BiggerPockets Real Estate Podcast - 308: From 0 to 400 Units in 3.5 Years with Sterling White

Episode Date: December 13, 2018

Would your life be positively impacted by owning over 400 rental units? What if you could get there in under four years? On today’s show, we interview BiggerPockets contributor Sterling White, who has managed to do just that! Sterling shares how he started his entrepreneurial journey selling Pokemon cards and eventually worked his way up to owning over 150 single family properties (and several multifamilies as well). He also shares how he finds 90-100% of his properties OFF MARKET using a five-step system for finding and closing on them (so simple anyone can do it), as well as the script he uses when speaking directly to sellers. You don’t want to miss his powerful secret for building rapport with potential leads (by sending a specific puzzle to them in the mail) and how he raises money to close on these properties. If you want to scale your business and want the blueprint for how to do it, don’t miss this powerful episode! In This Episode We Cover: How Sterling got into real estate, working for free just to learn Negotiating equity: What is it? Why you possibly shouldn’t go the wholesaling route The benefit of focusing on your strengths How to work with your family and friends and branching out from there How he finds deals—cold call mixed with direct mail Why he sends Rubik’s cubes to prospects Tips for creating a network of investors by building a funnel What his team looks like And SO much more! Links from the Show BiggerPockets Forums BiggerPockets Calculators BiggerPockets Events Mentor Better Business Bureau BiggerPockets Blog BiggerPockets Facebook Profile BiggerPockets Podcast 061: How to Succeed in Multifamily Investing – A Unique Conversation with Josh, Brandon, and Ben BiggerPockets Podcast 170: The Journey From Flipping Houses to Owning 1,470 Units with Andrew Cushman BiggerPockets Youtube Channel Upwork Fiverr ListSource Brandon’s Instagram David’s Instagram Books Mentioned in this Show 90 Days of Intention by Brandon Turner (Journal) Jab, Jab, Jab, Right Hook by Gary Vaynerchuk Multi-Family Millions by David Lindahl Lead the Field by Earl Nightingale Fire Round Questions Should you invest in a passive deal first or jump straight in to being a deal sponsor? What do you believe are the pros/cons or benefits/risks of investing in multifamily and residential rental properties? Can you wholesale multifamily properties? What expenses I should consider when analyzing an apartment complex? Does anyone have any creative ways to target owners of apartment complexes to try and complete a deal? Tweetable Topics: “You just have to train yourself to get past objections.” (Tweet This!) “Share your story to other people who are where you were.” (Tweet This!) “If you can’t negotiate the price, negotiate the terms.” (Tweet This!) “Everything is selling. Even when you’re buying, you still have to sell.” (Tweet This!) “We all have a short amount of time on this planet, so might as well go after your dreams and goals ultimately.” (Tweet This!) Connect with Sterling Sterling’s BiggerPockets Profile Sterling’s Company Website Learn more about your ad choices. Visit megaphone.fm/adchoices

This is The Bigger Pockets podcast show 308. Even though you're buying, you're still ultimately selling. So I'm going to drop a gym for you guys here is I send Rubik's cubes to owners, but it'll have a small note that say, let's figure this out. Just staying top of mind because once they do decide to sell, they're going to think of the guy that sent the Rubik's cube. That's the buyer. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small.

If you're here looking to learn about real estate investing without all the hype, you're in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online. What's going on, everyone? This is Brandon. Today's host of the Bigger Pockets podcast here with my co-host, Mr. David Green. What's up, buddy? Not much, dude.

I was just about to ask you the same thing. It's actually really smoky out here in California. There's been a couple wildfires. You guys got the fire. Luckily, I'm safe, but the air is really bad. Yeah. Sorry about that. But, you know, thank you to all the firefighters out there putting out those fires.

You guys rock. So, yeah, today, show. It's a good one. You ready for this? Very good. We have a very popular contributor on bigger pockets named Sterling White. Sterling puts out a lot of blog posts. He makes videos.

He's always educating people. And today we get to dive a little deeper into Sterling's story, which actually has a nice little ring to it, and find out, like, what he does and how he does it. That's true, yeah. So we cover everything today from, like, he basically has gone from zero to, like, negative net worth to, like, 400 units in three and a half years, which is crazy. And he's actually about how he does that by, like, knowing what he's good at and knowing what he's not good at. Also, like, his, make sure you guys listen for his Rubik's Cube thing, which is incredible. You guys are going to love that, his story about Rubik's cubes and all sorts of good stuff

today. So you're going to like this a lot. So hang tight for that. But before we get to that, let's get to today's quick tip. All right, as you know, last week, we launched the new 90 days of intention journal here on BiggerPockets.com here on BiggerPockets.com slash journal before the end of December, you not only get the journal, but also access to an exclusive online class. I'm teaching on productivity. You're going to love that. And it remind you also that if you get it before the end of the month, you'll also get access to your very own intentional mastermind group with three to five other people in the bigger pockets community working on their big 90-day goals. Like I really believe that this mastermind group thing is going to be like the most powerful

part of this entire thing. And then two more final things before we move on. Number one, we only printed 5,000 copies of these journals for the first run and they will sell out. I'm 100% sure. So get yours today if you want it before the new year. And secondly, you can actually buy these in four packs and save 30%. It's basically like buy three, get one free for an entire year's worth of journals, right?

Because 90 times four is almost 365, right? So anyway, I challenge you to jump in with the journal, jump in with the intentional mastermind groups, and let's make the next 90 days of your life the most incredible 90 days ever. Go to biggerpockets.com slash journal. And that is today's not so quick tip. A lot of property managers think their job is answering tenant emails and coordinating repairs. That's not the job. The job of a property manager is protecting and growing your operating income and earning your trust while they do it.

And that comes down to three numbers. occupancy, delinquency, and net promoter score. If those numbers slip, your income slips, and your trust slips too. And most PMs don't hold themselves to performance standards. They focus on activity, not outcomes. Mind is different. They obsess over the metrics that actually grow your cash flow. Go to mind.co slash show me to see how mine performs and get a month of management for free.

Because if you're going to hire a property manager, hire one that manages your investment like an investment. Here's the thing about traveling. If you buy food at the airport, a burrito, salad, bag of peanuts, you start wondering if you should have opened a savings account for snacks. So wouldn't it be great if you could actually earn money while you're traveling? Well, you can. Airbnb has something called the co-host network.

While you're away, you can hire a vetted local co-host with hosting experience to help take care of things, communicating with guests, preparing your space, managing reservations, Everything runs smoothly while you're off making memories. Your home might be worth more than you think. Find out how much at Airbnb.com slash host. We all joke that rentals are passive, but if you're spending nights matching receipts

or guessing what a property earned last month, that's not passive at all. Baselain fixes that part of landlording, the financial chaos. Their banking and AI bookkeeping system automatically tags every transaction, updates cash flow insights in real time, and builds the reports you need for tax season.

You can even automate transfers and move money around without paying wire fees. It's just cleaner. Sign up at baselane.com slash BP and get $100 bonus. Baselane is a financial technology company and not a bank. Banking services provided by Threadbank. Member FDIC. And with that, let's get to today's guest.

As we said, today's guest is Sterling White. An awesome real estate investor really knows this stuff, crushing it, zero to 400 units in three and a half years. You guys are going to love this. So let's bring them in. All right, what's going on? Sterling, welcome to the Bigger Pockets podcast. Good to have you here. Oh, yes.

Let's bring the heat the fire. I love it. Dude, you know, like, it's funny. Like, you and I just met here in person. Like, well, I don't know. Do we call Skype in person? Whatever this is. But, like, you've been doing videos at BP.

You've been doing blog. I mean, you've been around for a while now, but I'm honored to finally meet the man today. So I'm pumped. I'm probably more excited than you are. It's going to be great. No, I'm more excited than you are. I just have to one up you. All right.

