Episode 165 of the Diary of an Apartment Investor with Sterling White and Marcellus McKinley. Transcript by Otter.ai – please forgive any errors.
Brian Briscoe 0:00
This is Brian Briscoe, hosts the diary apartment investor, podcast and partner at four oaks capital. So we have something that we've been working on for a really long time we are building and we'll continue to build an educational community that we're calling the tribe of Titans. And it's going to be a community of multifamily investors based around education and his house on the mighty networks. What you're gonna find in there is a lot of events that are exclusive to the tribe of Titans members a tonne of educational content, and you're gonna find great people. So if you're listening to this podcast, because you're looking for community or you're looking for education, go no further the tribe of Titans is something you need to look into for the price of about $1 a day, you're going to be able to have access to everything that we have an elder content that we continue to produce for years to come. And just so there's no pressure and there's no obligation, the first month is free. So sign up first month free, and give it a test drive, if you'd like to keep hanging out and you'll continue to have access to Well, me and my partners are four oaks capital in a lot of other experience and aspiring investors. And where can you find it? The tribe of Titans dot info. There's a link to that at the bottom of the show notes of every single episode right now. So if you're interested type in www dot the tribe of Titans dot info or go down to this bottom in the show notes and just tap the link. Oh, Marcellus, we got Sterling on the line. What do you want to ask him?
Marcellus McKinley 1:23
What do you think is some of the bad advice that you hear a lot?
Sterling White 1:26
I would say the one thing is when you find a good deal, the money will follow. That's true to an extent. But you just want to want to get one I don't think you know just I mean come out of thin air and hey, I've got 50,000 100,000 invest in your deal. But what I've seen the best more so best practice and this is what most people don't want to hear is that while you're finding the deal is simultaneously you want to be building and nurturing those relationships, getting soft commitments if you can that way. Once you do have the deal, that's you have that that money that's already there. And of course, some people may not pull through so you want to have more soft commitments than you actually need.
Brian Briscoe 2:14
Welcome to the diary of an apartment investor podcast with your host Brian brisco. In this podcast, we bring some of the top professionals in the apartment investment field to discuss various aspects of the apartment investing journey with the sole purpose of educating listeners to make wise investment decisions. The Diary of an apartment investor podcast is sponsored by four oaks capital bringing you high yield returns through apartment complex investing. Welcome to the diary of an apartment investor podcast. I'm your host, Brian brisco with four oaks capital A very excited for today's show. We got two amazing people on the line with us today. We got the sterling white, and Marcellus McKinley. So first of all, we're going to talk to Sterling, I'm going to put his bio in the show notes so that you guys can all read it. He's done a whole lot of great things in the multifamily space. So that said Sterling, welcome to the show.
Sterling White 3:04
Yeah, thanks. And I love the opener of the sterling white. I haven't heard that before, but appreciate that. Yeah, I mean on here, you know, so
Brian Briscoe 3:12
you you were someone you know, I listened to your podcast for quite a while and you were somebody you know, in this space. When I got my my beginning that the saw saw a lot of posts on social media saw a lot of things, you know, you got your YouTube channel and everything else. So it's been very helpful. And, you know, I'm excited to have you on the show. Finally, so great, great turnaround here. So anyway, thank you. The Sterling white.
Sterling White 3:36
Yeah, and everyone on here. Go ahead and get your popcorn ready because we're going to drop some bombs. We've got Marcellus on the other end, which this is his first podcast, so we'll go ahead and give him a warm
Brian Briscoe 3:46
welcome. Yay. Hey, Marcellus. Yeah, okay. See, Mr. Marcellus, this is fun. Hopefully it's fun for you. But so that said Sterling, go ahead and tell us a little bit about yourself. Give us an idea of your background and history and what got you into real estate.
Sterling White 4:05
So I'll give everyone the cliff note or I believe it's spark note version. So grew up Indianapolis and now live in Houston, Texas, but born and raised there. And the not so good parts of the city where you wouldn't want to walk your dog at night or even during the day. And section eight housing welfare food stamps, and I grew up single mother fraternal twin brother and there was one point in time where I actually almost lost my life at six years old due to a stray bullet. So it was really one of those environments. You never knew what if you would live the next day but luckily I was able to get out of that environment. And then I got started in construction. This was in 2009. Shortly after that, I saw that the wealthy and rich did not get that way by being labourers and construction. So I started buying single families bought 150 and then started buying multifamily and didn't scale portfolio. Just close to about 500 units. So that's the compact version. Of course, there's a lot to unpack there.
Brian Briscoe 5:05
Oh, yeah. Yeah. And I mean, Cliff Notes is, is I think my generation, you know, you said, sparknotes, I made a mental note to look that up, you know, like, sparknotes. Alright, got it. So
Sterling White 5:16
it's the cliff notes or the sparknotes eyes forget which one it is.
