Real estate investing is having the guts to go in there and move yourself forward. Today, Monick Halm interviews Annie Dickerson, the Co-Founder and Managing Partner at GoodEgg Investments, where she inspires us with her perseverance in succeeding in the world of real estate syndication. She talks about how she and her husband got into house hacking and how they went from out of state investing to syndication. Annie also gives us some tips on raising capital and passive investments.
Listen to the podcast here:
How To Passively Invest In Real Estate — Interview With Annie Dickerson
I’m excited to have with us, Annie Dickerson. Annie started investing in real estate years ago. First, through house hacking duplexes and then she went on to invest in out-of-state rentals. Eventually, she started investing passively in real estate syndications. She’s the Co-Founder and Managing Partner at GoodEgg Investments, a company that helps people learn about real estate investing passively in real estate syndications. GoodEgg Investments has co-syndicated over $400 million worth of real estate assets in multifamily, self-storage, and manufactured home parks. Welcome, Annie.
Thank you so much, Monick. I’m excited to be here with you and your goddesses.
You’ve started years ago and you started by house hacking. What got you started in real estate investing? Why did you get into that game?
If you asked me when I was growing up if I would ever get into real estate investing, I would have laughed in your face. My parents never even bought a house when I was growing up. We always rented and I had no concept of even how to buy a house. My husband and I got married young. We were 23 and we set out to buy our first home. We were good savers. We had a bit of money saved up to put into a home and we thought, “We’re young, we’re hip. Let’s get a loft or a condo.” We were living in DC at the time. We looked at some of those, and on the flip side, we looked at some fixers. We were like, “We could possibly do this.” We chose something in the middle because our realtor at the time told us something that I’ll never forget. He said, “These condos are nice but these row homes in DC are popular. Many of them come with a basement apartment. If you could live in the upstairs unit and rent out the basement apartment and you play your cards right, down the road you could get it to be cashflow positive.”
I had never heard that term before. Nobody had ever taught me about anything like that and I thought, “This sounds like real life monopoly right here.” We did it. Our first duplex was a foreclosure. The basement had previously been a brothel so there was a bit of work to be done. We were young with no kids. We were excited about this new project. We fixed up the basement and rented it out, and it worked. We were having this money coming in every month and it was like a dream. We did it again with duplex after duplex. At a certain point in life, I’ve got two young kids. They’re 6 and 3, tons of energy, lots of stuff, toys, clothes, everything. We were at this point where we’re like, “Should we buy another duplex? Maybe we move again.” Kids have so much stuff, then we have to move schools. It’s such a hassle. That’s when we decided to pursue other types of real estate investing, which led to then out-of-state investing and passive investing through syndications.
I started similarly by house hacking by accident, it’s great. You started at a great time in DC too. You did out-of-state and then you got into syndication. Tell me more about why you like syndications.
I would not appreciate syndications had I not first done the out-of-state investing, and here’s why. Duplexes in hindsight, now I know, are fairly easy. House hacking is fairly easy because we live in a unit. If we hang onto them after we move out, we’ve been there before, and the tenants that we attract are people like us. There are people who have steady jobs. They pay on time, are good savers, lets us know if there are maintenance issues and they’re relatively easy to maintain. When we ventured out-of-states, we did everything that they tell you to do. We looked in developing areas, the B and more likely C areas. We’ve got small multifamily and we put in local property management.
On the surface, everything was great on paper. The properties were supposed to be cashflowing well. We chose the market of Huntsville, Alabama and we quickly amassed 25 units in that market in small multifamily. At first, things were going fine. A few months in, we found out some tenants weren’t paying and some were vandalizing the property. We had one person who wasn’t paying and we asked him to move out. He left in the middle of the night without telling anyone. He left his dog behind. His dog was in the unit for three days and nobody knew that he was gone. The dog chewed up all the dry wall. It was a mess.Before looking at a single deal, look first at your current situation and think through your investing goals. Click To Tweet
We had another tenant who we were going to evict because she hadn’t paid for many months. The day before the sheriff was set to show up, she stuffed up all the tubs and the sinks, left the water running and took off. Out of the four units in that fourplex, she flooded three of them. It was things like that we were not prepared for. We had never dealt with that thing with our house hacks, with our duplexes. One thing and another thing, things kept either breaking down, surprises kept happening and we’re like, “There’s got to be another way. Is this the only way?”
