I do think we’re at a point where you’re finding a lot of tired landlords, a lot of self-managing people. If you get to connect with them at the right time, those are your motivated buyers, potentially. So yeah, I think that’s still a great strategy. You just have to change up how you get in front of them, obviously, and how you get ahold of them. But I think that, theoretically, it’s still a great strategy.

Robert Leonard  06:01

As you said, people probably wouldn’t use a newspaper today. But we arguably have something even better, right? I mean, we have Zillow and realtor.com, and all these different websites where people are listing rentals for sale all the time. Those make it easier to find and to contact people than the newspaper was. So, maybe it’s an even better opportunity to reach out to people.

Liz Faircloth  06:21

Absolutely.

The folks that have owned these self-managed properties for a long time have a lot of their heart invested in the property. They didn’t just buy it as just an investment, so we tried to get creative with them, making them small equity owners, so they can become a partner. That creates more creative financing. There are a lot of ways to slice and dice it to know what’s important to them, but yeah, we’re in negotiations with a larger multifamily right now, that the owner might be just a small equity partner. And that’s another way to get into the deal versus having to raise the money over leverage, those sort of things.

Robert Leonard  06:59

I actually want to dive into that a bit more because that’s an idea I’ve had to myself, and I’ve bounced it off my business partner. “What if we were to buy a property or we offer to buy a property from someone, and rather than just completely buy them out? Maybe we can leave them with a 5% or 10% stake in the property.” You don’t hear people talk about that much on podcast, you don’t really see it online. So talk to us a bit more about that. What does that look like? What does the structure look like? How does it work?

Liz Faircloth  07:22

I’ll tell you the evolution of what we’ve done in terms of financing as we’ve really built our business by raising private capital.

What ends up happening on a lot of these larger multi-families is that you give around 70% away to your limited partners, and you’re keeping 30% as the general partner. That’s commonly how we’ve been managing and structuring them. What ends up happening there is your equity goes down, and you’re doing all the work. It’s a lot of work as you have an asset manager and you have more people involved, etc. It’s not a bad thing. It’s just the way that it’s structured or can be structured.

But then the question becomes, “If you don’t do that, how do you structure it in another way where we’re staying with this owner?” A particular owner wanted to have residual income coming in. They’ve owned the property for a long time, and we had to figure out a way to have them in it. We tried a setup with them being 20% equity holders of the building. A creative way is also to implement a phasing out process, where you could phase them out completely in five years.

We have smaller multifamily properties right now. We’ve struck up a deal where the investor is almost like a private lender/equity, where they’re getting equity in the LLC, but it’s phased out in three to five years, and then we basically buy back more of the building. In five years, we’d own the building again, and they’ve gotten their money back from their returns.

So, there are so many ways to go about it, Robert. I think it all starts with what’s important to the person, and really what’s important to the project. If we bought this other building and raised the money like how we do it in our normal structure with a 70/30 split, it, financially, wouldn’t make sense for the investor. And that’s really the biggest question: Is this going to make sense for people who are investing in the building? I always tell people, “Don’t tell them you’re getting money. It’s not a handout. They’re getting an investment.” I have to catch myself too. But yeah, I think it all comes back to creative financing. How do you meet that person’s needs, and also meet the needs of the project? If you can’t do those two things, then it probably isn’t the right fit because I don’t think this project will work as well, in the traditional sense, financially.

Robert Leonard  09:51

Do you think that equity split, even if the seller is just keeping a small piece, works better with the medium to larger size multifamily? If somebody listening to the show today wants to do that with a duplex or even like a triplex or quadplex, do you think that’s possible?

Liz Faircloth  10:05

I think anything’s possible. I think what’s really fascinating is how you can slice and dice projects. It’s not like you’re adhering to some policy, right? When our first equity partner came on, there’s no rule that it has to be this way. I think that’s the good news, but also it poses a challenge to get creative and to protect everyone. It’s like the wild west, right? Anything goes. It’s all possible.