All right. So we're going to go to the very beginning of your journey. How did you get started? with real estate. What did you do before that? How'd you walk into it? Yeah. So this goes back to my early days childhood. I got into the whole entrepreneurship field, elementary. And through that is my first product was selling Kool-Aid, the kids around the schools, the classes, and then Pokemon cars. So ultimately, anything that I can get my hands on was born and raised here in Indianapolis, Indiana, the not so good parts of the city where you couldn't walk your dog,

during the nighttime or even during the day. Yeah. So to fast forward, how I got into real estate was ultimately the universe. I had a roommate in college, which he was in the construction field. And he said, hey, why don't you come work alongside me? And that's how I got the bug on the real estate and fell in love with it ultimately. Very cool. So tell us about the very first deal.

Like, what was the very first thing you did with real estate? So the very first deal was, I would say, I found this for my mentor, which I would mention to everyone, if you could find a mentor when you get started in the industry, it's huge. I actually started working for this individual for free. So I found a deal and they brought the capital. Well, he specifically brought the capital. And then I retain equity instead of just getting a simple wholesale fee. Interesting. Let's talk about that.

So first of all, I want to talk about the whole. I want to talk about the whole work for free thing, right? Because a lot of people are like, well, know your value, you know, know what you're worth and never work for free. How do you view that? God, I would say through the course of that, I learned so much. I would say it's probably over a million dollars or $2 million of tuition. People thought I was crazy, but there was so much real life experiences that I got from that

that I did not in college whatsoever. So that's kind of how I viewed it. Yeah. Yeah. So would you advise other people. It's okay to work for free then? I would say if you can get paid for it, then go that route. But for me, I just wanted to learn ultimately.

Cool. I like it. So, okay, so tell us that first deal. You said instead of a wholesale fee, you negotiated equity. What does that even mean? Yeah. So it was a $40,000 a house, Indianapolis, very affordable houses here. I promise you, it was not falling over.

And so with that is I could have took a fee of sold it to him basically for $45,000, but instead I told him say, hey, I would like to retain 15% equity in this. And then you can have the remaining 85. And I was ultimately thinking long term versus on the short term. That's smart. So let me ask you, Sterling, I have a question about that. When you guys decided you were going to get 15% equity, did you drop some kind of operating agreement so you'd understand, like, what if one of you wants to sell it?

one of you wants to keep it. Do you only get paid at the exit? How do you split up the cash flow? Can you tell us a little bit about like the way you structured that in case someone else wants to do the same thing? Yeah. So we did put together. It was a handshake initially, but he has the experience of being an attorney. And so through that he did draft up an operating agreement that said, okay, in the event that we sell, you would get 15% of the profits. And then also other cash flows, you'll get 15% as well. And then I'll get the remaining. So do you guys have an agreement in place for like reserves that you're going to have to keep and then anything above that you split up the cash flow. On that, that's a great question. I would say this was years ago. So do not know

the specific one to that one. That's fine. That's fine. And you know, it's often our early deals. Like, you know, we tell the stories on the podcast and they weren't always like one, we don't always remember every detail and that's fine. But also like they weren't always done right. Like if I get, if I told my very first property like what I did, like you should not do what I did on my very first property or my second or my third or my 10th or, you know, like, we learned throughout our careers. And that's, that's okay. It's kind of part of the fun journey that we're on. So, all right. So you, I want know, how did you find that first deal? You mentioned that and I just missed it or did you not mention that? Yeah. So that first one was actually found through another wholesaler. And this was 2013,

right when I was making the transition from the construction side to more on the investing portion. And through that is when you could actually get good quality deals from wholesalers, I would say. You say that like you can't today. What do you mean? I would say no, not for my experience. It's more of just overinflated and construction costs are way under what they're supposed to be.

Yeah, it's so true. Right. So why are there so many bad wholesalers out there? I think it's more of there's a lot of, I wouldn't say stigma, but a lot of people getting into the industry. us and there's what is it classes being taught on wholesaling so there's quite a bit of newbies that just don't know what they're doing just yet but i would say there's the whole 80-20 principle it may be even 90 10 principle in this case to where there's only actually 10% that are actually the ones

making moves and actually providing good deals that's so sure yeah and it's completely unregulated right it's like the wild wild west in the world of wholesaling there's no licensing there's no regulation like anyone can say, I'm a wholesaler. And what that really means is I'm acting like a real estate agent, but I don't have a license. And if they give you bad advice, they tell you it's a 30,000 rehab and it's a 70,000 rehab, or they lie on the ARV. They're like, oh, I didn't know. I thought it was. Here's the comp, you know, in Bel Air, even though I'm in Compton or something.

And it shows that this is what it should be. So they can give you like a massively inaccurate ARV. And there's no consequences for them if they do that. If it's a licensed real estate agent and they're giving you information that completely bad, they can get in trouble for it. But with wholesalers, there's not. So, you know, there's a lot of people out there that are hungry for deals. And then you have wholesalers that are basically, they're trying to learn about real estate investing while making money at the same time, which is very dangerous. So you got to be extra careful when you vet from a wholesaler. Wholesaling isn't really

a title that means hardly anything. So you're right. You know, like it's a market and it's hard to find deals. And it pushes a lot of people that make decisions that are a little bit riskier than they should be. Exactly. And always, just as an investor, do your due diligence. It's a wholesaler sends your deal is just don't go based upon what they say. You always have to complete your own research. Yeah, that's so true. I mean, like, I always tell people this about any kind of real estate. Like, never trust your agent, never trust your, I mean, that sounds bad, right?

But never trust your wholesaler. Never trust your mom. Like, at the end of the day, like, you are responsible for your financial. Like, you got to do your own math homework. You got to do your own, like, you don't just take at face value what an agent said a property is worth. like asking, well, why is it worth that? Show me some examples. You know, dig into a little bit.

Like, you got to take responsibility totally for like, hey, this is like, this is my financial future here. I'm going to do the work, you know, to make sure it is what it is. And that might be one of the reasons why you want to work for someone else for free because you can see the way they analyze deals, how they do their due diligence and see the process they go through and it gives you a better idea of how to do the same. And my biggest takeaway from that was they had, going back to the mentorship, was was able to compact 20 plus years knowledge and education mistakes into the two and a half,

three years working with that person. It was just huge. Yeah, it's huge. All right. So what came next after that very first deal? So the next deal. And then it basically just snowballed from that point to where I was doing some. And this was me figuring it out ultimately, is I was doing wholesaling.

I was doing buying hold. I was doing fixing flips. And finally just decided on, okay, well, I'm going to go all in on the buy and hold. And just bought one single family and then just kept buying, buying, buying, buying, buying from that point. Yeah. So why did you decide to get into buy and hold? I mean, you were doing flips, wholesales.

Why the switch? The switch was, I've seen, if you look at the highly successful, they're ultimately buying and holding. And that's how they build their long-term wealth. there was the tax benefits, and then it's more of you purchase it, do the rehab, and ultimately, I would say there's less work when you think in correlation with fix and flip, which also on that side is it's highly taxable versus on the other side. It's passive income, so it's not as taxes it is on the other side.

That's very true. So tell us about your first rental property. So that first rental property, I would say which was the one I partnered with, with that mentor. and I learned so much because I was thrown into the fire ultimately. So I did the closing with the title company. I took all the tenant calls that came in. I managed the contractors. Gosh, it was a complete nightmare.

