my mindset? What do I need to embody to be a real estate investor that’s bringing in $10,000 a month? I have to probably break those initial identities around being an employee who’s told what to do.

I’ve got to switch to an entrepreneurial mindset. Thinking through what are those mindset changes that somebody needs to make. This process can take a couple of hours in the afternoon to think through. Once I’ve made these mindset changes, I’m going to pretend that I am this entrepreneur that’s bringing in $10,000 a month. What kind of skills does that person need to have? They probably need to have some financial skills, goal-setting skills, team-building skills, relationship-building skills and negotiation skills.

In some way, processes around tracking progress and continually checking in with themselves. Not once a year, not every six months, not quarterly. Weekly or daily. Whom do you need to have in your world to make this happen? When we’re first starting, we’re probably the ones that are wearing all these hats as the operator of our business. I encourage people to think future state in 1 year or 5 years. Elevate yourself to CEO quickly, which means you shouldn’t be the one posting on social media or sending out networking emails. You might have to do that at the very beginning but quickly let go of that and start bringing people into your role to help you out with these things.

Think about how you’re using your time. I take people through a wonderful exercise on time management. It’s helping them color code their time and putting dollar amounts to the activities they’re doing in their day. The shift in thought can be overnight and very impactful when you realize that you’re doing a lot of things that are robbing you of money, as opposed to giving you wealth, not only financial wealth but personal wealth, health wealth and stuff like that.

You could be doing things that are actually robbing you of money as opposed to giving you financial and personal wealth. Share on X

I’m super curious about the color coding your time blocking to see where you’re losing your time.

I would encourage the people who are reading to go and look at your calendar. Write everything down. Maybe you’re doing this retrospectively. It’s like doing a food diary. Nobody wants to write down, “I had a Snickers bar or I drank a Coca-Cola,” especially if they’re trying to lose weight. Do that. Write everything down.

How much time do you spend on social media, watching TV or doing all these things that you may not need to do to be successful? Once you have it all written down, this is about getting real with yourself. You’re going to go through anything that you’re getting paid $0 an hour to do and color code it brown. This might be mowing the lawn, washing dishes or doing laundry. I’m not going to beat up TV, social media or anything like that.

The next thing to do is to go through and do any of those administrative tasks that you have to get done. They are related to your business but there’s no exchange for money. Maybe it keeps the lights on. You would pay somebody $10, $15 or $20 an hour to do. Color code those in light green. There are going to be those activities whenever you step it up. They’re going to be networking events or meetings that only you can do but if you train the right person to do it, they can do it. Maybe those type of activities yields you $100 to $1,000 an hour. Color code those in the brightest green you possibly can.

You’re going to go through any of those activities that only you can do that you love doing and you’ll do $2,000 or more an hour. Color code those gold. If your goal is to spend more time with family or your health, those things are priceless as well. Color code those things gold. The first time somebody does this, they’re going to realize that their calendar looks like a pile of poop. It’s a lot of browns. We’ve given the context of where you’re spending your time.

What do we do? We try to reduce, eliminate or outsource as much as we can the brown things. Cut what you can. Get it all gone. It’s hard like going on a diet. Those things tend to creep back in. Automate whatever you can and then outsource. Do you have to be the one to mow the lawn? Do you have to be the one to do the laundry? We’re outsourcing to our daughter some of these things so she can provide value to our household. I love gardening. I know I don’t need to be shutting down the garden for the winter. I have somebody coming tomorrow who’s spending all day gardening. I get to tinker around with my little herbs.

The light green things are going to be the first virtual assistant that you’re going to hire. They’re going to take on all of those low-level tasks for not that much. Maybe you pay them $10 or $15 an hour. They’re going to get it done so much faster than you can because that is their primary job. As you start scaling your real estate business, you’re going to start bringing in more people or partners to help share the load on those bright green tasks.

