BiggerPockets Real Estate Podcast

BiggerPockets Podcast 408: Full-Time Income on a Part-Time Schedule with Emma Powell

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Ever wonder how your family would manage if you or your spouse lost your job? Emma Powell faced that reality head-on. She knew she needed “full-time income” while continuing to spend time with her family… and she knew real estate investing would be the vehicle to get her there.

Today Emma shares her journey from part-time photographer to multifamily dealmaker – how she got in the game by joining a REIA and immediately loaning money to an experienced investor (we discuss the right and wrong way to do this); her #1 piece of advice when meeting with a potential mentor; and her foray into the world of lease option (“rent to own”) deals.

Plus – Emma shares her perspective on how to choose a niche that suits your strengths (wholesaling wasn’t for her; syndication and bigger commercial deals were a better fit).

This is an inspiring story of someone who experienced a financial wake-up call, and went from total rookie to syndicator in just a few years… all while homeschooling 6 kids. Enjoy this one, and we’ll see you again on Sunday!

Click here to listen on Apple Podcasts.

Listen to the Podcast Here

Read the Transcript Here

Brandon:
This is the BiggerPockets Podcast show 408.

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Emma:
She stands up and she says, “Hey everybody, this is Emma. She has some money she’d like to lend, raise your hand if you have a project that needs some money.” And a couple of people raised their hand and everybody was like, “Hey man, over here, over here.” “Do you need X amount of money?” And he was like, “Yeah.”

Speaker 3:
You're listening to BiggerPockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing without all the hype you're in the right place, stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com, your home for real estate investing online.

Brandon:
What’s going on, everyone? It’s Brandon Turner, host of the BiggerPockets Podcast here with another phenomenal show today with my co-host Mr. David Greene, David, what’s up man, how’s life, how’s business treating you?

David:
Business has been amazing actually, this is the best year I’ve ever had. We’ve helped more people in the Bay Area in Sacramento, either buying rental properties or buying investment properties then like, or house hacks, than I ever would’ve dreamed. So this has been a very fulfilling year, also very challenging-

Brandon:
That’s awesome.

David:
… but that’s what’s fun about business, is it forces you to get better than you were the day before, so thanks for asking. How’s things in your end of the woods, how’s business going?

Brandon:
Yeah. The baby is sleeping more through the night, that’s great, which then business is doing good. We just actually closed on a big park last week and we just launched fun three. So like we’re raising a bunch of money now from a credit investor, so it’s been nuts, but good. And like the biggest year I’ve ever had. So yeah, crazy. It’s like half the world is like, this is the worst year ever. And the other half is like, this is phenomenal. So it’s just interesting how that different perspective and all that stuff works. So that said, today’s guest also has a fantastic story of just killing it lately.
I mean, this year and the last few years has been killing it, all while having six kids at home, you’ll hear my surprise in this show when I find that out. Six kids, homeschooling them, not just six kids, they re homeschooling six kids while building this amazing real estate empire. So our guest today is Emma Powell. And she just goes like deep. Like, this is a really like, what’s the word? Like you’re going to want notes for this. It’s like a note taking episode.

David:
Very informational.

Brandon:
Yeah. But she also wraps everyone in a story. Like here's how she pulled up this crazy big deal and wrapped it inside this amazing thing, and this is how you can do it as well. It's really good. So if you're not driving right now, I'd recommend grabbing a paper and pencil up, you're going to learn how to do these deals. Some of like creative finance stuff, like no and low money down stuff, really good stuff in there. Again, a mom who works part-time at the real estate thing, crazy. Awesome story. She also has a tip. One of the best tips I think I've ever heard in like 400 plus episodes of the show, is her tip on what to do when you meet with a potential mentor. Like it was so good. And I don't know why I've never thought of it before or never heard anybody else say it before, but it's going to change my investing career in the future and it will probably change yours as well, like as you meet people who are ahead of you on the path towards your future.
And then we talk a little about lease options today, which is kind of a more, again, a deeper topic, but you'll learn the power of how those can be really, really, really, really helpful in growing your business. So all of that and more to come in just a moment. But before we get to that, let's get today's quick tip.

David:
Quick tip.

Brandon:
Today’s quick tip is very simple. If you are not currently a BiggerPockets member, I know that sounds weird, right? What does that mean? It means if you have not joined our list, you have a profile on BiggerPockets, I want you to go do that today. You might be wondering why, it’s because you need to start building your reputation right now as somebody who like is in the game, who’s connecting with people, who’s getting to know people. You’re going to hear why in today’s show with Emma on why that’s so important. But a lot of people, a lot of you guys are just listening to the show, but you’re not subscribed to like BiggerPockets as a member yet and it’s a free membership. Yes, we have a pro membership as well, but just a membership with your face. And it’s like having a Facebook or Twitter, but less cat videos and a lot more real estate content. So go to biggerpockets.com and do that.
If you want to post a cat video, you probably could as well. But David would appreciate that. David actually is like the guy for like sending me funny cat videos. He’s like every couple hours I get a new cat video from him. David, that’s not true at all.

David:
Yeah. While we’re talking about reputation, my reputation as a cat video man clearly precedes me.

Brandon:
That’s a lie. All right. I just think that’s such a funny thought of like David, anyway.

David:
It’s about as opposite of me as you could get.

Brandon:
Yeah, that’s probably true. I think we’re ready for the show. Anything you want to add, David?

David:
I love this interview. I think you guys are going to love it too, as you listen, make sure that … there’s going to be phrases that you hear that maybe you aren’t aware of, it’s okay. Write that down, there’s some research for you. Like if you come out of this not knowing more than what you knew when you went into it, then you did something wrong. This is definitely a show that should be very educational.

Brandon:
Yeah, great point. With that said, let’s get to our show with Emma Powell. Emma, welcome to the BiggerPockets Podcast, good to have you here.

Emma:
Thank you.

Brandon:
So tell us about yourself. What’d you do before real estate and then we’ll get into your real estate journey?

Emma:
Well, I was a real estate photographer before for about 10 years in Austin, Texas. I shot weddings on the weekends. Before that I taught graphic design online, so I’ve always been entrepreneurial minded. I went back to college in the middle of my photography career to get a degree in entrepreneurial management. Just felt like it’s never-

Brandon:
Wait, entrepreneurial management, I didn’t even know that was a thing.

Emma:
Yeah. Well, it’s a specialty in a business management degree and I call it the degree, the teach you how to keep all the plates spinning, how to wear all the hats and get things done. And so that’s my background. And then after I graduated from that, I was about 40 when I finished college. And my first job out of college was a part-time marketing consultant, social media manager and content marketer for the professional rugby team in Austin.

Brandon:
Oh, that’s cool. That’s cool. So how do you go from that to, I’m going to invest in real estate? Where’d that transition come from?

Emma:
Well, my husband is an IT, he’s a Specialist in tech startups, so that’s why we’re in Austin. It’s a tech startup city. And he got laid off from a company that he was employee number nine, a friend of his started it. And one day I guess they didn’t get their series B round of funding valuation that they were expecting and they had to lay off 30% of their workers to get enough working capital to stay in business. So he comes home one day, it’s noon. He walks in the door and he didn’t look sick. So I mean, I knew what that meant. And I said, “Did you get fired?” And he said, “No, come on. I didn’t get fired, I got laid off.” Oh, great. So we just went into kind of kill mode at that point and just started working all the network and going to all the meetups and just trying to find another job.
And I said, "Well, I'd be willing to move to Salt Lake because they also have a rugby team and the rugby league is headquartered there. And it's hard to obviously find a job in the rugby industry, it's a really niche type of thing. And so when he told the recruiter he'd be willing to go to Salt Lake, they were all over it. They set him up six interviews in three days. And so we drove up, interviewed, he got a job offer the next day and an offer we couldn't refuse. And so we packed up all the kids and sold our house and got to Salt Lake and the Austin team couldn't really keep me remote in the Salt Lake. Neither one of those organizations really could need it or could afford me at that point, and so I didn't have a job. So I started sending more meetups, same thing, trying to figure out what I wanted to do.
And I’d always wanted to be a real estate investor. We’d made some money off of the houses that we lived in and just found myself having to redo my identity. I didn’t want to keep being a photographer, just getting too old. Didn’t want to build another business from scratch like that. I thought I don’t want to work full-time and I knew that real estate gave me a full-time income on a part-time schedule. So I just, I found this organization, they wanted to sell me some education, not into that. So I got on the internet and Googled them and I found BiggerPockets and started reading up on this organization on BiggerPockets. And somebody was like, “Well, why would you pay all that money for that education when you learn it all on BiggerPockets for free and go to your local REIA.”
And I was like, "What's a REIA?" So I signed up for BiggerPockets and I found my local REIAs and just started going. And the first one I went to, a guy was talking about developing lots and we had just sold our house. And I said, "Well, I've got all this cash here, maybe I should loan it to a flipper and while I figure out what I'm doing." So I found him, everybody, they all pointed the same guy, right? Loan it to that guy, he knows what he's doing and he can use that much money right away. And the second REIA that I went to was sitting there, I had the money placed and I was feeling kind of like a hot shot. Like I'm a hard money lender. So then the guy got up there and he said, "Look, if you can just skip residential and go straight to commercial, you should just do that." And I was like, well, I can do that. Okay.
So I decided at that point I wanted to be in commercial real estate. I still did some residential deals that came in my way because I understood that, we bought our own houses, we'd rehabbed our own house. And I figured I already knew how to do a lot of that so we went in and got a couple of small rentals. We had the cash so we could do it by ourselves. I wanted to get some credibility and some experience, all that while I was learning about commercial real estate. That first year while my money was out and when it came back, just decided to tear it up.