With our first non-family equity partner, we had a 50/50 partnership. We started an LLC. We were more focused on the day-to-day, while he had a strategic role in the company and the project. It involved two single-family homes, and it was 50/50. When he put up $50,000, we didn’t put a dime of our own money as we were the local feet on the street. We managed property, knew how to turn it around, found it, and so on. That was a perfect connection, and that structure worked really well.

My husband’s all about raising private money, so I’m not going to go head to head with him on the details, but what I can tell you is that equity is great for people who want to be in something long term. They want the cash flow, but also that tax benefit. They want that, and all the other things that come in with being an equity partner. And then you win together, and lose together as an equity partner. Things may take longer than you would want. Lenders are great if they need that fixed amount because they’re really lending the money, and they want their interest rate whether the project goes well or not. I’ve had flips which were horrible. We had to go to the closing table, and you have to write a check to your lender. That completely blows because you did all this work, but that happens. It happens. no one can hit a home run every time.

My point in saying that is that as someone who’s trying to creatively finance deals, you need to know what’s important to that other person. They need that fixed income. Do they want to win with you or lose with you so to speak? Are they in this for the long term? Or are they just in it for six to nine months and want the return because they want to move on because their kids are going to be in college in two years or whatever? People’s lives change. I think we’re so into our world that I think, to be good at connecting with people that want to invest with you, you have to be in their world, and you have to know what the deal needs, what the person needs, and what you need. Those three things all matter. If one doesn’t work, you’re going to go into a deal, everyone’s happy, but you get nothing. That’s happened to us before. Not nothing, but after doing a lot, and what were we getting? You know, like, that doesn’t make sense. And then or the lender gets more of the lion’s share. I just think you have to be almost like that, truly customer-oriented. You have to know what’s important to the seller, and you got to talk to them. You have to really seek to understand them in their place.

Robert Leonard  12:56

How about someone just getting started? This probably isn’t the best way for them to get their first deal. What do you think the best way is for someone who’s listening to the podcast today who hasn’t done their first deal yet or is still new in this? What is the best way to get started?

Liz Faircloth  13:13

I think the best way to get started is to start building your track record. We didn’t just run out, raise money, and buy a big apartment building ourselves for our first deal. I think some people can do that, but I would recommend a more conservative approach by starting small, getting your feet wet, maybe minimizing your upside, but really minimizing your downside, too. I highly recommend that as you can get burned pretty badly in this business.

So, for those getting started, know where you want to be in a few years. What’s important to you? Some people just really want to build their cash flow up while keeping the job they love. They want to build passive income, but then they go flip properties. And those two things don’t make any sense because flipping is not necessarily going to give you this monthly stream of income unless you build a business around it. But it’s really going to give you a chunk of cash, hopefully. After a while, you’re going to make money at the end of that timeframe You have to know what’s important to you and where you want to be. If building long-term wealth is important to you, flipping can be a means to that, but not in and of itself. Create strategies to get you there, and to be part of your master plan.

I think we got involved with too many things. Most people want to build long-term wealth when they get into real estate. They don’t want to lose money. We do it for a lot of the same reasons. If that’s important to you, number one, assess where you are financially, and the easiest way into the game. With rental property, know what kind of rental property you want to get into. Do you want to stay local or go out of state? I always think local’s best unless you’re in California as it’s hard to invest locally in some of those areas.

My answer in a short way is to get started by knowing where you want to go. Then, what strategy do you want to take to get you there? Then start to study that strategy.

If it’s buy-and-hold investing, you want to buy that rental property and stay local. Start learning your market and the numbers, and know your numbers to the tee. If you want to buy a rental property within a 30-minute radius, you need to know what a good deal looks like as people are going to check if it’s a good deal. You have to know that. You need within minutes to know if something is a good deal or not, especially in this market, as good opportunities do not stay around.

