The Super Repeatable Path to Real Estate Wealth (No Experience Needed!) w/Erika Brown

David:
This is the BiggerPockets Podcast show 572.

Erika:
I didn’t want society to write my sentence one way easily thinking, “This young woman is pregnant before she gets married,” and all these kind of scenarios. You can instantly just think, “Okay, this is what her life is going to turn out.” But I am just in a situation. I don’t want society to write my story. And I want to encourage other people that they can write their own story too, even if they don’t have a perfect past.

David:
What’s going on, everyone. It is David Greene, your host of the BiggerPockets Podcast, the show where we arm you with the information that you need to start building long-term wealth through real estate today. If you’re new here and you like today’s show, go check out BiggerPockets.com. It’s a free one-stop-shop for all things real estate investing. We’ll help you save time and money, avoid mistakes, and tap into the wisdom of two million fellow members. One of them is my cohost today, Mr. Henry Washington. Henry, how’s it going?

Henry:
How are you doing, sir? Mr. Greene, glad to be back. Thank you for having me.

David:
Yeah. I’m glad that you’re here, too. Today’s guest and you had a pretty good rapport. I thought you did a great job asking questions and pulling some nuggets out of Erika today.

Henry:
Oh, thank you very much, man. That was a lot of fun. You surprised me told me, told me to talk some more, and so I did, and I hope I didn’t drop the ball on you.

David:
Not at all. Today’s guest is awesome, and today’s show is really, really good. We get into some pretty interesting information about going big pretty fast, but safely. So Erika, as a new investor, or a newer investor, bought a huge portfolio. Well, I would say it was huge. What, 20 properties or so, or 20 units at least I think? In one of her first deals, right off the bat, is flipping houses, became a real estate agent, then became a co-founder of a brokerage. She’s just become like Wonder Woman of real estate, and she just pulls back the sheet and shows us everything that she’s doing and exactly how to do it.
Henry, what were some of your favorite parts of today’s show?

Henry:
Man, I love that she just gets it, like she gets that, “I have a purpose, I don’t want to repeat the lifestyle that I had, and I’m going to take this real estate passion, and I’m going to try to blow it up as best as I can.” The woman, buying deals, brokerage, Airbnbs, Airbnb management. She’s just trying to find every opportunity that she can and tries to add value; and by adding value, more doors get opened. And so I hope the people really listen in to her mindset and how she approaches deals, and how she approaches adding value to people, and how that benefits her business.

David:
Yeah. Erika is in love with real estate; and when you listen to her, it makes you love it more, too. I caught myself getting jazz-up and just thinking how lucky I am to get to make a living in this space, versus all the things that we’ve all done at one time in our life that was not as much fun as what we get to do now.
All right. And for today’s Quick Tip, go check out BiggerPockets.com/podcast. You can get an overview of all the podcasts that BiggerPockets offers over all the different topics that they do, and you’ll always have something to listen to. It might be the quickest Quick Tip that I’ve ever actually given.
All right. If you have any questions about anything that you heard on today’s podcast, we have many resources to get you answers, one of which is joining us for a live question and answer. All you’ve got to do is visit BiggerPodcasts.com/LiveQuestions to sign up for an upcoming recording, and get notified when we’re going to go live, and we will bring you in to ask your questions and answer them live.
Henry, anything you want to add before we bring in Erika?

Henry:
I just want people to get out a pen and take some notes. There’s a lot of mindset gems in here, and I know mindset stuff can sound a little froufrou at times, but I’m telling you these are great gems both on how to approach your business, how to find deals, how to get those deals financed and closed. Right? All of these things that she was able to do without a ton of experience is because she’s got this great mindset and approach, so try to write some of that stuff down, and write down how you can implement it in your business for you.

David:
Very nice. All right. Let’s bring in Erika.
Erika Brown. Welcome to the BiggerPockets Podcast.

Erika:
I’m so happy to be here. Thank you so much for having me.

Henry:
Erika, it’s great talking to you again. We chit-chatted at the BiggerPockets Conference. Yes?

Erika:
Yes. It’s so good to see you guys again. And I met David and he didn’t even know who I was.

Henry:
That’s okay. He barely knows who I am. Awesome. Tell us a little bit about how you got started in real estate.

Erika:
Oh, man. It just happened, which was crazy. I was working a nine-to-five and I thought, “I’m going to retire from this company. I’m going to be there until I’m 65,” and I was killing it. I was managing a sales team. I used to be a banker, and then I worked my way up to be the manager, and everything was working out really good, but I just realized like, “Hey, I want a little bit more flexibility. I want to continue to grow.” So I mean I started applying, networking. I would apply for the job, get the best reference, my manager gave me a 10 out of 10, and still not get the job over and over and over again, and so I’m like, “What is happening?”
At the same time, I moved to this area of Atlanta that was way up-and-coming. I don’t even want to say up-and-coming. It was just like… It was just there. Right? And a lot of people had lots of perceptions about it, but I moved there with my family, and also I moved there with three other people. We all moved to this neighborhood together, and then we just started to break down a bunch of perceptions. So then my friends were like, “Well, how is the living over there?” and I’m like, “It’s great. We do this. We do that. Let me show you. There’s a house for sale.” And at the same time, while I am trying to climb this corporate ladder and I’m getting all these declines, I was helping all these new people move to this neighborhood, and passing them on to the local real estate agent. So after 10 deals, and $100,000 plus, I’m like, “Wait, I’m doing something wrong,” so then that’s when I decided, “Let me look into this whole real estate thing.”