Brian Briscoe 5:19
I always use Cliff Notes. And that's what it is. That's what I was meaning cliff. Yeah, yeah. I mean, you know, back in the day, we used to go to the bookstore and buy these little yellow and black books that said Cliff's notes on our Cliff Notes on it. But I did a lot of book reports based off of Cliff Notes, I'll tell you that. But yeah. So yeah, lots to unpack there. And, you know, I think, you know, were there any challenges getting into, I mean, looking at your background, you just said, You came from a rough, you know, rough neighbourhood rough area. Were there any challenges going from from the background that you had to getting into single family and later multifamily?
Sterling White 5:57
I would say the mindset, that was the biggest thing, I had so many limiting beliefs that were grounded in me, that one, and this is we'll get to why at a later point, but is that I had someone who I woke up, or I saw people on a daily basis that told me I wouldn't amount to anything and be enough. So that was one limiting belief that I had that Oh, who am I to be able to start getting into real estate, that that's only for the most wealthy and succeeding Hijri. So there was that, and then also that, hey, you have to have a large amount of capital in order to get started. So all these different limiting beliefs, but what I did Brian is I had this very pivotal moment in my life and early 20s, that changed the trajectory of my life. And one of those things that I ended up focusing was mindset. Huge. Yeah.
Brian Briscoe 6:47
Yeah, it is absolutely huge. You know, and I think, you know, I'm 40 something years old, you know, I'll say I'm in my, my early 40s, still. But, you know, 20 years ago, I would look at all this mindset stuff, and think that's a bunch of crap. You know, I remember reading, thinking Grow Rich, getting like a chapter and a half into it and saying, this is just dumb. But looking back now, at my life, I've had some major mindset shifts that have enabled me to do more and be more so, you know, now, as you know, older and wiser, that's something that I am focused on. And I realise, you know, when I have my own limiting beliefs, you know, every once in a while I'll say something or do something. And, you know, it's like, oh, my gosh, I have a limiting belief right there. So
Sterling White 7:36
that takes a different awareness. Brian, I'm getting cold chills you saying that? Most people don't realise that. But yeah, as you said, it, you're like, that's a limiting belief. I need to Yeah,
Brian Briscoe 7:47
yeah. Yeah. You know, I grew up in a house. Now, I, my childhood, your childhood, you know, I probably looked like, you know, the rich and famous compared to what you grew up in. I mean, my dad was a postal worker, you know, so he didn't make a tonne of money, you know, never got shot at, well, growing up, never got shot at but I'm military, but we've definitely had people lob mortars and shoot rockets our direction, but you know, so, you know, me growing up, I had similar limiting beliefs with money. You know, it was it was just the, the scarcity mindset, there's only so much money doesn't grow on trees, and things like that. And, you know, I, my dad, you know, I love them. But I think, you know, one of the things that he has, he is kind of a, an envy, you're not really an envy almost a dislike for people who are rich, if that makes sense. And I've noticed that recently, in some of the things that I've said, you know, talking about people who are, you know, other side rich, and it's just like, wait a sec, you know, I shouldn't really be thinking like this, because, you know, that's where I want to get, you know, so anyway, lots of stuff out there. Once again,
Sterling White 9:01
I want to tell one quick story on how much mindset and shifts it takes. So I'm a part of Big Brothers, Big Sisters, this organisation that gives back to people that are well, I'm basically a mentor to kids who came from where I came from. But the short end of the story is that I went took my little two Kings Island, and I ended up buying a fast pass, which is a way for you to skip the line. And it was like 25 bucks more. And I also had my business partner, too, and friend, and he said, I don't know if we should pay the fast. I said, Just Just get it. We go to amusement park, it wasn't as effective because we just got there, they just open but later on the line started getting two hours, two and a half hours long for just a regular general admission. And then for us, it took 15 minutes. And that was another highlight. And I share that story because this is one concept that I learned is that rich people buy time. That's a prime example of buying time that people are thinking So much of that $25 or 50, or however their their family is, but they don't realise the amount of time they're saving that is buying time.
Brian Briscoe 10:08
Yeah, I mean, another example and this this happened this morning, literally, you know, my, one of my kids who's at Grandpa, their their grandparents house, Mo's our lawn. And, you know, she's gone this week, you know, so she's not around the middle lawn, and my wife said, Hey, Brian, how about mowing the lawn today? You know, and I'm like, how about we pay somebody else to mow the lawn today? Because that's exactly what I'm thinking, I'm thinking, Okay, I've got a lot of income generating activities that I could do today. Or I could spend an hour mowing the lawn, you know, I would much rather spend 2530 bucks, whatever the going, I didn't know what the going rate is in, in Idaho for mowing lawns, but I would rather spend going rate because I guarantee you, I can make more money in that hour timeframe, then I will save by doing it myself.
Sterling White 11:00
And that's always another analogy that I used. When I was on the single family side, I remember several owners that got burnt out on managing their properties, we would show up, they would be cutting the own grass. So I'm like, why do you if you enjoy cutting grass, by all means cut your grass, but it's something you're doing to save money is just Yeah, but I'm glad you brought up that point, too.