But I learned a lot and absolutely loved it and go back and do it again. No, actually, no, I wouldn't. Yeah, no, I wouldn't. Yeah, it's one of those like, I'm glad I did it again. got to me to where I am, I would not want to do that one again. Yeah. Yeah, that's the funny thing. Actually, way back in the day, I used to ask people that question all the time is what would you do differently if you could like go back and change anything? And everyone would like, the answer I usually got was what I give today. I wouldn't change anything. Right. I wouldn't, I wouldn't change anything

if I went back and did it again, but because it got me to where I am, but it doesn't mean I want to to repeat that or it doesn't mean I want anybody else to repeat that. Right. So what were some of the things that made that a rough property? Like a tough one. I would just say mainly. due to the amount of work that it needed myself, I walked through that, well, I was managing the contractors and I had no idea what construction was. I knew construction, but I didn't know what to determine the rehab on a single family residence and how to, and then also managing the contractors, which my skill today is I'm not a manager. So those were the biggest things that I ultimately learned through that process. Okay. That makes sense.

So I have a question for you, Sterling. You mentioned that you're not a manager, and I like that you said that because it shows that you've actually thought about what your strengths are and what your strengths aren't, right? And in my opinion, one of the things that keeps people from either getting started or progressing to the next level is they don't feel comfortable, but they don't know why. And you understand, like, I don't like managing. So anything that involves me having to manage people, I just don't want to get into it because I won't move forward. So tell me a little bit, A, like what do you feel your strengths are? And B, how did you change the direction of your business and the type of stuff you invested in to fit your strengths? That is a great point. And that's one thing I wanted to get to as well as being self-aware.

So myself is on the financials underwriting is 2 plus 2 equals 200. I'm not a math person whatsoever. And then also operations, I'm messy. So through that, through the course of that, I found a partner who's superb in that that complements those weaknesses. because I'm more again on the sales and marketing, et cetera. So we were able to basically, again, complement each other. And I filled those holes, which allowed us ultimately to scale our business. So where did your business go? What direction did it take? Yeah.

So right now, I own just a little under 400 units, which is comprised of single family and also multifamily. Wow. Okay. So you went from that first deal and, you know, got into, then you got into you a little bit, flipping wholesaling, rentals, and then 400 units. That's like, that's amazing, right? So we got a lot of time to cover all this.

So we're going to unpack this now. So when did you start doing large? I mean, obviously, I'm assuming in there, you're not just buying single family houses. You must have shifted into multifamily. So what does your portfolio look like today? What types of properties do you own? Where are they? Kind of give us a broad overview if you could.

And then we'll go back and like dig in and pull out some cool points. Yeah. So it's mostly C class assets. and C plus the B minus neighborhoods. So distress is when we purchase some and then we do the whole value add through renovations, push up the rents. And it's a mix of 150 of those are, what is it, single families.

And then the remaining, what is it, 249, 275 is multifamily. Wow. That's a lot of single family houses. Yes. And why we shifted the multifamily. Yeah, yeah. Because that's a lot. So, I mean, how do you buy 100 and some single family houses?

I mean, don't like people always complain, right? I can't get more than four mortgages or I can't get more than 10 mortgages. How do you get 150-ish, like single-family houses? Walk us through that. One is not having a abundance mindset. So when I got started in the industry, I had no credit and also negative money in the bank. I actually withdrew my account. So that's how I had negative.

Wow, yeah. different discussion. But it was also, my partner, I first started with friends and family capital, and then we started bringing investors in to where that's when we utilized. We basically did the Byr method. So we would purchase the properties ourselves. Again, we're in Indianapolis. Our properties are super affordable. And then we would be all into them. They would be cash flowing. And then we would bring investors in, cash ourselves out, and then just go do it again. That's awesome. I really, like that a lot. So walk us through, I guess, this idea of like bringing in partners and raising money

and that kind of stuff. How have you done that in your career? You know, what's, I guess, people struggle with that a lot and you just kind of seem to dominate it. How did you get to do that? Yeah, walk us through that. Yeah, so it was basically from those initial relationships. So starting with your power base ultimately, everyone, well, I would imagine someone has a rich uncle somewhere down their family line or someone knows someone when you ask someone. So it's about just starting with your inner circle and then branching out. It ultimately just snowballed from that point on. So you can, again, start with your power base. Or if you want to extend outside of that, you can attend local networking events that are real estate focused. And then also leverage biggerpockets.com is a huge

source. And you ultimately have to be solving a problem for someone that you can find the deal, provide great returns and then someone out there doesn't have the time to find the deals and you're basically bridging that gap. Yeah. Yeah, that makes sense. So I think that's about family and friends real quick. A lot of people have worries about that. Like, I don't know if I want to work with family and friends. I don't know if I want, you know, first of all, my family and friends don't have any money, you know, or I don't want to work with them. What do you say to that or should I work with them? How can people cover that? I would say if you're, that's just something you're going to have to overcome ultimately if you're, you're going to get stuff.

I've always just, I've never ran into those situations. I've always just thought about something and then acted on it. Sure, sure. And, but people are afraid. I mean, people are just like terrified. If I go to you and say Sterling, I'm afraid to ask somebody to partner in a deal with me. I'm afraid to ask somebody to fund, you know, go in on an apartment building with me. What would you say to those people?

I would say, what is the alternative? Not going for your dreams or not being able to jump into multifacething? family to hopefully spark, spark a light of fire underneath them or something or find someone or partner with someone who has those resources. Yeah, I love that. So, Sterling, one thing you mentioned is that you don't like to manage projects or people and you don't like the numbers and the analytical stuff. And yet you scaled a very big portfolio in a relatively short period of time.

Just real quickly, how long was it that most of these units were acquired? Like two years? Three and a half years. Three and a half years. Okay. So what role did you play and how did you use your strengths to drive this thing forward? Yeah. So my drive was on the actual acquisition side, which I really enjoy, is the whole mechanism of we do about 90 to 100 percent of our deals. I would say 100 on the off market side. So that's my focus in is even though we're acquiring, we're still utilizing sales.

So through that, it's getting in touch with the decision maker. they're not interested following up with them, getting them in the pipeline. And once they are interested in selling, boom, that's when we're there. And we pull the trigger and move forward. And then the other half is the whole front branding side, which is basically getting investors into the funnel and they become partners. That's cool. So off market, 90 to 100% of your deals are off market. First of all, can you explain what that means?

And that's really impressive. And then let's walk through some of your marketing strategies. He's like, what are you doing to get leads coming in? Gosh, so this is actually my favorite. I would say ultimately my favorite. I just get super like, ah, jazzed up. Good, good, yeah, me too. But it was, by off market, I mean, is on market is, let's say you're going through a broker

or a real estate agent and it's actually listed online so anyone can go there and visibly see it, the details, et cetera, on that asset. off market is the seller cannot even be of interest of actually selling the property until you actually reach out to them. Okay. So you find people that aren't necessarily shopping their deals around right away. You're getting off market. So what are you doing?

Direct mail marketing or what are you doing there? Everything. Everything. What does that mean? By the way, I love that. I love that answer, by the way. But let's dig into that. Or whatever it takes.

Yeah, exactly. So the first mechanism is we set up a cold call system. So that's the first touch point is cold call. We mix in direct mail if we're having trouble getting in touch with the decision maker or we just want to stay top of mind. And then also there is the personal visit, meaning, hey, John Smith, I'm going to be in the neighborhood next Thursday. How about we meet for coffee? Half the time, I did not plan on doing that, but a prime example, if that owner's in Louisville and they say, yeah, let's meet up, I'm driving out to Louisville to meet with them. Yeah, that's awesome.

I don't know any, but I don't know if we've ever had any been in this show that the first point of contact was a cold call. So I want to definitely dig in on this because I'm terrified of cold calling, right? Like that's like, like, I would rather like, I don't know, swim with sharks or something, get bit by a centipede. It works. Yeah, oh man. Okay, so what do you, who are you calling? I mean, are you picking up the phone book and you're just going A, you know, Adam Adams? Or what are you, who are you calling for this?