Henry:
You basically became an ambassador for your neighborhood.

Erika:
Yeah.

Henry:
Showing people the ropes, what’s so great about where you live, showing them houses for sale, and then they buy houses, and then you didn’t get paid.

Erika:
Didn’t get paid. And I’m at the bank, and most of my clients are very wealthy, and I’m asking questions, “How did you get your money? How did you build your wealth?” And even if they’re a corporate person or an entrepreneur, I start seeing patterns: and they all, in some form of fashion, invested in real estate. So those two connections began to happen, which really made me to start to think, “Okay, maybe retiring at this company is not what’s going to happen for me. Maybe my journey will be different.”

Henry:
That’s awesome. Where’s your portfolio right now? Is it all Atlanta based or… Talk a little bit about that.

Erika:
It is mostly Atlanta. I have a property now in Texas that I inherited, but everything else is in Atlanta, and it’s in the city 15 to 20 minutes from downtown.

Henry:
You know I love that. I love your story about figuring out who all these wealthy people were and what were they doing to get wealthy. I tell people all the time, “If you want to be wealthy, you got to do what the wealthy people do.” Right? And if you want to know what the wealthy people do, you can just ask. Most of them will tell you.

Erika:
They’re happy to tell you.

Henry:
It’s not a big secret. They love talking about it. I tell new investors all the time, “Go to these RIA meetings and start talking to people. If you don’t know what you’re doing, investors love talking about their deals. They’ll give you all kinds of juicy information, as long as you go and you start talking to them.” And so I love that you took that approach.
You know, I had a very similar kind of beginning. Mine was through a Ted Talk. I watched a Ted Talk of this kid talking about real estate, and him being financially free and owning 20-something properties, and I was like, “Well, if he can do it, I can do it.” Right?

Erika:
Right.

Henry:
You quickly learn that this stuff… It’s public knowledge that’s out there, and people are doing it, and it’s really just a matter of having the right mindset and taking action. So I love that, man.
Dave, do you have anything to add?

David:
I think what you guys said was very insightful, even though it sounds simple, so I don’t want it to get glossed over: if you want to be wealthy, do what wealthy people do. If you want to be successful in relationships, do what successful people in relationships do. If you want to be fit, do what fit people do. It’s not easy, right? There are absolutely certain human beings that have a naturally better physique, or were raised with better eating habits, like I was not raised with very good ones, that it is harder for someone with bad habits to be successful, but that doesn’t mean to say, “Well, I can’t do it.” It actually means you need to put more effort towards that thing because you’re coming from behind.
There’s many people that came from a position where they weren’t taught very good habits with money, and they weren’t given a vision that you can achieve financial freedom. Like Henry, you said you heard a person talk on a Ted Talk. There’s a lot of human beings that just don’t even know it’s a thing, and then they hear us talking, and it’s like magic. Right? But the best advice you could ever give them is, “Do your best to copy what that person does.”
Any job I ever had that I ended up doing well, I found the best person that worked there, and I just tried to become their best friend, and do everything they did. I modeled everything. I remember in the Police Academy there was a guy named Gabe White, he was a scout sniper in the Marine Corps, and I quickly figured out on day one he knew what to do in that place and I didn’t, and I just was always like, “Where’s Gabe?” and I just copied whatever Gabe did. Right? His last name was White, mine was green, so I had a stupid joke like, “As long as I’m peppermint, I’m near him, I’m going to be okay.” I just want… Erika, as we hear your story, I would love for everyone listening to just think, “If I do what Erika does, I’ll get what Erika has. If I do what Henry does, I’ll get what Henry has.”

Erika:
I say it all the time. I just said it on a post last week on Instagram, I was like, “I didn’t have any type of super secret sauce JAY-Z-type story. It was just like millions of decisions every day, discipline happening over years. That’s really it. It wasn’t anything super sexy.

Henry:
Tell us a little bit about what is your portfolio… what’s it composed of right now? And then, if you wouldn’t mind, tell us a little bit about like how that first one came. How’d you go from being a real estate Atlanta tour guide to closing your first deal?

Erika:
That’s so funny. Right now I have a mix of single family homes and small multifamily. I just actually closed on a 20 unit apartment development. It’s five quads on the same street right next to one another. And then I own another quad, a duplex, and then I have a couple single family conversions where we’ve converted them to a duplex. And I do a bunch of different investing: long-term, Airbnb, travel nurse, regular long-term rental, and then I’m getting ready to get into the Veteran Voucher Program. I like to do it all. I like to diversify.

Henry:
Awesome. Which one was the first one and how’d you get there?

Erika:
All right. The first one I left the job, so I got my real estate license, and luckily it was in a great time of the market. I had clients already ready to go because I had been showing them houses through the other realtor. And so I tried to work part-time as an agent in my manager role for a few months, and it just was not working, so I left like cold turkey and I started selling real estate full-time. At the time, I got hooked up with an investor friend, he was an apartment guy, but he was looking to acquire some single family homes; and with new agents you don’t have much going on, so it’s like you take whatever deal is happening in front of you. And he was like, “Hey, I want you to drive in these neighborhoods and write down these vacant homes, and look them up and try to find the owners.” So because I had a lot of free time, because I was a new agent, I started looking up properties online with the tax assessor, and I noticed that this one neighborhood had 20 properties owned by the same LLC, and so I was like, “Well, instead of me just looking up these individual homes, let me just call them, let me find a number to call them and try to get the entire portfolio.”
I get someone on the phone, and they’re in Florida, and they’re going to liquidate their whole portfolio, and I’m like, “Okay, that’s cool. Can you send me everything?” He’s like, “Hey, if you’re going to send us an offer, send it to us fast because we haven’t done any appraisals.” I said, “Okay.” I said, “I’m looking for my client, but I actually want to buy one myself. If I just want to buy one is that okay?” and they were like, “Yeah, sure.”
So I found one that was actually not too far away from where I live, and it was right next door to this future development on the Atlanta BeltLine, which is a huge development in Atlanta, and it happened to be right on the BeltLine, so I just took a chance. I didn’t know how to do comps. I didn’t know any of that kind of stuff. I just submitted an offer for $60,000, and they said yes. And because I didn’t have a job, I was just starting this new real estate business, my husband got the loan out in his name, and we used a part of my 401(k) for the 20% down payment, and then now we became real estate investors.

