Whitney Hutten – Real Estate Investor, Founder, Consultant, Mentor, at Ash Wealth based in the Denver, Colorado Area, talks to Neil Henderson and Brittany Henderson, the hosts of The Road to Family Freedom podcast. Whitney got her start in real estate with turnkey properties investing. Now she is a partner in over $250 million in real estate investments, from single-family homes and mobile home parks to multi-family assisted living and self-storage. Founder at Ash Wealth, Whitney Hutton also teaches others to achieve financial independence through her coaching program.

Post-Interview Analysis

• Key Lessons Learned: Have more than one property manager. You never know when your current property manager is going to stop being effective. It seems to happen to most of them.
• How did they acquire their knowledge or what knowledge did they need to acquire? Whitney Hutton figured out real estate mostly from actually doing it. Dealing with lenders and property managers were key skills she learned.
• How much money did it take to get started? She was able to borrow the financing and turn the equity into more money. Whitney put 20% down on 10 turnkey properties the first year with a 55% return.
• How much time does it take now? Whitney still works a part-time job along with taking care of the real estate investments, which probably adds up to a full-time workweek in total.
• Could they do this strategy from anywhere in the world? She can do it from anywhere in the world.

What you’ll learn about in this episode

• What was the ‘a-ha’ moment that got Whitney Hutten involved in real estate? 
• What were the numbers like on her first house hack? 
• What went wrong on Whitney’s second house?  
• How soon did Whitney purchase a rental condo? 
• Whitney discusses commercial lending. 
• What was involved in the growth Whitney achieved 10 properties in her first year? 
• Whitney’s core turnkey markets have been Indianapolis and Kansas City. 
• How did she go about building her team on the ground? 
• Whitney explains the syndication deal structures.  
• What things did Whitney need to learn that she didn’t know when she was getting started?  
• What can clients expect to learn in Whitney’s coaching program?  
• Which sort of systems does Whitney utilize?  
• They discuss the importance of having multiple property managers for scale.

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Connect with Guest:

• Website: Ashwealth.com
• LinkedIn: Whitney Hutten

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I mean, I've been in retail, you know, management for years. That's like, okay, the tenants aren't happy, they're my customer, I got a problem. So who am I gonna hold accountable the property manager and when I tried to partner with the property manager at first and they had acquired so many assets so quickly that they just they didn't have they didn't have the support staff to be able to take care of me and I went from being a you a good relationship for them to being just kind of a number and a cue.

I'm Neil and I'm Brittany,

Neil Henderson 0:34

we are a family on a journey towards financial and location independence. Each week, we interview successful real estate entrepreneurs about their chosen investment strategy, and rate it based on how much money it took to get started, how long it took to educate themselves, how passive it is, and whether or not they could do it from anywhere in the world.

Welcome to the road to family freedom. If you like our show, the easiest way for you to give back is to leave us a rating and review on iTunes head on over to rode family freedom comm slash review for links and instructions on how to do that we would be so grateful. All right, and that thought of us Let's hit the road to family freedom.

Before we get to this week's show, I'd like to make you an offer. You can video chat with me if you like. It's something people do with me all the time and it's completely free every Wednesday evening. This is a free strategy session done over video chat, anything and everything you want to talk about in regards to real estate investing. There's no sales call here. There's no ulterior motive, I'm not going to pitch you on mentoring program. This is really just a way for you and I to connect. I talk to real estate investors all the time at Ria meetings, but there are only so many meetings I can attend having a family and a full time job. And I prefer the one on one connections anyway, doesn't matter if you're brand new investor just starting out or an experienced investor. I can act as a sounding board on a deal you're looking at or maybe just answer some questions you have about real estate investing, head on over to rode to family freedom comm slash connect and fill out the form there to schedule a call. I look forward to speaking with you. Greetings, friends and families on Neil named Brittany, you're listening to the road to family freedom podcast. Our guest this week got her start in real estate investing using turnkey properties. She then transitioned into bur investing, which she still does now. And now as a partner in over $240 million with real estate from single family homes to mobile home parks, multifamily assisted living and self storage. She's the founder of ash wealth and also teaches others to achieve financial independence through her coaching program. What do you haven't Welcome to the road to family

freedom you having me on?

It's a pleasure. We have not had enough parents on we've had to do something. Nothing against you single people. But it is called the road to family freedom.

So it's nice to have people on that have the actual experience because most of the time we have to sort of apply to families at the end of the podcast. It's always good to have someone that's already experiencing

Yeah, it's a whole other element.

All right, well, let's get right into it. Do you recall an aha moment for when you decided to pursue real estate?

Well, Sue, my foray into real estate actually started in 2002. And it was an accidental house hack. I had purchased a single family property with a significant other and bought a month after closing the relationship fell through and here I had a house a mortgage. And the house needed a huge rehab on it. And I hadn't I was like, What am I gonna do so I, you know, put a bunch of roommates in there. And people who are fortunately we're done pretty, pretty okay with living in a construction zone and then about a squirt. 11 months later, I hadn't paid for rent. I was pocketing cash every single month. And then I was able to force equity on the property and sell it for $52,000 more so. And then it was just like, it just totally opened my eyes wasn't so lucky on my second deal. But you know, I took an incredible amount of lumps in that second deal. But fast forward a few years later. I mean, I felt pretty comfortable in you know, when we hit you know, in 2016. There's a lot of turmoil going on politically. And we just really, really realized that my husband's pension plan was just at like, kind of the winds of like, whatever political party would be in office, it didn't matter who and so we were just like, you know what, we have to take matters into our own hands. I said, let's go back into real estate. And of course, my husband was like, do you remember the time? That money that you made on the first deal? I'm like, I do and I think I can do it better. So you know Anyways, he had a lot of faith in me. And then we purchased our first rental here in Colorado, and then realized he had invested entirely wrong for what our goals were. Unfortunately, real estate, somewhat, even though it's illiquid is very forgiving and you can kind of reposition assets in order to fast forward your your, you know, perpetuate yourself down your,

your path. Did you that first house hack? What What were the numbers like that you bought that you bought as a personal residence? Correct.

