There is always hope in real estate if you follow the right path and find the right mentor. Host, Monick Halm interviews Ellie Perlman, the Founder and CEO of Blue Lake Capital, about why she started syndicating deals. Ellie prefers multifamily as an asset class for investing and she gives reasons why you should invest on it too. She also gives the importance of finding a mentor to guide you in your real estate career and become a nine-figure syndicator.
Listen to the podcast here:
From Poverty To Nine-Figure Syndicator – Interview With Ellie Perlman
I am excited to have our guest, Ellie Perlman. On this show, I interview incredible badass real estate investing women to share their stories, triumphs, and stumbles so that we can learn. I try to get the most incredible women I can on this show and our guest is certainly no exception. Ellie and I started a mastermind together. She’s one of my mastermind sisters. She is a real estate investor who owns over 2,000 units across the United States worth over $250 million. She started her career as a commercial real estate lawyer. Like me, she’s a former lawyer.
She was leading commercial real estate transactions for Africa Israel, Israel’s largest development company. Later, as a property manager for one of Israel’s most prominent oil and gas companies. She oversaw properties worth over $100 million. She has some badass experience. She’s the Founder and CEO of Blue Lake Capital. It’s a real estate investment firm specializing in multifamily investments. She helps investors grow their wealth and get double-digit returns by investing alongside her in large multifamily deals they otherwise normally wouldn’t have access to. Welcome, Ellie.
I’m happy to be here. It’s always great to connect with you.
Likewise. On this show, guests share their stories. I like to start at the beginning. How did you get started in real estate investing?
I started years ago as a passive investor. I was always in real estate. I was in real estate as a lawyer, as a property manager. I was always around real estate and I knew that was my future and I wasn’t sure in what capacity exactly. From the legal side, I moved to the operational side and then shifted back to investing. Investing for me, as a limited partner was a mind-opening experience. That’s how I started.
Where was your first deal? You’re originally from Israel and you live in the US now. Where did you first invest? Tell us a bit about that first investment that you did.
I invested here in the US. In Israel, it’s a bit different. We don’t have the opportunity to invest. I wouldn’t have access to invest in the deals that we found here. I started investing in multifamily with a syndicator who is a big syndicator and that’s a great way to learn about multifamily investing. Also, you don’t have to figure everything out on your own. You can let other people manage your money, but it allows you access to information so you can ask whatever you want to ask. You can see how what the business plan is, why they chose the specific property, why this specific market. That was it. I don’t own anything back in Israel. Everything that I own is here, in the US.You have to be pessimistic and realistic when dealing with the real estate market. Click To Tweet
I want to echo that because that’s how I started, with multifamily as well as a passive investor. It’s a great way to learn and to get into that game. You are on the active side. You’re syndicating. How did you get into that and what made you decide to become a syndicator?
I was in California in Los Angeles, working in a tech company. At some point, there was no more work for me because my team was suspended. Our company was not doing well. I was also getting bored. It was an easy six-figure job and I was not intrigued. I came to a realization as I was negotiating with other companies, I should own my path. If I want someone to measure my potential and write a check, I prefer not to be my paycheck. I prefer to be an investor investing with me. When I was transitioning to a new job, I decided to stop the process and take a few moments and try to understand where I want to go from there, and the answer was owning my own business.
I was always in real estate, so I decided to make it full time and transitioned to active investing. I got a mentor. I paid a lot of money and I found someone who I liked how he grew in the space and I liked his spirit. I realized that no matter how much I paid for the mentorship program, it’s probably going to prevent me from making mistakes that are going to cost me more and accelerate the process. It’s an investment like anything else. It’s easy to lose money in real estate. Somebody is going to make $50,000, $100,000 mistake. Having someone who can walk me through the process, can teach me everything, for me, was invaluable. That’s why I started syndicating deals.
When did you get started?