Brandon:
Wow. All right. So I want to unpack this a little bit. So first of all, you packed up the family and moved. Now you said the kids and I heard you had a lot of them. Is that true?

Emma:
Yeah. I have six kids.

Brandon:
Okay. So you’re moving across the country, you pack up six kids. You get to this new place and, first of all, for those who don’t know what is a REIA, when you say REIA, what does that mean?

Emma:
Real Estate Investor Association, it’s a national organization and they’ve got chapters all around the country and you can start a chapter. It’s kind of like starting a business. Do you own the chapter? And you’re supposed to promote it and get people out. And there’s a small membership fee, maybe a hundred, 250 bucks a year. I learned that Salt Lake had three live ones and one virtual one. And so I just joined all of them to see. And there was actually another one in Northern Utah and one in Southern Utah, so I went and visited those, just getting my feet around, trying to meet everybody I could and listening to, they put on lots of variety of speakers. So wholesalers, flippers, apartment guys, commercial, rentals, property managers, just every meeting has a different focus and so you really can get fast exposure to a lot of different types of things. And you can say, okay, this one feels right to me, this one fits. And so that was really helpful for me to figure out which direction I was going.

Brandon:
Yeah. Interesting. Now, when you decided that you partnered with that one person, or you lent them that money, I should say, so I guess it’s a partnership, right?

Emma:
Yeah.

Brandon:
So you gave money to somebody, how did you know that, that was like … Did you know like, oh, this guy is going to be solid. What kind of due diligence did you do? Or did you get lucky off that? Or like, I'm wondering, like people listening to this they're like, well, I got some money, should I just go randomly give it to a guy talking at a REIA? Like, what's your thoughts on that?

Emma:
That was really scary. Really, really scary. It was quite a lot of money. It was the most money we had ever had at one time. And I told my husband, I said, “Look, we made this money off of the personal houses that we invested in, that we would buy brand new construction, it appreciates very quickly, and then we’d sell it. We’d live in it for a few years and move on.” And so when we moved to Salt Lake, I said, “We’ll just put barely enough down on this house. So we’ll buy a house that we can afford with the minimum down on your W2 income and the rest of this, I’m taking to go start a real estate business.” And so that was when I found that guy, I was like, hey, I can do this. He was not speaking at the REIA.
I asked everybody at the REIA, I have this amount of money and it’s going to be available on this date, do you know anybody that can use it? And it was kind of funny because I was sitting in the REIA, it was my very, very first meeting and I was knitting, just sitting there by myself, just knitting. And the president of the REIA comes up to me and she says, “Hey, you look new, the purpose of a REIA is to network and you’re just sitting up here by yourself waiting for the meeting to start.” And so she asked me a couple of questions, she said, “Well, what are you here for?” And I said, “Well, I have some money from the house I just sold and maybe was looking to place it with somebody.” And she stands up and she says, “Hey everybody, this is Emma. She has some money she’d like to lend, raise your hand if you have a project that needs some money.” And a couple of people raised their hand and she said, “Okay, go meet Joe and Sam.”
And so she just pushed me to the back of the room to go meet him. And they couldn’t use that amount of money in that quick of a time frame. But they kept saying, you know who should ask? Is this guy, this guy, this guy, and he’s not here, he’s not here, he’s not here. Well, that guy walked in and everybody was like, “Hey man, over here, over here, do you need X amount of money?” And he was like, “Yeah,” and I just really liked how calm he was about it. He didn’t get that shark, desperate look in his eyes, came over, had a very calm conversation and very patient.
I went home and I looked him up, tried to find any dirt I could on him. You Google his name and scam, you Google his name and lawsuit, dispelled, whatever I could, talked to a lot of people, spent some time in his office. He ended up being a great mentor for me, even though I ended up, my business went a different direction than what he was doing, was really great. When you loan someone money, you have a question, they pick up the phone and will answer any question you have. So that was a great tool for me to get a lot of education very quickly.

Brandon:
And I want to bring up a couple of things here. First of all, for those who are listening to this going like you gave somebody money, understand the cool thing about real estate for those who are maybe new here and they're not sure how this whole thing works. The cool thing is when you put money into a deal like that, I'm assuming this is the way it was with you Emma, you have some sort of like lien against whatever properties they're working on. So it's not like you just give him a duffel bag full of cash and crossing your fingers, hoping you're getting something back. It's all very like, as long as you do it correctly, it's all done very legally. And there's a lot of protections in place. I used the analogy recently somewhere, I said, it's like driving down the road is a dangerous activity, you're in a car, it's dangerous.
You get hit by a car, you could flip over, you could steer off the road, but that’s why we do a driver’s ed. That’s why we go and we learn how to do this. You learn what all those safeguards are. And that’s why we have airbags in the car. We have insurance on the car in case something goes wrong. There’s all these things that help lessen the risk of driving. And so then we go and drive. So when people are like, well, I would never, I would never give money to somebody in a real estate deal because that’s risky. Just understand again, it’s not a duffel bag, it’s you have some protection. So I’m assuming that was the case with you, Emma.

Emma:
Yeah. And we had actually had a friend of ours in Austin several years before when he found out we were saving up all this money because of 2008, 2009, the smart thing to do was to live simply and save up all your cash because you never knew if you’re going to get laid off. And so my husband and I both had part-time jobs and were just piling up cash. And then when the crisis seemed to be winding down and we hadn’t lost our jobs and lost our house, somebody came to me and he said, “Oh, we can do a flip and 10% on the line.” Oh, 10%, that sounds really high, that must be a scam. Even though he was a friend of ours and we trusted him, it just seemed like a way too good to be true to be getting 10% on your money.
And so we said no, because he was asking basically of all of our money. And they said, never invest what you can't afford to lose. Don't put all your eggs in one basket. So we said no. So it wasn't like we had never been exposed to that concept before. I had read Rich Dad, Poor Dad, 20 years before. Didn't have enough nuts and bolts, so I didn't really know what to do with it after I read it. But I knew it was a thing. So when I asked this new guy in Salt Lake, so how does this work? Do I just write you a check? Does it go into your personal account? Because that was not the answer I wanted to hear. If he had said yes, I might not have done business with him. He said, "No, no, no. I'll hook you up with a guy at my title company.
It goes into an escrow account, we hold it there in trust. And then they send you the lien paperwork that you got to sign.” He kind of walked me through the legal ins and outs, like what you said. And because I knew that he was doing it correctly because from my research, that’s how it was supposed to go. I offered to send it straight to his bank account, write him a check. And because he said, no and educated me on the way it was supposed to be done, I knew that, that was a test and he was being trustworthy.

Brandon:
And that highlights why your reputation is so important and why doing things the right way is so important, because let’s be frank, if you’re giving someone $100,000, $50,000, it’s a risky thing to do. And it’s going to feel even riskier than it is. Even if that person is completely legit, there is still a very real component that they could be gone and in the Cayman islands before you know what happened. So for both sides, if you’re looking to partner with someone and you’re bringing in the money, you should absolutely do exactly what Emma did. And if you’re the person who’s borrowing people’s money, you need to prepare ahead of time for how you’re going to explain to them what’s going to happen. You don’t want the answer to be, yeah, yeah, yeah, just cut me a check right now, that I’ll go put it in the bank and don’t worry, you can have this or you can have that. That’s the wrong answer.
And then the third piece would be, if everyone speaks about you the way that they spoke about this person, it’s going to go very far. If people say, I don’t know, I don’t know that he’s even done a deal. This guy just shows up at these meetings all the time talking about how he never has money. That’d be a big red flag. I’m not going to be helping this person learn how to do the business or if there’s, I don’t know. So and so did a deal and they weren’t too happy about it. That goes really, really far when it comes to raising money.

Emma:
I agree. And I felt like the only thing I didn't do that maybe I should have done was to run a private investigator background check on him. I would never say that, that's a bad idea. I didn't really think about it at the time. But if with the amount of money that I was loaning to him, I probably should have added that to my due diligence, but everything else, I felt pretty safe with it. And we're still friends. He's still around. We call him my "Mentor" because basically he paid me to mentor me. And so I really felt like I came out on the better side of that deal.