I bought it for $271,000 put about $1,000 into it, and then sold it 11 months later for 229, somewhere like that. Yep. And the cool thing about it, or the not so cool thing about it, depending on how you view the lending at that time, was that I didn't put any of my own money into it. So

that's great. So you were able to, because it was 2002, the width of wild west? You know, people were able to get in for a lot less. And it turned out well for you. Some people did not turn out well for obviously.

Exactly, yeah. So I borrowed some $1,000 from a family member. And then three weeks later, I was able to take out a HELOC to get to 103% financing in crazy times. And then in here, I had a house. You know, you know, for me, though, I did, I did generally understand what I was doing at that point in time. And I knew that I had a house that was undervalued. I mean, I had no idea. So the term paper wasn't even coined back then that I knew. And I had a realtor too that was very knowledgeable with doing these sorts of things that he had been, you know, purchasing rentals in Fort Collins Colorado for 20 years. So he was like, don't worry about it. You get set out by this thing from you tomorrow and you want to Gloucester dial that I felt pretty comfortable in its

house hacking every person I talk to if their tongue I really don't know how to get started in real estate or I want to buy into the market right and buy my first house but I don't really you know, the markets so hot right now, like buy a house hack for the love of God, you know,

somebody else's. It's just but I love my renters.

You know, we have a friend of mine, Spencer here in in town is a young kid, hard charging, and he's got like a seven bedroom house. And he rents out too. He furnished is it is he furnished is the rooms and he rents it out to long term renters. And so he has six roommates, and but they pay his mortgage plus cash flow. And you know, and his young so you can do it now, you know, obviously, we wouldn't be able to do it as somebody with a family. But if you live somewhere where there's duplexes and triplexes and for plexes just an amazing way to get in, you can get in for the residential, very favorable residential loans. And we've covered this before.

There's some great benefits, but people don't want to deal with it a lot of times.

They're last. So what went wrong on that second house?

Well, you know, there's such things as immutable laws of real estate, one of them being location, location, location, I purchased a mountain home at 8000 feet, I had 19 steps from the driveway to the deck. It wasn't easy for somebody, you know, young like me, it was awesome. But when I realized I had actually, you know, the the amount of time that I purchased in Estes Park is at the time and I still think it is now heavily a second home market. So the my clientele when I went to resell were older, older people and you know, half of them, they would get to you know, they parked in the driveway, and they're at 8100 feet. So they're out of breath already. And then they get halfway through the steps are like know that for a second, I'm not gonna do it. You know, not only that, like the safety in the wintertime that somebody was in the live year round. So it really took me it was two bedroom, one bath. So I just hadn't purchased an asset that I knew that I could get out of pretty pretty readily, because then I had legal issues with that, because whenever I finally found a buyer, we were going through the sales process and inspection fees, the buyer, the inspector flags, the back retaining wall on the home, and it was compromised. And so the seller wanted me to replace it. And it was like just give my name and remove her school that like she had a buddy of hers living in school bus and like nothing happened to the one to that school bus Shut up. Well, I signed an attendance saying that I would only bring 6000 to closing so I locked everybody into the deal. And of course I was kicking and screaming my realtor, you know, very smart. The wall ended up costing about $27,000. By the time it was all said and done. I mean the buyer had used the most expensive contractor any anyway, fast forward, this bomb proof wall that's now behind the house just a matter of like a couple days after closing my neighbor bus back into position the bus balance to the roof of the house anyways that's the in this is where my husband you know says remember that house and we I was getting calls. The call came on a Saturday afternoon we're laying on the couch it was rainy drizzly, we're cuddled up, like watching a movie, and I get a call. And when you pick up the phone, you just hear all this siren going off in the background. And then lo and behold, it's my realtor. I'm like, Wait a second, what happened? Anyway, so I was sweating bullets for a couple days until I realized that I actually had no, my liability and that situation had ended. And anyways, so I took a path

towards that.

We dodged that. Well, I mean, we everything was aboveboard and legal. So there was no shortcutting, you know, here is just that that onus on the construction didn't fall on me, it fell on the buyer to work that out directly with the contractor that he had hired. So anyways, fast forward, I, you know, you know, a few months, I was like, hey, let's go buy a house. We purchased a condo here in town, I was like, Okay, I'm gonna have to break him in when I have to wear him down. So you purchase a condo here in town? And of course, right? When we get it all fixed up, I really do it comes over and does, you know, it's 2008 Well, I shouldn't say it was 2008. But you know, it's right about that time housing prices, was the lowest that was ever going to get in Boulder for us to get into a house. And she says, You know, I could sell this condo for, you know, 30 grand more than we get paid for it. Like, let's go buy a house.

You flipped the condo,

we flip the condo into a house. I mean, this time, we bought the house with the intention of converting it into a rental. So we really, you know, worked with our realtor who understood the market in Boulder really took very, you know, even though we might have wanted, like the big basement or you know, larger backyard and all these different things, you know, going in with the intention of knowing what we were going to do with the house afterwards. Now, fast forward, we're here we're still in this house. The market kind of ran away on us. But even then, I mean, it's still wonderful for us because you know, with the market growing we and rents escalating here in Boulder we pay less to live in our house than if we had to go rent now.