I don’t remember the exact time but I was also in the market for a while, looking for deals and analyzing. It took me some time to learn, but I was okay not rushing into the first deal. I’m making sure that I know what I was doing, that I’m 100% sure about what’s happening with the deal, how the numbers should work, what’s a good deal, what’s not a good deal, and what I should pay attention to. For instance, if I’m being optimistic about the rent growth, that can affect the numbers. The market is doing great and rents increase and some markets even increase 5% to 7% every year, but I can’t assume the same is going to happen in the next five years. I have to be pessimistic and realistic because we’re at the top of the market. I’m a nerd and I lack information, I feel secure in what information I have. That’s how I do things, and maybe it’s my legal background. I love information. I didn’t want to do anything. I can’t even take responsibility for my investors’ money before I knew what I was doing.
It’s one thing to make a $50,000, $100,000 mistake with your own money. It’s another thing if it’s somebody else’s money. That is what keeps you up at night. It’s important to invest a lot in mentorship and important to study a lot and important to know what you’re doing. When you’re a steward of other people’s money, they’re hard-earned. You have to treat it as well as you can.
Lots of guys like more risks, there’s nothing wrong with it as long as everyone is aware of the risk that is involved with it. Women, in general, are more risk-averse. I went to law school. I see everything through a legal prism. What are all the bad things that can happen and how can I prevent it from happening and protect myself? That’s how a lawyer thinks when they write down a contract. You need to cover all your bases and think, “What are all the bad scenarios that could happen to my client in that relationship? How can I protect him or her?” That’s how I think. What happens if the rents drop? What happens if we’ll need more money for a renovation? What happens if there’s going to be more new construction in the area and that can be a competition? I can relate. I want to be able to sleep at night. This is not why I started my own business. I can’t sleep. It’s more stressful than any job, but it couldn’t be more rewarding.
You are all about multifamily. Tell me why you like multifamily as an asset class for investing.
I love multifamily. Most of my investment as an active investor, as a syndicator, also as a passive investor, is mostly multifamily, also in other asset classes. I love multifamily because I can see the trend and the trend is moving away from single-family homes and into apartment buildings for two reasons. One, you have Millennials and they don’t want to live in houses anymore like the previous generation. They delay the marriage age and they want to have the flexibility of moving around and open to new experiences and new job opportunities. The demand for apartment buildings is increasing.
On the other hand, you also have the baby boomers that are scaling down cylinder homes, moving to either condos or comfortable apartment buildings where everything has been taken care of. I see this trend. I also like the economies of scale. You don’t buy one door, one contract and one loan for one unit. You can do this thing for a hundred units and it’s much easier to acquire 20, 15, 100 doors than to acquire 20 different single-family homes. Offices are more sensitive to the cyclicality of the market. If there’s going to be a shift, businesses are going to get hurt and unless you have a serious anchor tenant like Microsoft, you can feel it and it can be painful.
Everyone needs a place to live. It’s a safer asset class, probably the safest. I like to be in class B buildings in the ‘90s to early 2000. We have Class A, B, and C, and sometimes even D, some people say. I don’t like the two extremes. I don’t like the high-end buildings class A because they’re sensitive to corrections, they get hit the hardest. A lot of people are migrating because they can’t afford the high rate rent, they go to Class Bs. Some Cs are great but then Class Ds are in crime areas. It’s not where you want to be in. In my opinion, in any stage of the cycle, I don’t want to deal with drug dealers and hookers, I don’t want to go there to collect rent and I don’t want to send anyone to do that for me.
It takes a brave person to do Class D. You can get some good returns, but it is dangerous.
It is a high risk, high reward. They’re not bad. They’re good for certain types of investors. I’m not of them.
Me neither, I feel like you learn so much more when things don’t go right than we do when it’s smooth sailing. I always ask all my guests, what was your biggest mistake and what did you learn from it?