Yeah, so what we'll do is, and this is also I would love to break down the process because we have it into three key roles too, because now it was just one, it was formerly one person, which is it's, oh gosh, it's an animal. But through that is you find the LLC that owns the property and then you can skip trace the LLC, meaning doing a Google search on it, go to manta.com, better business, business bureau.com or dot org, et cetera, find out who owns that and then Dick to find their contact information, and then that's when you pick up the phone to call them. I love that. So what do you say when you call them?

Hey, John Smith, Sterling here. I just purchased one, two, three main street around the corner from yours. I wanted to personally reach out to you to see if you consider on selling. They say, I don't know. I'm not really in the market, say. Yeah. Yeah. Sir, I completely understand. However, if I was willing to provide you the right price, would you consider on selling?

Oh, well, maybe. Well, what's the right price? Can you give me a number? Gotcha. So in order for me to provide an educated offer for you, John Smith, what I can do is you provide the financials, we can start the underwriting, and we'll have a solid and great offer to you within 24-day hours. Sound good?

Well, you know, sounds all right. Maybe we can, you know, meet up later. I can show you the property. Look at that. Perfect. Yeah, exactly. All right. All right.

I like this. All right. You know, you got this. I like it. And then oftentimes you'll get a lot of it. And this is why people don't like the cold calling route is you'll get kicked in the face quite a bit. So you just have to train yourself to get past those objections, which is not interested.

it. Hey, I completely understand. I knew that before you even called. Give me 30 seconds. If you don't like what you hear, I'll hang up on myself. Wow. Oh, actually, I like that. Well, I like. I was going to ask how do you, I was going to get what, what? Go ahead, David. You take it. I was going to say that. I'm in hogging. No, I don't remember what I was going to say. All right. Okay, this was Sterling is taking control of that conversation, right? He's not letting the person and say, what are you even calling me for? Why are you here?

You're just like all the other telemarketers. That's when you're getting kicked in the face, right? He's walking in, taking control. He's offering his solution. He's seeing if there's interest. If there's not, he's getting out before you have a chance to kick him. And then your ego isn't taking a beating the whole time and you don't hate cold calling, right? It's the passive approach where you like, um, hi, I kind of want to buy your house, but I don't

really know how to ask that. And I don't want to offend you. And I don't know how to bring this up. And would it be okay if we talk that makes the other person pissed off because now you're wasting their time. And then they're going to respond with that negativity. So I think that like you said, you're going to get kicked in the face a lot. You just developed a tough face and you've learned how to see that kick coming and get out of there before it comes.

Yeah. And this goes back to my childhood too is I was born and grew up in the not so good parts of the city where you wouldn't want to walk your dog at night or during the day. So of that environment, again, that's where the entrepreneur spirit came from. But I got quite a bit of rejection and had to figure it out ultimately to get things that I wanted. so that just translated to the business world. Yeah, that's so good. Because I really, I really struggle with that idea, like, of all these people and getting kicked in the face.

Like, I really, like, out of my personality, I just can't handle it. But I like the idea of, like, you're like, you're not calling them. Again, this is what we talk about a lot on the show is you're not calling asking for a favor. You're calling with a real life solution. Like, I was, I tell people about, like, most landlords hate being landlords. Like, most investors are not out. there learning how to make their business better.

They inherited their property or somehow they got caught up in some scheme or their partner left and whatever. So a lot of people just absolutely hate being a landlord or hate owning rental properties. So when you can approach them with a, hey, this is what I do. I mean, in fact, I had my 24 unit that I owned in Washington, like, I had a guy cold call me out of the blue. I ended up selling to him because I was like, yeah, you know what? I'm a little tired of this property right now.

I want to move into something bigger. I want to get, you know, I want to change things up. He hit me at the right point at the right time. Was I offended? Of course not. It actually helped me quite a bit to be able to sell that property. And for him, he went in there and just raised all the rents and he's making a killing off of right now.

And I'm kicking myself for not raising those rents. And the thing on that too is if they're not interested initially, it's all sales ultimately, even though when you're buying, you have to implement the follow up. So the follow up is very crucial in terms of. This is one, even though you're buying, you're still ultimately selling. So I'm going to drop a gym for you guys here. I send Rubik's cubes to owners. And with that Rubik's cube.

Like the little like puzzle thingies? Those like, yeah, the little puzzle thing, a little small miniature. I thought I brought it with me. But it'll have a small note that say, let's figure this out. Oh, dude, I love that. That is awesome. At one point, I followed up with the owner. He's like, I cannot get my damn wife to figure out this Rubik's cube.

And the funny thing is just staying top of mind because the right timing that you mentioned, once they do decide to sell, they're going to think of the guy that sent the Rubik's Cube. Yeah. It's the buyer. I love that. This is really, really smart. Investors have a hard time because they're thinking they're going to walk in, throw one punch, knock out their opponent, get the deal, and walk away.

And that is just not how life works. Like every once in a while, you'll catch one of those. But normally it's not. They teach us in sales training that lead follow-up is actually more important than like lead generation, which is what Sterling is talking about. Like you make the call, they're not interested. You need to look at it like you swung your axe, you hit the tree. The tree didn't fall, but you made a divot.

And that divot will allow the axe to find its home the next time you swing it. And you never know how many chops it's going to take, but eventually a tree will go down because eventually that seller is going to be at a point when they want to sell. And they teach us this trick in real estate sales where if you want to get a listing or you want to help a buyer, you need to be one of the first people they think of the minute they think about real estate. And they use this example of toothpaste. And they say, how many kinds of toothpaste are they're out there? There's like 50 different kinds, right? And if you put someone, you hold them to have to give you a very quick answer and you say, tell me the first two brands you think of, everybody

says the same things. They say Crest and Colgate. Christ and Colgate own the real estate mind share of everybody who thinks about toothpaste. So if you're walking in the store and you're seen a bunch of brands, you don't know. The minute you see either Crest or Colgate, you're going to grab it. Right. So what Sterling is doing is he's becoming the crest and the Colgate to these sellers that he's reached out to you. You should put that on your business card. Yeah. Well, you have a very white teeth.

It would make a lot of sense, actually. Yeah. So the minute that they get like, oh, my gosh, the tenants are not are laid on their rent again. What? It's going to be that much money to turn this property to get it ready. I'm so tired of this. I guarantee you they're thinking of smelling right away, right?

I need some toothpaste. He's my cold gate. And that's what they go with. And if you're not willing to put that work in on the lead follow up to establish that like brand dominance in their mind. Yep. You shouldn't even bother getting started with this. because to think you're going to walk in there

and with one swing, take down that tree, just isn't realistic. The smart ones come up with the system. They develop a funnel and they just chop and chop and chop. And eventually, how many single family houses do you have, like 150 or whatever? You're taking on that many trees. Yeah.

And if you keep going one channel, that seller will get mad and then that's how you get on the block list. But if you're getting creative on the follow-up, they don't even realize that you're following up ultimately. Yeah, which is what that Rubik's cube is, right? Exactly. You came in with the haymaker and he blocked it. And now if you do that again, he's going to see it coming.

So instead, you hit him with a hook or a body blow. They're like, oh, I didn't expect that. That was kind of fun. And now you have a rapport and you're not getting kicked in the face every time you talk to them. Yes, because I've just gone through so many haymakers. That's awesome. But one way not, Brandon won't. He's always trying to protect his pretty face.

I got to keep the beard clean. And then one thing is, if you're not someone who wants a cold call, You can find someone on Upwork, for instance, or even Fiverr. I would recommend Upwork for $15, $20 an hour that does the qualifying for you. And then they set the appointment for you to then close it. Well, you mentioned that you're finding all of these people. You basically gave us five steps. Find an LLC, skip trace the number, call the owner, propose the solution,

then meet with the owner if they're interested. Are you only calling other investors through their LLCs because they're more likely to want to sell? Is it because it's easier to find their numbers? Why are you targeting that demographic? Yeah, so we on our side, we like mom and pop owners. Some of them even have the entity under their personal name. So that makes it even easier when they do that.