One of the I know the whole the whole Denver boulder market has just gone nuts in San Francisco level. But it's it's definitely gotten hot. And so

yeah, we have a huge influx of California money right now.

So same here in Las Vegas.

So

I have to pick up

that you

five year old. So that wasn't so 2002 was the first house. And then how soon after that first house, did you buy the bus house?

Oh, immediately I take that I take all that money I made on the first class and I put it into the second voucher.

And then how soon after that, did you buy the condo.

And we paused for about a year, year and a half to actually enter into the condo and then the condo to our second. And then we've been in this house. We actually today at 10 years, but I think it took us about seven years it was until you know from 2006 years 2010 to 2016 until we bought our first intentional gunshot went outside of our primary so this

one was the fourth house that you bought intending it to be a rental sort of but then it turned into your primary residence.

Yeah, we just it we love We fell in love with the location. It's right next to her daughter's school. And, you know, again, I we got we nailed it right location, location, location, pay somebody else around, you know what we can send our own rental. But it's a nice, it's a nice little nest egg for us because it really played into us being able to grow our portfolio with the grow the amount of equity we were able to put into it as a down payment. And then you know, just like the natural, like market growth that we experienced when we start getting into you know, picking up our turnkeys That was a nice asset for us to have to be able to leverage again so

So talk to me about that because that's that's a strategy you know, we have a HELOC. We have substantial equity in our house and, you know, it's, I'm, I know people who've used he locks and things to buy turnkeys but talk to us about that process talk to us about what you did.

Well, so we actually held on to our second keylock out on the property it initially is kind of a failsafe for us, like, we had a pot of savings that we were going to continue to invest in, in in rental real estate. But, you know, say we got out to six homes, which that's what we were projecting we could get to before we had to go find more capital, we could do that. And then say, like, there was a major repair that we needed to do on one of the rentals, we could pull the money from our HELOC and then use the cash flow to pay it down. So but as we neared the end of 2017, you know, we had six properties under contract with our excuse me, we had six properties that we had closed on, we had another four under contract, like for the last two months. So we were really kind of staring down at having to figure out a way to actually leverage the hill lock to continue to grow. And that's actually when I was let go from my job. I mean, part of this whole impetus was, we needed to create future equity growth for to, you know, as a pension kind of replacement for my husband's pension plan. And then also cash flow now, because I didn't my job had an expiration date on it, we knew that I was going to get let go at some point in time, we just didn't know when. So that eventually happened. And then I was very sad when you like stay and let go. I mean, you could delay on, you know, and not only that had two properties under contract and my name at that point in time. And so I called my lender and he said, No, I can't lend to you. So I cried for a couple hours. And then it dawned on me like wait a second, my husband can buy a house. I called him back. And by the end of that day, I mean, I was like go by like 9am. And by the end of the day, we had everything moved over to my Aspen lending was under process, you know, and then we it only delayed closing in a couple days. And but we were able to kind of problem solver way through that. But my husband said, Okay, once we get these two properties closed, what are we going to do, we still have the capital issue, and now you don't have a job, a W two to be able to get additional loans. I'm like, but I got my 401k back. So we have been slacking away. You know, we had really in this time, we've been learning a lot about how money works. And we'd really gone down the path of being able to max out our pension or retirement plans. So we had a good chunk of capital built up there. Okay, boys, so

you had six properties closed on the owned, you had two that were under contract when you were let go from your job, and you transfer those over to your husband. So now you've got eight, correct. And those six those six properties? How did you finance those first six properties? Were they just conventional, Fannie, Freddie 20%, down 25% down?

Actually, we did 20% down, we worked through and worked with a broker in order to use 20% down. And that's always been kind of interesting to me. And how some lenders, you know, you know, I don't know exactly what the parameters were, but you could take two different people. And one lender would say, Nope, you're at 20%. And no, you're at 25. So we just we can we, you know, when we were shopping around our lending process, we're finding the same thing, getting told the same story. So we finally settled on working with a mortgage broker who could get us leveraged at 20. Gotcha. And make your capital go further. And were

you were those financed under strictly your name those first six months? Or the first is yes. And then so you know, the Fannie Freddie limit is 10 per individual, is that kind of what you're doing is sort of trying to, to separate that so that you can have 10 and your husband can have 10?

Oh, yeah, we'd like Fannie Mae and Freddie Mac are, you know, if there were people, I haven't seen it, what they've been able to do for us. But we actually can only pick up nine in each of our names, because we own our primary together so that that kind of against against each other. So had a new dads. I probably would have, I mean, it's one more property but and now I know how to get into commercial lending, which really just sounds scary, but it's not that much different. I actually find it easier than conventional lending, but the rates are so attractive right now, to put 20% down instead of 25%. You know, I would, personally I would leverage the conventional stats as much as I could. And that's sort of where we're at right now. And

we actually interviewed a guy by the name of Chris from the stealthy, rich calm who has like 52 single family homes in Houston, and only one of them has been bought by Fannie Freddie with the restaurant, every one of them are portfolio loans. And you know, his explanation for it is low. You know, getting a Fannie and Freddie loan is like getting a colonoscopy and a tax audit at the same time where the portfolio lenders, the rates are not as great and the terms are not as great, but you walk in and they go, Okay, show us what you got. Okay, you walk out that afternoon you get a loan. But it's definitely I think, somebody if you can, you can go the Fannie and Freddie route, use those, you know, Britney are buying some homes right now. And we're, I'm trying to keep it all those initial loans all on my income, and she's Her name's not on a loan at all. And then, when we're ready, we're gonna start transitioning getting some loans on hers, and then we'll go from there, we'll figure it out.