Brandon:
Emma, I love that you said that. Like he paid you to mentor you and you said a minute ago, when you lend somebody money, they pick up the phone and it's such a great point out. So if you're listening to the show and you maybe have some extra cash lying around and you want to get into the business, I'm not saying every single person in the world is trustworthy. Right? Of course not. But if you find the right person and you become their private lender or their hard money lender or whatever, like you get to learn from them as they do their deal, they'll talk to you. So it's a great way to get started if you've got that cash. So what happened next then? So you lent this guy the money and now you're in the game a little bit. You're feeling like you got a little momentum going, and then somebody told you, the same guy, right? You said that, said, if you can just jump to commercial, you can just skip residential, which it's not bad advice at all. And so is that what you did?

Emma:
It was a different guy, I was actually just speaking at a REIA.

Brandon:
Oh, okay.

Emma:
And I went down immediately afterwards, introduced myself and took him out to lunch. And I said, well there’s this little office that’s for sale across from the high school, I’d really like to buy it. I had no idea. I didn’t really want to buy it, I just, I called the guy. I got all the numbers, run on it. Between the time I met him at the REIA and our lunch date, I went and found an actual commercial project that I could bring to him. I knew it was going to be garbage, but I just wanted a real deal to talk about and run numbers. The owner really wanted to sell this, so the owner spent a long time on the phone with me telling me all the ins and outs of the properties, the area, of the price, when they had expected out, when they were going to build it.
So I went in armed with as much information as a beginner could be armed with, went into this lunch meeting and it ended up not being a very good deal and not a good fit for me at that time. But that conversation was really valuable. And then-

Brandon:
Hey, can I stop you right there?

Emma:
Yes.

Brandon:
Because you’re just making like point, after point, after point that I just got to-

Emma:
Sorry.

Brandon:
No it’s good. No, I mean like everything you’re saying is like, I want to stress this because this is so important. A lot of people will say, can I take a mentor out to lunch or out to coffee or whatever. And they do that. And then they get there and they sit down with the person and they’re like, so? How’s it going? How do you like real estate? What’s new? I love that you said that, but you went and found something to bring them, now you had a topic, something you could specifically ask questions about and then you’re going to learn from. So this is what the income says it is and he’s going to be like, well, that’s what they say, it has to be in reality. You got to make sure you count for vacancy. And you’re like, oh yeah, good point. You write that down now.
Like you didn’t even know to ask that question, he knew to ask that question. Right? So, because you brought something to talk about, man, that’s such an amazing point that rather than just a random meeting with somebody, bring them a deal or bring a deal to just discuss with them. Okay, go ahead.

David:
And don’t say, can I pick your brain? That is literally the opposite of what Brandon just described. Right? Pick your brain is very general. I don’t even know what I’m asking. I’m just trying to hope if I talk to you enough, whatever’s inside your head will get in mind, as opposed to, I have a specific direction that I want this to go. I know what questions I need to get answered, that just tells the person you want to talk to if it’s a good use of their time or not.

Brandon:
That’s so good.

Emma:
And at that point I decided I wanted to start a wholesaling business, right? The low hanging fruit. And I knew that it was going to be difficult, tons of cold calling, tons of hustle. And I didn't really think I was cut out for that, but I thought, I need some more cash to get my pile up so that I can go do these commercial deals. So I wanted an office because I was going to hit it big, right? So that was why I hit on this office. So I could run out a little closet in my own space and build it. I can't rent. We tried to rent for four months when we got to Salt Lake for months, that's all it lasted. And so I immediately said, well, if I'm going to go get an office, I'm going to go buy the whole building. I just, I'm not cut out for it.
So that was kind of the nexus of where all of these things are coming together. But so I went, I took a class on how to do lease options and my parents had already sold their houses just doing lease options when I was growing up. But I would see a lot of stress and frustration when the person that they would put in there didn't pay the rent or the mortgage for that month. And my parents didn't have a good reserve to be able to do that and they would be freaking out like, how are we supposed to get a mortgage when they're late again? And it seemed like a great way for an extra stream of income, but I didn't think the way that they were doing it was bringing a lot of peace and passive income into their lives.
And so I thought, I love this lease option idea, but I'm going to go out and learn how to do it correctly with the emergency fund in place and with the correct legal documents and the marketing, how to do background screenings on the tenants. And so that's when I decided I was going to do these lease option. I'm wholesaling, I get this office. And during that time we had someone close to us who her husband was laid off and he had been out of work for a year and their house was in default and people would call her and say, well, honey, what can we do? How can we help? And she'd say, I don't know, give my husband a job, like find us a rental to live in. We have late mortgages and our credit's short. Like nobody will even rent to us.
It’s just, I don’t know, maybe by my house. And I said, “Are you being serious? Because I know some people I can ask, I think I can buy your house.” And she said, “Can you really?” I said, “I don’t know, let me go figure it out.” And so I called all the people I knew and they gave me some ideas and I presented her a couple of options. And we ended up taking that house, subject to the mortgage. I put in a lease option renter into it, that was in Louisville, Kentucky and they are the best tenants I’ve ever had. I just met them for the first time last weekend, actually, when I was out of town for that conference, I flew into Louisville and spent the day with them. They’ve just been so great.
I just decided, instead of asking them to get their own mortgage, I’m going to refinance and wrap the mortgage to them because they’re such great tenants. And so that was my first investment home. I reinstated the mortgage, I helped that person move out of that house and get them into a rental and just did what they needed to do to get moved on with their lives. And then that paid for the class that I took on how to do lease options. That one deal.

Brandon:
That’s awesome. Now, you mentioned quite a few industry specific terms there like wholesaling lease options, subject to, can you explain to the audience who’s listening one, what lease option is, and then maybe two, what scenario is a lease option is a better fit than a standard rental contract?

Emma:
No, to be fair, I didn’t know what any of these things were either when I first started, I knew my parents were not selling their houses to people who just came with a mortgage, but I didn’t know what that was called. So the lease option is when you sell your house to somebody who’s going to come in and rent it and you give them an option to purchase that house at a later date at a pre-specified price. So maybe slightly over market value because they’re going to buy it in one to two years and you get to choose the term between you and the renter. They’re going to pay you rent each month and maybe, or maybe not, you might give them a little credit that goes towards their down payment each month. Sometimes you do, sometimes you don’t, depends on the strength of the renter and how their background check comes up.
It's just a little bit of a deeper look into their background than you would do for a normal renter. We use a service that gives them some credit and mortgage counseling on top of the criminal background check and the credit check. And I just make sure that we are communicating. I require them to buy a home warranty and they're in charge of most of the maintenance on the house, unless it's large enough that we need to take out a homeowners claim against it. And so we get them in there and they have one, two years, however long you agree on to perform on that option. And when the option expires, you can just keep renting it to them if you want to. But usually you'll want to build into the contract if the option expires and they want to renew that the house price is going to go up by say 2% and the rent's going to go up by one or 2% because otherwise they think that 10 years down the road, they can buy the house for what it was worth when they first signed it.
And those are the kinds of provisions that why I took that class because I needed to know some of those pitfalls and have the right legal paperwork. So we took that to an attorney's office and closed it with a title company. And we actually recorded their interest against the house in the County records so that they knew I wouldn't just go sell it out from under them, because then they would lose whatever money that they had built up into that.

Brandon:
Yeah. That's cool. Let me jump in real quickly. I want to make sure people know if they're listening to this, like lease options and wholesaling and subject to, you mentioned like all that stuff. Just so people, if you're listening and going, I don't understand what that is. I always say it has been two hours explaining that like, first of all, understand, like this is like a gym tour, right? Like we're walking through a gym going, here's all the cool stuff that is at your disposal. You can lift with this thing and this thing, but nobody expects when you walk through a gym to know every single thing, you still have to show up to the gym multiple times, which means go read the books, go search BiggerPockets for this stuff. Like these are really, really powerful strategies. That can be great, especially if you're getting started without any cash, all three of those are really interesting strategies for that. But again, there's books on it. There's podcasts on it. So I always know whenever we talk about stuff that's like really like-

Emma:
Creative.

Brandon:
… needy, creative stuff, people are like, well, they’re not explaining every single, like you didn’t tell me what you told the attorney on the third meeting with the attorney. It’s just like, this is a gym tour. So anyway, with that said, so if you’re freaking out right now because you don’t understand every piece, that’s okay. That’s all right. Take a breath. And then learn, keep going.

Emma:
That’s why I want just to say that I took a class because this is complicated stuff and you don’t have to take a class. I’m usually more of a self-taught person, but because of the legal implications of doing a deal like this, I really wanted to make sure that I had the ducks in a row. And so I did a couple of those that first year and just realized that I wasn’t really cut out for it. It’s just too much volume. I’m not into the volume of say wholesaling, where you find a deal and you sell it to somebody else and you take a little spread in between. You have to do a lot of those because if you’re only making 10, 15 grand from each deal, how many of those do you have to do a year to replace your income?
Plus, it’s a hustle. So I was more after the passive income, where the financially independent, retire early, have my husband quit his W2 was our goal and things like wholesaling or being in the intermediary and lease optioning other people’s houses just was not getting me towards that goal. Even though it was helping me make some money, I really realized that it was distracting me from my passive income goals.

