Building a business is one thing. Learning how to scale it to success is another. Helping you piece out the two, Lisa Hylton sits down with the founder and CEO of Blue Lake Capital, Ellie Perlman. As a real estate investor who owns multifamily properties across the US, Ellie has the hard-earned wisdom from experience to share with us the secrets to building and scaling a successful syndication business. She tells us about her first deal while providing a greater understanding of multifamily and passive investing and looking for a sponsor to invest with. Plus, Ellie then provides some tips on finding the market to invest in and competing for deals, as well as having the right mindset to invest in real estate to achieve the financial freedom you seek.
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How To Build And Scale A Successful Syndication Business With Ellie Perlman
I’m welcoming you to another amazing episode. Before we get started, I want to remind you to head over to my website, which is LisaHylton.com to learn more about passively investing in apartment deals. In this episode, our guest is Ellie Perlman. Ellie is a real estate investor who owns multifamily properties across the US. She’s the Founder and CEO of Blue Lake Capital, a real estate investing firm specializing in multifamily, acquisitions, and management. At Blue Lake Capital, Ellie helps investors grow their wealth by investing alongside her in large multifamily deals. She also leads a mentoring program ready to scale where she coaches people to become multifamily syndicators by building and scaling a syndication business. Welcome, Ellie, to the show.
Thank you, Lisa. It’s great to be here. Thank you for having me.
To get started, how did you get started investing in real estate?
I’ve been here in the States for several years. My first stop was MIT. I got my MBA degree and a Law and Property Management background in an experience in Israel. Shortly after graduation, I started Blue Lake and started investing in real estate. I’m a sponsor, syndicator, and also a passive investor in other groups’ deals to diversify and have multiple sources of income. When I started, I was a real estate lawyer and I said, “I want to be an investor.” I thought that I needed a lot of money to buy real estate, which is not true, but I didn’t know it at the time.
Do not be afraid because fear can hold you back many times. Share on XAfter a few years, I said, “I want to be part of the real estate world of the operations. I want to know how to do the things that they do. I want to feel my clients.” The closest thing I can be at that point, that’s what I believed in. There’s a lot of limiting beliefs when it comes to real estate investing, wealth, and I still didn’t have enough money to buy real estate so I became a property manager. I learned how to deal with tenants and how to improve operations. After four years I moved to the States from Israel and I went to MIT. I wanted to learn more about marketing, operations, and learn how to read and improve financial reports. About a year after graduation, I started Blue Capital.
What are the early lessons, if any, from starting a business and moving through investing in real estate that you could share in your journey so far?
One of the best lessons is to get help. It could be someone that you shadow that is willing to teach you. It could be someone that you hire to help you and do not be afraid because fear can hold you back many times and limiting beliefs are voices in your head that, “You can’t do it. It’s too risky. What happens if you fail?” Nobody is born a syndicator. Nobody is born an investor. Everyone learned somehow. That’s one of the best advice that I can give people who are starting. Don’t be afraid, but get educated. Go to a course, hire a mentor, read a lot of books, make sure you’re fully educated, you know what you’re doing, and then go for it.
Nothing in life is certain. You have to take some risks and you have to be comfortable with it. If nobody wants to take a risk, then we wouldn’t have any investments because there’s no guarantee in any investment. I tell that to all of my investors. I cannot guarantee anything. Being comfortable with a little bit of risk is essential to develop, to grow, and not be paralyzed by fear which wasn’t my problem at the beginning because I made sure I had the right people to teach me how to do it. I wasn’t experimenting with investors’ money trying to figure out how to do it. I had someone that showed me the way and that’s what I’m going to do. I’m that someone who shows others the way and help them avoid costly mistakes.
Successful Syndication Business: One of the best lessons is to get help. It could be someone that you shadow that is willing to teach you.
I want to dive into a couple of different things here. The first thing I want to get into it, for my readers, can we talk about why multifamily to start with in terms of your focus?
I chose multifamily because it made sense to me on many levels. When I made a decision that I’m going to become a real estate investor, I said, “With money or no money, I’ll find a way to do it.” I was determined to own real estate. I start with the end goal in mind and then I work my way to achieve the goal. I said, “I’m going to own properties.” How? Which properties? I thought about fix and flips. I said, “I can get the money to buy one house.” I rivet and flip it. I started listening to podcasts, reading books and started attending all kinds of events that we’re talking about, and teaching you how to flip. Because I had the end goal in mind, I knew how much cashflow I needed every month.
