REIG Emma | Real Estate Investing Lessons

 

Often the biggest hurdle you have at the beginning is the belief that you can do something. For Emma Powell and her husband, the first step was remodeling their house on their own after her husband was laid off from his tech startup. Realizing how it could be a great moneymaker for them, Emma seriously dove into real estate investing. She is now a passionate real estate investor and the owner of Highrise Group. Today, she joins Monick Halm to talk about her real estate investing journey and the lessons she learned along the way. She also touches on passive investing, raising capital, and the importance of communication, accountability, and coming clean with your investors.

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Real Estate Investing Lessons With Emma Powell

I’m excited to have with me, Emma Powell. She is no exception to the bad-ass role. She is a passionate real estate investor with her husband, Troy. They have been investing and homeschooling six kids. All of you mamas out there who have been getting to have the taste of homeschool in the past few months, imagine times six. She’s crushing it and they’ve invested in a variety of deals as a lender, deal sponsor, co-owner, syndicator, property manager. She’s a former real estate photographer, a small business project manager with a BS in Entrepreneurial Management. She has tons of investing experience. Welcome, Emma.

Thank you. I’m excited to talk to you. I feel like your voice has impacted the way I feel about investing this 2019. It’s funny you say at the beginning talking about women who are crushing it because I was struggling with that before I found your podcast and your group. I felt like I should be crushing it, killing it, and 10x-ing it. I wasn’t happy doing that. I needed to feel more like I was getting passive income and I wasn’t out there to crush it. Your voice of enjoying the journey and not being so caught up in the race itself gave me permission to settle into how I was already feeling. It helped me to identify that that was something I was struggling with.

You’re welcome. Thank you for saying that. That’s the more feminine way, isn’t it?

I prefer it that way. I didn’t get into this business to hustle and grind. I got into it because I wanted to retire early. We’re definitely the financial independent retire early mindset. That was not going along with miracle mornings at 5:00 AM. It is not my thing.

REIG Emma | Real Estate Investing Lessons

Real Estate Investing Lessons : In real estate investing, the biggest regret you can have is not buying rentals with that side hustle money.

 

I do love The Miracle Morning.

I do a miracle morning at 7:00 AM. Sometimes it gets too extreme and there’s almost this “Are you man enough to be a real estate investor” attitude where we’re all working out two times, 45 minutes a day. We wake up at 5:00 AM and he who works harder wins. I never felt that was a good fit for me. I felt like to be successful, I had to find that part of myself. I have realized since listening to your stuff that I don’t have to find that part of myself. It’s not there and I can still be successful being true to my identity and my feelings.

How did you get started in real estate investing?

Dave Ramsey gets a lot of dumping on in the investor community. Dave Ramsey in some ways helped us, but in some ways harmed us. I’m choosing to focus on the parts that were beneficial to us. He put the idea in my head that I could be a landlord. I should have rental houses and that was the goal that I should have. What slowed me down was him telling me that I needed to pay off my house first and then pay cash for a rental. Often the biggest hurdle you have at the beginning is the belief that you can do something then thinking, “I’ll do this. I just need to figure out how.” That was a start for us. When we finally got off that wagon of having cash for everything, it was about a few years ago that my husband was laid off. We lived in Austin, Texas for many years. He was laid off from his tech startup and it was sudden and unexpected. We had been remodeling our house and had done a total gut job on it. I felt like that was going to be a great moneymaker for us. You should see the pictures. I have it on a public Facebook album. We were living in a shack because we lived in it. It was awful.

I had a home birth in there. It was a period of our lives where we were crazy doing that for two years. We lived in it for about six and sold that right before we moved to Salt Lake. When we got to Salt Lake, we had no debt because of Dave Ramsey. We didn’t even have a house payment because we sold our house. We had this pile of cash from all the rehab that we had done in that place. I showed up. I didn’t want to be a real estate photographer anymore. I’m getting too old, the camera is starting to hurt my hands and didn’t want to rebuild the business from scratch. I did weddings on the weekends. Weddings in Salt Lake are very different than weddings in Central Texas. I didn’t understand that industry here.