David:
I love that you recognize this strategy does not fit for my personality and my goals because there are some people that the opposite is true. They need a hustle, they love the chase. They get addicted. Like they’ll always be needing some kind of work, but maybe wholesaling, where they get 10 to 15 grand a pop is actually exciting to them and it gets them out of bed every morning. And they’re like, this is so much better than my salary job, where it didn’t matter what I did. I didn’t make anything. But you knew yourself and Brandon and I talk about this a lot. You have to know your goals and your personality and pick the strategy that aligns with those, as opposed to just saying, well, I heard somebody else did this, it worked, it sounds better than what I’m doing. And you jump in and do it. And your REIA story that you started off, where you said you get exposed to a little bit of everything, kind of gave you what you needed to recognize, this is something that I would enjoy doing. Brandon, do you agree?

Brandon:
Yeah, can I double down on my analogy from earlier, I’m taking your analogy as the role today, the analogist role, you ready for this? This is going to be good.

David:
Is it about the gym tour?

Brandon:
It’s like going to the gym, right? And if you were to go to the gym and they were like, this is the bench press. This is what you need to do every single time you’re here. This is a squat machine, I want you to do a squat. Like you’d end up looking, maybe you like the guy who’s giving you the tour, but that might be not the best approach for you. It doesn’t align with your goal, it doesn’t align with your personality or what you like doing. And so again, it’s like, I think the gym is a perfect example of this is people oftentimes are just doing the thing because they heard it on a podcast or something. They went to a seminar and it said, you should be doing wholesaling. You’re a newbie, you should be doing wholesaling. And they just do not like that. And they’re just not good at it. And-

David:
They don’t have the skillset for it.

Brandon:
They don’t have the skillset for it.

David:
I’ll go even one deeper with the gym tour. When you’re talking about a chest exercise, there’s many different kinds. There’s a standard bench, there’s an incline bench. There’s a decline bench. There’s a butterfly machine. There’s weight you can do butterfly stuff with, they all deal with the specifics of how you want your chest to look. Right? Some of the deals that Emma here has mentioned are things like subject to, which are very specific strategies that we use for our overall financing. Like financing would be chest and subject to is something you use within that. Okay? So don’t get caught up if you’re like, oh, this is too complicated for me. I don’t understand subject to, it just doesn’t make sense to me. You probably don’t even need to address that. Say you’ve been working your chest out for a year and you say, okay, I want to like tweak it in a little way. Most people just need to go to the gym. You don’t have to understand the intricacies of every single machine that’s there. Like just get in there and sweat, and it’s better than if you didn’t go.

Brandon:
That’s a good point.

Emma:
I’ve tripled down on that analysis.

Brandon:
All right, let’s hear it.

Emma:
Show up to the gym and be very strategic about the personal trainers that you hire. I’m a cheapskate. When I say I paid for a class, that’s a big deal for me. I am all about the $150 a year REIA. I’m all about learning for free on BiggerPockets. But when you hire somebody to get you some help, I didn’t know what a subject to mortgage was. I called the guy that I took the lease option class from and I said, “Hey, I’ve got this situation, there’s a house that fell on my lap. I’m trying to do something, what would you do?” He said, “Well, I’d take it on subject to mortgages,” blah, blah, blah. I didn’t know what he was talking about. He almost had to fill out the documents for me.
So make sure that you've got some people on your team who know what they're doing. So the guy I loaned money to was a great mentor on flipping. And it was a great way for me to see, I don't like flipping and I don't want to do that. And the guy who was doing the lease options while it ended up not, I'm not going to say lease options ended up not being a good fit for me because there's a story, remind me to get back to that later in the commercial, where that ended up becoming very handy. But the volume of lease options and the residential was not a good fit, but he got me into that first deal because I took this class. I knew who to call when I had a situation come up and help me solve it, and he helped me solve it in a creative way.
So get the personal trainer, that doesn’t mean you have to spend a thousand million zillion dollars on the best personal trainer on the planet. Be strategic about who you bring in there with you and know who to call when you’ve got a situation.

Brandon:
Yeah, that’s really good. All right. Well, I’m tempted to 4X our analogy here, but I will move on. So you kind of figured out that you did it, you didn’t really love it. And so you pivoted into something else. Otherwise, we wouldn’t be sitting here today talking. So what came next after you tried out your hand at the whole selling thing?

Emma:
Okay. So it's kind of a funny story. It's one of my favorite stories. I was at the bank. I was actually depositing a check from a lease option that I had just gotten paid for. And I was walking out and there was a contractor there and a big truck. And he had the wrap on the truck and the brand had polo and he was on the phone and he was walking into the bank and I thought, well, this is the kind of professional contractor that I want to be dealing with. And I was having a hard time finding him because in Austin, when we remodeled our house, it's hard. You're dealing with contractors and I knew that there were a lot of bad ones, and I knew what I was looking for in the ones that ended up being good. So I figured out, I'll just ask for his card.
So we chatted in the parking lot for a little while and he started calling me almost every day, a couple times a week. Do you have a house we can flip? Do you have a house we can flip? Said, “I don’t flip houses.” He said, “But you said you wanted to maybe look at flipping houses.” I said, “Maybe, I don’t know.” He bugged me for six weeks. And finally I said, “Fine, I’ll go find a house that we can flip.” And so I opened up my email and I got all the wholesaler emails that have been coming through. Because every time you go to a REIA and you sign in, the wholesaler’s start emailing you stuff. And so these deals are coming in to your inbox. I didn’t know if they were good deals. I didn’t know how to really run my numbers. I knew spreadsheets from business school and all that, but I didn’t know how to evaluate these deals.
I’d be on BiggerPockets like on the deal evaluator, trying to figure out, I had no idea. And I said, “Look, I’ll line up a couple of property tours and we’ll go look at them.” And he picked me up in his giant truck and he drove me from North Salt Lake through all these properties in one day to South Salt Lake, spent all day with me. He was so excited. And if he hadn’t been hammering at me every single day, I never ever would have done that. So about Thanksgiving, we found this wholesale flip and when I walked upstairs, there was a duplex in the attic. And I said, “Well, this is a rental and when I started figuring out, I knew 1% rule and a few things, so this is going to be a great investment.” And he started immediately firing off, like this is only going cot us $25,000 to rehab and this and that.
So I put an offer on it. We bought it. I called up the guy that I had my money lent out to. I said, "Hey, can you send me back like 30,000 so I can put a down payment on this duplex?" So he replaced that money and I went and bought that duplex. And then I got a hard money loan for the rest of it. We remodeled it, put some renters into it, immediately refinanced it. So it was kind of a partial BRRRR, so there's another term that I learned from BiggerPockets. So I guess the point of this, watch a lot of YouTube videos, spend a lot of time on BiggerPockets, spend a lot of time at your REIA and you'll learn these things exist. This is my first BRRRR, I didn't get all my money back out because it's in Provo, Utah, which I don't know if you know anything about this area. Provo is the second fastest growing city in the country.

Brandon:
Oh, wow.

Emma:
Utah County is the fastest growing County in the country. I knew this thing would appreciate like gangbusters, but I knew I wasn’t going to be able to get all my money out in the refinance. And I was okay leaving a little bit behind. So we did that. Got my duplex, super proud of myself. I got a property in Provo, Utah everybody, this is like my second property. I had just closed that one in Louisville a couple of months before. And I had the fire, like let’s go find another one because he was excited too. Let’s go find another one. So I found that same wholesaler, brought me another one not far from there, it was a dump. It was a disaster. I was originally going to flip it, but I found out it had foundation issues that I didn’t want to fix.
And I said, “Well, I’m just going to lease option this one and I’ll fix the foundation later.” It was basically kicking the football down the field a little to fix the foundation before they closed on mortgage. So couldn’t find anybody who wanted to buy it on a lease option, so I just rented it out. It was not ready to go, the subcontractor really dropped the ball. The guy who wanted to rent it was a contractor. I said, “Look, I’ll just hire you to finish it.” He paid me his rent separately. Don’t ever hire your tenants to do the work or give them trade in rent to do work. Never, never, never. He paid me his rent and then I paid him.

Brandon:
Yeah. I’ve done [inaudible 00:35:33], never worked out for me.

Emma:
Never does. So I hired him to basically finish the rehab on that. So he moved into it with no bathroom, no nothing. And he managed that like a project. And I paid him completely separately from the rent that was coming in. And so that ended up working out really well. He’s really made that his home.

Brandon:
Oh, good.

Emma:
And he recently called and said, “I actually want to buy this, do you still want to do that lease option thing?” I said, “Sure.” And he said, “Well, I need to save up some down payment.” I said, “Look, if you fix the foundation, I’ll give it to you for no down payment.” So these are the kind of creative things that you can do. So we’re working our way through that right now.

Brandon:
That’s cool.

Emma:
So the next deal that I did, it was I found through a wholesaler. I don’t know, you might want to do this one for the deep dive because this one is a fun story.

Brandon:
Give us a high overview, So you did a wholesale deal is what you’re saying, right? Is that what you said?