We had inherited a lot of tenants and we didn’t realize the process it would take. We’re closer to a point where we’ve got good qualified tenants in there and it’s more stabilized than it has been. It took a while and we did not account for that. In the process of that, I discovered passive investing through real estate syndications. This is naive on my part when I tell this story but what happened was as we were amassing these 25 units, our friends and family got interested and they were like, “How do you do that? I want to do that.” I’m like, “It’s easy, here’s what you do. You research markets. You find a market and then you talk with brokers. You look at the properties and then you run the numbers. You talk to a lender and fill out the paperwork.”
I’m going down the list. Their eyes are glazing over in front of me and I’m like, “Oh, boy.” None of them would take action but they were interested. I thought, “There has to be some way that I could help them get into real estate.” I thought, “These deals that we’re doing are small. There’s not much room for them to get in.” That’s when I did my research and discovered syndications. Here’s where the naive part comes in. I thought, “I’ve done a four-unit deal. Surely, I could do a 40-unit. It’s the same thing, it’s just a little bigger.” I went in and I talked to brokers in Huntsville because I already knew that market. I pursued a couple of properties and was almost at the point where I had them under contract. I was all-in on this that I quit my job so that I could go into real estate full-time before I even had those properties under contract. That’s how much I believed in it and wanted it.
During that time, I had an opportunity to raise some capital for somebody else’s deal. My first thought was, “I’m not going to raise money for your deal. That’s the hardest and worst part of the whole process, raising money.” I gave it a second thought and I thought, “This is a good deal. This is a good opportunity for my investors. Maybe I’ll give it a shot.” Once I did, I realized that I love raising capital because it’s all about talking to people. It’s about helping people understand what these opportunities are about opening their eyes to these opportunities that they never even knew existed before. I loved it so much in fact, that I shifted my entire venture to focus specifically on capital raising and that’s what GoodEgg is all about.
GoodEgg is focused on helping passive investors learn what they need to learn in order to get into these deals. If there are some highlights, if somebody is interested in passively investing in syndication, what are some of the main things they need to know?
The first thing that we always talk to people about is before you ever even look at a single deal, first, look at your current situation and think through your investing goals. The moment that you get a marketing deck in your hands, you’re going to see those beautiful pictures and see all those numbers. You’re going to be like, “I want to put my money into this,” without thinking about does it match with your long-term goals? That’s the first thing we tell people. Are you investing for cashflow to replace your income? Are you investing for long-term appreciation? Maybe you’re investing for tax sheltering purposes or some combination of those. That will then help you to find the right opportunities for you. A good deal for me might not be a good deal for you.
Another thing we talk to people about, people always put so much emphasis into the market. I want to find a good growing market and I’m going to find a deal to invest in there. The market is important. Certainly, being in a good growing market with good job growth, population growth and job diversity is important. Real estate is hyper-local. In fact, what we find is what’s even more important than the location is the team who’s going to be operating it. You want to spend way more time vetting the people that you’re investing with more so than the actual deal or the market. That’s something else that we tell people.
As a syndicator and a passive investor myself, it’s such good advice. I’m going to switch gears a little bit. I want to ask you a question that I always ask because I find the most gold in this question which is, what was your biggest mistake and what did you learn from it?
A lot of real estate investors say this, “I didn’t put my foot on the gas soon enough.” I started with those duplexes, but it was slow going. We bought our first one in 2008, then we bought our next one in 2010. That was okay, a two-year cadence. We took a break and we bought our next one in 2014 and then again in 2016. Over the span of almost ten years, we had only bought four properties, which is slow when you think about it. If I could go back with what I know now, I would have leveraged the heck out of everything that I could so that I could scale faster because I would be that much farther along now.
Another story I’ve written about on my blog is back in 2009, we bought our first duplex in 2008, while in 2009, my mom was looking to buy her first condo. She and my dad had gotten divorced and she was ready to buy her own place. I was like, “Mom, I got you. I know this whole real estate thing now. Let’s get your condo. I know how it all works.” We bought her a condo. We figured that even with all of the HOA fees and the maintenance, after she vacated that condo, she would still be cashflowing maybe $100, $150 a month. We thought that’s good because that’s all we knew at the time.