I quickly calculated how much you’re making per flip and how much time it’s going to take you. I realized that it’s going to take me a long to get there. If I’m not working, there’s no money. There’s nothing passive about flipping homes unless you hire a CEO to do it. That didn’t work for me. I said, “I want a passive stream of income. I’m going to buy single-family homes.” I did that math. I understood that I don’t have to be there in order to have an income. The tenants are paying rent. I’m making money while I sleep. That was great, but it would have taken a long for me to hit my cashflow goals. I quickly found out that many years ago, the average cashflow per personal family home, which is what’s left in your pocket after you paid all the expenses, the debt, and everything is anywhere between $0 and $300 and maybe $700 worth the amazing deals.
Now is different. I said, “All this work, finding a deal, negotiating to underwrite, bringing in a management company, bringing in a tenant for $300 to $700 a month, I need more than one house.” I realized that you get a mortgage for up to ten homes, and then you need to bring a partner. I realized this is not sustainable. The amount is going to take me to have 20, 50, and 100 single-family homes. It makes a lot more sense to buy 1 property with 100 doors. It’s going to take you longer to find it and negotiate, but it’s not going to take you as much as it would have taken you to do the same with 100 different homes. That’s when it clicked for me. In addition, I understand multifamily and I was an attendant for a big chunk of my adult life.
I understand how to instinct what they need. It’s fun. There’s a lot more creativity when it comes to multifamily. You can walk around a unit of an apartment complex and say, “I can increase friends because I can create a, we workstation here. I can make reserve parking or preferred parking or add washers and dryers. I can do all those fun things, bring Amazon lockers, and charge tenants.” It taps into the creative part that I liked about real estate. That’s another reason why I decided to go with multifamily.
Moving on from there, someone reading is probably thinking from a perspective of, “I’m thinking about buying single-family homes.” For a lot of people, they feel like they have to cut their teeth on a smaller deal than doing a bigger deal. Could you talk about your first deal and the reason why you probably focused on a larger property for your first deal?
What you described is a perfect example of limited and limiting beliefs. It’s exactly the opposite. In my opinion, it’s much harder to manage a 10 or 20-unit deal and it’s riskier. It’s harder to manage because the likelihood of finding a good property and professional property management company that is willing to manage a twenty-unit is almost zero. You’re dealing with the smaller operators. You have to chase them down many times. They’re not getting paid that much. You’re going to find yourself, maybe yes or maybe not, but you may find yourself answering tenant’s phone calls in the middle of the night to be more active. If you don’t have a property manager then there’s nothing passive about it.
You’re an active investor. Before I get to the risk portion of it, when it comes to 100, 200, or 300 units, I have a property management company. I pay them a 3% fee, but they take care of everything. They’re sitting on the property there. They’re helping to fix the property, talk with tenants, collect the rents. If a stove is broken, they’re fixing it. I don’t need to do it so I can use my time to find the next deal. I use my time to manage the manager and strategically think, “What can we do to improve the operations, rents, and to do all the great things one does with a property.” It’s much easier to manage a larger property. It’s riskier to buy a smaller property.
Nobody is born a syndicator. Nobody is born an investor. Everyone learned somehow. Share on XLet’s say you own a ten-unit building and you have three tenants that left because they can’t pay the rent especially during COVID. Here you are 30% vacant. What are the chances that you are profitable and that you can pay your mortgage? Not high. When it comes to 100 units, the likelihood of 30 tenants leaving your property at the same time is low. You’re more protected because you have more tenants that are pulling up the weight of paying their share of the rent. Even if 10 or 15 are leaving, you can still be profitable or at least pay your expenses or make the debt payments. It’s easier to manage bigger properties. It’s less risky but the question is do you have enough cashflow? Do you have enough money? Can you raise enough money to buy those bigger properties?
That brings me the decision to passively invest. I want to start with the fact that you also passively invest even though you are a sponsor yourself. Can you talk about the reasons why you also passively invest?