Emma:
I found it from a wholesaler-

Brandon:
Oh, okay.

Emma:
But it ended up falling through with the wholesaler. But since I kept showing up to meet the seller, I eventually just bought it directly from him, wholesaled it on a lease option and just wrapped that mortgage to the current buyer. And that was beyond a BRRRR. And not only do I have all my money back out of it, but I’ve made a bunch of money on top of it as a huge spread, so that was a really fun story, how I found that-

Brandon:
There’s no reason we have to do the deal deep dive at the end of the show, so why don’t we just do it right now?

Emma:
There’s you go.

Brandon:
It’s time for the deal deep dive. Hey, it’s our show. We can do whatever we want. Right? So let’s do the deal deep dive right now.

Emma:
Right now.

Brandon:
Yeah. We’re going to right now. So tell me, Emma, do you have a property in mind that you want to talk about today? Anything off the top of your head that you’d want to talk about right now?

Emma:
I haven’t even thought about it yet Brandon, let me think.

Brandon:
Okay.

Emma:
Let me get out my spreadsheet here and check-

Brandon:
Yeah, that’s good.

Emma:
… which one would be best for this.

Brandon:
Okay. All right. So tell us about what was this property like? What is it and where was it located? And then we’ll go into the specifics.

Emma:
It’s in a town called South Salt Lake. It’s South of Salt Lake.

Brandon:
Is it really called South Salt Lake? That’s funny.

Emma:
It is the city of South Salt Lake. Yeah.

Brandon:
That’s funny. Okay.

Emma:
Which, that is relevant to this story because South Salt Lake is notoriously difficult to deal with on zoning changes because they have a lot of commercial industrial properties and they’re very protective of their residential properties. And so that fed into this story. So I found it from a wholesaler, same wholesaler I bought the other two houses from, and he sent me by to go look at it. And when I showed up, nobody was there and he called and he said, “Oh, we’re not going to do it.” He pulled out, but I’m standing there on the front porch and the owner’s like, who are you? What are you doing here? So I introduced myself. We chatted, ended up not being really good plan. I said, “Well, when do you need to move out?” I said, “Maybe I’ll check up with you in a couple of months and see if it’s a better fit.”
So a couple months later, that was probably January I think I called him, well, maybe earlier December. So I called him maybe in January, called the wholesaler. And I said, “Hey, do you still have that deal under contract?” “No, I lost it. Another wholesaler picked it up,” and he said, “Let me put you in touch with them.” So I called the other wholesaler, I’d never met him before, I’ve never talked to him again since. And he said, “Yeah, we’re doing a showing on Thursday or whatever.” So I show up on Thursday, nobody’s there. I knock on the door, the homeowner opens the door and he recognizes me. He says, “You again, what are you doing here?” I said, “I’m here to look at the house.”
He said, “No, we’re not selling it, all right? We got in a big argument, I ripped up the contract.” And I said, so I back up, text the guy. He goes, “Oh, I’m so sorry, we canceled the showing. But since you’re not on my mailing list, you didn’t get the notification. And I forgot that I told you,” so he didn’t text me. So I’m standing there on this guy’s porch again. And at this point, I said, “Well, this is getting ridiculous.” I said, “Do you want to sell your house? When do you need to move out? What do you need for it?” And we talked for a long time, like two hours again, this is the second time. And finally he was so burned and so skiddish, but he finally allowed me to sign the contract. And I had to take out the assignment clause and promise him that we would close on this house ourselves. We would not assign it to anybody else.
He was very skiddish, so I ended up going in and we closed it and I we had a hundred percent hard money loan. So I just had to pay the points up front that I borrowed from a cash advance on a credit card. I was in the middle of that rehab with the house with the bad foundation and everything’s going bad on that. I did not have any cash. I had actually paid cash for that house. I didn’t have anything leftover. So this cash advance on a credit card is what got me into this third one. Got in and I ran all the numbers. I thought I was going to flip it. What I needed to spend on the flip was the same amount that it would have sold for on the Corps, like put $60,000 in and only sell for another $60,000. And I thought that’s not worth doing-

Brandon:
By the way, how much-

Emma:
… so maybe I could turn it … Oh, sorry.

Brandon:
What did you actually end up buying it for? Like what was the actual purchase?

Emma:
255,000, and I thought that it would only sell for 310 rehabbed, turns out my comps were really, really wrong. But we comped it out. I asked a couple of different people to help me, I hate doing comps. So I definitely asked people to help. And then I decided that I was going to convert it back into a duplex because I discovered from the owner that it used to be a duplex. So I go down to the city and they said, "Well, it's not been a continuous duplex use that converted it. You can't have it back. It would have to be grandfathered." And I said, "Well, there's a 12 Plex down the road, so they built that before the zoning changed." "Absolutely not." I said, "Well, what if I subdivide the lot? Put another house behind it?" It was this huge lot.
And they said, “No, it’s not wide enough for two driveways.” So every turn, they were just making it very difficult. So then I tried to buy the house next door because it was being condemned and could never get ahold of the guy. I thought if I could buy both lots, I can combine and turn it into four lots, every creative option. And this whole time I was trying to wholesale it with a lease option, a seller finance, I’d just mowed the lawn. I hired a painter, painter stole money from me. This is where I really learned how to manage contractors and don’t ever pay a deposit and put them on a schedule of payments and make sure they do their prep work and demo before they get paid, so that was the lesson I learned there. So I ended up hiring a different painter, got it done.
And had somebody come into lease option it, they were so excited about this house. And then right before we’re supposed to close, she calls me and says that her grandma died in Puerto Rico and since they were the wealthiest people in the family, that it was their responsibility to fly everybody to Puerto Rico and pay for the funeral. So they didn’t have their down payment money. I was devastated because I was sitting here, I’ve got hard money on this thing. Right?

Brandon:
Yeah.

Emma:
Clock’s ticking. So I ended up just putting it on the market with a realtor and I said, “Just sell it however we can.” And I said, “But I’m really open to seller financing and lease options, let’s be creative.” And I said, “And to get it, somebody who’s not just going to come with a mortgage, we need to overprice it a little.” That was a mistake that we made trying to sell our finance and lease option our personal homes, because that was always, we always tried. Was we would price it at market value and somebody would come in with a mortgage and snap it right up. And I said, “We’ll keep it …” But I learned in that class, you price it a little over market, people who want to get a good deal and can bring a mortgage are not going to buy it. But people who are looking for a seller finance deal are willing to pay a little bit more because they’re willing to deal on terms.
So we overpriced it a little bit. We got an offer in from a contractor. So he loved that it was a project, a hotel type of project. Hotel means that you pick it up at a wholesale price and instead of flipping it, you just turn it around and sell it on the MLS for what it's worth, because it's worth more than what you paid for it even if you didn't do anything to it. So he came in and bought it on a lease option from us and moved in and he just wanted to fix the upper that he could do himself. And so I said, "You can't do anything to it for six months until we can do the rent mortgage." So the appraisal came back at 330.

Brandon:
Oh, wow.

Emma:
I said, how did I not know that it was worth this much? All the comps were telling me that we can only sell it for 310 if we rehabbed it. And this came back at 330 as is, and we were way, way off. And I don’t really know, still don’t really know how that happened. How all our comps, the hard money lender, all my realtor friends were way off what this appraisal came in at.
So he ended up giving us like 328 for it and gave us a little down payment, lease optioned it, six months, set up the escrow account to handle the payments. He’s getting a little credit. And then last June, he gives another down payment and we went and wrapped the mortgage to him, went to the title company, transferred title. And then he continued to pay his down payment in chunks for a couple of months after that. And so what I ended up with was getting cashed out of that, it was like a $70,000 spread on the purchase versus sell price. And then between the chunks of down payment that he gave me, I’m completely cashed out of that deal and I’m holding the note on it for 10 years.

Brandon:
All right, so let me dig in a little bit here. So first of all, so we know where it’s at and what it was. We know how you found it. We know how much you paid for, it was 255. I’m curious and the negotiation, that was a cool story. So the funding part is where I’m getting a little bit confused here or lost because, so you bought the property, you said, was it hard money, is that what you said?

Emma:
It was 100% hard money loan, but you have to pay the points up front.

Brandon:
Okay. So you paid, like you got a loan, you paid this big fee to a hard money lender, and that hard money is typically pretty short term, right?

Emma:
Yeah.

Brandon:
So how did you go from that? Did you go then actually after you find the guy you went and found a mortgage on it at that point? Or how did that work?

Emma:
I missed that part.

Brandon:
Okay.

Emma:
Yes, we had to refinance it. And so we had the other house, the little house that the other contractor was fixing up, was in the middle of a refinance. And so within our personal names, we couldn’t do … was causing problems to both of them at once, so it was very, very stressful. So we put him in there on hard money. The new mortgage that we got would not allow us to get a mortgage on it until we had a signed lease. So he actually moved in with that house on hard money. And then as soon as I had the signed lease, I immediately went in for the refinance. And that took a little while, maybe another two months after that. They didn’t need the seasoning look back of the six months, so I made sure I found a lender that would do the refinance right away, rather than making me own it for six months, because that’s oftentimes a stumbling block.
You’re having hard money on it for six to 12 months before a lender will even look at it. So find a lender that will do a short period of ownership or doesn’t have a seasoning requirement. So we got that mortgage in place and that’s one of the reasons I made him wait so long before I’d wrap it because I had to get it refinanced. And then we had to let that season, and then we could go back and do a wrap on it.