Henry:
That’s crazy. There’s several great tidbits I want to touch on there. First thing, I love how you said you saw the property, and so you said, “You know what? I’m going to call the owner and see if they have more, and see what else they’ll give me.” Right? I tell all the time investors: when you’re talking to somebody who’s selling you a property, you should always ask them, “Do you have anything else? What else do you have?” Because people sell to people who they like, in a lot of situations. They may enjoy doing business with you. And so if you’ve built this rapport and you’re buying something, always ask, “What else do you have?” I’ve bought lots of property just by asking, “What else do you have?” And actually my very best deal came from asking that question, so I love that you did that.
And then also you mentioned that you were working full-time, and then you started to do some real estate agent work on the side, and I know a lot of new investors are interested in becoming real estate agents. And you said quickly saw that it was going to be hard for you to give your best to both. Right? And so you decided to leave your corporate job to do real estate as an agent full-time.
I know David, he’s been an agent for a long time. What do you think about making that part-time to full-time transition, especially so quick, and that mindset?

David:
Well, first off I love when an investor also becomes an agent. The industry needs more of them, frankly. If you are buying property yourself, there’s just a different understanding you have of it when you’re representing someone, than when your broker is telling you what you’re supposed to do, and you’re going through the motions, but you don’t really get it. It’s like having a coach that never played a sport that they’re coaching you in. They might know what they’re supposed to say, but it’s not the same as if they did it and they understand.
I made that jump probably later than I needed to, but I’m just more of a conservative person by nature. I worked both jobs for about a year-and-a-half, and it wasn’t until I had so many real estate clients that I had a listing, and three days went by and I literally couldn’t put it in the MLS because I was too busy with the police job, and I realized, “I’m not doing right by my client.” It was such a hot market it wasn’t a big deal, but I knew, “I have to make a decision. I can’t do both,” and that’s when I said, “All right. I’m going to stop being a cop and I’m going to be an agent.” And I could fall back. I could have went back to the corporate job if I needed to, but I didn’t. I actually went the other way.
I hired an assistant pretty much as soon as I left, and then I said, “Okay, you’re going to handle the admin, and that way I can focus on sales, because I’m scared to death I’m not going to have enough people coming in.” When you’re an agent, and we don’t talk about this, but we are terrified 23.5 hours a day of where our leads are going to come from, and the other half hour of the day we’re overwhelmed by all the leads that we got that we’re trying to not screw up so that they don’t send us referrals. It is a crazy, crazy world. Right? So that helped.
And a lot of agents look at it and say, “Well, I don’t want to hire an admin because that’s an extra cost. It’s more risk,” but it actually decreased my risk because I was just grabbing clients, walking them through the process, having my assistant schedule me to show them homes, putting them in contract, and handing it to her, and then I was right back in there to get the next person to put them in contract, and I think that really helped so I didn’t have to go back.

Erika:
Right. And I did something similar because I built a team really quickly, because I’ve seen the value of a team working at the bank. So I hired an admin and brought on an agent year two when they were like, “What are you doing? How are you going to start a team when you don’t even know what you are doing?” You know? Well, I’ve seen the value of that delegating and being able to have my time to go back out and sell, so it’s a real thing.

David:
I was going to say: if anyone is listening to this and they’re either interested in what real estate agents do, like what goes on behind the scenes of an agent, or if you are an agent, BiggerPockets has a series of books for agents. The first one has been released, I wrote it, it’s called, Sold, and the next two are going to be on the way out there.
But we’re seeing at BP this convergence of investors and people who want to make their money through real estate, whether they become home inspectors or real estate agents or contractors or something. I love that, personally. I’m not a huge fan of completely quit your job and just live off of your rental income. Because as you know, Erika, as we’re going to talk about, and Henry you know too, it’s inconsistent income. It’s not the most consistent form of income. Over a long period of time it’s great; for short periods of time, not so much. But get into the world of real estate and make your living doing the stuff you love. There’s lots of ways you could be involved in real estate other than only owning it.
I’m just a big proponent of anybody who hates their job, but they know that they can’t just completely quit and live off rental income: well, quit your job and become a loan officer, become a real estate agent, become some form of business owner that works, a property manager, or someone who assists other investors in some way to help them create wealth. And you can make income doing that, too.

Erika:
For sure. Yeah. Absolutely.

Henry:
Awesome. One more thing you said before we move on. You said you leveraged a 401(k) to help get the money for the down on that property. When you say that, did you cash out your 401(k) or did you borrow against it?