I like to see what my competition is doing. I like to see how they have an interesting way of operating the property or increasing rents, the NOI, and cutting costs. I learn a lot from being a passive investor. It’s a great way to reallocate my capital and my equity. I’m working usually with 1 or 2 big syndicators. One of them is managing $7 billion. They have $7 billion in assets under management. They’re huge. I learn a lot from them. Sometimes I’m also viewing the deals that they are selling, that I’m part of them on the passive side. If I have extra money, I prefer to invest it in another deal. If I don’t have a deal at that point, I invest in all my deals, but I also like to invest in other people’s deals. I like it more than the stock market where I don’t have any control over what can be done with the company.
The CEO can have a silly or inappropriate comment on social media and then the stock drops like crazy. The valuation, the way that I see and invest a little bit in the stock market, not much a lot of it is the perception and how investors are viewing the market. Many times, investors are scared. A lot of them are pulling up their capital from the stock market. That affects my investment. My husband and I, right before COVID hit, understood where the market was going so we pulled our money early. We were wearing masks back in January when we heard that China is struggling. It’s simple logic. They have an infectious disease that they’re battling with. Flights are still going out of China to the US, Canada, and all over the world. The disease is going to get here sooner or later. The stock market is going to get a serious hit.
We pulled our money before everything collapsed, but that’s the type of behavior that is risky when I’m investing. If someone else is seeing the market, the way that I saw it a few months ago, then my investment can be harmed. Multifamily is such a safe investment. Nothing is recession-proof, but it’s resilient rents. Collections were around 92% to 95% since April 2020 and valuation hasn’t been impacted that much, maybe 5% or 7%. It’s a good hedge against inflation, against recession. That’s one of the reasons why I like multifamily and why I believe in multifamily as an investment vehicle.
Connected to that, someone reading is probably thinking they’re interested in passively investing in real estate and potentially multifamily. What are some of the things that they should look for when looking for a sponsor to invest with?
First and foremost, invest with someone that you trust and feel comfortable with because they’re going to be your partners for 3, 5, or maybe 7 years. That’s the first thing. If you don’t feel the connection, if you don’t like that person, it doesn’t matter how successful they are. That’s how I operate. These are my partners. I want to invest with someone that I feel comfortable asking questions if I need to, someone that I trust that can handle my money the right way. The second thing is to vet the sponsor. Go to the website and see what deals they’ve been doing and they’ve been involved with. You can ask them for performance versus projection reports and see for every deal how much they’ve projected and how much they’ve performed and seen if that makes sense.
The third thing I would say is to make sure that your investment strategy and your risk appetite are aligned with that of the sponsor. For instance, when I speak with an investor that says, “I want to double my money in eighteen months,” I said, “It’s not a good fit.” I’m conservative. We’re aiming to double our investor’s money within 5 years or maybe 4. I don’t do it in 18 months or in 2 years, this is a riskier investment, which could work, but it’s not the type of investments that I’m doing. Maybe it makes more sense for you to partner with a sponsor that is buying distressed assets or you can be involved in a flip that you’re supposed to make more money in a short period of time, but make sure that your investment philosophy and your tolerance for risk are both aligned with that of the sponsors.
People who invest with me, they’re usually conservative. They like to see steady returns every month, 7% to 9% cash on cash for instance. They’re not looking to triple their money in a year. That’s not the type of investment that I’m managing. That’s the third thing besides trusting and liking your sponsor, looking at their performance, and making sure that your tolerance for risk in the investment philosophy and strategy are aligned. Those are the top three factors or three things that I would encourage every passive investor to look into and explore before they go ahead and look at a deal.
Successful Syndication Business: The likelihood of finding a good property and professional property management company that is willing to manage a twenty-unit is almost zero.
Building on that, your outlook as people think about investing in real estate in this environment through the end of the year and even into next year. What advice you would give to them both passive as well as active investors as they think about investing in real estate?