But our focus is, I would say, 75 to 125 or 150 apartment complexes. And the more you go up, the more sophisticated. So we carved out that niche because we feel not only you get more, more mom and pops, but also through that as well, it's just more likely to get it off market versus them being sophisticated and say, I'll just get put this on, go with a broker and get top dollar for it. Yeah, that makes sense. All right.

So let's talk about like the people that you're buying from these larger multifamily properties. I mean, again, are, you say they're sophisticated, the higher up you get, right? So is there like one decision maker in these deals or is there usually two or three? Is it a team? Is it a, like, how have you found these? I mean, the second answer or the second part of the question is, how big are we talking about here? What's the largest property you have? And then, yeah, what's the ownership like on these?

Right now, the largest is 80 units. And in terms of the ownership, there's normally just one decision maker, which is the most recent 80 unit that we bought, I'd say a month ago was one individual. He had multiple partners, but he owned majority percentage. So it was just going through him. and yeah, his son actually managed the property and was running it into the ground because he was not a manager at all. He just got thrown into the fire because his dad didn't want to manage it. Yeah. So that was perfect on our side. Okay, that makes sense. So, okay, so let's shift to financing for a

little bit. How are you putting these, the financing together? I mean, you're just paying, I'm assuming cash out of your wallet for the 80 unit? Maybe not. Yeah, right out of my backpacking. And Dave's money, too. Oh, good, good, good. All right, so how do you pull off financing? First of all, let's go back to the, when you were buying single family houses, you were buying dozens of single family houses here. How are you putting together money for that? And then shifting to multi, how are you doing that?

Yeah, so we just used the same basically investor network, which is friends and family and also some investors that we basically marketed and then got into our funnel and then provided them value by giving them return in their cash. So that's, we took those relationships. from the single family side and transition to the multifamily. Okay. I love that. You said the funnel.

What do you mean by that? You got them into your funnel. Some people look at that as kind of a negative thing. But I mean, if David Green knows me, like, my middle name is funnel. Like, I talk all about them. What do you mean by you get the, like, you get people into your funnel that later end up funding your deals? What does that mean?

Yeah. So the way I figure it is, or my philosophy in the way is basically grabbing people's attention, hey, hey you. And through the course of that, you have the top, the top of it, which is all these people who are interested in your product. And then you do the qualifying, and you find that, okay, this person has the capacity to invest with you. And then also, they have the same investment philosophy as you. They're not fixing flip because we're buying a hold. And then through the course of that, now we have them a qualified investor partner. And then that's when they invest in our deal.

So that's how I look at it in a funnel is top and then kind of narrowing it down. That's cool. So what are some of the things you do to say that? Hey, come into my funnel. I mean, what are you? Like, are you out there with a sign on the side of the road saying, hey, looking for investors? I'm assuming not.

No, there's a SEC regulation. Yeah, the government doesn't like that, the sign on the side of the road. But I would say it's ultimately being of value and a great book. I would recommend, I know you've probably read this too, Brandon, it's Jab, Jab, Right Hook by Gary V. Phenomenal book in terms of that overarching concept is being of value. So through that, Bigger Pockets is a great source. I've contributed over 200 articles and I would say two or three years. So being of value. And then in return, people will invest with you. So there's that route. And then you have to reverse engineer, find out who your ideal investor is, find out,

where their eyeballs are, where their ears are, and be in position to be of value to them. And then that's how they basically get into your funnel again. Yeah, I love that. I love that. So basically you're saying you need people to know who you are and the more people who you know who you are and what you do. And you do that by blogging on bigger pockets and doing, you know, Facebook lives on bigger pockets, which you do a phenomenal job of that stuff and making videos.

Now more and more people, you're just teaching. You're providing good information to people. And then the more people who know who you are and what you're, what you do, they come into your funnel, they go to your website, they visit your site, they see who you are, they sign up maybe for an email list, and then eventually they want to end up giving you money. I mean, like, it's, that's what it. That's it. That's it. Right. And like, a lot of people wonder, why should I participate on Bigger Pockets? Why should I get involved? And why would I write, why would I get involved in the forums? Why would I get involved in the blog? Why would I

start a member blog? You know, people can go to BiggerPockets.com slash blogs. Why would I do any of that stuff? because it comes back to you. Like, that's, the reason you do those things is because it comes back to you over and over and over and over. And you're like the perfect example of that. Another buddy of mine the other day told me he's raised $80 million directly from Bigger Pocket's members. Okay. Right. Like, what?

Like, that's huge, right? Because he's got a large funnel. He's in the forums every single solitary day. He's super active answering people's questions, you know? Like, the whole idea is. You build a funnel, get people to know who you are, you reach out. And this is not just for people trying to buy 80 unit apartment buildings, right? This is for anybody.

If you're trying to buy your first deal, build your funnel and you do it through sites like bigger pockets or real world networking events or, you know, however you got to get out there, let people know what you do, have a way to keep track of their information, even if it's as simple as a spreadsheet, but you can get more complicated with CRMs and email and then just, yeah, crush it. I love that you said that story. And from a tactical standpoint, if you're just getting started, going bigger pockets, going to forums, and provide your story ultimately. And then let's say you get some traction going, you can share that with other people who are where you were. Yeah. And that's exactly how you can be of value and just, I mean, it's a snowball ultimately. Yep.

Yeah. So what about people who maybe have zero experience right now? Should they still try to build that? And if so, any recommendations or how do they start building their? so to speak, funnel if they've got no experience. Yeah. So the funnel is just going out there and getting your name, being known, be seen. And with that, there's, I mean, you guys have some local events or there's local real estate

events in, I would say, just about every market. So getting out there, learning who the movers and shakers are. So there's that. And then again, there is, I just go back to Bigger Pockets because it's such an excellent resource. I don't want to take people from that. I agree. But yeah, meeting people in real life, though, is such a good way. If you're brand new, I love that you said that.

If you're brand new, go to BiggerPockets.com slash events. Like, we don't make money off this. This is not like a Bigger Pockets sponsor thing. This is just where our community gets together all over the country and they meet for drinks or for conversations or to go play golf or whatever, right? It just let's do this together. I use an analogy of like real estate is like a hike. Like we're all on this hike together.

It's not a cliff you're jumping off. You're on a hike. And bigger pockets is like a bunch of friends hiking together. It's like, hey, let's go do this together. Let's go meet up on this night and go do this cool hike. Except for instead of hiking, we're, you know, sitting in a library or something talking about real estate. So not.

Yeah. And you can learn from others' mistakes too. Yep. And ultimately go through the journey side by side and say, hey, what tactic did you use to acquire that deal? Oh, what tactic did you use? Oh, okay, this is what I did. And then you can get bits of pieces from different people. Yeah, and you can, everybody brings something different to that hike.

So you have some people that are really analytical and smart and they can point out all the plants and say, well, let's watch out for that. That's poison ivy. Oh, this is a good route we should take because my map shows this. And other people are natural leaders. and they can help bring courage when someone's scared. Like, nope, let's go this way. I know how to do this. I'll figure it out.

Everybody has different skills. And when you're all hiking together, the hike goes better when you combine it. Otherwise, you just sit at home and say, well, I want to go on a hike, but I don't know how to do this part. So you just don't make any progress. And then, like Sterling said,

you're not learning from the other people on the hike. You're not becoming a better hiker. And when you look at the successful people, this is why we always say to take action. It's not like just take random action just to say you did it and pat yourself on the back and become one of those Instagram entrepreneurs that, you know, takes a picture of Leonardo DiCaprio and puts a quote on.

Let's not go there. Yeah, right. It's taking action, gets you experience, and gets you knowledge. And that's what makes you better. That's how you kind of find your way. And you end up like Sterling, he's like, like, yeah, I don't like to analyze deals. I don't like to manage anything. I don't like a lot of real estate.