Erika:
No, I cashed it out. I left the employer, so essentially I needed to roll it over to an IRA, because there was no one matching it. And so I cashed out, paid the penalty, and bought this property, but it was amazing. I mean we put around $20,000-something down, we renovated it. Because it was already a Section 8 home before, it didn’t need a ton of work because Section 8 requires… they have certain stipulations that has to be up to certain standards; so when we bought it, it was just updating the cosmetic situation. And I had just heard about Airbnb, so we put it on Airbnb and we made 35K the first year. So I made all my money back that I invested from my 401(k). I know people don’t recommend that, but sometimes you’ve got to use what you got, and that’s what I had.

Henry:
I understand. I borrowed against my 401(k) to get started, so I did something similar, so I understand. Yes, you start with what you have, and that move may not be for everybody. But yes, it is an option, as long as you’re making sure you buy something that makes sense.

Erika:
Yes. Not a Louis Vuitton purse or something like that.

Henry:
Yes. Right. So you started building your portfolio and you started growing. What kind of road bumps did you run into, and how did you overcome those as you were moving through?

Erika:
Some of the first obstacles I ran into was just having the capital. Right? And at the time, the market, homes were selling for, like I said, $60,000, $100,000. I slowly started seeing the numbers crawl up. And so I would a bunch of houses, save money, buy a new property, and I would do that. But for the first four years or so, I was just doing one at a time because I was having to save 20% each time, and so that was a big obstacle, not really having the mentorship to actually go out and say, “Okay, what are some other ways to buy faster?” Instead, I just tried to learn on my own and read some books, and I hadn’t come across BiggerPockets yet, and save up 20% each time. But the whole time the market continued to appreciate. So that was a huge obstacle, is just finding the money to buy more deals.

Henry:
Okay. How did you start finding that money?

Erika:
That’s a great question. One thing about me is that I’m very resourceful. Eventually, I think after flexing that real estate muscle, you get burned by a contractor, you have all those things that we all go through, you eventually start talking to people a little bit more and recognizing like, “Hey, I need a little bit more community. I need to like ask people. I need to reach out to people.” And so one of my… that first client that I mentioned, he actually became my mentor over time, and I just said, “Hey, what can I do to buy properties faster?” and he’s like, “Hey, let me introduce you to this lender that I use. You can take advantage of this commercial line of credit, and this is what we do. We buy properties that we have to improve at 70% or lower, and then we renovate it, and then we rent it.” He basically described to me the bird method, but did not know it was called the bird method. Right? And I was like, “Okay.”
And so what happened was I actually helped them find their property and utilized that method; and through that process, I learned how to do the bird method myself. So then I began actually doing the bird method, after doing it with the client, and asking questions like always. And so once I figured out the bird method, and then got connected to the right lender, so that I can stop using all my money every single time, then that next year I bought four properties in one year.

Henry:
Awesome. I do the same type of financing method through commercial loans and small local banks. A lot of the things that they do for me as well are they let you tap into some equity that you may have in existing properties, and use those to grow in scale. And another method that we’ve used is there’s a chunk of my portfolio that I own with a partner. Have you dove into partnerships and have you leveraged some equity as well to scale?

Erika:
Yes. And that was a whole happenstance situation, too. A good friend of mine, I’ve known him since college, and he’s done well, built his wealth, entrepreneur, all this stuff. We’re just friends, kept in touch. Him and his wife came to me and say they want to seriously invest in some properties. So I helped them buy a few properties, and then I began managing because a couple of the units were Airbnb, so I actually started managing Airbnbs as another stream of income.

Henry:
Do it all.

Erika:
Do it all. And then throughout that time I realized… We got a chance to work together. I got a chance to see what their strengths are, what mine are, and I came across this deal. I had actually someone reach out to me about listing their property, and they called me. And I it’s crazy because when they were telling me where the property was located, I instantly knew where it was, I instantly was like, “I’ve got to figure out how to buy this,” because this would have been my biggest deal, which was a quad. I hadn’t bought any type of small multifamily yet. So I’m going to meet her out there. She’s really impressed because I know exactly where her property is and everything, so I’m like, “Okay, let’s meet you out there and we’ll talk about the listing.”
So I meet her out there, I’m walking through, and I’m like… In my mind I’m just like, “I’ve got to figure out how to buy this. This is nice.” And at the end of the appointment I said, “You know what? I think your property is worth this. Also, let me let you know I am also an investor. I would love the opportunity to place an offer on your property. Would you give me to the weekend to put an offer together?” She said yes. So I said, “Okay, great.” I went back home, started talking to my husband, I was like, “We’ve got to figure out how to buy this.” And this was August 2020, we were in very uncertain times, and this property was located right by a bunch of colleges, and that was the economic driver for real estate in that area.
It was like a big risk to move forward and try to buy this property, and my mentor actually said, “I don’t think it’s a good idea. I don’t think you should buy it. It’s going to be home hard to rent it.” But I started figuring out the numbers and it’s like, “Okay, because this property doesn’t need… ” They’ve already improved the value, it’s already rented out, I can’t necessarily find a scenario where the bird method works, so I do have this commercial line of credit, but I have to put down 15% to 20%, and that’s $85,000. So it’s like, “Oh, I don’t want to spend $85,000. How are we going to figure this out?” All the while my friend and client had been talking to my husband and he’s like, “I really seriously want to invest,” but they’re out busy, has money, but doesn’t have… not in the business to actually do the deals. So I said, “Okay, what if we decided to do this together?”
So we walked the property together, and we said, “Do you like it?” He said he liked it. I told him about the deal, how it can make us money, and I proposed, “Okay. What if you put the upfront capital, you purchased it. I improved the value. I rent it out. And then after a year, we refinanced it based on the actual value, and you get your money back. What do you think?” and he said, “Great.” And we got on the phone with an attorney, put together an operating agreement, submitted an offer, and it didn’t even hit the market. And then that’s where our partnership started.