I’m a big fan of multifamily rentals. I know people have built wonderful portfolios with single-family. We just sold our last one. They’re great when they’re full, but they’re not very effective when they’re vacant and you only have one tenant. I’ve heard people do amazingly well with them. Find a niche that works for you, study your market, and know your numbers, then just start looking at everything you possibly can to get in a way that works financially for you.

Robert Leonard  16:23

I like what you said about minimizing your risk, especially at the beginning. On social media, whether it be Instagram or just all over the internet, you hear people talk about going big on your first deal, and I get it. I understand that thought process, and I understand having big goals. I probably have some of the biggest goals among anyone I know. But when it comes down to it, I think minimizing your risk and really just getting started is so important. For my first rental, I did exactly that. I bought a single-family property. I told myself I’d never buy single-family, but I decided to as I wanted to minimize my downside risk. The mortgage payment was $300 a month all-in, so I knew I could cover that myself if I had to. I figured my downside was minimal, and that allowed me to grow my track record. And if that went against me, it wasn’t as bad as it could be compared to if I bought, say, million-dollar multifamily with 50 units. So, I think that’s really, really good advice.

Now, how about turnkey properties? Are they a good way for a new investor to get started?

Liz Faircloth  17:24

We’ve never bought turnkey properties. We sold a few because we were in the process of renovating properties and then we people would offer to buy. I think, again, it depends on how active or passive do you want to be as an investor? It’s a really helpful question to ask as you get going in this business. Some people want to be passive, hands-off. They don’t want to deal with the tenants nor the vacancy nor matters with the construction. There are a lot of active parts of real estate. We keep hearing about passive income, but it’s a very active business. If you’re doing something traditional, like the BRRR strategy, it’s an active business. Somebody’s managing all that.

For the folks listening, the most important thing to figure out for yourself as an investor is how active or how passive do you want to be? Some people want this to replace their job, so they want to get in and figure it out themselves and scale that themselves. Other people love their job and want to do this part-time to be their retirement vehicle, not a full-time job. Turnkey is a great strategy for folks that are looking to be more passive, or looking to not make this their full-time gig, and replace their whole income. If you like showing up at the job site, meeting the folks, and figuring out the contractors like, that’s you awesome, but that’s not being passive. That’s active, so you need to know what your time is worth, and how far your money can go.

With turnkey properties, yes, it’s more retail. In essence, it’s definitely not the BRRRR strategy. You’re not buying low nor undervalued properties. You’re buying at value or a little higher, more retail. We all know what that means. When you go to the store and get something on sale, that’s not really on sale. Likewise, you’re not going to get something on sale with turnkey properties. But is that maybe the right strategy for you and what your goals are? Sure, depending on what you’re looking for, and on where you financially want to get to in 1 to 5 years.

Still, you have to know the market, the area, no matter how good you are as a turnkey company. If you don’t want to invest in a particular area, that’s also important to determine. You still have to vet the market, you still have to vet that local community, you can’t just ignore it. Make sure that your turnkey company does that, and you should know a bit about the market, as well. You shouldn’t really ever allow anyone to do that for you, in my opinion.

There are some big things to look out for. There are some amazing turnkey companies, and there are some that probably aren’t that great, to say it nicely. You’ll want to look out for folks that do this full time. If it’s just their gig or they’re looking to start an arm of the business, and they’re still building processes out, they may not be the right avenue for you, whom you want to be, and what you want to do in this space. And that’s fine. We did a good job with the handful that we ended up working with. But if I was going to buy a turnkey, that would be important to me. The ideal turnkey company has been in the business for a long time, talking to their customers, because they’re doing it all and then they’re managing it for you.

Robert Leonard  20:23

Yeah, I completely agree. I’m writing a book on how to invest long distance. In the part of the book I’m writing right now, I’m answering some questions that I often get about why I don’t just invest in cities that are common for out-of-state investing, like Indianapolis, Memphis, Birmingham, and other cities like that. My reason is exactly what you just said. For me, it doesn’t reduce any of the time or the analysis that goes into the properties and it just increases my competition, so why would I go there? Why wouldn’t I go somewhere else where I’m going to put in the same level of effort to analyze the market, analyze the deals, find deals, and have way less competition? So yeah, I completely agree with that.