Yeah, I mean, I would totally agree with what you know, Christopher theme is, here's the difference, you know, the feedback on that you want to you're getting conventional lending, they're underwriting you personally, when you're getting a commercial or portfolio loan, generally, they're underwriting the asset. Yeah, can the asset perform? And you know, you're purchasing through an LLC, so they don't actually, you know, the how they foreclose is a little quicker and easier for them, if they need to take back the asset. So but I mean, I still have not found a commercial lender or a portfolio lender that won't make you sign a like factoid carve out as I call it, our personal guarantee.

So you ended up with 10. That first year, is that correct?

Yes, we close out the year at 10. And I, you know, my husband thinking that I was completely nuts. He was like, What are you going to do with your 401k? I'm like, go buy a house. And actually, you're gonna go back. Check that, but not me. But yeah, you know, that was it was such a mindset shift for us, that first year of it just growing, just understanding how you can, you know, even using turnkey in the MLS, just how you can generate cash flow for yourself, generate equity, like we could we could see that vision. That's so hard, I think in our culture today. I mean, there's I mean, people are very attached to the W two job. And it's a again, it's the golden handcuffs. But that was just a huge eye opening experience for us. But then we were like, Okay, great. Like, what do we do when we get another 10? Like, how are we going to continue growing and scaling. And that's when we really dawned on us after getting those first 10 in the first year is that we actually had to figure out a way to do the rehab method. Use the bur method. Gotcha. So we can so we could scale

Well, for move on to the borough because I want to hear about those. The markets. But I think I've heard you say you and your turnkey markets were sort of Kansas City and Indianapolis, is that correct? Yes. Yeah. And the those you've had great, you've had no complaints. They're cash flowing, happy with the property managers and things like that.

Interesting. So this is another realization for us, you know, especially picking up turnkey, you know, just to dispel it turnkey is not a passive investment. You know, it makes it easier for you to enter the market. But yeah. So when we got into Indianapolis, that was the first market where we're in cashflow, and very well, we had a B plus to a minus assets, I mean, in great markets, appreciating very well, actually, we, after two years of owning them, we've been able to get a 55% average return on all those assets are repositioning them right now. And that's just on the appreciation, not factoring and cash flow and, you know, tenant paid on everything like that. So are you know, we're all shooting. So, anyways, we hit issue with the property manager, we were very satisfied with them when the turnkey provider placed us with the property manager who was a vertically integrated process. But then they got bought out, that was something that we couldn't control. And we, we went through the acquisition process, and it was fine for us. It was smooth, we didn't really know any different until things started happening. Our you know, Brent was getting paid later and later and later on a couple of our properties. We could tell that, you know, through watching the maintenance tickets in the portals that tenants weren't happy things weren't getting repaired. And this is really where my, you know, business owner mindset kicked in. I was like, Okay, I mean, I've been in retail, you know, management for years. I was like, okay, the tenants aren't happy, they're my customer. I got a problem. So who am I gonna hold accountable the property manager, and when I tried to partner with the property manager at first and they had acquired so many assets, so quickly that they just they didn't have they didn't have the support staff to be able to take care of me and I went from a been a good relationship for them to be in just kind of a number and IQ. And anyways, we fired them. You know, we worked with them, we tried it, we tried, we gave it a couple months, things weren't working. And that's it was nerve wracking to do that from a distance. But I'm like, Hey, if you're not, if this person was an employee, in my company, giving this type of performance, I would fire them. Yeah. So we did we fire them. And we move property managers. And we were, you know, on the second property manager, we've been very, very thankful for how they've taken care of our tenants and stayed on top of repairs and construction. So, yes,

we interviewed Allie Boone on episode. Sorry, Episode 24, and has been released at this time, but it will be by the time yours comes out. And she talked a lot about turnkey operators start off great, they're new in a market, they're growing, they're growing, they're growing. And they at some point, the property management side of it just goes crazy. And it's mostly because as you just alluded to the scale, they don't know how to scale. And they get to a point where the customer service is great when they're dealing with 50 properties. But when they're suddenly dealing with 250 properties, now the systems start to break down that they didn't, you know, put in place. So I always tell people look for property manager you have now that's great. If you love it, oh my god, I love my property managers so much taught, like constantly getting constantly have them in the back pocket, because you never know when they're just gonna go cuckoo for cocoa.

You know, and that's, you know, I work in a in the startup, you know, tech startup industry now. And, you know, with that hyper scaling, that, that that growth trajectory, I mean, just trying to manage the business there. I mean, our systems are breaking down every six months, because we're doubling, do you imagine for property manager, we're doing that they're definitely in from 10, to 2020, to 4040? To 80? You know, and, and that's just a modest growth of doubling, you know, the, yeah, we actually, you know, we're actually going through your property management change here in Kansas City, because our, the person, the property manager that I've been working with, and has helped me scale my portfolio in Kansas City, he's, he's looking at his business. And he's, you know, making a very intelligent decision on where his genius is. It's not the property management side, he's like, looking at it. He goes, You know what, there's other property managers here that have better systems than I do. So he's like, moving off the property management. So he can, you know, stay on the deal acquisition side, the construction side. So everybody has their zone of genius, a very aware property manager.

I'm aware.