What that does is it’s going to open up more time for you to bring in those yellow tasks, those conferences that you should be going to network, the deal-finding activities that you need to be doing to scale your portfolio, spending time on your health, your family and relationships with others. We’re starting to open up time. When people say, “I don’t have time,” it’s a clue that tells me that they haven’t done this inventory to understand how they’re spending their time.

 

On the other side of that, when you free up a lot of your time and you say, “I don’t have time,” it’s more about examining, “Is that because this is something you don’t want to be doing?” You can take it on both sides of that. In the front end, you clear up a lot of that time if you’re still feeling like, “I don’t have time.” You do have time now for the things that are important to you. Are those other things not important to you?

Also, if they’re not in alignment with the goal. I sit down with my family once a quarter and do what we call a dream session. What are the things that we want to learn and experience and how do we want to give back? Those are the three key areas for happiness. There are so many things that I want to learn like language and playing chess.

I have 50 things written in those categories but I don’t have time to do it all. You continue still to have to make choices. The things that you still can’t make time to get, does it align with your goals? How bad do you want it? We’re centered back on those three questions. “What do you want? Why do you want it?” Sometimes you have to purge. Every year, I purge a lot of the activities that I thought would be cool to do. I’m like, “They’re not. I don’t want this.”

Thank you for that. That was super awesome. I’m going to try that. I love the visuals of the colors. Talk to me about real estate syndications, syndicators, operators, markets and all of that stuff.

I have a whole process. I have boot camps. People can reach out to me. It’s this little ten-minute primer. It’ll work for them because it is truly a process. The first thing to understand is syndication means group investing. A lot of people initially are like, “I don’t understand what syndication is. It sounds like the mafia.” It’s not. Syndicate comes from the Latin word “As a group.” As a group, how can we take down a larger asset?

Syndication means group investing, it's not anything mafia-related. Share on X

We split that group further down into limited partners and general partners. General partners are the ones that are going to be the day-to-day operators who run the business. They’re going to be sourcing the deal, underwriting the deal, acquiring the deal, raising capital and figuring out credit and lending. They’ve got all the brokers and lenders. They can get other investor capital pulled together. That’s their core business.

The limited partner’s job is to do three things. Vet the operator, market and deal. That’s it. Once they write that check, essentially, they still have other jobs because they’re in a partnership. They still need to read the communication, ask questions and be responsive to any needs that the general partner has of them. Largely, their day-to-day operation role is non-existent. They’re done.

This is a great way for somebody who’s a high net-worth individual and somebody ready to transition from having their controlled portfolio. They’re ready to fire Home Depot and their property manager and get their time back. This is a great avenue. It can even be a compliment to somebody’s portfolio. Maybe somebody loves doing this specific niche part of controlled real estate.

They want to have exposure to multifamily, self-storage, car washes and hotels but they can’t. They shouldn’t and they can’t go learn it all and be the expert in everything. They can invest with experts. That’s what syndication is. The first question in this process is, “Do you love real estate?” If you can’t check that box, this isn’t for you. “Do you believe in real estate?” That’s a better question. A lot of people here do believe in real estate already. We can check that box.

The next question is, “What are your goals?” Do you need cashflow, tax benefits, equity or diversification? I have a whole eBook that walks people through this exact process. You need to understand your risk. Do you want a class-A asset? No CapEx, no maintenance. Do you want more value to add or plus assets where there’s maybe a little bit of CapEx and deferred maintenance to work on but you get maybe a deeper discount on the property?

Are you swinging for the fences and you want a development deal or a heavy-value add opportunistic deal? There are different reward profiles and risk profiles for all of these different types of assets. You have to understand what fits best for you and your portfolio. That’s all the groundwork. You have to do that groundwork first and it doesn’t have to take long. I walk people through a process that takes them an hour to get all these questions figured out for themselves.