Brian Briscoe 11:23
You know, and I will say I will say this, you know, a lot earlier in my life, I was definitely cutting my own grass. But I did not have other income producing activities to replace it, you know. And so, you know, once once I started realising that, oh, my goodness, I've got other things that I could do, you know, I can start this side hustle, this multi and multifamily for me was a side hustle. And when I started realising that the side hustle was going to be as lucrative as it is, all of a sudden mowing my lawn, you know, had this rotten tail, let the rotten taste in my mouth. It's like, you know what, I'll do anything, but mow that lawn today. So, anyway, I've been I've been paying for people to mow my lawn for you know, good four years right now, and probably probably should have been a lot longer.
Sterling White 12:08
Yeah, I mean, I outsource my grocery shopping. That's one because if you enjoy groceries, but it's just one of those things, it's just buying time. And it's, you really just pay a little bit you just pay I think it was like 99 bucks a month, or you give the person a tip. so worth it. So those are just some things that I've just learned over the years.
Brian Briscoe 12:28
Yeah, a lot of things there. definitely buy your time. And I think that's, that's a big mindset shift that a lot of people have to go through is, you know, do what you can to buy your time back where it makes sense. So because good only give it back. Yeah. So mindset shifts, you know, kind of enabled you to to get into multifamily. You know, let's let's talk a little bit about you know, what you've done with multifamily so far and where you're at and then as you talk about that, you know if you if you'd walk us through one of your properties and you know the good the bad the ugly on that too.
Sterling White 13:01
Yeah, so the the company that I had started because of 14 is that both my partner and I we decided to go direct owner own all of our deals. And this was starting in 2017 where we were going to the broker route not having much success and instead of sitting on the sidelines and saying hey, let's go ahead and wait for let's say a correction to happen if that is we decided well let's take a pivot because I'm a firm believer that's what entrepreneurship is about is taking the feedback making the pivots and then we started going direct and for sale bought was a 46 unit bought a 50 units to 80 units and then the most recent was 156 unit apartment complex. All just starting with an initial call out to the owner. Right right.
Brian Briscoe 13:45
Now you said are you still in Indianapolis?
Sterling White 13:49
I'm in Houston Texas now three months ago
Brian Briscoe 13:51
Okay. All right. Well I'm in Idaho Falls as of one month ago just moved from from DC out here so yeah, so how you guys doing settling down
Sterling White 14:00
I mean, that's takes a while. I would say well, it's more so my stuff we didn't move the business or company so is we still have holdings in Indianapolis and then also Louisville, but my stuff I love it out here it's a lot more vibrant people are like go go go go versus in Indianapolis is a different culture more conservative, I would say and a good place to raise a family but I enjoy this environment more the humidity I am going to have to prep myself for that's going to be deadly.
Brian Briscoe 14:28
Yeah. I just did the opposite. I mean, I went from DC which is super vibrant to you know, Idaho Falls has about 100,000 people. If you start counting the surrounding you know little towns you know, you may hit 100,000 but I went from you know, hot and humid DC to hot and dry. I think the humidity right now is like 20% here, you know, I go outside for five minutes. I'm like, Where's My Water. The funny thing is I grew up about 100 miles south to here. hot and dry. And I remember adjusting you know and really disliking the humidity but now moving back I'm just like water lotion. Oh my gosh, you know things are super dry here. But anyway, we digress but let's let's talk specifically pick pick one of those apartments that you have and tell us about it. You know how you found it and like said the good, bad and the ugly.
Sterling White 15:23
Yeah, I would say that very first deal, which was the 46 unit, found it driving for dollars at that time driving 2100 court love Honda's and so drove past the property saw that it needed work, the the signage was outdated parking lot look like an alligators back. So it needed some updating. And so this was a 46 unit apartment complex, called the owner. So all this information is public record for anyone and picked up the phone, ask them if they were interested in selling their property. And it just so happened to be this was their very last apartment that they were selling. And well there because they sold all the others because they were shifting from being an operator to a debt collector, the property was about 60% occupied. So we were able to negotiate seller financing. And then yeah, we we put $200,000 down and bought it for $900,000. So he carried back a loan of $700,000. And then we raise additional money to take care of the improvements for that property.
Brian Briscoe 16:28
All right, that that seems like a lot of work for your first apartment deal. I know you did single family before were you were you into the fixin flips already? Or is this like a venture into something brand new.