Brandon:
Okay. That’s cool. So now you got a normal mortgage on it, he comes in and pays you and you basically do a wrap or you have a mortgage, and then he, you go get with seller financing-

Emma:
As a second.

Brandon:
… almost like, yeah, for you wrapping around.

David:
But it’s better for him because he’s getting the wraparound mortgage at better terms than what he might’ve been able to get for himself because the assumption is you have better credit, you have a better ability to get a better loan on the house. Is that right?

Emma:
Yeah. And he’s self-employed, he’s a contractor and he couldn’t get any mortgage. And so again, I ran them through my very detailed screening process with the mortgage counseling. I knew exactly what I was dealing with. It’s not like you just go out and do these sellers willy nilly. You have to be pretty thorough about the way that you know that they can perform. And to get a little deeper, if you’re going to do this more than once or twice, and you’re subject to the same laws as a mortgage lender is, so you can’t just be going out and being a shark and putting people in these homes that can’t perform on the financial obligations, you’ve got to vet them out and you got to make sure that they know what they’re signing. So we’re very careful about that.

Brandon:
How did you deal with like the whole due on sale clause? For those who don’t know, like mortgages have a thing called the due on sale. That if you sell it like to somebody else they could make you pay back the loan. Did you have that in that note? Do you just not worry about that? Like, do you have a backup plan? Like how do you deal with that?

Emma:
They all have that in there. I've found that if you don't want to get called on the due on sale, don't use a small community bank. They actually will do audits and they'll look back and say, wait, the person on title doesn't match the person on the loan and they'll call it. So if it does get called, have a backup plan, you need to have some cash in place in a Heloc or life insurance policy, or somewhere where you can stash some cash. That if you need to come in and pay this off quickly, or have a relationship with a hard money lender. If that's what it came to, I'd go back to that same hard money lender and say, I got this no-cost called. I need to pay it off right away, I'd pay his points. And then I would go figure something else out to get new financing on it.
Because with that hard money, at least I wouldn’t lose the house. So I used a larger bank that I knew was going to sell the loan to an even larger bank. And so the due on sell doesn’t really ever get looked at in those situations.

Brandon:
Okay, yeah. I haven’t heard of it happening too often, it’s one of those, is a risk. It’s something that could happen. And like you said, if you have a backup plan, it’s not … I mean, obviously we’re not lawyers here, but my understanding, I’m sure you agree. Like it’s not illegal to do it, it’s simply in their right. If you do, do it, then the bank can say, well, we don’t want to lend it, we want to call that note due now. And so it’s just, it’s a condition of the contract and you say, okay, well, I’m willing to take that risk.

Emma:
It’s their right to call it and if they do, like you said, have a backup plan. So we do.

David:
From a practical standpoint that is more likely to happen when interest rates are going up. Lately they’ve just been going down. So the bank doesn’t want to call a note due and then have to lend that money out at a cheaper rate than what they gave it at. But if that changes, then we could definitely see more of these due-on-sale clauses being called.

Emma:
And that is a risk, but I didn’t have him have a prepayment penalty. And so if need be, he can go get a re-finance a lot more easily than he can get a purchase loan, even being self-employed. And so if I come and say, hey, I’ve got it on hard money, I need you to go and get a re-finance, press out really hard while I’m working hard on my end, that’s also part of the backup plan.

Brandon:
Cool, all right. So this whole deal he ended up giving you a big down payment, get you a bunch of your cash. So now you want, like basically you have no money left in at this point, or?

Emma:
Yeah, I'm positive money on that one. I made money on that. And it continues to pay me because it's one of those deals that pays you on the front end, pays you in the middle and pays you monthly. And it might pay me on the backend when he does it in 10 years, or whenever he refinances it, I'll get another chunk of cash from the equity that's still in it.

Brandon:
Yeah. Very, very cool. All right. So last question on this is what lessons did you learn from this deal overall?

Emma:
Don’t pay your contractor.

Brandon:
Okay. I’ve learned that lesson many times as well. All right, so that’s really good. So after this, so that’s the end of the deal deep dive. What came next? Like where are you at today? Let’s just kind of go to the end of your story, what are you doing now? What’s your thing? And where do you see yourself headed?

Emma:
Well, a couple months after that, I bought another triplex, just a turnkey triplex, had a little bit of money left. And so I got that and that's, I'm just self managing that. That's pretty easy. Doesn't even have a fun story behind it. So I've got that. So we have those eight units and then that city I bought the triplex in was near my husband's hometown, and I knew I wanted to invest in that area. It's in Idaho, it's hot, it's great cashflow, hybrid appreciation model, our market. And I saw on Facebook somebody from the REIA, she said, "Hey, I'm selling my 50 unit apartment complex," in the same town that I just bought that triplex, like we just closed that month, right? And I said, "Sure, I'll take a look at it."
There might be some seller financing available, I didn’t know what I was doing, but I didn’t care because I knew people from the REIA who said that they wanted to do apartment complexes and I knew exactly the people I was going to call. So I get their crappy spreadsheet through a really rinky-dink, took a look at it. I said, “This actually looks like a pretty good deal.” I know three ratios, right? I know cash on cash return. I know internal rate of return and 1% rule, that’s it. That’s all I know. But it looked like a good deal from that. So I sent it to a guy I knew who was a spreadsheet geek and dropped it in his monster and sent it back to me. He said, “This is a really good deal, I think I can raise the capital for it if you are thinking about partnering on it.” I said, “Yes, if you’re going to go raise the capital.” I don’t know how to do that. Right? That’s a whole nother field out there that I knew was a thing that I didn’t know anything about.

Brandon:
That’s like another part of the gym, that’s like the room that does like the spinning class. That’s like, it’s like intimidating, but you’re like, I could learn it. But man, someone’s got to invite me into that spinning class because it makes me feel weird.

Emma:
Yeah. And he grew up in Salt Lake from an old respected Salt Lake family. And so he had a lot of connections that I did not have. So when he said he could go raise the capital for it and he really wanted to split the work. And so that just became, that's going to be a deep dive deal on its own. That took six months to close. We ended up taking over management before we closed on kind of a master lease, which is again, another word for a lease option. The owner was like, if you guys can't close this thing, I'm sick of it. You got to take over. So we hired our own manager, put it in place. We even started rehabbing it before we closed on it, we had so much hard earnest money in that thing there was no way we were going to let it go and not close.
So we took over management of that in September of 2019, just closed on in February of 2020. That’s how long it took. And I found it in May of 2019. So we have rehabbed 30 of those 50 apartments, we’re way ahead of schedule. And the month that we closed on that February, I found another apartment complex in Little Rock, Arkansas, and that has another funny story. They all have funny stories. They’re all like your kid.

Brandon:
[inaudible 00:52:46].

Emma:
It's like creative financing and creative approaches, they all have a story behind them and I'll have a lot of lessons to learn. So I put that 34 units under contract in Little Rock in January and we all know what happened the first week of March, right?

Brandon:
Yeah.

Emma:
So I lost all my investors. They’re like with the coronavirus and this, we don’t know what’s going on, we’ve got to preserve capital. So they all pulled out. And so I called the owner and I said, “Hey, I need some time to put this back together. I can’t get a loan on it, I need to go raise more money for it.” So I started over from square one, raising more capital just on Facebook and LinkedIn, just put it out there, like hey, I got this deal, who wants to partner on it? And couldn’t get a loan and so I went back to the seller and I said, “Hey, Mr. Seller, there’s this thing called a lease option and you want to do that on your apartment complex?” And he was like, “Okay.” So we bought that apartment complex in June, basically on a lease option. And because I had done it a couple of times and taken a class and knew what I was doing, I was able to save that deal using creative financing.
And it never occurred to me that I would want to buy something on a lease option because I thought that was a distressed buyer. They couldn’t get a mortgage. Well, here I was a distressed buyer, couldn’t get a mortgage. So I bought that on a lease option in June and we rehabbed about 10 of the apartments. And then in June I went to a retreat and told these stories to some people there and a couple of weeks later, one of them called me and he said, “Hey, I found a piece of land in downtown Salt Lake, it’s in an opportunity zone. We can tear down the warehouse and put up a 60 unit high-rise apartment complex.” And I was like, that sounds cool. “Go ahead. You know, what do you need?” He goes, “I don’t have any large multi-family experience, do you want to partner on it? And I said, “Sure.” He was the general contractor, so he could build it, but he didn’t know how to do property management stabilization, lease up, any of that stuff. And I said, “I’m there.”
So I found a guy who could underwrite it. He’d done commercial development before and we made a little team and we closed on that one in January. So it’s again, goes back to networking, learning how to run the numbers on your deals, knowing who to call when you have something. If you’d asked me even six months ago if, you’re going to build a high rise downtown, now, that’s crazy. But the funny thing about that, and here’s where it comes full circle. I rebranded away from the lease option business and I named my business high-rise because it was about us rising higher together through real estate. And what? Two months later, somebody comes to me and says, let’s build a high-rise and it’s this manifestation-

Brandon:
That’s [inaudible 00:55:11].