It the horror stories that we've heard, it's funny, because it seems like a lot of, and I'm sure it's with anybody who expands too quickly, they sort of lose that self awareness. And in the like, oh, we're growing, we're growing. It's amazing. And then turns on them. And I can turn so quickly.

You moved on to the bur method? Are you still investing long distance? Are you doing those closer to home?

No, we're doing everything in a distance primarily because we have not seen how we can? Well, first of all, it just doesn't make sense with the capital that we have to put in a property here in Colorado. It would make sense if we can make the returns cash on cash returns. But when we had our property here in Colorado, we were so excited to be in the market. We're so excited that we found it and it was such an amazing deal. Then it was like wait a second, we're only making we put all this cash into it. And we're only making $400 a month. Like we can't we can't scale that. But yeah, so it makes we could take that same equity and turn it into about 1200 to 14 $100 outside of Colorado. So what market are you guys investing in for bur primarily Kansas City in Indianapolis?

So you've already got the you already have sort of the boots on the ground? It's markets you're familiar with and and their cash flow markets. It's great. So

it a little a little sweet spot of appreciation out of book.

They're not straight, just cash flow markets, they've they've also got some appreciation. That's great. How did you go about building your team on the grounder? Because for the bird now you're talking 19, the dreaded contractor and a deal act with someone to help you with deal acquisition. So probably a realtor or a wholesaler of some sort. How did you go about building that team?

Well, funny in both markets, we started off with turn keying. And so the the path is a little different in each market. But in Kansas City, we picked up three turnkeys with this particular provider, and we get to the end of the 2016 and I'm like you know what, I'm just gonna ask if he would walk us through a construction. You know, maybe he's got enough deal flow that he can't take it all down. And then you know, he'll kind of like throw us a bone. And then, you know, walk us through how to do this. And we can learn, he said, sure you pay me and property management fee, or excuse me project management fee, I'll do the whole thing for you. And I'm like, what, and we under just under that into the numbers of the deal. So we were leveraging visibility to find deals through other wholesalers, you know, scouring the market, you need to market really well. And we were leveraging his contractors. And then, of course, he was getting paid multiple ways he was getting paid on the purchase of the home project management fee, we've placed the you know, with property management, and so he got the project, or excuse me, the property management fee. And then if we decided to flip it out, he also got the Commission on the sale. So that's how we entered in Kansas City. Now we've, through that experience, we've made contacts with other construction crews, we continue to build our team, because as we were scaling there, we couldn't, the contractor can only do one job at a time. So we needed to bring on more team more contractors in order to do other projects. Because last year, we're with you, we were doing two or three deals at a time. And then in Indianapolis, when we moved, you know, move to our new property manager, they actually have an in house ability to handle either very heavy, maybe like a 5000, or a 10,000 just kind of cosmetic makeover on a house. Or they would contract out to one of their contractors in order to do larger projects. And again, they got a property management fee from that tunes for our project may

be one of the you know, it's always people always say, Well, you know, how do you find good contractors and, you know, come occasionally hear somebody say, Well, you know, ask other real estate investors, I'm like, No, don't ask other real estate investors, because they're not gonna make any changes or good ones. So, talk to either realtors or property managers, because they want your business and they're going to give you the people who they've worked with that are that are good. And so that's, you know, that's always the it's so funny to be with them. Oh, just ask other real estate. Yeah, you're gonna get their, their C level guy that that, you know, they don't like working with so. So what how many properties like you've done you had 10 turnkeys? Is that correct? Yes. Okay, and then how many birds have you done?

10 turnkeys MLS properties and we've done a 10 verse. Wow, actually, we've done more person that we are holding 10 pairs right now holding 10 burrs, and they're all they all have 11 or 12.

Then you've all you've right refinanced out of all of them. We've refinance or sold, you put you put long term loans on them or Yes, gotcha,

gotcha. 3030 year debt are we flipped to another investor. Gotcha. So,

yeah, this good. Talk to us about your transition to syndications.

Yeah. So that our goal for our first year of real estate, I didn't get to tell you what our goals were, it was just one of the first year to the second year three, the third year, you know, just pick an easy, steady path.

Yeah, instead you bought 10

You know, every time you you know, hit a plateau, we had to figure out a new person or system in order to break through that plateau. So this entire time, I am building cashflow to get to supplant my income. I sat down with my husband last November of almost a year ago and I said hey, guess what I have got my income plus replaced I'm good like, you know, you know, is there a way that I can start you know, at least reducing my hours transitioning out of my job? He goes fine with that too. I smiled I'm like yeah, that's great. Do this three more times. You know, big big breath in I was like, Okay, well, we could we had a few ways of doing it. We could do 20 more burgers, we could try to figure out a way to get more capital partner and pick up just more house houses cash for purchase or we take down a multifamily and it just you spend six months the scale. So we in this time and actually started I you know, again, you know my evolution of money started moving my you know, retirement funds into self directed environment. I invested in newts and a couple other you know, I started dabbling in syndications. We can argue all day, whether you should put a syndication in your retirement account or not, but it got me thinking like, Okay, great, I can start trying to figure out a way to purchase the multifamily unit. And the deeper I got into trying to build my team, I'm like, I have a soft landing. I gotta solve the market. I got to solve the realtor. And then I you know, it's easier to get into single family I feel like because, you know, everybody needs to buy a house or can buy a house like there's really no you don't have to have much experience but you start getting into multifamily. Everybody wants to understand what you're experiences. And I could use my single family experience for that. But not for the size a unit that I wanted to take down. Yeah. So now I needed a key partner, I needed all these different things. And then I'm like, Wait a second, what if I just didn't we take some of this equity and reposition it out of our single family portfolio and go in as an LP. Okay, so that's, you know, we kind of wrestled between being trying to figure out all the puzzle pieces and being on the GP or just like continuing to invest as a limited partner in a syndication deal. And so that's the that's the path we took. And I felt since taking that path at the beginning, we are built several different relationships with different operators, and have now grown into the ability to provide value on the general partnership. Gotcha.