Now, if someone starts to feel adventurous or they just can’t avoid the temptation that auction prices often present Why might they need to think twice about buying properties at an auction? What stopped you?

Liz Faircloth  21:15

Auctions are interesting because you’re trying to figure out where to get a good deal or opportunity that not many people can get to or so. We’ve actually never bought a property at a physical auction location, but we’ve bought a couple of properties from Hubzu or one of the auction websites. The biggest challenge to working through is what you don’t know about the property, really, and you normally can’t get into the property unless you break-in. Some people do that, but breaking the law is not a good thing. At auctions, you have these assets that you don’t get to know enough about. It can get intense because you’re trying to make a decision quickly as you don’t have tons of time, and we see other people bidding. It can get emotional, which is the opposite of what you should do in business.

We did pull the trigger for a property online because we knew the market well. Number one, the address comes up and you know that area really well, meaning you can visualize that street and know, in a second, that it’s a good deal. That’s number one. You have to know the area if you’re going to move quickly on that type of bidding or what have you. The second issue is in the property, what liens are against that property? What title issues are with that property? You can be getting into something that costs a lot more money to get out, so you need to be so conservative with your numbers. Prepare for the worst-case scenario. That’s how we went into it.

For one property, we knew it was worth about $200,000 fixed up, and we agreed that we’re not exceeding $50,000. It was a 1400 sq.ft. house. We had to consider what kind of liens it had. What’s the worst-case scenario? We went into that property, with that type of cushion, in our opinion, in an area that we knew, and we knew what kind of rehab it needed. We knew, so we took that risk, but that wasn’t our first property. That’s the other thing. I don’t know if an auction property should be someone’s first property unless you have an experienced investor going to that auction. You could be a part-owner of that or a fly on the wall or help that person in some way. That might be a good strategy. A lot of those processes that you have to put within 30 days. You have to pay them in full cash, not literally. You bring cashier’s checks.

The bottom line is it’s really important to do your homework on the area as much as you can, that’s why building relationships with title companies help. Having a great title company to work with will help you and throw some business to you, too. They can also help you when you look at properties. We’ve done that. We’ve gotten a quick title search on a property before we made an offer. But yeah, I don’t know if I’d make that my first property, my first deal because there’s a lot of risk that goes into it. But you also can get some really good deals.

Robert Leonard  24:39

Yeah, I haven’t done an auction deal yet myself. But when you look at some of the prices, it starts to be tempting. That’s why I wanted to ask that question as I’m sure people see those numbers and they start to get really tempted, too, so I wanted to chat about that quickly.

Liz Faircloth  24:53

The other thing I would recommend that what we also ended up doing was connect with regulars. There were a couple of wholesalers who’d go to physical auctions every Wednesday, and people know them. These are the kind of people you want to connect with. The business involves a whole process to study, which you can if you have the time on your hands. But if you don’t have the time, and you have the money, you’ll want to start to build relationships with those wholesalers because they’re looking for people like you to sell to.

Like title companies, wholesalers are not all created equal. Some are wonderful, and others that are a little psychotic and will charge you like highway robbery. You want to find people who are fair but also diligently studying the market. They should rightfully get paid for that, too. Anyway, that’s the other thing that we did. We stopped going to physical auctions and teamed up with some of the wholesalers. We pay a little more, like $5,000 more, but that made more sense to us than having to do it all yourself because it’s a whole process in and of itself.

Robert Leonard  26:08

Yeah, it’s one of those things where you need to just focus on what you’re good at, and you can’t do everything. Sometimes, you’re going to give up a little bit, but you gain a lot more on the other side, so I think that was probably smart for you guys. Let’s get back to your portfolio. After that first deal that we talked about, where did you guys go after that? What did your next few properties look like? And what strategies were you using?