Emma:
… you put it out there. I thought it was a little bold of me to name my company and have a skyscraper as the logo, but then look what happened. And the guy, the broker who is selling us that piece of land, selling us that project, is the guy from the REIA, from the very first REIA who said, if you can skip residential and go straight to commercial, you should do it.

Brandon:
Oh, wow.

Emma:
And so it all comes around if you just know the right people to call, and you know who to talk to. You will have opportunities come up if you just keep learning who people are and you keep learning how to recognize a good deal, you can put it together and just be creative.

Brandon:
And this whole thing with six kids at home and during the whole Corona. I mean, are they in school right now? Like, I mean, what’s that like? I mean, how do you manage that much of a business like with six kids at home?

Emma:
I just did a podcast interview where, when you found out I had six kids, we’ve been homeschooling for about 10 years. And we-

Brandon:
Wait, wait, you are homeschooling your kids in addition to building a massive empire.

Emma:
Yeah. The mass empire, mass empire.

Brandon:
No, it’s huge.

Emma:
Well, that’s why that interview really just went left. We ended up not even really talking about real estate because all we talked about was how to run your life and simplify your life so that you can focus on your real estate. We just talked about homeschooling and housework and just time management and delegation and all of that. And so I don’t homeschool in a traditional way, I don’t do anything the traditional way. So I’m all about like Tim Ferriss, cutting corners, being efficient, like how can we do this in the least amount? I’m lazy. I don’t want to wholesale and hustle, obviously. I’m not going to homeschool that way either. So we’re very creative. We just put ourselves right in the mix and meet people who are doing it in a way that’s very clever, creative, outside the box and extremely efficient so that we can get more done in the same amount of time.

Brandon:
Wow.

David:
I think Bill Gates had a quote that was like, “I always look for my most important jobs and give them to the laziest people because they’ll figure out how to get it done the fastest.” Does that sound familiar?

Emma:
I actually quoted that on that other interview because when people say like, oh, how do you get so much done? Well, first of all, you don’t do it all. That would be super, like how do you get it all done? Well, I don’t do it all. Some people are like, I don’t know how you could be a mom of six kids. I say, “Well, not very well.” You let things go, things fall. You just have to learn how to focus on what’s really important and stop trying to control every little bit of thing in your life because that is asking for a heart attack.

Brandon:
So two quick things, Emma, first of all, what was that other show just in case people want to listen to and is that out already? Or is it coming out?

Emma:
It’ll be Whitney Sewell’s, The Syndication Show, The Real Estate Syndication Show and that’s dropping on November 2nd. So lots of just little life hacks to get more done in less time.

Brandon:
Very cool. I love those type of shows anyway. So very, very, very cool. And then second thing is, have you heard of the book, what’s it called? The 5-Hour School Week? Have you heard of that? Is that what it’s called David?

Emma:
Yes.

David:
You talking about Aaron’s book?

Brandon:
Yeah, Aaron’s book.

David:
The 5-Hour School.

Brandon:
Okay, all right. Emma, you’ve heard of that one?

Emma:
Yeah. I heard him interview on your podcast. And so I went and looked him up and I now are Facebook “Friends” with him.

Brandon:
There you go.

Emma:
He doesn’t have any clue who I am, but yeah, he home schools and again, that very efficient and creative way. We are even a little more freeform than he is, but I joined his wife’s group.

Brandon:
Oh, perfect.

Emma:
And if you definitely, she’s got it going on, like if you need some help there, definitely reach out there.

Brandon:
Yeah. Aaron and Kaleena, they’re like good people. It’s just funny, when you were explaining the four hour work week and how you apply that to a homeschool. And I was like, that’s exactly Aaron, like that’s Aaron and Kaleena, definitely. All right. Very, very cool. Man, I’ve figured we could just talk for hours and hours and hours, but we got to get this thing moving on. So last question I have before I move on to the famous for, what do you need right now in your business? What can our users or listeners or members bring to you to help you out in your world?

Emma:
I am really looking to scale up very quickly. Financial independent, retire early. We’re looking to get out of the W2 my husband is in right now and I would like to take on so much larger projects. I work very well with people who are new and looking for some mentoring. So if you’ve got a deal, especially a larger commercial deal that you don’t know what to do with, or you’re looking to place some capital with somebody who will be that mentor to you and walk you through and give you the passenger seat view of how these deals work, I would love to talk to you. That’s my favorite thing to do. I always end up teaching, no matter what I do, I always end up turning around and teaching. It’s just, I can’t help it, I just love it.

Brandon:
That’s awesome. All right. Well, with that said, let’s head over to the last segment of the show. It’s our-

Speaker 5:
Famous Four.

Brandon:
All right, this is the Famous Four, the part of the show where we ask the same four questions every week. Before we ask this questions to you, Emma, let’s hear what’s going on this week over on the BiggerPockets podcast network.

Ashley:
Hey, it’s Ashley from the Real Estate Rookie and on last week’s episode, we had Joe Roberts and Steve Rosenberg on. Joe won $20,000 at the last BiggerPockets conference to buy a property. Steve Rosenberg is guiding him through the whole process of doing an out of state deal, so make sure you go back and listen.

Brandon:
All right, with that, let’s get to the Famous Four. Question number one. Emma, do you have a favorite real estate related book?

Emma:
I've been dreading this question. I don't really read real estate books.

Brandon:
All right.

Emma:
So 20 years ago I read Rich Dad, Poor Dad. Last year I read the book on real estate, Property Management by this guy, what’s his name again?

Brandon:
You’re talking about me?

Emma:
Yes, you.

Brandon:
Oh, good. Thanks.

Emma:
My husband bought it and he listened to the audio book version. And now he’s like, oh, did you do this? Or did you do that? So I had to listen to that one just to defend myself because suddenly the guy who’s not even in my business is all up in my face about how I run my business, so I read that one last year. And then the one that I’m working on right now, it’s an ebook actually. It’s a lead magnet that my partner on my Little Rock property, John Stober did, it’s about how to underwrite multi-family properties and that he is a spreadsheet animal. So reading, if you need to learn how to underwrite properties, go get that ebook. And he has a spreadsheet that you can download and a more complicated one you can purchase. And so that one I’m getting through right now. I do know how to underwrite multi-family properties, but he takes it to a whole new level. So I’m really trying to up my game there.

Brandon:
Yeah. I love having those people in your life. Like I have Walker, like Walker Meadows is my like underwriter/VP of acquisitions. And like, I just love having those people. Like I can underwrite, but he can underwrite. Right?

Emma:
Yep.

Brandon:
It’s like different, like yeah, [inaudible 01:01:55].

Emma:
So the difference between being able to do it and liking doing it.

Brandon:
Yes.

David:
That’s a great way to put it. It feels light for Walker to do that work whereas we can do it, but it feels heavy.

Brandon:
Yeah.

David:
Uh-huh.

Brandon:
Yep, that’s it. All right. Next question, David Greene.

David:
What’s your favorite business book?

Emma:
Crucial Conversations by Kerry Patterson, hands down best. But I don’t think it’s just a business book, I think it should be a human book. If you’re a human over the age of about 10, you should read this book.

Brandon:
I have it on my shelf, I haven’t read it yet, but now I’m inspired to.

Emma:
Got to read it. So along with that, I would say Nonviolent Communication by Marshall Rosenberg. It was basically what taught me how to stop trying to control everyone, everything, that people are their own people and Crucial Conversations gives you the tools to go into that how to actually have Nonviolent Communications. So my son was diagnosed with autism when he was 18, just last year. So we knew for a long time, his whole life, that something wasn’t quite right, but he has a kind of autism that makes him argue, complain. His withdrawal is to get out of doing social things, is to yell and complain and argue. And so he really forced us to step up our game to be better parents. And so I read this book off of the personal MBA book list. Saw that, I said, well, this has got to help me, right?
It was life-changing. It will improve your relationships. Like I said, with my son, it will prove your business negotiations. It will improve your ability to communicate on any number of topics. And the reason I like it as a business book is because they basically boil these skills down to the high achievers that they were interviewing in the business world, the CEOs, when they were trying to find out what they all had in common, it was this set of communication skills. So you have to read it.

Brandon:
Yeah. Cool, awesome.

David:
Awesome. Okay, when you’re not raising six kids and building a real estate empire, what are some of your hobbies?