So for our listeners who don't know much about syndications, can you describe what you mean by LP GP and things like that?

Sure. So as syndication, we can start with that definition, a group of people that go and buy a building or an asset, that's what it is, syndication means group. So when you are looking at the actual deal structure, though, there's usually a the active part, the team that's actually going to go by it, they're considered the general partnership. And then the limited partners are the people that are bringing the equity to the deal to get a slice of the pie. So their responsibility ends at the time that the investment actually closes and goes under operational management with a general partnership.

Gotcha. And with a syndication, typically, you're being paid cash flow, a yearly cash flow based on your investment, and then there's also a planned equity bump at the end when, when they sell or refinance the property.

Yeah, so think of it in terms, if you're doing a bur strategy, you're buying a house under valued. And when that's what I focus on is a value add type property, we're buying an apartment undervalued, we're gonna through some way, like either a rehab or repositioning the unit somehow increasing rents, we're going to increase the cash flow there to where we can pay investors. And then the cool thing about multifamily it's not, when you go to sell a multifamily unit, the value of the unit isn't determined on what the market says it's determined on what your operational cash flow is. So if you can push However, you can, you know, your net operating income, however high you can push that will determine, you know, the actual value of the property. And then hopefully, through raising rents and doing rehabs and, you know, other value add, you know, projects, you can actually push the value higher, and then everybody, you know, say like you, you push the value by $10 million, then that gets divvied up amongst the general partnership in the limited partners. It's so powerful because it's, you know, it's again, like you said, it's not based on comparative market analysis, it's not, you know, whether or not the house next door has a pool, it's based strictly on the income. And when you push that cash flow, when you when you increase the net operating income, you're a you're increasing the cash flow, which is putting more money into the pockets of the limited partners and the general partners, but you're also increasing the overall value of the property. So

when you go to refinance, or you go to sell, you've you've increased the value of the property now it's I love I love commercial real estate. So yeah, how do you go about because you are you've invested in a lot of them. you've invested in mobile, home parks, self storage, assisted living facilities, and large multifamily, correct? Yes. So how did you go about because they're not it's not like they are advertising them on bigger pockets? I mean, there's a few but in general, they're not. There's not some big ad that says, hey, come invest in our synchronous sec rules.

That's illegal.

If you see an ad, we got a really quick, actually, you can advertise, you know, depending on which section of the, you know, 506 code, you can advertise to investors, but generally No, and even that's questionable right now, that is purely through building the network. I really, so I just really sought out people that were educated in that space. It was interesting to me, and you know, just got to know them and just networks. And the cool thing about the, you know, the syndication community, they all know each other. So they're, you know, if somebody doesn't have a deal, right, then they're going to be known if they can solve your problems. So they might refer you to a different syndicator. Yeah. Sometimes they raise money for each other. So it's just really getting to know you know, to know that whole network.

That's cool. So what are the benefits? diversifying, I mean, because you've got stuff in so many different types of syndications. Yeah. So they're

known as an uncorrelated assets or real estate. So I think my initial thought was and you know, you can argue this strategy all day long is breaking up my real estate investments into different uncorrelated assets in real estate just to kind of provide a base. So, if multifamily went down, maybe Self Storage goes up, because you know, maybe there's a market correction and people have to move down to, you know, a lower class and to take a step down in the class of property they're living in which means they downsize so they have to their belongings and self storage, you know, mobile home parks, it's a tote there. It's a totally different clientele than multifamily assisted living entirely different clientele, and age group than multifamily. So again, those are just words, I was looking at uncorrelated assets in order to kind of diversify you want to use that word. Okay.

Yeah. And then your these are, I assume, are just kind of in multi multiple different markets, like location wise as well. Depending on Yeah, the cool

thing about syndication is that you can you're leveraging everything you're legit leveraging leveraging other people's network, other people's credit in order to get the loan other people's time in order to run the asset, other people's knowledge because they can do it better than you. So it's really the ultimate leverage. You don't have to be an expert in everything. You do need to be able to underwrite the sponsor, or the operator and the deal. Like, you know, I know people who get into syndications and don't do those things. And then, you know, to me, that's very dangerous. But those are the two things that you do need to educate yourself on and be able to do is underwrite the sponsor in the deal. It's not a mutual fund.

It's, you know,

yeah, it's illiquid, you can get your money back until it's repositioned. Yeah. So and they do go sideways, you know,

yes. Have you had any go sideways on you?

Yeah, I've actually had one go sideways on me. And, you know, again, I had underwritten the sponsor, you know, I felt very thoroughly in the asset. The hiccup came when the leasing agent laughed the wrong time a year. And so the sponsorship team, that wasn't an issue that they had dealt with before. And they were like, Oh, we always need to have like a backup redundancy system. So that was a huge learning lesson for them. The cool thing, at least with the operators that I'm familiar with, is, you know, they really looked to add a way to make investors whole, you may not be in that particular quarter, but over time. So you know, that is something if you're building your cash flow office syndications, and then there are risk that you have to be able to to weather and it would be the same thing, if you were investing in single family, you know, your tenant vacates either at predictably at the end of the lease, or they get another job, like you have to have reserves in order to to weather those storms.