Liz Faircloth  26:31

At the time, we decided we needed to focus on an area. We thought that was going to be the Philadelphia, but that was right when we got married, too, and we moved to New Jersey. We decided to focus on where we lived. We lived about 15 minutes from Mercer County, Central New Jersey, so we really wanted to make that our focus. We ended up doing a 1031 exchange from that duplex into our next set of properties, which were quadplexes. We bought two from one person.

Over the next eight years, we ended up getting about 20 units on that same block. We’ve sold those in the last five years as a strategic move, but we had great learning around how powerful it is to buy in a similar area. Sometimes, it becomes very deal-oriented. People get pulled because it’s a “good deal”. But it really makes a lot of sense that if you’re going to farm an area, start going all-in on a street, a block, a neighborhood, and then you begin to create your comps, which is super cool because you’re improving the property and those sorts of things.

It was a good strategic move for us to get focused. When we would talk to the owners on the street, and they’d be looking to sell, and we’d reply, “Awesome! We own those buildings.” Those were all fourplexes. After, multi-families became the focus for us, and that was right around ’08. Then, we got into other things. We started to flip houses and bought a commercial building. Then, we bought a raw piece of land. Everything you’re not supposed to do, we did, and that slowed our growth a bit. I think when you get involved with things too quickly, too soon, you get diluted a bit. And we got involved in a lot of different things.

A multifamily property was our first purchase, and it’s still our strategy. It’s what we know. If you can run a duplex, as it gets larger, yes, it’s a different type of asset, but still, in essence, has a similar pivot. So, the success that we’ve had has been focusing. The bumps or the twists and turns have always been things on things where we were not as focused on what we know, executing what we know, and building a team around what we know. But we were young and just wanted to try different things.

You have to be mindful of your personality and your own needs and your own. This is a boring business. It should be a little boring. I think that’s the trap. It looks very glamorous, as you’re always doing something different. But it’s sort of a boring business if you’re running a really good portfolio. Maybe not boring, but it shouldn’t be as sexy and glamorous as I think we hear on podcasts and read in books. I think that’s, unfortunately, what HGTV wants you to think about or see, but it should be a little steadier and truer. It’s all about getting better each time you do a deal, and trying to build a process, and streamline it, and so on.

Robert Leonard  29:29

Yeah, HGTV and social media certainly do make entrepreneurship and real estate look a lot more exciting than it really is. When you’re in the business. growing a business, that’s for sure. I would agree.

Liz Faircloth  29:41

That is the truth.

Robert Leonard  29:43

Given how many deals you guys have done, and how many units you currently own, you must have learned quite a bit about finding good tenants and how to screen them. Once someone buys their first rental property, what is the best way for them to find and screen potential tenants?

Liz Faircloth  29:59

There are a lot of strategies out there in knowing the profile of your tenants. People get very focused on the property and price, but we don’t often think about who rents there. Who’s the common tenant? You need to know those things before you buy a building. You need to know the type of customer you’re serving.

We bought a lot of property in Trenton, New Jersey, which is an urban community, high-C to B-minus neighborhood. At the time, we felt like the property would turn, and we knew where we were getting ourselves into, but we needed to know who our tenant base too. Trenton’s a different environment than Princeton, New Jersey, if you will. I’m not saying it’s not accurate. So, you need to know who you’re serving, and you need to know how to best serve them and what tenant profile is going to work for your property.

With ours, we were too nice, at first. We didn’t know. We had standards, but we didn’t hold on to them. We had it all written down, but we’d meet someone, and accept when we hear people’s stories. My background in social work added to that. I think we got kicked in the teeth a couple of times in the beginning because we were empathetic to people’s stories and needs. Then we learned to hold to our policies, procedures, and rental criteria. We don’t budge off of that. Over the years, once we stuck close to what our rental standards were, that became really helpful and important.