Henry:
I love that because a lot of people are interested in potentially working with partners, but it tends to scare some people as well. But what you said that I liked is you said that, “They heard what I was doing, and then they came and said they wanted to invest.” Right? And so I think the fundamental value there is: be passionate and share what you do with people, and people will find you, money will find you, especially if you’re good at finding deals. Right? And so sharing what you’re doing with people can bring people to you. Now, does that mean you should partner with everybody who comes to you with the check and says, “I want to invest”? Absolutely not.
But you found a way to form a valuable partnership where you find the deals, you put in the sweat equity, they have the money, they maybe don’t have the time, and so you each bring something different to the table that creates value, and then you split a deal, and that’s essentially the foundation for a good partnership. Obviously, there’s things that you should do to vet somebody in between there. You said you knew them, so that helps. But you want to make sure that you are partnering with somebody who brings something to the table a little different than you. And then I like that you said you called a lawyer and then you put together an operating agreement.

Erika:
Yes.

Henry:
That’s huge. You can be friends, you can be family: still get it all on paper upfront, write it down. Even if it’s just a contract between you and them and no lawyer. If it’s in writing, it’ll help avoid a lot of problems in the future, man.
What are your thoughts on that, David?

David:
I think we all know that’s the right move to make, but we don’t make it. And so as I’m sitting here thinking about, “Well, what’s different about Erika that she’s like, ‘It’s a phone call to a person who does this for a living. I could solve this problem,’ versus ‘I don’t know. What am I going to say? What if the attorney says this? I don’t want to have to pay him. What if it goes bad? You know what? This is probably just God doesn’t want this to happen for me,'” because they’re [inaudible 00:28:01]. Right?
And as I’m reading through Erika’s story, I’m seeing where you’ve come from likely had a lot to do with your drive to make this happen. And what happens is for someone like you, Erika, my assumption is that is not a hard thing, because you’ve been through harder things in life. And you’ve harnessed that pain and struggle and put it in real estate investing, and now you’re crushing it, and it doesn’t seem hard. And other people listening to this like, “Man. Why can’t I be like Erika?” Well, Erika’s harnessed her pain.
And I’m just wondering, I know you mentioned that you’re willing to share your story, so I hope you don’t mind me asking, but can you share us a little bit of your background about your parents, where your family came from, and what it was like growing up that helped create this mindset that has now given you the superpower, and you’re like Captain Marvel out here taking down houses.

Erika:
No, no. It’s a real thing. I mean my parents grew up extremely poor. My dad was a sharecropper until the ’70s, which means that his family picked cotton. My mom just grew up in a two room house and didn’t have a bathroom until she was 18. These are my parents and they’re in… Well, my dad recently passed, but my mom is in the 60s, so they’re not really old, and they just really taught us the value of hard work and just grinding. So even as a young child nothing was given to me. I’ve been working since I was 14. And so I just learned a lot from them, and just throughout… I mean even myself personally I got pregnant before I got married, I wasn’t finished with school, and it was a hard road starting out. And so I think for me, I just like… I’m just not going to let them down. I’m going to make them proud. And I’m going to leverage my resources, and look what’s around me, and figure out what I need to do to accomplish my goals.
And I think really what’s also really important is recognizing that I didn’t want society to write my sentence one way, easily thinking, “This young woman is pregnant before she gets married,” and all these kind of scenarios. You can instantly just think, “Okay, this is what her life is going to turn out.” But I am just in a situation I don’t want society to write my story; and I want to encourage other people that they can write their own story too, even if they don’t have a perfect past and come from the perfect scenario.

David:
I think what I love about what you’re saying is in many cases, if we don’t do anything to change it, you do take that road that people can see. Right? You become a statistic. Really what to me I see is it’s a downhill path. And this is not you, but just a hypothetical scenario: you don’t graduate high school, you get pregnant, you disappoint people. Your parents were hard workers, but they weren’t really financially savvy, so they didn’t teach you these things. It’s not hard to predict where that goes. Right?

Erika:
Right.

David:
All things left alone, that’s probably where it’s going to happen. But you didn’t accept that for yourself, and your story is an example of when we decide, “I’m going to write my own story,” where you don’t have to go down that path. In fact, that’s not even an option for you. I can tell from speaking to you that will never happen, and your children will never be allowed to take that path themselves, if you have anything to say about it. And real estate is, at least as far as what I’m seeing, and I’m sure you two would agree, the best tool to change that trajectory. I don’t know of a better one that could take somebody with the background that you came from and have you become a superstar. You don’t need a super fancy degree. You don’t have to have a ton of capital to get started. Right?
If anyone listening wants to rewrite their own story, there’s probably not a better vehicle to do it than real estate, and there’s probably not a better place to be learning than from you right now. So I just want to commend you for coming out and sharing of the parts that you’re not most proud of, that you’re not coming up here and waving around the big check and saying, “Hey, you could be like me and you could make a million dollars.” Right?

Erika:
Right.

David:
You’re sharing the things that you weren’t proud of, but that fueled you to now become someone that should be very proud of herself.