It is then the time to go look for operators. We’re looking for high-quality operators. One of my favorite ways to find operators is by going to conferences or meetups. You can do a simple Google search if you would like but you got to get good at discerning great marketing versus a great operator. Always get on the phone with the operator before you ever write a check. One of the number one investing mistakes I see limited partners do is that they love the operator. They’ve heard about them through a friend but they don’t get on the phone with them themselves to fully understand if this is the right person for them to be in partnership with.

 

We’re trying to figure out, “Are they genuine, authentic and transparent? Do they have a background in real estate? What is their track record? What exits have they currently produced for their limited partners? What are their biggest challenges have been?” We went through the COVID pandemic. We’re butted right up against heavy inflation and a recession. We’ve had all sorts of weather-related issues in the past couple of years.

There has to be some challenge that’s cropped up. I’m not looking for an operator that has had zero challenges. I’m probably more attuned to invest with an operator that has had challenges and overcame up well versus somebody who’s never had a challenge. What you’re doing when you go into passive investing goes back to that identity shift.

You’re no longer the day-to-day operator on a deal. You’re investing. According to Robert Kiyosaki’s Cashflow Quadrant, you’re getting into that self-employment category and shifting into that investor category where true financial freedom and time freedom are found. You have to get good at vetting operators. The other mistake I see limited partners make is that they get starry-eyed by returns on deals. I can put any number down on these papers guys.

I can show it to you but the operator is the one that has to deliver so you’re investing in people primarily with this type of strategy. Whereas before, you were the strategy and the person. Essentially, this was leveling up, becoming the CEO and back-filling with a Director of Operations or a CO to help build and scale your investment business. There’s a wealth of questions that you can ask an operator here. That gives you a high-level little primer on that but then you want to understand what markets they’re in. I encourage people when they’re moving into passive investments to be in markets where a lot of investing cards are stacked in their favor.

When you're getting into passive investments, make sure you are in markets where a lot of investing cards are stacked in your favor. Share on X

I like metropolitan service areas, maybe in the primary area or the secondary area or 35 to 40 miles from the city center. There’s a lot of infrastructures there. There is going to be a lot of money put into these areas. Certain areas are scaling there. They’re becoming a tertiary market and they’re scaling to a secondary market. You can find those areas to be on the path of progress but we’re looking for areas where the population, income growing and jobs are growing and diversified. Crimes and poverty is coming down.

We’re also looking for areas that have good landlord-tenant laws, especially if you’re going into multifamily. Certainly, good tax laws because taxes are one of your number one expenses on any real estate asset. If we can be in those pro-business areas, that’s even probably a feather in a cap for an investment. There are tons of other questions there and resources that I can share with people on how to suss out good markets and then we get down to the deal. A lot of people are like, “Show me the returns and the money.” That’s not where we should start.

 

We need to double-check that deal. Does it match our goals? Where do we want to be invested? How do we want to be invested? Equity, tax benefits, diversification, is it in the markets that we want to be in? We can start getting into the business fundamentals of the deal. Does it have the risk profile that we want to have or be exposed to? Does it have the time horizon that we want to be exposed to? Does it have a distribution schedule that works best for our finances monthly, quarterly or annually?

We can start getting into the return profiles on the asset. There’s a wealth of other things that people need to do to complete actual true due diligence when they look at a deal. Those are some high-level screening-type questions to help somebody get jumpstarted into passive investing. When they look at an initial deal, to understand in a few minutes whether that deal will work for them.

Is all of that covered in the book that you’re going to be giving my ladies?

Yes, and more.

Why don’t you tell us a little bit more about that book? Ladies, Whitney has been super generous. She’s giving you a digital copy of her book.

It’s called The Passive Investor Playbook. It’s the ultimate guide for hands-off investing. It’s a free eBook. You can go to PassiveInvestingWithWhitney.com. It’s a subpage on the PassiveInvesting.com website. Be sure to go to PassiveInvestingWithWhitney.com because that’s the only place where you can get this eBook. Once you read it, I also put together a short checklist for people, that way they can have that short checklist and do a quick screening on a deal in the future once they learn these general principles. There is an opportunity to schedule time with me and we can talk about all things real estate. I love it.