When you were I want to sort of circle back to your original investments in like turnkey. When you're starting off there, what kind of things did you need to learn that you didn't already know when you were getting started?

I mean, up until that point in time, we knew how to work with a realtor to buy a property and to work with the lender and work with the title company in order to get it closed. We had no, we've managed our properties, either I've been managing house tax, or we manage it personally manage our property here in Colorado. So we had no idea how to work with property management. We didn't know what were their role began and where ours, their role ended and ours began, we did you know, with that dynamic, so I brought in my experience of business management. I was like, Okay, I'm gonna I'm not an employee. And that was a huge learning experience for me, because the property managers in a unique position that they have to keep the end customer happy, which is the tenant, and then also me happy because I'm a customer too. And I don't envy their position. Well, it's, it's really an art, you know, a good, you know, finding a good property manager. I mean, if you do have one, hang on to them, because it's really an art also trusting in their systems. I had to be able to ask the right questions when it was getting them to really get a thorough understanding of how they operated, what their systems were. And then I would take it one step further. I mean, the the blogs that I see on how to vet a property manager, I feel like don't really dive in well enough on how to put them in a roleplay situation and challenge them on how they're going to deal with certain situations. So you can go in and you can ask a property manager, if you ever dealt with an eviction? Yes. How are you going to deal with the eviction You know, when this happens, what is the communication to the tenant? What is the community communication to me? What are the next steps? Are you going to do with my direction without my direction? So, you know, understanding those type of challenging situations was something I had to learn how to handle too, because I don't know how to ask the right questions. And those are other things that help you mitigate particular downside of it, you know, asset management.

Gotcha. Now that nowadays, what does the day in the life of a multiple asset investor really, and you have a full time job still correct? Or have you been able to escape your job,

I'm definitely escapes. I've actually, so my, my goal this year was to transition into you know, what they the status of a real estate professional. So I've backed off my hours and my full time job, I'm still there on a part time consultancy basis. And, you know, currently, I work as an investor relations manager for a syndication group. So that is part of my income there. And then I also manage my own assets. And then I have my training company as well.

Gotcha. Awesome. Well, talk to us about your coaching program.

Yes, yeah, I work with the new people that are good starting off in real estate that are, you know, wanting to scale portfolios, either with turnkey or even better bur investing. And I help them set up their initial strategy. And systems in order to get either into the first property or five and beyond. That's awesome.

What kind of systems do you use for yourself, or for the people who are using your coaching program that that need those in place?

Sure. So this is really where I tried to get people out of the shiny object syndrome, you know, because there's so many different solutions on the market, and apps and plugins and whatever. So but really, honestly, when you're first starting out a simple spreadsheet, and understanding which numbers you really, truly need to track, in leverage, you need a pool in order to get the most returns out your portfolio. So I started with spreadsheets, there are apps that I embedded that I really like. And so I hope I will plug in an app every now and then. And then, you know, learning how to set up a team. So that's also vetting the team, but getting a very strong team in place. That's a huge system as well. And then after that, is having your checklist like a checklist is a system? Yeah. So just keep it is super simple as possible. I'm going to talk to people all the time that are looking to either work with me, or just like, you know, understand that, yeah, how they can get into real estate in general. And they're looking to get an LLC and start talking to lenders. And I'm like, what market? Yeah, they're like, I don't know yet. I'm like, well, don't open an LLC. Yeah. Don't talk to lenders, like don't get your blood drawn and your DNA checked from a conventional lender yet, because we don't maybe they don't find in that market. We don't know. Yeah, they're really just trying to put the dominoes in the right order for people. Yeah, pick the market first, and then start building the team there. And yeah, it's it's even your investment strategy. Like, what is it that you want? Do you want cash flow? Do you want a paycheck at the end? Like, how much time are you willing to put into this? You know, if you don't have time to shine, don't flip. Yeah. That's a job. Yep.

And don't don't wholesale either. Exactly. So many people, you know, you got to begin with the end in mind, what do you want your life to look like, once this is up and running? You know, and right now, there's a lot of people trying to get into multifamily syndication, things like that. And you you've experienced that. There's a lot of moving parts to that. It's not a part time job.

Yeah.

And nor is it a sole a sole proprietor job. It's a team, it's a team sport, I don't know, I can't think of a single syndicator that doesn't have at least one partner. You know, you're not you don't wanna be doing it yourself. And so, you know, if you if you, you know, head off, I got a full time job, and I'm going to start, you know, syndicating, you know, multifamily properties. Now, the only person I've known that has taken down a large apartment community while they had a full time job was Joe fairless. And he did it on one, and then he quit his job, and to focus on to focus on that. And, and he was, I think he was fortunate. And then and then he very quickly found a partner and and that's how they how they've scaled So

yeah, I mean, it would be a red flag. For me it was somebody was trying to manage all the pieces on their own, because we each have our zone of genius. I mean, it would be hard for me to understand that one person can be an amazing asset manager, acquisition manager, capital raiser investor relations manager like all rolled into one like You are awesome. But there's an area that you enjoy more, let's match it with your zone of genius and just like plug you in there and build out your team.

Well, Whitney, thank you so much for sharing with us today. If any of our listeners want to get to know more about you, what's the best way that they can reach out to you?

Sure. Yeah,

you can visit my website ash wealth.com. Or you can email me directly at ash wealth. co.com.

Gotcha. All right. Well, listen, thanks so much for being part of our show today.

It was really great talking to you. Thank you.

Yeah, thank you so much.