Erika:
Yes. What fueled me is doing things that people don’t think I can do. That is [inaudible 00:32:03]. Did you guys watch, The Last Dance? They said, “Tell Michael Jordan that he can’t do something?” That’s me. You know? I love when people tell me I can’t do something. I’m like, “Okay. All right. That’s cool. I’ll show you.”

Henry:
The other part, what I love about what I’m hearing, is that you’ve then taken this experience that you had through your upbringing, and then now this experience that you had that got you started in real estate, and showing people properties, and not only have you turned it into investment, but you’ve now got this purpose driven business, and I have a feeling that all that comes as an accumulation of all those experiences. Why don’t you tell everybody a little bit about where you are now and how all this has come full circle for you?

Erika:
Man. What’s crazy is a part of… As I was working that nine-to-five and driving to work, I would pass up so many people sitting just like… I’m driving to work, I have a goal, and they’re just hanging out and just chilling, didn’t have anything to do. Right? And so I knew that, “Okay, I don’t know how, but I feel like real estate is going to provide an opportunity to be able to provide jobs. I’m not sure how, but I know that I can do this through real estate.” And so the purpose driven businesses we’re birthed out of just that fuel to want to share, “Hey, you can hope. You can want something different from yourself, too.”
So from the real estate sales then led to just hiring agents who also don’t come from the best situations, that want to change the trajectory of their homes in their lives. And then that birthed into starting a landscaping company that provides jobs for our neighborhood, and it actually physically beautifies the neighborhood as well. Then that led to co-founding, with a group of other local top performing agents, to form this purpose driven brokerage to say we’re going to put our foot down and say, “Hey, we’re in real estate, we want to make money, but we want to provide a opportunity for everyone, to home for everyone,” so we’re going to say that is our mission, and through that we utilize real estate. And so it’s just been a full circle, it’s been a great journey, and I’m just honored to be able to do it and to be a small part of it.

David:
If I was to ask you, Erika, what is your superpower when it comes to investing, what do you think you do better than other people?

Erika:
I think I see the treasure that’s in front of me more than other people. Now I teach people how to invest as well, and that’s exactly how I teach them is like, “Okay, you may say, ‘I can’t do this. I don’t have this,’ but what do you have? Let’s start talking about what do you have, what are your goals, and how can we have some of those things align?”
I think my superpower is that I am resourceful to the max. If you get me some lemons, I’m going to make lemonade soda for the block. You know? So I think that is a superpower that I have that’s been super helpful, and I’m not afraid to ask questions, and I’m not afraid to admit that I don’t know something. A lot of times, people they don’t want to admit that there’s something that they don’t know, and I actually prefer to ask a question to find out versus missing out on an opportunity, or just not doing anything just because of a lack of knowledge.

Henry:
I love that. I often tell people when you’re going to answer a question, especially when you feel like the answer is no, don’t just say no, but think through what you can do instead, and that typically sets you apart from anybody else who that person may be interacting with. And the magic in finding great deals, the magic in being successful, is being of value. Right? We’ve said it multiple times on this show alone. Right? And so this doesn’t go for just investing, but it goes for anything.
If you can approach situations from a perspective of, “What can I do?” instead of, “I can’t,” or “No, I can’t do that,” or “No, that won’t happen,” but give people something more that you can do: a) you create longer lasting more beneficial working relationships, and you will always be on the top of somebody’s mind when the time comes for them to start working with you, when they do have that deal. Right? When they do have an opportunity they’re going to think, “I want to work with that person because that’s the person who tried to add value to me when everybody else kept saying no.”

Erika:
That’s so good. And I had to learn that the hard way. I have a quick story about that. I had a situation where my husband’s frat brother called us and said, “Hey, I have this house. I want to sell it to you. It’s $20,000.” He had some type of tax situation and he just needed to get out of it fast. And at the time, we were in the process of purchasing our second investment property, and again we were putting 20% down. That $20,000 was all the money we had. And so I thought about it for like 24 hours, and then I came back to him and I said, “I can’t do it.” I didn’t call anyone. I didn’t ask for advice. I just looked at it just based on a very narrow scenario with my own personal finances and said no.
A year later, their property was renovated and sold: it sold for $315,000. They probably put about $100,000 into it, but they made over $275,000. And when I seen that happen, I said, “Okay, no more. I’m not going to do that anymore. One, I pray that I never not have $20,000; and two, I’m going to say yes and I’m going to figure it out.” So that type of opportunity that I missed out on fueled me to say yes more instead of saying no and just counting myself out.

David:
Henry, to your point, I want to add something before we move onto the Deal Deep Dive. That was an amazing piece of advice you both gave regarding: if you can’t do it, don’t just say no. When you say, “No, I can’t,” you’re coming from a place of yourself, “No, this doesn’t benefit me. I can’t help you. That’s all there is to it.” “It’s not my problem,” is what you’re basically telling someone. When you say, “No, I can’t do this, but I can do this,” you’re being honest that you cannot help them, but you are saying, “I care about your situation and I can help you in this way.” I would say that is a very good step for anyone who wants to build wealth in a capitalistic society. It’s how much value do you bring to other people. And that’s the thing that people who want money, but they don’t want to bring value, never get it. People who bring value end up having friends and money. That’s usually the way that it works. Right? The rich get richer in that sense.
The next piece I would just add onto it is after the conversation ask yourself, “Why could I not help them? What would need to change so that I could help future people?” That’s probably, Erika, how you became a real estate agent is you had all these people asking you, “How do I do that?” and you were like, “I can’t help you. I’m doing it myself,” and at a certain point you said, “All right. I’m just going to help them. I’ll just get my license and I’ll help them do the same thing I’m doing.” Now, you have another source of income because you’re helping people. That became a team that you built. Now, you become a business owner. That became a brokerage that you’re talking about or… I don’t know. Do you own the brokerage or you just work in it?