But I'm involved in 150 single family houses and 400 units altogether because I found the part of the hike where I'm really good. Exactly. Hey, Sterling, what does your team look like? I mean, you must have a pretty, like you must have, do you have partners in there? Do you have employees in there? Do you have like, what does your entire like organization look like? Yeah. So we, it's my, well, we just brought on a new partner who actually runs with our property

management company, but it's me, Jacob, who's the one that does the underwriting, performa, financials, loves those spreadsheets, et cetera. And we just brought on another individual who runs with the property management side. because formally, when you're self-managing, property management itself is just, ah! See, I have no hair because of property. I figured. Yep. But it looks, it's us three at the top.

And then we have a construction manager. We have a leasing agent. We have a property manager. And we have, I would say, about five to six maintenance tax that service all of our communities and also single family homes. And everything filters up to. to our chief operating officer, who I mentioned was the partner that we just brought on. And then if there's anything outstanding huge fires, then it would go to my partner or not.

Versus before that, everything came to us. So that's one thing I would mention to people is if you can, well, depending where you're one to scale is, put people underneath you so you don't have all that going up to you, making all these decisions that ultimately take energy to do. Yeah, that's so good. So good. All right, dude. Well, I want to shift gears here a little bit and head over into diving deeper into one of your deals.

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Wouldn't it be great if your houseplants paid rent while you were out of town? I mean, they've got the whole place to themselves, lots of sunlight, zero responsibilities. But no, they just sit there waiting for someone to spray them with some cool mist like a bunch of leafy loafers. But guess what? Your home actually could be earning you money while you're not there. Airbnb has a great feature called the co-host network, which makes hosting your home so easy. If you live far from your property or are away for extended

periods, you can hire a local co-hosts to take care of the hosting for you. These co-hosts are vetted locals who already have experience hosting on Airbnb. A co-host can handle all the details like messaging guests, creating your host space, and managing reservations, so everything runs smoothly. It's a practical way to earn a little

extra money, maybe even some cash toward your next trip. Plus, you get to share your place with someone traveling to your area while you're off making memories somewhere else. Your home might be worth more than you think. Find out how much at Airbnb.com slash host. All right, it's time for the deal deep dive.

This is a part of the show where we dive deep into one particular deal of our guest. Sterling, you have a deal in mine, correct? Yes, I do. All right. What kind of a deal is this, I guess? Before we get into the specifics of, you know, what you paid for and all that, just what is it? It is a apartment community, a multifamily.

All right. All right. So how did you find this property? This was found off market. No. Favorite. Yes. So getting in touch directly with the owner of the asset, which was one decision maker. One decision. How big was the property? This was 80 units.

No, this is your 80 unit. All right. So you reached out this person off market. Do you remember, like, actually, you might remember, but also I want to ask the follow-up question I should ask earlier. Are you like getting a list of these? Are you driving around looking for possible deals? Are you just doing the more of a shotgun approach or just a lot of them? Or are you rifling it? Yeah.

So that's how it was initially was doing the whole driving for dollars approach. That's how we purchased our first one. But now it's pulling public records of, let's say, 75 to 150 apartment complexes in Indianapolis, Indiana. Okay. Do you know what site you used to pull that or is there a specific resource? There's list source is one good one. And I have a realtor that I have access to basically their database that they use. All right.

We'll just brush right over that because I don't know if I'm supposed to have. I don't know what you're talking about, Sirley. All right. Next one. How much was it when you bought it? Would you pay for it? That was $3.35 million. Whoa.

3.35 million. All right. and how did you negotiate it? Any negotiations and stories part of that? Was that exact what they asked for? Or what can you walk us through that? Yeah, so there was quite a bit of back and forth. And the negotiation, I would say it takes just as much time to negotiate and even acquire

these larger deals ultimately, even for the smaller deals. So it's the same processes ultimately. And yeah, so I believe they started at 365. At first, they weren't interested in selling at all. So it took multiple follow-ups. And then they started at 365. We were started way low at 3-1, and our underwriting was not as crisp at that time. So we looked at the numbers again, and they came down, I think, to 3-4, and we sold it at 3-3-5, contingent upon them replacing the roofs.

So we kind of just slid that in there. Yeah, I love that. That actually is a really good negotiating strategy, too. I love doing this. At the very end, when you get down to the price, you get the final number, add one more. Okay, fine, we'll agree to your number. Can you just toss on new roofs? Okay.

That sounds reasonable. Very good piece of advice. And I use it all the time when representing sellers or buyers, right? There's something I don't understand why people think this way. But the number that they're selling it for means so much more to them than what they're netting at the end. Like you can say, okay, I'll agree to your price. All I need to do is cover the closing costs and this and this and this. And it's like way more that they're giving up than the price they're getting,

but they're just happy to be able to tell their friends. I guess they sold it for a price. So never negotiate the price. Always try to negotiate the terms if you can help it. And you'll be way more likely to be successful. I love that, David. That's a gym right there. That is a gem.

Nicely done. I hope nobody listening is an agent I negotiated against because now they're going to know exactly what I'm doing. They're like, David, I know what you're up to now. That's funny. But it's totally true. All right. So you negotiated down to 3.135. How did you fund it?

That was funded. It was $837, $837,000 that we needed to put down. So that was just our family and friends and also investor partners that we used to put that as a down payment. And yeah, after that, that's how we acquired it. The remaining was through a bank loan, which was a recourse. my, I wanted to customer, but I won the line ultimately. So I would say that was signing onto these recourse loans is a little nerve-wracking at times, but just got to perform. Yep.

Okay. So you got a bank loan on the rest. You got a down payment. So you're kind of basically syndicating it at this point. What did you do with it? I mean, you still own it today. What's the, what did you do with it? And then what was the outcome?

Yeah. I'm actually at that complex now, but it's ultimately buy and hold. And so our strategy is in five to seven years. I actually refi and pull all our cash out of it and just hold it until we die ultimately, which I will never die in the next life. I actually, I heard something recently about how like anybody under 40 will like live to like 150 because of like technology will improve so much by the time we get older. They'll push us longer. And then anybody under like 12 is supposed to live to like 200.

It was some like science, like article. Yeah, they, they say that it's, you know, like, yeah, who knows? We'll see. So you might live, you might have that property for 150 years, which can you imagine, like, if people lived 150 years, like, and they started investing in real estate at like 20, like, yeah. Oh, you're right. Like, the inflation possible.

Yeah, like all of them. Like, they would be like trillionaires just off of like real estate. But anyway, totally different point. So the outcome is that. What is your like, I'm wondering what you're, what you're. what you're like I don't say outcome but you're still working on it but like is the plan like cash flow completely are you playing more hoping more for appreciation on it like what's it worth today do you think or what are you trying to make it worth walk through the little of that yeah so we do put in

improvements to have it once it go gets reappraised it's a higher value in that we pull our own cash out but our primary focus since we're in the Midwest is on cash flow so we're looking at pushing the returns anywhere between about 12 to 14% cash on cash alone. So that's our primary focus is that income side. Okay. So for those I don't know, cash and cash return is basically the cash flow that, you know, received compared to how much money you put into it, like on an annual basis, right? So if you invested $10,000 and you made $1,000 in year one, that would be 10% cash on cash

return, right? So it's not counting the appreciation or the loan getting paid off. It's not counting all those things, just cash flow. how much you make in there. So I think I got that hopefully, right? So last question of the deep dive. What lessons have you learned in this? Oh, man.

The first one is everything is sales. Even when you're buying, you still have to sell yourself to the seller that you're the right buyer. So that's been a huge unlocker for me. And then the other one is find people to compliment your weaknesses, which is what David was able to allude to earlier.