That was Whitney Hutton, from ash wealth calm. Check her out there. Also check out BMC you can get a strategy session from her and ash wealth calm, it's great talking to

her. Yeah, it was awesome. So Alright, so what was your key lesson learned from? Today,

I would say that you got to have more than one property manager in your pocket, when you're, when you're having someone manage your properties for you, you know, every property manager is, you know, we have talked about on previous episodes, they're not always the best at scale, like once they sort of hit a certain number of properties, a lot of property managers start to go a little bit crazy. It's a really tough job. So even if you've got the best product, I've got the best property manager in the world always go out and network with other property managers and start asking rounds, you've got somebody else in your back pocket in case that person starts to go downhill. Yeah.

I mean, on top of that, it's really good to have multiple people for just about any job. I mean, even with the apartment syndication that she was in that she said kind of wasn't doing well, it was because they lost a leasing manager kind of the wrong time of year, and they didn't have that backup situation. So you know, having a backup for really important jobs is good, especially in this kind of situation. fast moving, you always need someone it's not something that you can wait on. So it's, it's good to have

that. And how, what was the knowledge that she needed to?

Have she needed require before she got started?

I mean, for her, she really just kind of like figured it out through doing.

She didn't I mean, we should we shouldn't really talk about any books. I think this may have been one of the only interviews that Rich Dad Poor Dad.

We didn't ask the question.

No, no, usually that comes up in the aha moment question. Or somewhere in that, like, you know, where, you know, that learning piece somewhere? I mean, we we talked about it in a couple different ways, but it was never mentioned. She didn't really mentioned podcast or anything like that. It seems like for her it was a lot of doing and then networking with people and and learning from them. So and that seemed to work really seem to have worked really well.

I'd say she, you know, she talked about having to learn how to deal with a property manager. She needed to learn how to deal with a lender, when you're doing turnkey, a lot of this stuff is being done for you. But there's like she said, it's not completely passive, and especially starting off. There's a lot of moving parts to acquiring a property. You know, when do you go to a lender? You know, what sort of documents are you going to have to get to them? What kind of questions are they going to ask, and you need to sort of learn how to sort of dealing with a lender who's working under Fannie Mae, Freddie Mac, and it's going to kind of feel like a colonoscopy and a tax audit at the same time. And she talked about having to sort of come understand the relationship between a property manager and the renter, the tenant, and the property manager and her is that their property manager is not an employee and sort of navigating that and trying to figure out how to navigate that

money. How much money does it take? Well,

if you're going to have for her, she was actually able to start off very, with very little money because she was able to borrow those first funds and it was back in the wild and wooly days 2002 when you could basically, you know, get almost 100% financing, and she was fortunate enough that she was able to turn that equity into more money and that sort of launched her on our way. We didn't get into specifics about like once you when you're doing turnkey, you really need to come to the table with at least 20 to 25% down on every property. And it's not the kind of thing that you can really do creative financing on and we didn't really talk about the price points that she was looking at.

I got the impression it was coming from like a 401k or other savings.

Yeah, I would say knowing those two markets the way I know them, I would say she's probably buying around $100,000 properties price points, so she's probably having to come with about $25,000 per property and she they bought end up buying 10 of them. She actually said that she got 20%, down 20%. Okay, so $20,000 per property. So you know about $200,000, she was able to acquire 10 properties. And those were cash flowing properties, and they also appreciate it quite a bit. So her return, she said overall returns like 55%. That's pretty great. How much time does she spend on her real estate endeavors

and actually nail that down.

She sells a part time job. So yeah, part time job. For the real estate do, I mean, she does multiple things, though. So she's, they still have some properties that their holdings single family homes that they're holding, she's involved in, and different certifications, etc. And then she's also got the coaching and then the investor acquisition job, as well. So I would guess probably, you know, between all the different things, managing and speaking to people and, and looking for more deals and underwriting and such as probably working a full time job, when you combine the real estate with her part time job, it's my guess, which is a great way to do it, if you can, you know, if you still need to work, if you can drop down to part time, and you're, you know, nine to five sort of earlier, I don't know, I'm trying to say that your your W two job, that's what I'm sure. When with that, then it allows you to do more with real estate, if you can make that work for you financially, it's a great way to kind of get the best of both worlds because you don't have to feel like you're, it's a little less scary.

One, it's one of the one wonderful things about the way that real estate investing builds financial freedom, you've got the end, you've got the cash flow approach, versus the nest egg approach, you know, with the nest egg approach, it'd be really difficult to, to get to the point and go, Well, it covers half of half of my income from my job. So we're going to turn that spigot on and start drawing from our nest egg. Whereas with real estate investing, you can build it up to the point where it's like, Hey, you know, we've got enough cash flow that it covers half or more than half of my w two income so I can probably drop down to halftime you know, whatever.

And then location dependence.

She can do it from anywhere in the world. Yeah, yeah. It's a matter of Oh,

we got the tiny person. Yeah.

Hello, Janice person.

All right, also, so yes.

He's gonna make notes. Let's just finish up. This is a family show. Yes. You can do this from anywhere in the world. Yes. Obviously, barring some timezone difficulties.

Yes. But having having those teams and yes,

as long as your teams are in place, you can manage furs and turnkey properties. And then also, you know, continue to manage assets and syndications and things like that. So

trying to be quiet.

All right. All right. Anything else?

No one. So that was Whitney Hutton, from ash wealth calm. We appreciate over time,

it was really great talking to her. No, say it with me. Let's hit the road by

and if you like this podcast, we would really appreciate it if you take just a few minutes and leave a review for us on iTunes. It's really simple to do. Just go to road to family freedom.com slash review for links and instructions. Thanks for listening. We're doing this all again next week. Until then, safe travels.