As you buy assets in different class neighborhoods, you’re going to see different types of tenants because they’re attracted to that building in a different way. The different classes of assets do tend to have different types of tenants, so you need to know what you’re getting yourself into. I think that’s the number one thing that people don’t think about. We can say Class A, Class B, or Class C, but that doesn’t translate to what type of tenant is going to typically rent there.

When you take over a property, large or small, you’re going to have a transition time, right? There’s a new sheriff in town, and, most of the time, folks are selling for some reason. We know that it’s not like they’re selling because all their tenants are perfect, and everything’s running wonderfully. There’s always an issue. In every asset we’ve ever bought, there was always something that the owner did not tell us before closing. You need to have a transition plan, whether it’s a duplex or a 10-unit or a 100-unit. The transition plan becomes even more important the more units you have. In that transition, you need to teach tenants how to treat the property, define what the standards are, and then be able to communicate those to the tenants. You’ll see who falls off and who’s not able to keep up with your standards, and so on.

When you’re screening new tenants, you’re keeping to your rules and your policies. I would keep to them as close as possible because the more exceptions we’ve made over the years, the more it came back to bite us. Also, if someone offers to do some of the maintenance, in exchange for a reduced cost of a property unit, …we’ve had those kinds of arrangements, and those don’t ever work out very well either, because the two aren’t created equal. So, you have to keep that stuff separate. It could be your maintenance person, but pay them in addition to them paying their rent.

All those funny little scenarios, we’ve gotten into, and they just don’t work in our experience, so have standards. Number one, then keep to them. We even created a scoring mechanism. We score people based on the rental standards; credit score, rental application, the interview. It creates a consistent way to measure Person A from Person B so that you can’t be called out in choosing one person over another. The best thing we can do is create a standard way to do it versus how he started.

Robert Leonard  34:07

Yeah, I actually do the same thing. I create a scoring rubric, if you will, for all the tenants, for each property, and then I use that to choose my tenants. What are some of the big red flags that people should look out for? What are the big-ticket items?

Liz Faircloth  34:22

I think people really do teach you a lot during the screening process, and when they come to see the property. If you see inconsistencies between what people are saying and what they’re giving you, I think that’s a huge red flag. In other words, if someone tells you that they have XYZ job, and then see their application is completely different when you run your credit check, that’s a big red flag to me. If someone says they’re getting paid X dollars, and again, on their pay stub, it’s different, it’s suspicious. What people say, what they give you, and what they write down, should be consistent.

We used to create private showings, but then no one would show up, so it just killed our time. Now, we schedule open houses, and about 15 people say they’re interested. We don’t set up private showings anymore. That worked well, and I would recommend that to some of the other leasing agents that have worked with us. The open house approach creates competition and adds pressure.

I think the biggest red flag for me is inconsistency. Their credit scores can be really high, but they don’t make any money, that’s interesting, and it makes you wonder, “Why is that?” Credit is important. Being in a job for a long time is hugely important, in my opinion. It’s a red flag if you see people go into different jobs, hopping around. That always makes me wonder, “What’s going on there?” I’m sure there are more, but those are few that popped in my head.

Robert Leonard  36:26

What have been some of the biggest mistakes that you’ve made? And how can people avoid those with screening tenants?

Liz Faircloth  36:39

You know, I think the biggest mistake is allowing your gut to make a decision, in my opinion, even if you’re good reading people. The folks that are really good at reading people, and good with people are the ones that actually should do a scoring mechanism, or do something that’s objective. If you know that you’re naturally a subjective person, you have to create objective measures for yourself. I think that’s the biggest mistake people can make. They don’t listen to the numbers. They don’t listen to what’s on paper. They go with a sense of urgency. They don’t want to have another month vacant.