It's been such a game changer instead of trying to do everything and understand it is just putting people underneath you to fully trust in them and they run with it. Great. It's perfect. All right. I love it. All right, well, that was the end of the deal deep dive.

Now let's head over to the fire round. It's time for the fire round. All right, this is time for the world famous fire round. Of course, these questions come direct out of the bigger pockets. forums, which you can get at biggerpockets.com slash forums. Big shock there. All right.

I got through that. Good. Yeah, I screwed that up like 40% of the time. People don't know that because we edit the podcast, but like literally every week, I mix up fire on a famous four and sometimes deep dive and, yeah, it's a mess. Anyway, all right. So it's not like I've done 300 episodes of this. No.

Question number one from the Bigger Pockets forums. Let's see. I just came back from an event where I got to meet tons of successful people who are doing syndications, like big apartment syndications. My question is, should I invest in a passive deal first? Like, before I go and try to do my own, should I go put money with somebody else? Or should I just go and do my own syndication and start raising money? What do you think? Gosh, so there's many approaches. My first one is investing with someone to understand the process. Yes, that is a great and phenomenal approach, or with that, is finding a local syndicator and let's say you do have,

you go out and find your first deal, you may have to offer up some equity, but get an experienced operator on your side. So they run the deal and you really get in the trenches to understand what's going on, the interworkings. That is a fantastic answer. Like, there's like a, like a lot of people join syndications, put money into syndications. Like I put money into a syndication earlier this year, Ben Labovich, right? So I threw money into his deal. But I'm not really following that closely. I'm not learning that much about what he's doing because like it's purely passive for me, right? But if I would have been like, hey, I'm going to partner with you on this deal, like give me a, you know, like let's do this together. I would have learned a whole lot more. So I see both sides of it. If you want passive, great. But if you want to

really learn, I love that idea of maybe trying to find a way to get some equity out of it. That's how I did my first single family. I mean, it wasn't a syndication, but it was, I brought the deal to someone and said, hey, I would like some equity, even though it was a little minuscule, but you have to think long term. Being a limited partner in a syndication deal like this gives you an opportunity you don't have in other forms of investing. So you can't buy stock in Apple and earn a right to the board of directors table where they're going to go over exactly what their marketing plan is and meeting with their engineers and learning how Apple runs a company. But when you're a limited partner in a real estate, a limited partner in a real estate deal, you do get to see all that. You can talk to

the general partner. You can see the operating agreement in the PMM. Like, you can learn a lot by investing in that deal and have it be passive. So don't lose that value. Now, if you're Brandon Turner and you don't really want to learn because you make money in other ways, that's fine. But if you're a normal human being that isn't like a god among the men, take advantage of that opportunity to learn. Wow. Oh, my God. Wow. Yeah. No, I think that's good. And I think I think I should learn more. I actually should read more of the documents that come out every month and like, you know, how the deal is doing. And I should be asking more questions. but I'm like,

I like the passive income, right? And it's just different people, a different paces of their life. Now, if I was doing that with a mobile home park, which is like my real passion right now, I love mobile home parks. Like, I'm way more involved in those conversations with people

because that's like my big passion. So, you know, anyway. There's more public thing to say than my passion is mobile home parks. Honestly, man, I've never heard that before. I just need to get me an Archie Cola, a moon pie, and look at a mobile home park, and I'll be a happy man.

All right, Sterling. Next question. Next question. What do you believe are the pros and cons or benefits slash risks of investing in multifamily versus residential rental properties? One more time, you said the pros and cons basically with just one. Prosing cons versus multifamily and against choosing residential rental properties. And they're asking to try to figure out, like, which one should I get into?

I would say both have their, well, what you mentioned. and pros and cons, it just basically comes down where you want to go. So on the multifamily side, I would say from my what I believe, well, it's true in a way, too, is you determine what the value of the asset is because it based, it's, things trade based upon income, specifically net operating income. On the single family side, it's more of what one, two, three main street sold for across the street. The pro about that still is you have multiple exits.

What I is you can sell it to an investor. You can sell it to a homeowner. So you have those multiple routes versus on the, the multifamily side. Generally, you're just selling to an investor, whether that's a larger institution or an individual. But I just see so many more benefits with the multifamily tax benefits, scalability. And that's why the shift ultimately was made on that. All right. What do you, can you hold?

Question number three, can you wholesale multifamily properties? Yes, you can. I had a fellow colleague that wholesale a deal. It didn't work for our numbers. So he sold it to someone where it worked for them and made a six figure profit on that. Wow. Wow. That's awesome. It's going to be hit with taxes, but still. Yeah. That is. Yeah, because when you're wholesaling, like, you're not, that's not a passive, you know, income. You are an active, self-employed business owner getting hit from multiple directions. So. Oh, gosh. That's actually a really good point. We never talk about that out on the show. I don't think we've ever talked about the tax differences between like rental and flipping and wholesaling, but there are massive differences between them.

Not that one's better than the other necessarily, but you should be aware of that. Like if you make $50,000 from cash flow or you make $50,000 from a wholesale fee, you keep very different amounts of money at the end of the day. Yep. Exactly. All right. Anyway. Okay.

Next question. And this is along the same vein that we've been going on multifamily versus single family. What expenses should I consider when analyzing an apartment complex? Is it basically the same thing as a small multifamily, which I think they mean a two, a three, a four unit? Or do you just take the extra units into account for the bigger apartment or is it more complicated? More complicated and even more complicated for me because my partner deals with that side of thing. Yeah.

I love that, by the way. But I would say what we tend to do is go. on a per unit basis when determining what the expenses are going to be versus just a roll of thumb saying, okay, we'll be able to run this C class assets at 50% expense ratio. It's best to actually break it down per unit. Yeah. Okay. Yeah.

And of course. Brandon, what about you, Brandon? Because you own both. What do you think is the difference between the way you're analyzing the properties? Yeah. I guess I've asked Andrew Cushman about it. I'm like, can you just use the 1% rule at all when you're in multifamily? And he's like, no, it just would never work.

It's just too complex to boil it down to something that simple. Yeah, I would say you're going to use a lot less rules of thumb and you're going to rely a whole lot more on your calculator spreadsheet, whatever you're using to run those numbers. The nice thing is you can kind of generalize some stuff a little bit. Like, you know, I'm trying to have a good example, but like vacancy is going to be this percentage overall. And it should actually average that. And you can actually get a pretty predictable number based on their past or based on the market in the area, right? A single family home, like, if it says if I have a crappy property manager and it says, for three months out of the year, that's like what a 25% vacancy rate?

Yeah. Like, do I put that number in there? Right? But an apartment, like, I probably can get a pretty accurate number on vacancy rate based on data that's available from all the other apartments in the area, especially if it's a larger area. So that's one thing nice about multifamily, but there are a lot of moving parts, but I find that there's a little less, it's more complicated, but, and Sterling, you can tell me if

you agree with this or not, but I think it's less, it's more complicated, but more accurate to get a good number than I found on my single families. There's less variables that just drastically blow things out of the water. I agree. Yeah. Yeah. Cool. Yeah, because I mean like, yeah, again, like one tenant who trashes your single family house might kill four years of cash flow, but one tenant who trashes one unit in a large apartment complex, well, that's just assumed. Like, that's going to happen. And so it's just part of your numbers. And it just kind of all averages out. So, or if you're in Chicago and you have to evict a tenant, it takes up to six, and seven months to get them out. Oh, gosh. Yep. It just kills it. Yeah, it kills it, right? So,

yeah, that actually goes back to the other question of the pros and cons of small multiverses, like larger versus single family. I mean, again, there's not one best method, but these are things that everyone should be aware of them. When you're getting into it, it goes back to what we're talking about focus, you know, just focusing on something. Like, you chose single family, then you focus on multifamily. So, because you got to, you got to know these things. So anyway, all right, last question of the fire round. I know normally want to do four questions, but I really want to ask you this one. So I bought held and sold duplexes before, but I'm looking to grow into larger apartment buildings.