I love that. Thank you so much for your generosity in sharing that. This has been good. We went a little bit off-topic of what we were originally planning on talking about but I feel, Whitney, you’ve offered such valuable information to my ladies. I super appreciate that.

It’s my pleasure.

Ladies, one of the things I asked Whitney to talk to us about in EXTRA is car wash deals. This is something that nobody has talked about on this show and I’m super intrigued about it. We’re going to talk about investing in car washes and what that looks like. Stay tuned for EXTRA to know more about that. Before we go into EXTRA, let’s do our three rapid-fire questions. Tell us one super tip on getting started investing in real estate.

The super tip is going back to understanding the three questions. “What do you want? Why do you want it? Whom do you need to become to get it?” When you answer that third question, it’s mindset, skills and networks. That’s what you’re digging into. It’s not a one-and-done deal. Continue to ask those questions. If you’re just getting into real estate, do it once a quarter. Once you get solid in your plan, do it every six months. Eventually, you do that as an annual ritual.

Before you get started in real estate investing, you need to know what you want, why you want it, and who you need to become to get it. Share on X

1) It’s going to take you time to land on what you truly want. 2) Your wants are going to change as you move those goalposts down. Those are the three centering questions. My family does that still once a quarter to double-check that we’re flying the right path. If you’re flying from LA to New York, the majority of the planes are always off-course. If you can continue to do small course corrections, you’re going to eventually get to your destination.

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

Understanding very quickly that it’s a who, not how game. That can be from delegating, offloading, automating and also relationship-building. You don’t need to do this in a vacuum alone. With many of the people that I work with, that is a hard challenge. We’re brought up as employees to do your work. Even in school, do your work, stay at your desk and don’t look at the other person. That’s not how real estate goes. The quicker that you can understand that it’s a community, it’s a team and the majority of the people are working together to get deals done, you’re going to scale fast.

Thank you for saying it exactly that way. I love that. What is one thing that you do daily that you would say contributes to your success?

For me, it’s putting my oxygen mask on first. I get out of bed. I have a kid, a dog and a husband. The first couple hours of my day are all focused on me and getting my top priorities done. My priority is my health and my relationships. Also, what is the first goal that I need to do and tackle getting those things done? I sound like the Army commercial like, “We get more done by 10:00 AM than most people do in a day.” That’s pretty much what I do but it’s putting my oxygen mask on first, eating, getting those things done and moving those chess pieces early on in the day.

By 10:00 AM, if my day gets derailed, I’ve already won it. My day on Monday got derailed when we had to take my daughter into the emergency room. She’s fine. I had already been up for a couple of hours and I was like, “Here we go. We’re doing this.” It didn’t set me that far back because I had already moved a lot of those chess pieces pretty early in the day.

That is great advice. Thank you for everything you’ve offered on this show, Whitney.

It’s my pleasure.

We’ve got more. We’re going to be talking about car washes. I’m so excited. If you are subscribed to EXTRA, please stay tuned. If you’re not but would like to, go to RealEstateInvestingForWomenEXTRA.com and you can subscribe there. For those of you that are leaving Whitney and me, thank you so much for joining us for this portion of the show. I super appreciate you and 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

• PassiveInvesting.com
• Rich Dad Poor Dad
• Cashflow Quadrant
• PassiveInvestingWithWhitney.com
• RealEstateInvestingForWomenEXTRA.com

 

About Whitney Elkins-Hutten

The beginning of my real estate career went better than most—my first ever rental in 2002 was a huge success. It was on my second deal that I almost lost it all.

Those two experiences shaped my real estate journey into what it is today. Knowing there had to be a right way and that success always leaves clues, I studied the greatest real estate juggernauts and was able to replicate the personal finance and wealth creation strategies that they used to create financial freedom.

 

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