You always hear the adage, “Hire slowly. Fire quickly.” It’s the same thing with tenants or any of those things. I’m a big fan of making sure you get the right fit as it takes a lot longer to get somebody out of your property. Figure out your strategy and where to rent based on the type of people that you want to rent to. That’s going to work for your strategy. I think that’s an understatement. People do not think about that. They think about the cost of a property and the rental income, but they don’t even realize the type of tenants that the property attracts. Are you willing and able to manage that tenant base? It’s not a big question people think about, but it’s huge. Other people say, “For 20 years, I’ve never had an eviction.” Then they tell you where their properties are, and it makes complete sense. I think a lot of it is the asset. But more importantly, it’s the tenant base you’re going to connect and work with. These are all things to think about, so you really need to have a strategy before you get into that asset. Don’t just look at the rental income and your cash flow, and all that good stuff that we all get excited about.

Robert Leonard  38:18

Yeah, as I say, that stuff’s easy to get excited about. They often make you skip over the details.

A lot of people read books and even listen to podcasts these days when they want to learn about a topic, like listening to this podcast that we’re on right now, but what about the other ways someone can learn like, say, a real estate investing conference? Why should the listeners try to attend a real estate conference this year?

Liz Faircloth  38:40

There are so many of those, which is awesome. Almost every week, I’m getting invited to speak or to just go to a conference. There’s a lot of real estate investing conferences. I think they are phenomenal for a lot of different reasons, especially the ones that are a little more education-based, and not just trying to sell you things every minute of the day, which I’ve been doing, as well. I do love conferences.

Number one, I know it’s cliché, but your network is your net worth. I think there’s so much truth to that. So, to build that network, go to conferences. I think conferences are phenomenal because there are people in that room that don’t really need to be there as they’re doing just fine, financially. Other people are just starting, too, and it’s really neat to see people helping each other, supporting each other. There’s always something you can give. There’s always something you can learn. I’m learning things every day, and so is my husband.

I think the other way to learn is to start surrounding yourself with people that want to support each other. That’s what we’re up to, my partner, Jess, and I. We’re creating a community. Being in a community of people who really want to share and want to learn together, I think is critical. It also gives you a sense of accountability, too. If you said you’d buy a property six months ago, and you kept talking about it, the people that keep going to the meetups will remember. I think those types of communities, the conferences, and the meetups, help hold you accountable or can help you be held accountable. I think that’s really what it comes down to. You can read how to do all these things. You can listen to enough podcasts, and read enough books, but are you going to do it when the rubber meets the road? In communities, you’re going to have people to bounce things off of, so I think those that’s why conferences and meetups are good. We have investor meetups. There are 23 all-women-based groups around the country right now, and women really appreciate it because it’s giving them the support that they need. And it’s not just our meetups, but any real estate investing meetup kind of approach, as well, is really helpful.

Robert Leonard  40:50

If someone listening to the show today has tried real estate before, maybe they did a deal or two and it didn’t go so well, or maybe they’re thinking about getting into real estate now, but they’re worried what might happen if things go wrong; how can they overcome that failure? How can they be prepared to get back up when the entrepreneurial life of real estate investing knocks them down?

Liz Faircloth  41:10

It will knock you down. I was talking to a friend of mine in our InvestHER circle, and she was really upset. She was telling me about a project she went through, and she had lost close to $50,000. I said, “I’m really, really sorry to hear that. It must be really tough, but I’m really glad it happened.” I said it very kindly, but I said meant it that I was glad it happened. And she went, “Why? Why would you say that?” I said, “I’m really glad you got that out of the way because now you’re going to learn what you need to learn to move through that. Now, you’re going to take all that learning, put it into the next deal, and do so much better on that next project.