Emma:
I am one of those people who has a thousand hobbies. If it is a hobby, I’m doing it. Like I put my kids in music lessons and I sit in the room while they’re doing it. And I cheat and take lessons with them. I come home, I practice it. I get on YouTube. So I play the piano, I learned how to play the guitar. We learned how to sing a couple of years ago. I played rugby for a while. I really love just anything, knitting, like I said, knitting in the REIA meeting. I love hobbies, but right now what we’re really getting into is, with the whole passive income thing is I just decided I wanted to go hike the Appalachian trail. It was just, I knew somebody who did it and I was asking how they did it and how they rearranged their lives to be able to do it and take that furlough from work.
And I thought, you know what? This passive income thing, we should go do that. I don’t want to do an Ironman or the hard wake up at 5:00 in the morning, crazy stuff. But for whatever reason, this Appalachian trail thing got into my brain, even though it’s going to suck way worse than an Ironman, I think, but I don’t even care, it’s I just cannot get it out of my head. So we’re just starting to hike around Salt Lake and get our kids together. And that’s our new hobby. And now that the winter is coming, we’re buying some snowshoes. Like it’s just, I love hobbies. I love creating things. I love learning new things. I’m all about it.

Brandon:
Very cool. Very cool. Are you going to take your family on the Appalachian trail? I mean, the goal.

Emma:
We’re working out how that’s going to look. It’s going to be a few years, but there is a trail in Utah that we want to through hike before that, but we’ll probably just have our kids come up and see us at the campsite every night, or drive us home to sleep in our own bed on the weekends or something.

Brandon:
That makes sense. Cool. All right, last question of the day from me, what do you think separates successful real estate investors from those who give up, fail or never get started?

Emma:
Real estate investing is 90% the belief that you can be successful and only about maybe less than 10%, the nuts and bolts or the strategies. And so I think if you divided those three people among those groups, people who never get started are the ones who don’t believe that they can do it. They don’t know it’s a thing, or they don’t think that they can be successful because they listen to their in-laws or they listen to their friends who tell them, or they listen to horror stories. How I lost everything in the 2008 crash, because they don’t believe that they can do it. I know when I started this, my family was very, very concerned. And my sister called me and she said, she says, “I never want to be one of those people in your life that you disassociate yourself from, because I’m a negative influence on you.
So even though I don’t know what you’re doing, I don’t understand it and I’m terrified for you, I want you to know that I support you fully and I always want to be here for you, because if you are trying to better yourself and move on into a different realm, I want to be here with you and for you.” Who else has somebody say that to them?

Brandon:
That’s cool.

Emma:
Most people don’t have that kind of a person in their lives. And so they don’t believe that they can do it and they never start. And for the people who fail, it’s usually because they don’t have enough of the 10% and that’s in bolts. They haven’t learned enough about how to be creative, how to be a problem solver. My husband’s an IT guy, that’s what they do, solve problems under fire and then design a system around it. And then for the people in the middle who give up, it’s usually a combination of those two things. They don’t quite believe it. And they don’t quite have enough of the tactics or the network or whatever. And so they kind of get started, but it’s hard. And they don’t really have both ends of those tools. And so they just kind of peter out.

Brandon:
Great answer. Yeah, we don’t talk enough about the whole like, just the belief. Like I’m such a big believer in like the confidence is so important in this. Like believing that you can do it, which I think is why podcasts like this are helpful because people are like, if Emma with six kids and moving across the country, if she can do it, like I can do it as well. I can figure this thing out. And so once people start to hear other people doing it that are just like them, they’re like, wow, maybe I really can do this.
And so this is why, like if you’re just getting started, just if you did nothing over the next six months, I’m not saying you shouldn’t do anything, but if you did nothing but listen to podcasts for six months, but you were consistent on listening to this podcast or other real estate podcasts, just listened to other people who are like you doing things, you’ll gain such more clarity and confidence and momentum to be able to start really your own … growing just as a person. So yeah, everybody here can do it. Everyone listening to this can do it, you got to believe in yourself and you’ll make it.

Emma:
This is why I don’t read a lot of ton of real estate books. I’m finding I’m getting more up to date, relevant information from podcasts, YouTube, REIAs, by the time a book hits the shelf, sometimes it’s just not applicable. So I do read the first 30% of a lot of books and then move on. But the podcasts, I think by and large, and the people you meet are going to be the best education you can get.

Brandon:
Yeah, so good. All right, well-

David:
Beautiful.

Brandon:
Last question of the day, for people that want to know more about you, where can they find out more about you?

Emma:
My website is highrise.group. So H-I-G-H-R-I-S-E.G-R-O-U-P. And I am Emma Powell 28 on Facebook and LinkedIn. And I also have a group on Facebook about, it’s like a dating service between passive investors and active investors. So if you either have a deal or you have money that you want to place, it’s a place where you can get together and talk about whatever the SCC will allow you to talk about publicly. And just to meet people, and to figure out when you have a deal, who’s funding it. Or if you have some funds, who has a deal.

Brandon:
Very cool. Well Emma, this has been fantastic. Appreciate you being here today, thank you.

Emma:
Thank you so much for having me. This has been really fun, so I really appreciate coming on here and just looking forward to all the people that I’m going to meet through the podcast you guys have put up, it’s been life-changing for me and just really proud to be a part of that.

Brandon:
Oh, thank you.

David:
Thanks Emma.

Brandon:
All right, that was our show with Emma Powell. Fantastic. I feel like my head hurts a little bit just learning all that stuff today, but those are some of my favorite shows is when we really dive deep into topics, what do you think DG?

David:
Yeah. And Emma made it seem kind of effortless, didn’t she? I mean, she did big things, but it wasn’t this horribly stressful, terrible experience. I mean, I think this is a really, really good roadmap for how to do it right.

Brandon:
You know what? I want to 5X, I think five or six X our gym analogy real quick, just to kind of bring it full circle and wrap it up. What I think the reason that is, is because Emma just showed up every day at the gym. Like even though she didn’t know how to use any of the machines when she got there, like she literally just like showed up and asked questions. It was like, will you show me how to use that machine? Like I’m not sure what to do next day. Hey, what’s that room over there do? And if you went to the gym every single day and just became part of the culture of the gym and talk to people and like started obsessing about it. And I don’t mean that in a bad way, you would naturally just like almost, almost effortlessly, or at least to the outside world, it would feel like you just naturally became successful in that because you’re just showing up to the gym every single day. And that’s exactly what she did here.

David:
That’s a great example. First off, nobody likes strangers. I mean, maybe you like strangers, but you’re still a little iffy, you don’t know what to make of them.

Brandon:
I don’t, no. I don’t.

David:
Most people are that way. But when you see somebody all the time, even if you’ve never been introduced, there’s a level of comfort and familiarity that comes with that. And then second of all, if you’re in the gym all the time, you know what everybody else’s workouts look like, you know who to spot, you know who to emulate, you know who wants encouragement, who makes eye contact with you and who wants to be left alone because they have their headphones in. Brandon, that’s a great point. If you just get in the gym at some point, someone’s going to say, hey, can you come spot me on this thing? Because they’ve seen you around enough, they’re going to start teaching you how to work out.

Brandon:
That’s awesome, man. All right. Well, with that said, we’ll probably get out of here. Hey, if you guys, by the way, have further questions on some of the in-depth stuff we talked about today, for example, wholesaling, lease options, subject to, seller financing, BRRRR, this are all topics, you can go to BiggerPockets anytime you want to and go search, there’s a little like magnifying glass in the upper right corner. Just search for that term. You will find like blog posts, webinars, podcasts, all that stuff on there, generally for free, just go listen to it or read it or watch it or whatever you got to do.
Also, I wrote a book a few years back called The Book on Investing in Real Estate with No and Low Money Down. And in there I have a chapter on lease options, another one on wholesaling, another one on BRRRR, another one on syndication’s and more and more. And so if you want to know more in-depth stuff, if you want to read a book on it, go check out that one. It’s kind of a good high-level overview of all those topics. Especially I go really in depth on lease options in that book, because I think they’re pretty cool. So check it out. You can get it from library or from Amazon or biggerpockets.com/store. All right, well, I’m going to go buy some mobile home parts, what are you up to today, David? Anything fun?

David:
No, I’m resting right now. I caught a little bit of a bug over the weekend, so I’m just going to relax.

Brandon:
I can kind of hear it I can kind of hear it in your voice, man.

David:
I’m glad that you did some of the heavy lifting today, because I needed that.

Brandon:
Well, good. Well man, bye man.

David:
Thanks for being a good friend there. All right.

Brandon:
Yeah, thanks.

David:
This is David Greene for Brandon Jim Tour Turner, signing off.

Speaker 3:
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In This Episode We Cover:

  • Emma’s reaction to her husband being laid off from his tech job
  • What a Real Estate Investor Association (REIA) Meeting is
  • How she’s found nearly all her deals by simply networking
  • Due diligence when loaning money to an investor
  • What lease options are
  • What a “due on sale” clause is
  • Closing a great deal after a seller was burned by wholesalers
  • Her passive income goals for the future
  • And SO much more!

Links from the Show

Books Mentioned in this Show:

Connect with Emma:

Real strategies that work for real people seeking to build wealth through real estate investments. Co-hosted by Brandon Turner and David Greene, this podcast provides actionable advice from investo...
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