I would say be more conservative than usual. Look at the assumptions of the investment, and ask yourself, “Do they make sense?” Pre COVID, we would assume 3.5% rent increases every year. Ask yourself, “What are the assumptions for risk for the rent increases?” Because that impact returns. We usually use 0% to 1% rent increases during year one because the market is going to still have some trouble getting back to the same rents that were before COVID or increasing the rent at the same pace. Make sure that the sponsor is conservative when it comes to the first year of operations. Look at the rent increases and the next step that doesn’t make sense. If you see a 5% rent increase, it needs to be a specific property.
The rents are extremely under the market that it might make sense, but for the most part, look for something that is more conservative. Look at their innovation plan. When are you supposed to start with it? We usually start between month 6 and 15, depending on the market. If someone is basing their underwriting on starting renovations on the first day of ownership, that can be a little bit risky because you might not be able to renovate all the units that you want right off the bat. We’re in a different environment. The third thing I would say is to look at the exit cap. Every property is bought at a certain cap rate and that’s called the going-in cap rate. It could be 5% or 6% depending on the market and look at the exit cap rate.
The higher the cap rate, the lower the prices. The lower the cap rate, the higher the prices. If you buy at a five cap and you anticipate to sell the property in five years at five caps, it means that you expect the market to be as stronger as weak as it is. It’s more conservative to have a buffer and have a higher cap rate at the exit. Many investors don’t look at the exit cap. Make sure that it’s higher because what you’re saying is, “The market is medium, strong, weak, or whatever it is. I assume I base my assumptions that when I sell the property in five years, the market is going to be even worse.” Things are a little bit tight so I hope that in several years, the market is going to be better.
For underwriting purposes, I’m going to assume that the cap rates are higher and prices are lower. If the deal still works, then it’s a good deal. There’s a good chance that you can sell it at a lower cap rate and make more money but what if you can’t? That impacts especially the IRR, not so much to cash on cash. If you’re not looking at the right exit cap rate, then a deal that is projected to be 15% IRR can turn into an 11% IRR. Make sure you’re looking to that as well.
Can you talk about the markets that you specifically like to invest in and maybe some of the fundamentals why you choose to invest in those markets?
I like Texas, Florida, and Georgia. I like the big NSAs within those markets. We’re looking into the Carolinas, but what I like about those markets, I’m talking about Atlanta, Jacksonville, Tampa, and the DFW market. I like the fact that there’s population growth. People move to those markets because the climate is good, many jobs there, and it’s affordable. Every place that attracts people translates into higher demand for my properties. I always look at population growth. I always look at job growth. The more jobs, the more people are going to come and move to those states and those markets. I also like the fact that they’re landlord-friendly. I live in California and we both live in LA Metro and Santa Monica.
It can take me a year to evict someone. I’m not talking about COVID, I’m talking about regular times. In Atlanta, within 21 days if someone is not paying the rent, I can evict them. That’s not what’s happening in today’s market but in a normal universe, that’s what can happen. They’re not paying the rent and they’re not leaving for 9 to 12 months, you’re paying all the expenses. Having rent control kills your business plan. If you cannot renovate the unit and increase the rents, then your business plan is non-existent. Because of the fact that those markets are landlord-friendly, it’s one of the reasons why I like to invest in those markets.
That last point that you talked about with renovating the units, etc., at this point in the marketplace, I know there’s been a lot of talk about to value add or to not value add. Can you provide some insights for investors reading who are thinking and seeing these different properties whether they want to invest in a value add versus a non-value add?
I see most sponsors pause their innovation plan. They were of the opinion of that’s what we should do at the beginning, the first few weeks, but then I said, “Why are we deciding for our tenants?” For potential tenants, what to show them is, “Why not give them the decision and the choice to choose.” On our properties, we have a model unit that is renovated. We’re showing them the model unit that is renovated, staged, and everything. We also show them the classic unit, the non-renovated unit because we’re not renovating all the vacant units. We stopped. We’ve shown tenants that are coming in and are asking to see the units.
Nothing in life is certain. You have to take some risks, and you have to be comfortable with it. Share on XWe say, “Here’s a renovated unit, and here’s a non-renovated unit. Here’s the price of this one. Here’s the rent for that one. Which one would you take?” To our surprise, about 70% of new tenants chose to go with the renovated units. They say, “I want to renovate a unit. I don’t like carpet. I’ll pay extra.” From the time they sign on the lease, it takes us about 1 week to 1.5 weeks to renovate the units. We go in and we’ll renovate so by the time the person is ready to move, the unit is renovated. We only spend the money after someone is signing on the lease and is saying, “I want this renovated unit.” I call it renovation on demand. You want it, we’ll renovate it for you after you sign on the lease.