Erika:
No. I’m a co-founder of the brokerage.

David:
Okay. So now you co-found a brokerage. And now you’re helping people in all of these ways as your wealth is growing as well: that’s the secret. This is what you won’t learn in a real estate course, or a guru who tries to tell you how you can make $100,000 really easy isn’t explaining it. It has to be how you bring value to people, and I love that you two both mentioned: if you’re asking yourself the question of like, “Well, how could I help them? What would I have to change?” you will fall into money.

Erika:
Yeah.

Henry:
100%.

Erika:
Absolutely. That has been 100% my experience.

Henry:
Awesome. Awesome.
Well, now it’s the part of the show where we move onto our Deep Dive.

Announcer:
Deep Dive.

Henry:
All right. This is the part of the show where we dive deep into a specific deal with our guest. Do you have one in mind?

Erika:
Yeah. Absolutely.

Henry:
Awesome. First question is: what kind of property is it?

Erika:
This is a single family home that has a basement unit.

Henry:
Awesome. Awesome. And how did you find it?

Erika:
I flipped the home with a friend of mine next door, and the seller just came to me and said, “Hey, do you want to buy my property? I want to move.” And I said, “Yes.” That’s exactly how it happened.

David:
I’ve got to say you told the story at the beginning like, “I just looked up this corporation and called the guy,” and he said, “Yeah. I want to sell my properties.” And your neighbor came up to you. Right? I think a lot of people get in their mind that like, “I don’t have time to make 9000 phone calls to find the one person that wants to sell it. Doesn’t always work that way, especially if you’re in the right market. I think, Erika, your energy is just out there looking to make something happen and people are finding you. You look like an approachable person. I would have no problem coming to talk to you, so there’s something to be said for that as well. That awesome they walked up to you and said, “Do you want to buy my house?” So how much did you buy it for?

Erika:
We closed at $235,000.

Henry:
How’d you get to that number? How’d you negotiate it?

Erika:
Oh, that was interesting. He said, “I want to sell you my house,” I said yes. And then I said, “Okay. How much do you think it’s worth? How much do you want for it?” and he said $260,000, and I was like, “No way.” And he said, “$260,000. I need $260,000.” I said, “Okay.” So I sent him an offer for $260,000. I got a home inspection, I got my plumber in there, I got all my trades, and he had… So many things were shotty, they need to be done, so I sent him this email, and I sent him all my inspections and my estimates, and I said, “Hey, I need to buy your property for $240,000,” is what I said, “and here’s why.” And he said, “Yes, I can close in two weeks.” And he pushed back a little bit more and we ended up landing at $235,000.

Henry:
So you counted at $240,000.

Erika:
No. I’m sorry. He counted.

Henry:
Okay.

Erika:
I counted at $230,000. He counted at $240,000. We landed at $235,000. Sorry about that. Yeah.

Henry:
So what you said real quick that I love is he said he wanted $260,000. You said no. He said, “I want $260,000,” and you went ahead and locked it up. Right?

Erika:
Because I have to get it under contract. Atlanta is such a hot market. Someone can come right behind me and get it under $260,000, whatever, and I miss out on a deal. I don’t have time to hackle back and forth, especially an off-market deal.

Henry:
A lot of new investors would see that and say, “Okay. Well, I can’t do $260,000.” Right? And again, you are right on. You said you see the value that other people don’t. Right? And so by locking it up under contract, you gave yourself controlling interest, and no one else could have that, and then you did your due diligence to get to your number. Now, if it had come back and you still wouldn’t budge, you still have the option to get out, but you gave yourself a shot by locking it up. I love that. I love that.

Erika:
Yeah. I do it every time like that.

David:
How did you end up funding the deal?

Erika:
I got a private lender that basically gives me 95%. They paid the purchase price of the property, I put down 5%, and then my contractor estimated that the renovations would be around $80,000, so they funded my renovation, and so I renovated the property. And now it’s up for rent for $2500. And this is a unique one. He was operating a barbershop in the basement, and so I converted the basement to a loft apartment. So the upstairs we’ll be renting, it’s for up for rent, and we’re going through applications right now for $2500. And then the downstairs basement is going to be a completely separate unit that we’re going to put on Airbnb on the weekends, because it’s right by downtown, and Monday through Thursday we’re going to actually list it on a platform called Peerspace. Have you guys heard of Peerspace?

Henry:
I have heard of Peerspace. That’s awesome.

Erika:
So Peerspace will be Monday through Thursday, and then Airbnb on the weekends.

Henry:
What lessons did you learn from this deal?

Erika:
Oh, wow. That’s a great one. One, I learned… this was an interesting deal. I got my contractor to do the estimate for me, and I thought that it was high, so I said, “You know what? I’m not going to move forward with you on this deal. I’m going to sub it out myself,” and it ended up pretty much being the same cost. So that was the deal I learned like, “Okay, maybe ask more questions and figure it out,” because a lot of times the numbers can come up pretty much the same.
Another one was really just being available. Like I said, the guy he reached out to me. I had been coming to the house. Whenever I’m renovating a property, I get to know everyone on the street. I’m talking to them. I’m letting them know what’s going on. They’re looking out for my property so I won’t have any theft issues. So just really continuing to network, be approachable, and look out for opportunities was a big one I learned on this one.