I always say, “Fail fast. Fail quickly.” I don’t want anyone to fail, but we learn from failing. Some people claim they’ve never failed nor lost money, and that’s awesome. Good for them, but I can’t say the same thing. We have lost money. We’ve gotten our teeth kicked in. We’ve gone through really tough things, and we’ve had money stolen from us. We’ve faced some serious stuff that would make most people wonder why we still do this. We just keep learning from it. You keep learning from it. You have to look yourself in the mirror, and you have to take responsibility. Are you the victim? Or are you going to be the victor, so to speak? Bad partnerships have you in the middle of it. Look yourself in the mirror and take responsibility and accountability, learn from it, grow from it, and minimize it every time, then you’re on a good path. If you keep making the same mistake, maybe you should try a different business. But losing money in this business, I think, is inevitable, unfortunately. I hope it’s small for people, but if it isn’t, learn from it. If you keep learning and learning what you need to do next and making it better, don’t give up. It’s taken us quite some time to move through some challenges, but we keep getting better from it in learning and growing. That’s the key, and not giving up.

Robert Leonard  43:09

That’s the big key. You just can’t give up. As long as you keep going, you’ll make it through.

Liz Faircloth  43:13

You can’t expect to know everything in this business overnight no matter how many books you read, or podcast episodes you listen to. There are so many things that are unique to the property, to the deal, to the owner, and to so on. If you’re really good with people, you may not be as good with the analytics, or vice versa. There are so many pieces of this business. Just know yourself inside out. What are you good at? What’s your genius? Try to partner and build teams around you. Hire out what you’re not good at. That is important in this business. You cannot be good at all aspects of real estate investing. It’s impossible.

Robert Leonard  43:48

What is the number one piece of real estate investing advice you’d give to someone listening to the show today?

Liz Faircloth  43:54

I would say focus. Focus on where you want to go, and don’t let the outside noise distract you.

I had a woman come up to me at a conference recently. I was sitting at a conference, and she said, “We have a bunch of small multifamily properties. We’ve got 60 units, we’re making X dollars in cash flow every month. We’re doing well, but I think we might need to get into syndication.” I asked, “Do you own all these properties?” She replied, “Yeah, my husband and I own all of them 100%, but we might want to get into syndication. That’s our next thing.” I replied, “It sounds like you should keep doing what you’re doing. It sounds like you’re doing really well with what you’re doing, and if you want to get to that goal of X dollars every month, it sounds like you need about 10 more units of owning them 100% yourself. I would do that. Just do that a little more. That’s completely like another world.” So, I think people get so distracted.

When we hear people doing XY and Z, we think that’s the next step for us. I think you need to focus on what’s important to your own financial goals and the way you’re going to get there. I’m not saying don’t tweak that, but I think that too many people look outside when they should stay focused, and if you’re getting success, keep doing what you’re doing, and then pivot. You can get into something else once that thing is streamlined and you’re hands-off, and can step away from it. That’s the best advice I can give you.

Robert Leonard  45:05

Yeah, I think that’s really good advice. We’ve mentioned it a few times here on the show already, but social media makes everybody envious of other people even though their goals are not necessarily similar to your goals. I believe we talked about this with Chad Carson a few episodes ago, and he said the same thing. “Make sure you’re working towards your goals, not someone else’s goals, and make sure that aligns with what you want out of life.” I think that’s great advice. 

For those interested in learning more about you, and just connecting with you further, where’s the best place for them to go?

Liz Faircloth  45:35

They can check out our recent real estate projects, and some of the things that we’re up to at derosagroup.com. It’s our company website. As for all the neat stuff that my partner, Jess, and I are up to with regards to the investor community, our meetups, Facebook community, podcasts, and all that good stuff that we have going on, you can go to therealestateinvesther.com.

Robert Leonard  45:58

I’ll be sure to put links to all the different things we talked about throughout this show in the show notes, and, as always, I’ll put books that relate to these topics in the show notes so that you guys can go read those if you want to learn more about specific things that we’ve talked about. I’ll also put links to all of Liz’s resources that she just mentioned so that you guys can go connect with her there.

Liz, thanks so much for coming on the show. I really appreciate it.

Liz Faircloth  46:20

Absolutely! It was a pleasure, Robert. Thanks for having me.

Robert Leonard  46:23

All right, guys! That’s all I had for this week’s episode of Real Estate Investing. I’ll see you again next week!

Outro  46:30

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