He who works harder wins. Click To Tweet

I started going to small business meetups and came across some real estate investing in meetups. I thought its time. I’ve got the cash. I started researching. I found REIAs and found BiggerPockets. I started attending all the REIAs. I placed that money that we made on our house with a flipper who kept it for about 9 or 10 months, while we were learning, then that came back. I started buying up smaller properties, single-families, and lease optioning them, then smaller multifamilies, a duplex, a triplex. I was running out of money and I told my husband we might have to set a goal of buying one property a year because we bought 4 or 5 in the first year. We started running out of money. He said, “Remember that first REIA you went to where he said that if you can skip residential and go straight to commercial, you should do that.”

I had been researching commercial and multifamily for that whole year. Somebody put the idea in my head that I didn’t have to do residential first. That I could go straight to commercial. He said, “I challenge you to do a deal with zero of your own money.” I was like, “I have to go bigger.” I haven’t done it yet. We still have capital in every deal that we’ve invested in. This deal that we’re closing is the least amount I’ve invested in any deal that we’ve been in so far. We’re getting there. We need a little bit more track record. People always say, “What skin do you have in the game?” To me, it is almost ridiculous because I feel my time is way more valuable.

We’re getting to the point where that’s a goal. In 2019, I found a 110-unit that I ended up not getting. They sold it to somebody with more experience, then a 50-unit that we closed on in February, then we’ve got 34-units under contract in Little Rock, Arkansas that we should be closing on. Because of Coronavirus, that looked like it wasn’t going to happen for a while. I lost my investors and had to start over from scratch. It’s been a long uphill process trying to save that deal through all of this and make sure it still withstands a stress test of what we’re going into. We negotiated with the seller and got everything back on track and now we’re set to close. That’s how I got started, and that’s how I ended up with the larger multifamily. Our goal is to take down 100 units in one deal.

I had somebody on who’s also from the Dave Ramsey School but has only bought debt-free. It’s not a bad strategy but it limits you.

He always says that “We don’t make microwaves here. We make crackpots.” It’s a get rich slow technique. I thought, “What about a skillet? Can we have a skillet?” When we started, we were 40 already. I felt like if we don’t get the show on the road, it’s not going to happen. Our kids are already starting to move out. It’s got to happen now or it’s taking forever.

You can do it by yourself but it’s going to be a lot slower. You’re not going to get as far.

We spent many years wishing and planning to buy our first rental and still hadn’t bought it yet. That was a lot of time wasted. People ask me now, “If you could go back and do one thing differently in real estate investing specifically, what is it?” I say, “All those years I spent as a real estate photographer, as a wedding photographer, doing my little side hustles and cottage businesses, that money should have gone to pay down payments on rentals.” That is one thing I would change. Rather than using it to augment the family income by taking the vacation or having the kids be able to take lessons, and those things that we all want to have that we need a little bit of extra income coming in to be able to justify paying for those things. I should have been putting all of that money into down payments of rentals. In five years, those rentals could have been buying our vacations and our piano lessons. That is the one thing I would change and probably buy a duplex in a house hack the first one instead of single-family. We did well in our single-family homes. All that money to start this business, we made by our single-family homes. I don’t regret how we did that. We could have gone faster if we’d done duplexes and fourplexes. The biggest regret is that I didn’t buy rentals with that side hustle money.

You didn’t start sooner and leverage.

I thought I had to pay cash and it was such a big task. Instead of saving up to buy a little house with cash, instead, the kids need to go on vacation. They’re getting older and we can’t keep putting off living like no one else. It was time to start enjoying what we earned. I should have bought rentals with it instead.

That is my issue with Dave Ramsey. He’s very helpful to a lot of people but unsecured debt, that’s not great. Secure debt or real estate, using OPM to make money, that’s how you build wealth.

Often the biggest hurdle you have at the beginning is the belief that you can do something. Click To Tweet

Learning the personal discipline in managing your finances and avoiding unsecured consumer debt is a very important lesson that he and many other financial advisors teach. Learning that process of budgeting and controlling your “Because I can afford the payments, I can have it” attitude, that’s huge. I have to give that a lot of credit for us being in the position to be able to start investing once we got over the pay cash for everything. Debt is a scary thing but so is any sharp tool that you’re going to use. You have to use it responsibly and you have to learn how to use it. Nobody said going over-leverage, get tons of debt on everything, and go crazy. It is like a fire or a saw and you need to be very careful with it. It’s an important tool to your success as long as you’re conservative with it.