She sold her condo. I looked at the returns over a period of nine years and the returns are pithy. I’m thinking back if she put $60,000 into that condo and I thought, “If she had put that into a real estate syndication back then, it would have grown to be way more.” It’s so much more in line with her lifestyle. She wants something that’s hands-off. That’s one of the reasons we sold was by the end with the condo, I was doing all the hands-on management. I was like, “We’re done.”
A lot of people think that if they’re doing the work and it’s an active deal, then they’re going to make more money, but that’s often not the case. You can often do better in syndication passively investing, even if you’re doing all the work, especially if you’re in a more expensive market like DC or Los Angeles.
I’m glad you said that because I took a deep dive into my personal real estate holdings to see if that was the case because I’m invested in passive deals as well as active properties. I took one of my properties in Huntsville, one of the better ones. I looked back over the previous four months of my property management statements to compare to what I was getting with real estate syndication. What I found was sad. I can’t believe it. This is one that we’re still stabilizing, to be fair. It’s a fourplex and two of those four months, we had one tenant who is not paying. Two of those months we were in the red. We had to pay out of pocket to hold that property, two of those previous months.
In one month, we cashflowed $100, which for a fourplex is nothing. There was only one of those four months where we had a positive cashflow of $500. That’s what it’s supposed to be consistently every month. In actuality, we were not seeing that. That’s the risk that you take when you invest in these deals yourself. It’s not going to always be stable. With real estate syndication, I get my check every month, I don’t have to do anything. Most of the time, I don’t even know because it’s dropping directly into my bank account and I don’t have to think about it. That fits much better with my current lifestyle.
What are you most proud of in your real estate investing career?
People tell me all the time, “Annie, it’s great you’ve been able to take your marketing experience and put it into building this brand.” I say, “What marketing experience?” Every day I feel like I’m flying by the seat of my pants. Before I became a full-time real estate investor and entrepreneur, I wasn’t doing any of this. I started out as a fourth-grade teacher and then I went into game design because I wanted to create educational games for kids. I went into learning and development, creating corporate training. I was always on the education track and I did some design here and there, but marketing and branding were never something I did professionally. To be able to see people’s responses and to see the growth of our business has been truly gratifying and humbling.
To what do you attribute your success?Being in a good growing market with good job growth, population growth, and job diversity is important in real estate. Click To Tweet
One thing that sets GoodEgg apart is if you go to our website, it doesn’t even look like a real estate website. In fact, on the whole first page, you might not see any mention of real estate. All we talk about is, “We want to help you live your best life. By the way, we do that through real estate investing.” The reason that we do that is because we were able to get crisp on our target audience. At first, when my business partner, Julie and I got together, we said, “We’ll take anyone, any investors. Come on in. You’re a doctor, a lawyer, an engineer, anybody come on in. Male, female, old young, we’ll take you.” What we’ve found was by trying to market to everyone, we were reaching no one.
When we got crisp, like you have with your brand, on who we were trying to target and in our case, its other working moms like ourselves, then we were able to structure all of our messaging, our content and our branding to focus on what they would want. That’s why we’ve built the brand that we have and why there’s not much mention of real estate investing until you get deeper into it. Women and moms tend to be intimidated by investing in general. We don’t want to scare them off. We want to invite them in and get to know us. We’re about helping you to live your life, that’s what it’s about. Real estate is a vehicle that we’ve found to help us do that.
I love your mission because it’s similar to mine. What advice do you have for a woman who’s starting out in this field?
One of the lessons that I learned early on when I was in the game design field. I was fresh out of game design school and they had taught us to write these things called detailed design docs. It’ll put you right to sleep. It’s a 60 to 100-page Word document about every aspect of how a game would work. This was before you even built the game. That’s what I did. Out of game design school, the first job that I had was at a startup. I said, “This is how I learned to do it when I was in school. I’m going to write a big long design document and then we’ll build the game.” I wrote this big design doc and then one day we had this epiphany. We’re like, “We don’t even know if people will want to play this game. When you read this paragraph, you’re picturing something different in your mind than I’m picturing in my head.” We pivoted and right away we built an MVP, Minimum Viable Product, and we got it into the App store within two weeks.