What are the main things that I should be aware of or watch out for as I get into these much larger properties? Anything that stands out to you, Sterling, that's just like, oh yeah, this is something you should definitely know. I would say the people you bring on board tend to be more sophisticated, your investor partners. So that also goes into preferred returns, which we could go into a discussion of what a preferred. Did you want to go into what a preferred return? Sure. Tell us what, yeah. Yeah, give us a quick definition because that's important.

Yeah. Yeah. So a preferred return is just simply a promise in a way that, let's say, it's 8% needs to go to your partners first in order for you to start earning money. So let's, yeah, yeah. That's a good way. I know. It's weird to explain, but yeah, I think you're right.

They have to earn their 8% before you start making money as a syndicator, right? Exactly. Exactly. And yeah. So with that, you just have to be conscious of the partners you bring on get more sophisticated. And also is you, when you're scaling up to larger, I would say things tend to be a little bit more easier in terms of on the management side. So just be sure to get someone on board who has the

experience of managing larger multifamily versus the smaller side, two completely different skill sets. Well, you've got a lot more capital and cash flow. that's moving through this whole thing, which allows you the ability to leverage more of the things that you normally do to manage a project to somebody else. So on one hand, you can take stuff off your plate, but on the other hand,

it means it's that much more important that you get good people, right? So the stakes are higher on both sides. Like it could be a much better investment and easier way to go, or you can lose a ton of money because you put the wrong people in place. Whereas when you're doing single family,

it's mostly you making all the decisions because they're just not enough cash coming off of it for you to afford to get property management and analyzers and people looking over the deal and people, helping you raise funds. Like you can you can just have more hands in the pot, which can be a good thing or a bad thing. So that's what I would probably say. Before you start to scale into multifamily, make sure that some of your business skills are a little sharpened. You know the right

partner. You know what role you play in this. When you're doing single family, it's kind of the mom and pop thing. You could do everything. You'd be like Brandon picking up toilets that are full of crap and carrying them out of the house yourself, right? You're not going to be doing that in a multifamily of 80, 80 units. Well, the foundation set the have the foundation. There you go. Very good. Yeah, great. All right. Well, let's head over to the last segment of the show.

That's the end of our fire round. So let's head over to the world famous. Famous for. All right. These are the same four questions. We ask every guest every week here on the Bigger Pockets podcast, since episode I think number one, which is crazy. Let's get to these questions.

Number one, Sterling, what is your favorite real estate-related book? I would multi-family millions by David Lindhall. Yeah. I believe this is how he pronounced his last name. It is an awesome book. I have that one. All right. It's very elementary.

And it goes on some high level, but it was just really, it wasn't boring and bland. So that's why I really enjoyed about it. All right. Okay. What is your favorite business book? Business book. So I'm actually going to take a little shift on here, if you guys don't mind. So I want to go audiobook.

Okay. Which would be by Earl Nightingale. So I'm taking it way back before Tony Rob, Robbins and probably before Zig and Jim Rohn, but it's called Lead the Field. And I would say this ultimately really shaped my mindset. I was actually listened to CDs. I listened to the CDs so much they kept scratching. But it was a very, yeah.

That's like me and like the, you know, the Britney Spears and sync era. Oh, gosh. Backstreet boys. Oh. I don't know if that part. They're coming back. For those that actually hang out with Brandon, he does spend. an abhorment amount of time singing

so in Timberlake. He loves that song from trolls. He's definitely, you do love your music. I do, I do love my music. All right. So, Earl Nightingale. I've not read that. Go, go, go. Okay, what are some of your hobbies, Sterling? Hobbies is I really enjoy learning. So reading books. I know that's pretty boring.

I work a lot. And spending time with family, specifically my little angel, who is me with a bunch of hair. Nice. How old? Which is my daughter. She is six going on 17. Six going on 17.

Yeah. That's awesome. All right. My final question today, what do you think sets apart successful real estate investors from all of those who give up or they fail or they just never get started? I believe two things, which the first one is mindset.

Two things. The first one is mindset. I'm doing actions here. Yeah. So let's say for instance, right now the market is very tight in terms of being able to find quality deals. Those who have abundance mindset are still out there making things happen versus those are on the scarcity is, hey, I'm just going to wait on the sidelines until the market

right, but when the market is right, they're still going to be on the sideline. So that's the biggest thing is just a mindset. And then the second one is motivation. So what drives, what drives someone ultimately? Me is being an ideal for the people that came from my neighborhood that you don't have to take this route, drugs, crime, go to prison, et cetera. Here's the path that I took. And then ultimately, I'm not going to be on this planet for, we all have a certain amount of time on this plan. So we might as well just go after our dreams and goals ultimately. Dude, that was so good. I'm totally going to take that last, like, minute.

Did I go too deep? No, I don't know. I'm going to take that little minute and, like, make it an Instagram video and throw it all over social media because that was so good. You are Instagramable. That's going to be like Quots togram. You know, hashtag hashtag. Have you seen that?

Anyway, you hashtag it. Can you Photoshop a Lamborghini in the back? Of course I will. Yeah, yeah. Or a jet. Yeah, there you go. Lamborghini in front of a jet with Sterling in front of that. Oh, my God.

Yeah. Pretty women. Lots of lots. Of course, you have to. A yacht would be good at it in there. A yacht behind the plane. Wow, we're going like three levels of douche deep here. That's exactly what Instagram is turned into.

Okay. All right. On that note, Sterling, where can people find out more about you? So one is syndicationpro.com is one way, but also on, again, going back to biggerpockets.com. go ahead and you got any questions or anything slide into the DM and I will be a value to you ultimately love it all right dude this is direct message for direct message for those on the DL wait all right anyway Sterley this has been fantastic thank you so much like really like you are an inspiration like I love learning from you I love seeing your Facebook lives and your blogs and all that good

stuff you're a huge help to the bigger pockets community you have helped tens of thousands of people so keep it up and I know people are going to love this episode. So of course, people can reach Sterling and ask questions as well on the show notes for this page, which you can find at biggerpockets.com slash show 308. Again, BiggerPockets.com says show 308 and they can reach Sterling there. So, dude, we'll talk to you later. Thank you so much. Awesome. All right, that was our show with Sterling White. So thank you everybody for listening. Thank you for being a part of the bigger podcast community. Make sure you guys are leaving us ratings and reviews in iTunes. If you've not done so. We have like, I don't know, 4,000 reviews at this point, but we get like 300,000

people every week to listen to the podcast. So by next week, I want 300,000 reviews. Even if the reviews like, man, Brandon sucks and David's awkward, doesn't matter. Leave us a review. And I don't know. What's up, David? You agree? I think that sounds great. I think that they should be following us on YouTube and on Instagram or Facebook or wherever you are. If you want to accomplish what someone else has accomplished, the best thing you can do is start to follow the steps you see them taking. You know, Sterling gave us some really good advice today on. This is what I did. This is how I did it. So you can follow it. It's the same thing I do. When I see somebody who's successful and I want to be like them, I just start looking at what they do and copying it. So that would be the best

advice that I could give for everybody. You have anything else been? No, I think that's really good. And like you said, the Sterling does a lot of Facebook lives. So if you want to be alerted to those, just go to the Bigger Pockets Facebook page, Facebook.com slash Bigger Pockets. Follow bigger pockets there. And you'll get notified of those Facebook lives that Sterling does that I do, that David Green here does. And anyway, with that, we got to get out of here. Brandon is Beardy Brandon and I am David Green 24 on Instagram. And with that being said, this is David Green for Brandon. I've got a song in my heart Turner. Signing off. You're listening to Bigger Pockets Radio. Simplifying real estate for investors large and small.

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