It can help and it’s leverage. With a lot less pressure you can go a lot further. That’s the beautiful thing about it. You might have already answered this but this is a question that I ask all my guests. What was your biggest mistake and what did you learn from it?

That was the one thing I would do differently if I could go back. If you’re going to talk about it as a mistake, there are two big ones that were very humbling. It’s been difficult to even talk about it. When I told my husband the first time I spoke about it, I was embarrassed. When I made the mistake, my head starts spinning on all the ways I’m going to solve this problem. I’m not even going to call Troy and tell him what happened. I have some solutions that I need to try first, then I’ll call him and tell him what almost happened and here’s how I fixed it. The moment I had that thought, I said, “You need to call him right now and you tell him what you did.” The moment you start trying to hide those things, that was a huge red flag that went off in my life. I immediately called him on the phone.

What I did is I had put earnest money down on a property before I had done my own comps and before I had talked to my hard money lender. I’ve been doing this a long time with those hard money lenders and they’re good and fast at doing comps. I’m not good and fast at doing comps and I hate it. That was the earnest money I put down. The hard money lender came back and said, “We can’t lend on this because the numbers that you’ve provided are not accurate.” I immediately called up the person that I had put EM down and it was nonrefundable. He was like, “I’m sorry.” I’d bought several houses from him before. We still have a good relationship but I trusted his numbers too much and put that EM before I got feedback from the hard money lender and before I did a thorough job on the comps. I called him up. I said, “I lost this money and it’s gone.” I was crying. I said, “I’m embarrassed and humiliated. I didn’t want to tell you.” He said, “Thank you for telling me right away. Don’t worry about it. It’s only money and I know you’ll make it back.”

What did you learn from that?

The biggest lesson I learned was don’t try to hide things. We have been involved with many of our friends. This happened multiple times that our friends found themselves embroiled in a Ponzi scheme because they were trying to cover up their mistakes. Instead of coming clean with their investors and saying, “This investment lost money,” they would then pull in more money to pay back the investors. They didn’t think that they were committing a crime at the time. Several of them have served time in prison. Hiding things and being afraid of things always leads to problems. Trying to hide that from my husband out of embarrassment, I would have gone to jail. That’s not a crime but that could have caused the first crack in what could have been a scary journey towards what we call financial infidelity where you’re hiding things and making financial decisions, not as a team. It can have deep cracks in the marriage.

I learned communication and accountability from that experience. I had also made a loan of $60,000 to somebody who was still in litigation with him trying to get that return to us. Again, it’s humiliating. On that one, I learned to do your background checks thoroughly. It’s like stepping over dollars to pick up pennies. Pay the fee to your PI and get the background checks done because they’re going to turn up things. I thought I did a background check on him but I didn’t do a professional one. It turns out when I turned my lawyer on it, he found stuff that he would have found if I paid him to do it in the first place. Do the background check, own your mistakes, and learn from them.

That is such good advice. One of the things I learned from Ken McElroy who wrote The ABCs of Real Estate Investing, said, “Share bad news, it engenders trust.” A lot of people think, “If I tell them what I did, they’re not going to trust me,” but it’s the opposite if you share it openly and honestly as soon as it happens. Though you do want to come up with solutions that you can like, “Here’s what I’m going to do to fix it. Here’s the bad news and this is what I’m doing about it.” That’s not a bad thing.

Sometimes it’s like, “This is what happened. I will come up with a solution.” Sometimes that solution is, “I learned from this not to do it again.” There’s no way I was going to get that EM money back. I tried for a couple of days to finagle it and figure out, “Maybe I could still buy the deal. Maybe I can exit in this other way to still make money.” I tried lots of things but at the end of the day, all I got out of that was an expensive experience. I would have spent that same money on a class or a seminar. It’s a lesson that you learned and that money was spent. Whether it was spent on a seminar or was spent on a mistake, it was spent and you learned. That’s the value of it.