I usually don’t like to look back and think, “Could’ve, should’ve, would’ve.” One of the biggest mistakes that I’ve done was, the answer I’m not going to give you, and that’s starting syndicating deals and buying multifamily early on. Right after the crash around 2011, that was a great market but you always know that it’s high. That’s not the answer I’m going to give you, because I don’t like to look back and say, “Why didn’t I do that? That was a great opportunity.” I’m also raising money for my deals. The biggest mistake was I wanted to keep some investors for the next deal. I decided to raise money. I was partnering with another company and I said, “I’m going to raise a certain amount, X amount of money.” Once I got to that level, I raised more than I initially thought that I would do.
I have more investors. I decided to keep them for the next deal. I said, “Don’t wait for me.” I’d rather have them on the next deal, instead of bringing all of them to the current deal. What happened was, by the time I had the next deal, they already invested in another deal and I lost. They were open to investing in the future, and some of them came back, but I lost that opportunity. It was a window of opportunity. They had money, they were willing and eager to write a check, and I thought, “I’m going to spread out the investors, bring some to this investment. The other ones, they’re probably going to wait a few months for the next one.” It’s not what happened. One of my biggest mistakes is I lost some investors there.Market prices may increase but do not assume the same is going to happen in the years to come. Click To Tweet
Sometimes people have windows when they’re ready and available to invest certain chunks of money. It’s being able to take advantage of the right window when there is a willing investor and an opportunity that would match them, take and go for it. With the flip-side of the mistake, what are you most proud of?
What I’m most proud of is making a change in my life. I was born into a poor family. I was the oldest of four kids. My mom was sick. Growing up I raised my sisters and little brother. Being successful was not something that was reasonable. I got married at the age of nineteen. I was married for almost ten years. I was struggling. I remember we didn’t have money to pay for even bread. We needed to borrow money. I worked hard and I worked three jobs. I did whatever I could to get into a good law school. I knew that education was my way out of my financial situation. It wasn’t easy because around me, all I saw were people who told me I was a dreamer, life is hard and I should not expect too much of life. I rejected that. I refused to listen to it. I believe in creating your own reality.
Your brain is going to broadcast this new reality and you’re going to make decisions consciously and subconsciously to adjust to that new image that you have. It took me about two years to get into law school because I want to go to one of the best law schools in Israel, not just any law school. I did a bachelor’s and a master’s degree in four years. I started working for a big law firm and was part of huge real estate deals. After several years, I decided to move to the US. I went to business school in Boston. I went to MIT and it wasn’t easy to get in. People told me, “MIT is competitive and it’s going to be a stretch.” I said, “Let’s do it.” I learned to get excited when people think that something was hard to achieve or impossible. I don’t think there’s anything impossible. I’m proud of being able to shift from a sixteen-year-old girl who was in boarding school and saw drug abuse and kids who thought that being part of a gang is a way of life.
Being able to see through all of that and not touch any of those things and focus on school and knowing that through education, I can change my life. That’s one of the things that pushed me and I always aimed for more. I always think that what I do is not enough because I want to get to the next level and the next level. I’m always going to be that girl in boarding school from a poor family. It’s a state of mind, but not in a bad way. It’s not a negative way. It’s positive because I’ve been there and I’ve seen what it’s like to grow up without money. I never want to be in that place and that makes me work even harder. I don’t need to work, but there’s no way I’m not going to get up in the morning and try to find a new way to make money and a new deal and reach to higher heights every day. For me, that’s exciting.
That’s an inspiring story and I see why you would be proud of that, all the things that you’ve been able to do, given having a lot of perceived strikes against you. You might’ve already answered this next question with what you were sharing, but maybe there’s a different nuance. To what do you attribute your success?
Definitely to my past and my background, but also my parents, they had nothing to give me but they gave me the best gift, a strong belief in my abilities. My parents always told me, “There’s nothing you can’t do. If you put your mind to something, you will do it.” That’s why I believe I can do anything. That’s why getting to MIT from a poor family in Israel, for me it looked like, “Why wouldn’t I be able to do that?” Buying a $50 million apartment building, “Why wouldn’t I be able to do that?” That’s one of the things that contributed the most of my success. It’s how my parents believed in my abilities, and that is worth than any amount of money that they could’ve given me. I don’t know if I ever told them that, now that I’m thinking about it.