Sterling White 16:40
So I did a handful of fixin flips, but not like a heavy volume, but with single families is we're buying these and I'm going to say that the price of anywhere between about 15,000 to about $30,000 these are C class property c neighbourhoods. So some people that may be in California and New York or like you couldn't even get a piece of a piece of land for them. I
Brian Briscoe 17:02
Sterling White 17:03
So we will buy those for that much and then put anywhere between about 10 to 15. So we had a construction background of doing that volume, and then it translated to multifamily, but it still was a different animal. Oh, yeah,
Brian Briscoe 17:16
yeah. Yeah. And that that's maybe a bite it's a little too big to swallow for for a lot of people on their first one, you know, 60% occupancy, you know, a lot of a lot of capital expenses going in a lot of renovations. How'd that process end up going?
Sterling White 17:30
So these are the trials and tribulations. So one is worried, right? This is what I would say to everyone is always expect the unexpected and just buffer that cuz it's likely to come up, it's a high probability, something will come up that that year, we have one of the worst winters in Indianapolis, which there's no way you could have saw that coming. But that's what we had. And so that push back the the the project timeline in which we would be able to turn the units up. Great. So now that also trickles into our performance. So it was really like a snowball effect. And then also is we went over budget as well. And then a boiler had went out and then they expense, the boilers reading that. So all these things that we ended up finding out once we got into the deal, and then we actually ended up selling it and then got a really great return to our investors from that. But we actually was in a position to where it didn't make sense for us to hold it due to everything that we were experiencing.
Brian Briscoe 18:34
Yeah, yeah. Yeah, it's, you know, and I think a lot of people make make similar mistakes in their first one, you know, going over budget. You the unexpected, right, we closed on our first property October 2019. And it was gonna be a light value add we ended up not renewing a lot of leases in February and March. So we get renovate units. And unexpected for us was COVID. You know, just like you know, rental market went to zero and we're just like, oh, gosh, you know, I guess we didn't see the writing on the wall. You know, prior to COVID some people did. We didn't you know, but I could go into conspiracy theory with but yeah, yeah, right. You know, there's a lot lots of lots of things there. But it is what it is. I mean, we after that point, we had no control over a lot of things. But you definitely expect the unexpected, I think is good have a buffer, which is a great lesson learned. You know, when you're doing your capital expense, budget, your renovation budgets, you build in a buffer, you know, it doesn't have to be on every single line item but build in a buffer, you know, 10% or so you know, and, and same thing, have a reserve account going in, you know, we usually put one month's rent one month's income into an account that just sits there so definitely have the buffers so when you have those unexpected events, you can you can weather some storms, but
Sterling White 19:54
especially on the heavy value add projects and older properties built built Before 1970, so there was another bill that we bought was 156 units, and we're putting $2 million into that. So these older properties, especially as you get into it, things just start to come up. And then if you don't have that buffer that's allocated, then that's going to just eat right into your returns, because you didn't allocate that, then your underwriting.
Brian Briscoe 20:23
Yeah, and I mean, for those older properties, plumbing is something that's been big for us. It's, I mean, it's hidden behind the walls, you can't see the plumbing in a property, but you know, that the plumbing is 50 years old, and you're gonna have plumbing issues, you know, I think every depending on how old you are a Class B class C class and different ages have have different problems. But you know, definitely expect the unexpected. So starting, we're gonna shift gears right now. And one question I'd like to ask everybody is, what is your big burning? Why?
Sterling White 20:51
I would say I have a mix of different ways, and I pull from them at different times, I like to call it a cookie jar. But one is, the environment that I grew up in is I don't want to go back to that. But my overarching why's that there is a kid right now, multiple kids that are where I was, because when I was there is I did not know there was a way out, I was completely lost. And I was taking the being another statistic, I was taking that path. So I want to be the ideal and the message for those kids that, hey, I was where you were. And this is how I was able to make it out. And this is how far I've gone. So that's one really burning desire of a wife that I do have. And just knowing that I only have so much time on this planet. So just decide to go out there and live in and not have excuses. I see so many people come up with excuses that I could easily use the environment that I came from as an excuse, but I decided to take those lemons and make them into lemonade.
Brian Briscoe 21:56
I love it. I love it love that you're focused on giving back your love, you're focused on your lending people that were in your situation a helping hand. And I know you mentioned the Big Brothers Big Sisters earlier, you know, I think it's a great organisation. So my hat's off to you for doing that. And I appreciate it very much. Last question for you, before we bring on marsellus is what's next for you.
Sterling White 22:17
What's next to me is every day I just work towards becoming the strongest version of self. So that is just me reaching to my next potential in every year, I want to look back and say, Man, I've gone I've grown us I've grown so much from the year prior to and during the whole COVID pandemic is I look through how I was able to grow and evolve through all of that. And it took some real a lot of self reflection during that time. And so that's each year that I'm constantly working towards. What's next is how can I become more aware and also give back to people who came back from the environment were in the environment that I came from.
Brian Briscoe 22:59
All right. I love it. Love it, making yourself a better person. Grow, grow to give back, you know, is what you're doing. So love it. All right, another shift the gears here. We're gonna bring on Marcellus who's been patiently awaiting, you know, Marcellus. Welcome to the show.