Which is what I tell people who are thinking about getting an education. You’re going to get an education either way. Either you’re going to get it at the frontend or you’re going to get it in the process. It’s less painful on the frontend but you’re going to get it either way. As long as you get the lesson, then it’s worth it. What are you most proud of your real estate investing?

I’m proud of this 34-unit that we saved from the jaws of Coronavirus disaster. I’m excited that that’s turning out. What I’m most proud of is the fact that people are telling me, “This is okay. Do this big thing.” Believing that I could do the big thing, then going and delivering on it. We bought our first investment. It was a single-family home outside of Louisville, Kentucky in September of 2018 right at the end of the year. That first unit between then and now, which has been a year and a half. Once we close on this Arkansas deal, we’ll be at 92 units. I’m proud of that and people will say, “I don’t feel like I’m crushing it. I don’t feel like I even work that many hours.” Yet sometimes you turn around and look at what you’ve accomplished and you can say, “Look what I did.” I am proud of that. People say a lot of things but sometimes it never happens. I feel like we made it happen.

REIG Emma | Real Estate Investing Lessons

Real Estate Investing Lessons : Debt is an important tool to your success as long as you’re conservative with it.

 

To what do you attribute your success?

To being a weirdo. I’ll tell you a short story. My partners on one of my deals were saying to me, our other partners were a very optimistic person, so optimistic that we need to tone it down a little and get a little more real. He said, “You’re very negative. I need to help you to be more positive.” I said, “What? I’m negative? Really?” I was being maybe a little too real, a little too raw. This business is up and down. You’ll wake up in the morning to a bad email and you’re like, “This deal is going to fall apart and I should go and get a job.” By that night, you figured it out. You went back, you talked to the seller, the property manager, and to whoever. You solve the problem. It’s up and down. I was sharing all of that and closing that fifth unit was much harder than closing this Coronavirus one. Even though there was no Coronavirus, it took us six months. At many points along the way, it looked like we were going to lose that deal.

I finally told him, “If I was a negative person, I wouldn’t be doing any of these because I wouldn’t believe it was even possible.” No negative person goes out and says, “I’m going to buy 100 units this year when I haven’t had any experience.” That independent streak and believing that I can do things that most people think you’re crazy to even think about or try. It means that I’m an optimistic person. There are good days and bad days, good hours, and bad hours. I was being pretty raw and open about how I was feeling and it was coming across as negativity. At the end of the day, the reason that we’ve done anything that we’ve done is that we’re optimistic and believe that we can do these crazy things that most everybody else is like, “You must be risk-tolerant. You are crazy?” What did they say? Boring women never made history. The belief is step one, you have to have nuts and bolts. Belief is more important because otherwise, you give up.

A couple of things you said and they’re similar to my story. Sometimes you don’t even know things are possible. With Dave Ramsey, he had said there’s this possibility of being a landlord. You’re like, “Is that possible?” You then went to REIA and you heard about multifamily. You’re like, “Is that possible?” This is why I’m excited about this show because I hope that as people are out there reading your experience and the experience of all the women I interview, they’ll go, “That’s possible. She’s done it, she’s doing this, she’s doing that.” That’s all possible for me because it’s all possible.

If I’d known it was possible many years ago, I would have done it many years ago. I’m fundamentally the same person. I hope I’m better than I was many years ago. Some of those same character traits that have made me be able to do this now, I had it back when I was 25 or 35, I could have done it back then. I just don’t know, it was a thing. I did listen to Rich Dad Poor Dad and I heard all those other people’s money. I was like, “That’s risky. I don’t want other people’s money, like millions of dollars in debt. No, thank you.” He told me it was possible but I was like, “I’m going to do it that Dave Ramsey way. It wasn’t like I didn’t know that. I rejected it. Maybe believing it or agreeing with it is the next step after mindset.

I’m happily in millions of dollars in debt. I have millions of dollars in debt and that’s cool. It’s secured debt but that’s making me money. What advice do you have for a woman who is starting out in this field?