That does make a difference. My mom always told me that too, she’s like, “Monick, you can do anything you want.” She would always say, “You can do anything you want, you can be anything you want.” That makes a difference. It is a blessing to have had that. You were rich with that. What advice do you have for a woman who’s starting out in real estate?
I would say, find someone that you like and try to learn from them. There’s always a way to add value to anybody. It worked for me, hiring a mentor can boost your career in real estate or in anything else, specifically in real estate. You can always find ways to add value if you find someone that you trust, you like what they do, you want to do what they do, reach out and ask to sit down for a cup of coffee. Sometimes, one conversation can change your life. I met a guy in LA and I went to a Meetup call out of state investing. I met him, we were chatting, and he was excited about the fact that he’s going to buy a duplex out of state.
He ran the numbers, he liked them, and he was about to fly in a few days to see the property and buy it, I told him, “Why don’t you buy multifamily? Why start small?” He said, “One day I want to do what you do, but I’m not there yet. I want to graduate and do that, but I need some experience.” I told him. “It’s different buying 2 doors and 50 doors. You can’t learn much from the two doors. You can partner with someone. Find someone that you like, help them in some way. Find your way into that.” He called me and he said, “I closed the deal.” I don’t remember the numbers exactly, several million dollars. “I found a syndicator. I helped this guy raise money. I got in and I’m part of the general partnership.”
He took me out to dinner and to say thank you. He said, “That conversation we had at that Meetup in West LA changed my life.” He didn’t buy that duplex. He went straight to what he wanted to do years down the road. For him, that’s what he thought he would get there in years. Find someone, have a phone call, a chat, coffee, whatever, and as this guy did, he found someone that he wanted to work with. I didn’t have a deal at that time. He also wants to work with me but he found someone that did. He found a way to add value to that person. He brought capital to the deal and now he’s doing deals.
That’s such great advice. Ellie, thank you. Before we go into our famed end of podcast trinity, to the brag, gratitude and desire, what is the best way for people to connect with you if they want to find out more about what you’re doing?
It’s time for our trinity. What is your brag?
I bragged enough.
No, you didn’t. You were sharing your stories. Your story is badass.
That’s enough for bragging. To get admitted to one of the top law schools in Israel and then get into MIT, that’s enough of a brag for me. In all of those top schools, you have people that come from a specific background and I was a bit different. That’s enough of a brag.Hiring a mentor can boost your career in real estate or in anything else. Click To Tweet
Give us a recent brag.
I partnered with another company. We closed a $50 million apartment building deal, 398 units in the Dallas area. I was for that deal and then realized that my mentor was bidding for the same deal. He ended up getting it. We partnered on it. That’s a great deal. It’s a beautiful property. I’m proud of it.
Well bragged. What are you grateful for?
I’m grateful for my son, for my husband, which is not the same husband that I had when I got married at nineteen back in Israel. It’s a new husband. We got married at the beginning of September. I’m grateful for him because he keeps me grounded. Many times when we have big dreams, I’m sometimes stressed if I don’t get it in the time frame that I want which is many times. I don’t want to say non-realistic, but aggressive. He makes me see things from a more neutral perspective and put things in perspective. He believes in me and supports me in every possible way. I’m grateful for him.
Finally, what is one desire?
So shall your desire be or so much better than you can imagine. Thank you so much, Ellie, for being here. If you want to connect with her again, you can go to ElliePerlman.com. If you want to connect with me go to REIGoddesses.com. There, you can check out our programs. We have an education and a mentorship program. If you are looking for mentoring in real estate, then you should check it out under Programs. If you click under Invest, you can find out about our investor club and investment opportunities, like the ones we’ve been talking about. Join us next time when we have another bad-ass Real Estate Investing Goddess interview.
Thank you, Monick.