Marcellus McKinley 23:15
Hey, Brian, thanks for having me. I'm excited to be here.
Brian Briscoe 23:18
Yeah. Hey, thanks a lot. And for everybody going to Marcellus, his bio in the show notes as well, you know, so if you want to learn a little bit more about him, you know, definitely check out the show notes. But Marcellus, please tell us about yourself a little bit.
Marcellus McKinley 23:31
Yeah, so I'm kind of similar to you, Brian, and kind of come from a military background. So I've been in for I'm currently active duty been in for how long? 11 years now? Almost said 10. But, uh, yeah. billing for 11 years. And I'm down here in the Virginia Beach area. And, yeah, just a little bit of background, just kind of similar to Sterling. I had a you know, you know, there was a lot of a lot of that stuff was not available to me, or something that I thought was anything I could even aspire to, you know, thankfully, I you know, I didn't have some of those similar experiences. But yeah, it was definitely something where I thought that that was kind of for, you know, the elite. And, you know, it wasn't until relatively recently, I think it was in my last assignment in Denver, you know, when I really kind of under started to understand, like, the power of real estate, and you know, what it can do for you when you apply it properly. And I was like, Man, that's pretty awesome. So, you know, originally started out, you know, just kind of buying primaries and keeping them and stuff like that primary residences. And then, during COVID, I actually got approached from a realtor friend in regards to like, Hey, you want to go in on this deal? I know you're interested in real estate, and she offered opportunity to be like a limited partner in a 16 unit here in Newport News. And so you know, I kind of looked at the numbers. I was like, hey, this, this makes sense. And no, after I kind of started looking more into it, I was like, Man, this is pretty awesome. So, you know, I've done about four have been an LP about four or five bills now. And I'm also trying to go active. So yeah, it's got
Brian Briscoe 25:03
to be in a nutshell. Nice. Nice. Now, a couple a couple questions on that one, you're 11 years in the military. And I think most people know it 20 years, you get a pension? Where's your Where's your point of no return? Where's your line in the sand?
Marcellus McKinley 25:19
So, I think the biggest thing for me, Brian is more. So what I said from the very beginning is that I wanted to have fun, work with awesome people and do awesome missions. And the thing is, for me, is if I continue to get blessed with opportunities to do cool stuff, I'm going to continue to do that. But you know, also with the real estate thing of, you know, obviously, a lot of the benefits that it provides, in general, like, the biggest thing for me, too, is that, like me, my family had the ability to be safe, you know, thanks, Air Force, it's been really fun, but ain't been real fun. And you know, be able to just, you know, punch out from there.
Brian Briscoe 25:53
Yeah, I had the same philosophy. My wife and I always looked at it, you know, one, one set of orders one tour at a time. And I enjoyed every single minute of it until I got stationed at the Pentagon. And I think the last three years, that was my last assignment, and by the time this podcast airs, I'll be retired, you know, right now, I'm still active duty, but the last three years were the longest, you know, but anyway, that said, I mean, you've talked a little bit about, you know, why you're doing this, but if you could just boil things down. What is your big burning? Why?
Marcellus McKinley 26:27
Yeah, so, I definitely think that the big why, for me in regards to real estate is, you know, a lot of the, a lot of the ability to pour resources into, you know, things that are going on in the world, you know, like, I'm a big believer of not complaining about problems, you should do something to solve them. Yep. Um, and one that's kind of really near and dear to me and my wife, she works for an anti human trafficking nonprofit. So that's something that has been made very well aware of, and, you know, and it's not something that's in far flung reaches across the world, you know, like, in Southeast Asia, or a lot of things that people expect, but, you know, it's happening right here, in our, in our homes in America, you know, there's, there's major issues with that. So, yeah, I'm still in the kind of beginning stages of trying to figure that out. But that's just the biggest thing for me is a why to be able to have the resources to be able to pour into communities to pour into people to pour into organisations that are fighting things like that, that, you know, we can make a difference that we don't have to wait for, you know, politics or things that catch up that, you know, people that have the resources and the ability can help provide the NGOs and people that are doing that and be able to do in the best way possible. So that's, I would say, that's my biggest why I'm kind of saying this journal, I got a bunch. So yeah, you know,
Brian Briscoe 27:46
I love it. And you know, just just so happens, it seems like a match made in heaven because, you know, you're, you're both you're right along the same lines, you know, you're both I'm gonna like make this hashtag go viral, you know, we're both trying to grow to give you know, and that's, I think that's amazing. It's something that's near and dear to my heart as well. I mean, slightly different causes. You know, I'm, I'm looking more at you things equalise the playing field, you know, whether it's education or opportunities, but I mean, the Human trafficking is a big problem worldwide. So another great, great, you know, cause and I'm glad you're glad you're involved in that one. So, here comes I've got a lot of favourites but here comes my favourite part of the podcast. I'm going to hand you the mic, Marcellus. So Marcellus, we got Sterling on the line. What do you want to ask him?