We’re not going to renovate the unit and hope we can lease it because maybe it’s going to be hard to do it because people are more stressed when it comes to money. During COVID, we were able to get 10% to 29% rent increases. I’m talking about April, May, and June 2020. I was surprised that we can get that much over $200 rent increases. We gave them the choice. We said, “You choose, we’re not going to make the decision for you.” Some tenants say, “I don’t know what’s going to happen with my job, I got furloughed, or whatever it is, I’m going to go with the classic unit.” Many still have a job, they’re still able to pay or they have a partner that makes money even if they lost their job and they’re choosing the renovated units. That’s a great way to increase NOI. Our NOI increased during COVID, which was phenomenal for us.
My last two questions are primarily geared towards individuals who are reading, who feel that they’re at a place in their life where they probably want to invest more actively and maybe take the syndication route in terms of building a business. This question is regarding mentorship, environment, and how important that was for you or the impact it had in your life and your business.
I had a mentor myself and I’m a mentor. I’m mentoring students who want to become syndicators. It was valuable in my own journey. I scaled so quickly because I decided to pay someone to teach me how to do what they do. I learned from them. I implemented it, instead of wasting time, trying to figure out how to do it. Somebody has given me the roadmap and I’m implementing it. It’s not copied and paste. I adjusted to my tone. The markets that I am invested in that was based on the methodology that my mentor taught me on how to look for a market, look for markets that are strong with population growth, job growth, rent growth, and landlord-friendly states. I took that framework and I implemented it instead of trying to figure out, “How should I choose a market?”
That helped me scale quickly. Also, there were a lot of things that I didn’t think about that I could’ve made a costly mistake, but I didn’t because I had someone by my side. That’s what I’m offering to my students, “Let me walk you through it. let me help you make the right decisions and not make costly mistakes, and you don’t need to figure it out. Here’s a template of how you can do it. Now you can go ahead and implement it and make no mistakes. That’s not easy.” Being a syndicator is not easy. You will need to work hard to get to where you want to get to, but it will be a lot easier and a lot faster if you can have someone that can walk you through and help you throughout. That was one of the best career decisions that I’ve made to have someone by my side. To scale in such a short period of time, I don’t think I would’ve been able to do it if I did it on my own.
Something that you said is competition and finding deals. For a lot of people that I talk to when they think about playing in a bigger arena actively, they think how are they going to find deals? What advice and insights can you give to individuals based on you building your business in this space?
Competing for deals is a little bit easier in the market where you have a lot of the buyers evaporated or they’re waiting on a sideline. In a normal market, the first thing to do is connect with the brokers. When I started, I flew out to those markets, and I printed out all the reports that I had. I flew out there and I set about a week in each market, I drove from area to area, I learned the market, I talked to locals, I met with local brokers, I met with local property managers, they took me for rides around the NSA and taught me where the better areas, the worst areas, which areas to avoid, where is the change happening, and part of getting deals is connecting with brokers especially if you’re out of state.
If you’re investing out of state, you’re not close to them that you can grab lunch every month or so, make sure to meet with them and have a consistent plan of reaching out to them, calling them, and emailing them if they have an available deal for you, that would set you apart. The other thing is to think creatively. When everyone else is sending out an LOI, Letter of Intent, I also add a one-pager that I ask the broker to send the seller. It’s a nice one-pager talking about Blue Lake, who I am, and what we own. It makes it a little bit real. If you’re brave, you can record a short video explaining why you like the property, what you were going to do with the property and send it over so the seller can see it.
That’s one way of competing and standing out in a crowded market of buyers. The other thing is if you are not experienced and you’re starting, you can partner with someone who’s more experienced and their experience can be presented when it’s a partnership. The seller can feel comfortable that they’re investing with someone experienced because that’s the partnership that you’ve created. Every advantage you have, you have to highlight it. Don’t think that they know that it’s clear. It’s clear that I’m very experienced. They can see that we’ve done many deals in that area. Make a note that makes sure that they know and that’s the case.