The first thing is to read a couple of good books. Devour some podcasts on the topic. Look for the free material on YouTube, Udemy, iTunes, and those types of places. You’ll probably identify with one of the content creators and he’ll have us pay for a product that fits your business. Consume that person’s free material. You’ll find that what you’re paying for in the class is no secret. I wish nobody would ever call class, secrets of doing anything. There are no secrets. It’s all for free on the internet. Understand that what you’re buying when you’re buying that education program is that it’s being curated into a digestible format so you can get through it more quickly. It’s the same content they’re probably giving away for free on their YouTube channel.

Dive into that and when you’re ready to pay for the product, you’ll know that person very well and you’ll know if that’s going to be a good fit for you. Don’t go around buying over buying. You should pay for education. You’re either going to make mistakes and pay for it or you’re going to buy education and you’ll probably still make mistakes. Having somebody that you can call or a network of people to ask questions too. Some of those are free and some of those are paid and that’s fine. Make sure you consume the free content. On multifamily specifically, I like Lance Edwards’ How To Make Big Money In Small Apartments. It comes in audio or PDF. Read through that. That’s a lot of mindset and technique. You’ve got Joe Fairless’ Best Ever Apartment Syndication Book. That’s very nuts and bolts. It’s like a reference manual that’s always good to have under your belt or on your desk if you have a question.

Debt is a scary thing, but so is any sharp tool that you're going to use. You have to use it responsibly. Click To Tweet

Here’s the big thing, find what you’re willing to do that other person isn’t willing to do. We hear that a lot but what we tend to interpret that means do something difficult and you think sucks. That’s not what that means. What is it that you like doing that maybe other people hate doing? Maybe you like cold calling, door knocking, sending out mailers, and raising money. Maybe you like doing those things or at least you don’t mind them and you’re good at them. Other people aren’t willing to do it, because other people don’t like it but you do. Don’t feel like you have to go out there and make this a big grind. If you hate it, you’re going to procrastinate it and you probably won’t be very good at it. Find what you are willing to do that other people are unwilling to do. There is a whole list of them. I listed 4 or 5 of them but there are more. Find something hard that for you isn’t that hard, and then build your business around that strength.

What do you wish you’d known at the beginning that you now know?

I don’t believe in good debt and bad debt. All debt is scary debt but there is a powerful debt that can be used as a tool. Learn how to wield that tool. They call it leverage because you’re levering yourself up into something better. Use debt as a powerful scary tool. Use it wisely. I wish I had learned that sooner. The other thing I wish I’d learned sooner and part of a debt is other people’s money, meaning private equity, raising capital, networking with people, and talking to them about it. I walked in on this work from home meeting that my husband was in the other day. I walked into the conversation and somebody was saying to him, “Troy, we can’t all be real estate moguls like you.” Without missing a beat, he said, “Sure you can. You don’t even have to have that much money. You just have to convince other people to buy real estate with their money and let you run it.”

Leveraging people and leveraging their money as private equity. Start talking to anybody. Tell them what you’re doing. People will say no, but people will start coming to you and say, “I would like to get into this. Can you help me?” Eventually, those people will turn into the people who are like, “Take this and do it,” because they realize it’s hard or they don’t want to do it. Those people become the people who invest with you. What I wish I’d known at the beginning is to use debt and learn how to talk to other people about using their money. It’s an opportunity for them. You are not doing a sales job. You are not begging. It’s not multilevel marketing. You are providing them an opportunity that most people don’t even know they have access to.

You are letting people know, “This is how I think about it.” I have investors coming to me at this point, but without them having to do work, you’re going to grow their money. It’s the same reason why people invest in stocks. They’re putting it into a business that they hope will grow. That’s the same, except it’s a real estate. It is a better business and better opportunities than with the stocks. It’s an opportunity that you’re offering people. It’s not like they’re giving you their money.

They are trusting you with their money. Going back to what we’re talking about at the beginning. When somebody tells you that you can do this thing and that this thing exists and you think, “I wish I’d known this before.” How many people do you think that would invest money with you would be grateful that they have that opportunity and that they didn’t know they could even do that before you told them? Think of it more like that. Learn how to talk to people about using their money. That’s probably the biggest one right there.