Marcellus McKinley 28:35
Sterling? So first and foremost, man, thank you. I appreciate the opportunity to like learn about you and hear your story again and kind of saying is Brian man is I kind of geeking out right now because you know, just seeing you in bigger pockets and stuff like that. You've been you've been instrumental in my career. I just want to say thank you. This
Sterling White 28:53
is a change my Instagram handle and everything from a brand new to be nice.
Marcellus McKinley 29:00
Yeah, you heard it. Okay. Oh, yeah. So So I think the first question I have is, what role has systems played in you developing your business in like, what are the some of the biggest things that you've developed from like a systems perspective that has really helped take you to the next level.
Sterling White 29:22
So this is one thing looking back that I wish I would have done more of. And now I've got that hat on. Every single thing I do that even if it's new, I'm documenting what I do and putting a system in place as I'm actually doing it. That's how much of a system and processes person I am now, so I've had to shift from more of the if you've read the book, The E myth, he talks about the technician, which is the one actually always in there doing all the work in the trenches, the entrepreneurs, more the visionary, and just putting more of how can we make things better process systemize. So one of the key things that I Did systemize was the acquisitions arm, which was we take the approach of going direct to owner. So formerly did have a script, didn't have ways to follow up, didn't have a CRM, all these different things. So I just ended up finding people out there doc who was doing what I wish to do replicated their script, and then also started documenting the the things that got me the most success and just basically put those in place. And then as started hiring people just started handing things off to them that way.
Brian Briscoe 30:34
Yeah, okay. Yeah, also the same thing. I mean, we have built systems, you know, from from the beginning, you know, it's one of those things where, you know, you don't realise you need the systems till you don't have them in a lot of cases, you look at building the systems, but you know, we we begged, borrowed and stole from anybody and everybody who is doing the same thing, you know, from our mentors and everything else. And just to add to what Sterling said, one thing we did is we taken our acquisition slow, you know, we didn't jump into a 500 unit apartment complex off the bat, you know, our first eight acquisitions, our first seven acquisitions were sub 100 units, right? So it's just, you know, slow build, so we can develop those systems. So that now we're in a position where we have systems and we can scale. Gotcha.
Marcellus McKinley 31:23
So it sounds like yeah, like, like the book nailing scale it, you know, you got your systems down, you made sure that everything was good to go count on those test cases, and then you kind of kind of grew, it makes sense.
Sterling White 31:34
And from a tactical standpoint, the platform that I use is Asana. And that's not a plug for anyone who's on here, you can sign up for a free account. And you can even keep it free. And so with that is that's where we actually put everything, you can use Google Drive and put everything in a Google word doc or a spreadsheet. But now we're just migrating everything from those just to Asana to have everything in one place. Because one of the core values that I have constantly enforced to our team is less is more. Because if we have all these things in different places, his people will figure out a way to break things. And I want to mitigate that as much as possible. Yeah,
Marcellus McKinley 32:14
yeah. That's awesome. It makes complete sense. And I appreciate it, guys. Thank you. So, you know, obviously, I'm still kind of doing a W two still working. How do you think people that are moonlighting should approach you know, jumping into multifamily.
Sterling White 32:27
So I would not be the the best one to answer that question. Because just myself, I've always been in entrepreneurship, always, I, when I've had a job, it's been part time. And I've used those funds to fund my ventures. So in early in my early 20s, I just quit like the part times all together to focus full time on real estate so myself is I wouldn't be the best person to offer an experience here. Because I've never entirely been like a full time w two and had that didn't make the shift, tell you Tell you what, I'll
Brian Briscoe 33:03
take that one, you know, the big burning, why I would say and this is a book by Simon Sinek. I came up with this philosophy before reading the book, but start with your why. Okay, and always put that in the forefront, always remember why you're doing things that's going to help you to be able to prioritise properly, you know, so something else that I really like and appreciate Stephen Covey's Seven Habits book, in there, he has a phrase that he says you don't prioritise your schedule, you schedule your priorities, okay. So, you know, instead of looking at everything that's on your schedule, and then you know, figuring out you know, what's most important, look at what's most important, and then put it on your schedule, you know, so I just recommend carving out time every day. And if it means you stop playing, you know, games on your phones, or stop watching Netflix for a little bit, you know, carve out, you know, an hour or two, you know, every day to be able to do some consistent effort. And, I mean, it's like, you know, I can use a lot of cliches, you know, Rome wasn't built in a day, you know, or stuff like that. But I think daily consistent effort is what's going to get you there. But for me, you know, reviewing my why every morning reviewing my goals every morning, reminded me every morning why I was doing it. And that helped me every single day to be able to say okay, here's the time I have allotted to growing my multifamily business, let's go.