When it comes to the letter of intent, you can find what makes you feel comfortable, offering the seller to stand out. You can be like, “I lost deals because I was offering a $500,000 deposit.” Hard money deposit, which means that
Successful Syndication Business: Multifamily is such a safe investment. Nothing is recession-proof, but it’s resilient rents.
“I’m not going to see the money back if I’m not going to close the deal.” The deal was awarded to someone else that was willing to offer a million dollars. Hard to day one, meaning you sign a contract, you move $1 million, you’re not going to see them again unless you close the deal. I was not willing to risk $1 million. I was willing to risk $500,000. That was the way for someone else to stand out. Ask the broker, if you know that others are offering $100,000 or $200,000 as a hard money deposit, if you feel comfortable to offer $300,000 or $400,000, in nowadays environment during COVID, things are a bit different, but normally that can make or break a deal besides the price. Whatever you do, do not overpay.
That’s the one thing I would say, “Don’t do,” to get the deal. Everything else, if you were willing to take a little bit more risk on the hard money deposit, maybe you can show a shorter due diligence period. You can do the closing. Usually, there are 30 days for your diligence after you signed the contract, 30 days for financing, a total of 60 days. Sometimes you can have a clause in the contract that you can get another 30 days. If you can do it in 45 days, then you can separate yourself from your competitors. If the seller wants to sell it quickly and you might get to deal, but talk to your lender first to see if they can do it in 45 days. That’s one thing that you can offer that would make you stand out and help you get deals in a competitive environment.
To end these questions, before I move on to my level up questions is the mindset and limiting beliefs. You’ve touched on this throughout the entire part of this interview, but I wanted to officially have your insight on mindset and belief, not only as building a business but even investing in real estate to achieve the financial freedom that you seek.
Fear is something that I try to stay away from. People are motivated by fears many times. When you’re afraid of something, try to understand if this is a reasonable fear or if this is a limiting fear. Limiting fear is that voice in your head that tells you, “No, it’s risky. Don’t try it.” What’s the worst that can happen? You’re going to lose $50,000 that you’ve invested. If this is a paralyzing fear, I would say, “Don’t do it,” but don’t let the fear manage you. I hear the fear and I’ve heard fear my entire life from people around me that said don’t do it. Back in Israel, before I moved to the States, I had a mentor and he taught me how to handle the bureaucracy and how to get a lot of permits approved.
I told him, “I’m thinking about moving to the States. I want to become an investor and buy real estate.” He looked at me and he said, “Don’t do it.” I said, “Why not?” He told me, “You’re not a white American, only white Americans are making it in the States.” I said, “That’s a limiting belief. Thank you.” I didn’t listen to him. Many people when I said, “I’m going to quit my job and start a company.” They said, “Why? You’re making six figures. You’re living the American dream.” For me, daring was scarier than falling into that comfort. The comfort zone is always uncomfortable for me. Fear is something I hear around me and from people around me, they want to protect me.
There’s no malintent there, but they’re talking from their own fears because when I’m looking at them, I’m asking, “Those were giving me advice in a certain when it comes to career, relationship, or whatever it is, how successful are they in that field?” They’re not successful then maybe they’re not the right person to ask. I guarantee you if you go to a successful businessman and tell them that you have the desire to grow a business, build it, and invest, most of them are going to encourage you and give you advice. They’re not going to say, “Don’t do it,” because they took a bet on themselves and they dared.
They’re getting rid of limiting beliefs that it’s challenging, but it’s definitely worth it. On a personal level, I used to be married to someone who had those limiting beliefs. One of the reasons why it didn’t work. Now I’m married to someone, he’s my main cheerleader, and he’s so supportive. It’s tremendous and it’s important for everyone to surround themselves with the right support system and get rid of those that are unmotivated and managed by fear because you’re going to end up in the same place that they are. It’s not easy to find the right people, but it’s worth it.
For my level up questions, which I ask all my guests, the first one is what are you grateful for in your life?