I was blown away when I found out that syndication existed. It killed me that I didn’t know that myself years earlier. I could have gotten so much further. It is time for our famed end of show trinity. That’s a brag, gratitude, and desire. Before I do that though, how can people reach out to you and find out more about what you do?

I’ve been feeling a little discouraged because everybody’s like, “The downturn is coming,” and how do you prepare for a downturn pile of cash? I’m going, “I don’t have any cash. I ran out of cash. What am I going to do?” My husband said, “Use other people’s cash.” That was our business plan. I forgot or I wasn’t thinking about it in those terms. My main goal is I want people to reach out. I built a website to educate people on investing their money passively in real estate, through joint ventures or syndications. Joint ventures are not as passive. That’s at www.Highrise.Group. That has information about me, some of the things that we’ve worked on over the years, our portfolio, and general information about investing in multifamily. You can go there. There’s a form you can fill out if you want to schedule a call with me, a fifteen-minute or an hour call. Fill out an investor interest form. There are all sorts of things you can do there. Get in touch with me. I’m at EmmaPowell28 at LinkedIn and Facebook. I spend a lot of time on both those platforms. You can always get ahold of me through Messenger, LinkedIn, or Facebook.

What is one thing you’re celebrating? What’s your brag?

It’s getting the 34. It crossed the finish line. I thought it wasn’t going to close and we’ve got closing dates.

What is one thing you grateful for?

I watched Mr. Rogers’ movie on the plane on the way home from Little Rock. One thing down there that struck me is this, “Do you know what the most important thing to me in the world is?” The caller said no. Mr. Rogers said, “It’s talking to you on the phone right now.” I feel like that appreciating moments and whatever you’re doing right now is the most important thing that you could possibly be doing. Otherwise, you would be doing something else. Right now, I am grateful that I’m talking to you. I hopefully can meet some new people through this because that’s what I’m doing and being grateful for every moment.

What’s one thing you desire?

Financial independence, retire early. I am ready to become a 100% passive investor and doing some slow travel. Go and sit in on a beach in Albania or Portugal and having my husband be able to do some part-time work online, wandering around the country, stay 2, 3 months near each family member. That is the goal, 100% passive with a little part-time shtick for each of us, slow down and enjoy life a lot more. That is what drives me right now.

REIG Emma | Real Estate Investing Lessons

Real Estate Investing Lessons : Find what you are willing to do that other people are unwilling to do, and then build your business around that strength.

 

So shall your desire be or so much better than you can imagine. Thank you. This was awesome. You can reach Emma at www.Highrise.Group. You can find me @REIGoddesses on all the socials and www.REIGoddesses.com. There you can join our Investor Club and get on the list. Find out about our passive investing opportunities and syndications. Join us there and join our private group on Facebook. There are a lot of amazing women like Emma in there.

I also do have a Facebook group. It’s a matchmaking service between active and passive investors. If you have a deal and you’re looking for investors. You can legally solicit them. If you are a passive investor and would like to do more passive investing as I do, that’s my goal to transition over into that. Pop in there and talk to some of the operators. See if you can find a good deal that fits your risk profile. We get in there and try to get people together. There’s plenty of money to go around. I want to facilitate people getting together, having these conversations, and finding good deals that work for them either on the active or the passive side.

Boring women never made history. You have to have nuts and bolts. Click To Tweet

Thanks, everybody. Catch us next time for another interview.

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About Emma Powell

REIG Emma | Real Estate Investing Lessons

Emma Powell is passionate about real estate is the best investment available. With my husband of 23 years, Troy Powell, we live in Salt Lake City UT after 20 years in Austin TX, and are parents of six homeschooled children ages 22 to 8. We have experience partnering in a variety of deals as a lender, deal sponsor, co-owner, syndicator, property manager, and Emma is a former real estate photographer. Emma is a small business project manager with a BS in Entrepreneurial Management and Marketing Design. Troy Powell is the IT guy keeping the operations running smoothly with his background in young tech startups. As Key Credit Partners and owners on several properties, we have experience in getting transactions to the finish line through relationships with lenders, attorneys, and title officers, while building both in-house and third-party and property and asset management teams.

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