Sterling White 34:31
points in just making it happen is and this goes back to when I remember that when I was living in my friend's dad, when I was really just getting things off the ground is I would go to my I would wake up in the morning I would train because I was training for a Guinness World Record. That's a separate story in this setup, but I would train at the gym and then I was working for my mentor for completely free. I would do that from about nine to four or whatever he needed within this business. And then I would work on my Amazon business because that's what I was doing to basically fund my overhead. And then that night I would work on the actual real estate business that i was growing in itself. So what Brian just mentioned is just prioritising it that each and every day because there's a great book by Dan Hardy, it's the compound effect, that people don't realise how much when you're doing something consistently day in and day out that if you zoom out, and you do that, that's where you start to really see the results. People don't realise how much they can actually accomplish in a decade versus just looking at things from a year by year basis. Yeah, right. Absolutely. Love it.
Marcellus McKinley 35:40
Okay, so I got to ask now, because you mentioned that so what world record were you train it for?
Sterling White 35:47
So it was the world's fastest fireman carry mine. So like, I carry someone in a fireman's position, like the person on the cover of pack Ridge saw or have heard the credit, pronounce, but a fireman's position, equivalent way to me for the distance of a mile. I didn't break the record. But that was another aha moment for me, because I had the limiting belief of having the fear of failure. And when I bombed that, I bombed it in front of a tonne of people, it was all over the news. And I realised that failing is not so bad. Yeah.
Brian Briscoe 36:20
Now, did you come close? Or did you drop again?
Sterling White 36:25
It was I dropped the person at the 800 metre mark. So it wasn't even, which is halfway through? Yeah, yeah. But well,
Brian Briscoe 36:33
I've done a lot of Firemen's carries before, and I could not imagine doing that for even 100 metres. So, you know, I mean, I'm still impressed. I mean, bam.
Sterling White 36:45
Yeah. So and the person I was training with one, my back went out about two months into the training. So I could have stopped there, but I did it. And then also, a couple of weeks prior to the event, the person I was training with this whole entire time backed out, and I still ended up pushing through. And one thing is the day of the tip, I actually almost gave up, there was this little voice in the back of my head that said, Sterling, you don't have to do it, go ahead and just walk away. It's completely fine. And then that's when I ended up breaking through and just ended up doing it anyway. So yeah, that's by far one of the highlights I've experienced.
Brian Briscoe 37:23
Marcellus McKinley 37:25
That's awesome. All right. So I had kind of another question. We talked about it a little bit, but just like how would you say like your experience in residential has helped you in multifamily? Do you think that there's been a lot of connection with that? Yeah,
Sterling White 37:39
I would say there has been quite a bit of connection, especially dealing with that amount of volume of that many single families, and also the construction as well. But the main thing was really the momentum, was able to take all of that, the momentum from that. And then as we transition to that first deal, which was a 46 unit, that we didn't even and this was going back to mindset, I didn't even look at, oh, man, this is a 46 unit apartment complex. There's no way that we can take this down. We use the momentum, and the success that we have from the single families that Oh, if we could do this many single families 46 unit apartment complex. That's not an issue.
Brian Briscoe 38:18
Yeah, gotcha. Yeah, I only had two single families. And so that's, that's, yeah, not Not really. I wish I would have had more experience with single families. But my experience just didn't translate. I think, if you have something like Sterling had where you had a business based around it. Absolutely.
Marcellus McKinley 38:35
Yeah, I could definitely. I could definitely see a connection with that. So yeah. So I guess another kind of question I had just kind of gently going on. What do you think, is some of the bad advice that you hear a lot on like, you know, just a lot of real estate, you know, people going out there? What are some things that you hear you're like, I don't know if I agree with that.
Sterling White 38:55
I would say the one thing is, when when you find a good deal, the money will follow.
Unknown Speaker 39:03
Brian Briscoe 39:04
true. I was gonna say the same thing. Yeah,
Sterling White 39:06
yeah, that's true to an extent, but you just want to want to get one I don't think you know, just, I mean, come out of thin air. And hey, I've got 50,000 100,000 invest in your deal. But what I've seen the best more so best practice, and this is what most people don't want to hear is that while you're finding the the deal is simultaneously you want to be building and nurturing those relationships, getting soft commitments, if you can, that way, once you do have the deal, that's you have that that money that's already there. And of course, some people may not pull through. So you want to have more soft commitments than you actually need versus getting the deal. And then let's say you've got 30 6090 days closing, and then you've got your due diligence period where likely you're not raising money because you don't know if it's actually going to be a deal worthwhile pursuing. And now you've got to lend him out days and now you're starting to raise money. That's where you can get yourself in a tight, tough spot, especially in today's market where Your closing is to be even more shorter. Yeah,
Brian Briscoe 40:03
I would agree. That is the one thing that the one fallacy that I hear over and over and over again, and nothing to add. They're great jobs are on.
Sterling White 40:13
Yeah. And I know there's others, but that's the biggest one that comes to mind.