I’m grateful for three things. First and foremost, I’m grateful for my upbringing, which was super humbling, and that what made me keep the fire to succeed and the motivation to grow. I’m grateful for my husband, who’s my partner on many levels, and I’m also grateful for America. I’m living here and having those amazing opportunities that I did not have back in Israel, it’s the most amazing country. It’s not perfect. No country is perfect, but I’m grateful to live here and to be part of the American economy.
What has attributed to your success and continuous growth?
I’m getting rid of limiting beliefs and not listening to anyone, deciding that, “I’m going to be X or I’m going to own Y,” and figure out how to do it and not being afraid. Go for it. The worst that can happen for me was that I will not get what I wanted, but the guaranteed way to fail is never to start. I think that mindset helped me to get to where I am now.
Lastly, what do you now know that you wish you knew at the beginning of your journey?
There are not many things because I usually don’t look back and think about what should have or would have but I would say, “Take a bigger risk and hire your team earlier than wait a little bit to extend my team.” It’s a little scary to pay salaries and to hire people. I have an amazing team. Once they’re there, you got good people, you’re going to scale quickly and you’re going to make that investment back. Don’t see it as a sunk cost. It’s an investment. I had the team that I have now. Don’t go for the cheap hourly rate employee, go for the good ones. There are still good ones out there that their cost is reasonable. reasonable. I wish I did that early on and not wait about a year or so until I had the guts to have a full team.
The higher the cap rate, the lower the prices. The lower the cap rate, the higher the prices. Share on XIf my guests would like to learn more about you, where can they go about to learn more?
You can Google my name, Ellie Perlman. You can also go to my website at ElliePerlman.com. If you go there, you can download the free guide and the top five components that any passive investor should examine in a real estate deal. You can download this guide for free and there’s a lot of free content there about real estate multifamily, syndication, how to invest, how to raise capital, and all those fun stuff.
Thank you for coming on. I appreciate it.
It was fun. Thank you for having me.
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Thank you, Ellie, for coming on the show. I appreciate it. It’s an amazing episode. My key takeaways. Number one, if you’re interested in building a syndication business? One, get help. Two, shadow people who are doing this stuff. Three, hire people to help you. Lastly, check those limiting beliefs because they’re all there and they’re going to be with you. My other key takeaway is every advantage you have to highlight. Everything that you bring to the table is an advantage to that other person and that you think you can offer to that other person. Highlight it. Let people know about it. Otherwise, they won’t know.
As a passive investor, if you’re looking at investing in passive and syndications, she talks about you want to make sure that you trust and like the people you are investing in. If you don’t like them, you don’t trust them, and there’s no connection there, please don’t do it. Vet them. You take the time to get to know them, their track record, the different deals that they’ve done, understand their performance versus projected, alignment of goals, and strategy. That comes from you understanding what your goals are, what you want real estate to do for you, understanding what their goals are, and how they invest like are they conservative, etc.
The question on to value add or not to value add, I loved it. The way she talked about looking at the reasonableness, making sure you’re understanding those assumptions that people that are being made on the various deals the renovation plan, etc. Looking at the creative way that she’s decided to approach value add versus not value add, which is like having a conversation with your tenants, having her property managers ask them or potential tenants, “Do you want to take a renovated unit or the classic?” Giving them that opportunity to give you that feedback and then making that change, which is renovations on demand. It was an awesome interview. I hope you enjoyed it. For me, I think anyone who is reading who was thinking about investing passively, there were nuggets there for you. If you were thinking about, “I’m curious about this whole syndication or buying bigger deals,” or anything of that nature, there were nuggets there for you as well. Until next time. Keep leveling up. Take care.
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About Ellie Perlman
It was always my belief that the sky is not the limit but only Plan B. It is this belief that enabled me to get out of the trenches and lift myself up from the lowest point of my life.
I was the eldest of four kids in a family of six. We were poor. I was nine when I started to clean synagogues to support my family. As I got older, I realized what was happening, and I wanted something more for myself. I had a burning desire to succeed and break the poverty chain.
In high school, I met a guy who would become my husband. The idea of starting a household was exciting to me, and I firmly believed that this new start would help me break free of the financial situation I was in. I was 19 when we married, and soon found myself working three jobs to support us. My husband struggled to keep a job for more than a few months at a time.
We had no money – not even to buy bread. I had every desire to make a life for myself – to get past my adversities.
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