A simple little maze game where you hold your iPhone or your iPod and you’re walking or standing up and guiding your character through this maze. It was meant to be a physical fitness game for kids. Through that process, we learned so much. It only took us two weeks of work. At that moment we trashed that detailed design doc and we’re like, “That’s not going to work. Now we know what’s going to work and now we know what we need to test.” For anybody who’s starting out, that’s what I would say. You’ve got to get in there and do it because you could spend all day, all year, all your life on the sidelines thinking about what is going to be like and when you’re going to do it and how you’re going to do it. Until you’re in there doing it, you won’t learn the lessons that you need to learn to move yourself and your business forward.
What do you wish you’d known at the beginning that you now know?
One of my first epiphanies is when I got serious about real estate investing was the power of the HELOC, the Home Equity Line Of Credit. I didn’t even know there was a thing. Nobody had ever told me there was this equity sitting in my house that I could tap into. I was like, “There’s this money sitting in this house. Why aren’t we using this to do something with it?” That’s a small thing but then it opened my eyes up to all the different ways on how real estate investing is done and there are so many creative ways to go about it. That was the first a-ha moment that I had, that there was a lot of untapped potentials that I hadn’t been taking advantage of.
The equity in your home, the cash-out refinances. Before we get into our trinity which is a brag, a gratitude and a desire, how can people find out more about you and GoodEgg?
The best place to go to learn about GoodEgg Investments is through our website. It’s GoodEggInvestments.com. When you go there, if you’re new to passive investing, we have a course called Passive Real Estate Investing 101. It’s a free email course. It will get you up to speed on all the basics of what passive investing is all about. If ever you have any questions for me, you can always reach out to me at [email protected].
It’s time for our trinity which is a brag, a gratitude and a desire. What’s the one thing you’re celebrating? What’s your bag?
One thing that I’m celebrating is I finished the first draft of our book. We’re putting out our first book. I’ve written over 60 blog posts and this first book that we’re putting out is a compilation of a lot of those blog posts, and I thought, “It’s going to be easy. I’ve already written all the content. I’ll dump it all together.” It was still so much work to create the outline and then to go back through all those posts. What I wrote before is completely different from how I write now, and I had to go through and make sure that the tone was consistent, the style was consistent. Finally, I’m done with that and it’s out of my hands. It’s in the copy editor’s hands, then on to book design. Hopefully, we’ll get that book out.
What’s the name of the book?
The working title is Investing For Good.
What’s one thing you’re grateful for?
I couldn’t be in the world of real estate investing without every day being grateful for the home that I get to live in. We live in sunny Oakland, California. I’ve got a beautiful home office. I’ve got all this colorful, all these doodads that I’ve collected and photos of my family. I’m grateful every day to get to live the life that I get to live.
What is one thing you desire?
We got an email from one of our investors and she and her husband had been investing in multiple deals with us, and she emailed us to let us know that she could quite possibly lose her job. Her company was doing some restructuring and she also had a baby on the way, in that email she said, “I’m not afraid because I’ve got all this passive income coming in, and it’s covering our rent.” She lives in San Francisco, one of the most expensive real estate markets in the country, and her rent is covered by passive income. That’s what I desire, to be able to help more people to see that something like this is possible, whether they invest passively or actively, just that they see that this lifestyle is possible.
Annie, thank you so much. That was awesome. If you guys want to connect with her, go to GoodEggInvestments.com. To connect with me, go to RealEstateInvestorGoddesses.com. We also offer passive investing opportunities, you can go and click on Investor club and sign up to get access to those.
- GoodEgg Investments
- [email protected]
- Investor club
About Annie Dickerson
As a busy working mom with two young kids, the last thing I wanted to deal with were broken toilets and stolen HVACs, so I set out to find a better solution. That’s when we discovered passive investing, and it was a complete game-changer for us.
Suddenly, we could get all the benefits of investing in real estate, with none of the hassles. How? Through something called real estate syndications (i.e., group investments).
As passive investors in these real estate syndications, we could invest our money and have a professional asset manager handle the day-to-day operations. And, we could invest in commercial assets like apartment buildings, rather than duplexes.
Real estate syndications and passive investing have made such an impact on us and our family, that, together with my business partner Julie (also a busy working mom), we created Goodegg Investments to help other busy people learn about and invest passively in real estate syndications.