Marcellus McKinley 40:18
So kind of kind of related on that, you know, what do you what do you guys kind of say is like the ratio that you're looking for in regards to, you know, raising money, do you like, you know, kind of like the wedding role, you know, like, percent of the people actually are going to show up like, how do you how do you guys typically look at that in regards to like, soft commits.
Sterling White 40:35
So we'll raise anywhere between about 15 to 20%, more soft commitments. So for doing a raise of let's say, our average raise being $1 million, is we'll get soft commitments of about 1.2 to 1.3. Because out of that, likely that 200 to $300,000, people may get cold feet, they may find another deal, whatever happens. So that's why we'll raise more than that. And it's much better. And this is one thing that we realised to be in a position to to turn people down because you don't have enough spots for them versus being in the reverse that oh, well, we wanted to get as much people in we actually lower the barrier and did raise enough because we wanted to get everyone in there. So it's better to be in the other position. Yes, you'll get some pushback from that. But it's better from your side to be in that spot.
Brian Briscoe 41:29
Yeah, I would say on your first deal, you definitely want to overcommit. You know, we've gotten better at vetting people, so to speak. I mean, I remember the first deal, the first person that I saw committed a couple of things I didn't ask him is where the where's the money coming from? All right, what I didn't know Is he was selling a house, and he was going to use the proceeds from that house, to invest in our deal. And the house sold for a lot less than he thought it would, you know, we we've also had people who say, Hey, I'm gonna use my retirement funds. And we didn't know that they did not set up a self directed retirement account yet, you know, so you got to roll that over. And, yeah, yeah. And it takes, it takes time. So I would say on the first deal, you probably want, you know, I'm gonna say 50% more in soft commits than what you're raising, just just to have that buffer, but, and then of course, there's going to be people who who just don't come through, but over the years, you know, we've gotten better at, like I said, vetting people for so when we talk to them about investing, you know, and when we tell them, hey, you need to, you're going to have to wire your money, you know, within a couple of weeks, right? Where's that money sitting right now, you know, and, you know, look, look for the things that that are gonna be like the disqualifiers. Right. So that's helped us narrow down our, our numbers between people who soft commit and people who actually commit but I say on your first deal, you know, over raise as much as you can, and on subsequent deals, you can fine tune it later. But we're closing on a property next week, you know, we we had soft commits for not including what four oaks is putting in, you know, we needed to raise 2.4 ish, we have soft commits for 3 million. And we did tell a handful people, we told them from the beginning, first come first serve, we did tell a handful of people that, Hey, you guys are too slow. be faster next time.
Sterling White 43:29
That'll happen. And then that's also one thing that when you're when you're in that spot, as Brian mentioned, that you will give them hey, we need your funds by XYZ date, or we'll just have to move on to another investor. So I would say when you're first starting out, it's okay to ask those hard questions. Because that helps you out in the long run to not put yourself in a tough spot. Yeah,
Brian Briscoe 43:51
absolutely. hard lesson learned for us when we were counting on money and then all of a sudden, it's not there. But
Sterling White 43:59
all right. And then also another lesson that I want to share with you as well for ourselves is you also have to vet the other person to whether or not they're a good fit to invest with you because let's say you're a buy and hold investor and they say well I want to get my cash in and out is what I've learned is it's best to just move on that's just not a fit because if you do have that person invest with you that's just going to be a nightmare.
Brian Briscoe 44:23
Yeah, absolutely. Well, hey, this has been an amazing conversation. I just looked at the clock and we're we're out of time. You know, I had I glanced up I think we probably could have talked for another hour here but you thank you so much to the both of you for coming on the show today. One last question for each of you and Sterling you get to go first. how can listeners learn more about the sterling white?
Sterling White 44:48
Yeah, so I've got you can follow me on Instagram Sterling white official one more time that a sterling white official and then on my company, website Sander, Investment Group, that is s o n Er investment group.com. And yeah, just go ahead and slide into the DM, which is direct message for those of you with any questions you happen to have here to help. Awesome. Hey, thanks
Brian Briscoe 45:10
lost surfing, I appreciate it. Marcella, same question for you. how can listeners learn more about you?
Marcellus McKinley 45:17
Yeah, so I think the best way to reach me right now is on social media. I think my LinkedIn is probably the best way to reach me. Just hit me up there. same name, looking forward to it.
Brian Briscoe 45:27
All right, awesome. And we're gonna put links to your websites, social media accounts, everything in the show notes. So if you're interested in talking with your Sterling or Marcellus, you know, look up their their contact information in the show notes, and reach out to them. All right, that said, once again, thank you so so much. And that's a wrap.
Thank you for listening to the direction apartment investor podcast today brought to you by four oaks capital. If you'd like to know more about how to invest in apartment buildings or want to be a guest on our show, visit our website at four oaks capital comm slash podcast or email us directly. If you're still listening, you obviously like the show. So pull out your phone, app, subscribe, and leave us a five star rating on your favourite podcast app. And we'll see you again next week.
Transcribed by https://otter.ai