Henry:
I like that lesson. Because oftentimes what we forget to factor in, when we’re going to start subcontracting out jobs to save some money, is that our time costs money, too. And so when you factor all that in, sometimes it ends up being pretty close. Now does that mean you should take the first contract bid you get? No. But make sure you value your time as well when you’re looking to do something like that.

Erika:
Yeah.

David:
All right. Thank you for that Deal Deep Dive. That was awesome.
Let’s head over to the…

Announcer:
It’s time for the Fire Round.

David:
All right. These questions come directly from the BiggerPockets forums, and Henry and I are going to take turns firing them at you rapid-fire style. Henry, why don’t you take the first one?

Henry:
Awesome. Fire round number one. If you found a potential partner, what do you do to ensure a successful partnership? What information should I be asking to confirm they can provide their part of the financials and can follow through on our deals?

Erika:
That is a great question. For financials, you definitely want to review their business documentation, their profit and loss statement, their net worth agreement that you can have put together [inaudible 00:46:45], just to view to make sure that they are who they say they are.
And then also a big thing with our partnership: a partnership is like a marriage; it really is. You’re taking the same risk a lot of times, and you want to make sure that your values align with whoever it is you’re partnering with. And I’ve had a lot of people approach me about being a partner; and if our values don’t align, I’m probably not going to do it. So that’s one thing.
And then also have the end in mind in the beginning, especially if it’s a friend. You don’t want to ruin a relationship because expectations weren’t set right and things fell through the crack. One thing that my business partner and I we talked about in the end, “What is the out for us?” We decided that from the beginning, and that really does help to make sure we are protecting the relationship in case… Because we don’t know what can happen.

David:
All right. Question number two. Are there any benefits to having a purpose-based company beyond the satisfaction of helping others?

Erika:
Another benefit to being purpose driven is as you are… For example, with our landscaping company, we’ve been able to actually help employees that have been homeless to be able to transition to some of our housing. So the beautiful thing about that scenario is that we are able to provide a job; and because he’s working for us, he’s showing up, he’s being consistent, then now we’re also able to rent one of our houses, because he’s able to apply for a voucher, and so we are getting financially compensated for being a good neighbor and being purposeful. And so there are lots of scenarios where you can actually be incentivized for actually helping out and adding value to other people’s lives.

Henry:
Perfect. So question number three. As a newbie, how do I perform research to find who property investors are in my area? Is there a certain website or true indicators as to who the investors are?

Erika:
Yes. Back when I was first starting out as an agent, I was looking at my local MLS. There are ways where I did have access to some additional tools that made it a little bit easier to determine whether there’s an absentee owner, but that also you can find that from looking at your tax assessor’s website.
Facebook groups: I leverage Facebook groups. Right? Looking at what are the local real estate investing Facebook groups in your area, and are they meeting up, are they sharing resources? They have them anywhere from just single family, or specifically multifamily Facebook groups. Really leveraging that to meet other people and figure out what are the successful investors doing, and asking them, “How many properties do you own? What your end goal? Are you looking to transition?” So many older long-time investors, they may be open to a seller financing opportunity. You never know. So connecting with people in those outside of the box ways does uncover opportunities for you.

David:
All right. This is going to lead us to our segment of the show. It is the world famous…

Announcer:
Famous Four.

David:
All right. These are the same four questions we ask every guest, every episode, and now we’re going to ask them to you. Question number one. What is your favorite real estate book?

Erika:
Oh, man. Everyone says says, “Rich Dad Poor Dad,” but it’s a real thing, so that is one. But I’ll give you another one because everyone says that. One that’s been super helpful in me being a landlord is, Landlording on Autopilot. I would read that book in the middle of the night.

David:
Is it Butler?

Erika:
I think so. Yeah. Mike Butler. Yes. Yes. I would read that in the middle of the night and just screenshot certain things to my admin, and it’s like, “Oh, man. We need to do this ASAP.” So that book has been super helpful in managing properties and really optimizing my rental.

Henry:
Awesome. What is your favorite business book?

Erika:
Oh, that’s a good one. My favorite business book is, “We Should All Be Millionaires.” It’s a guide to women making more money by Rachel Rodgers. It has been truly life changing. Yeah. It’s been amazing so that’s definitely my favorite business book.

Henry:
Fantastic. What hobbies or habits do you have?

Erika:
Hobbies. I was thinking about this. I homeschool my children, so one of my favorite hobbies are just being curious with them. We love traveling. We love learning new things, new cultures. We love reading together. Just exploring with my family, homeschooling my kids, is actually a hobby that I really enjoy. And I’m really excited that real estate gives me the freedom to be able to do that.

David:
That’s awesome. All right. The big one: in your opinion, what sets apart successful investors from those who give up, fail, or never get started?

Erika:
I think figuring out what fuels you, and really just going in and using that as your mantra of life, whether you write it out and you put it on your mirror and you look at it every single day. Building your group of women, your group of men or women around you that are rooting you on that are also like-minded, that is really what’s going to help you be successful long-term.
So having that community, one; and then two, working on your mindset and really identifying, “What is fueling me? What is my why? How can I put this in front of myself every single day and remind myself of why I’m doing this?”

Henry:
That’s amazing. Thank you. So tell the people where they can find out more about you.

Erika:
I’m all over, but you can find me the most is Instagram @ErikaBInvestor. Erika with a K, B, investor. I’m always talking about either homeschooling or real estate. I am also an investment coach, so I teach other people how to invest in real estate with this same resourceful strategy, using what you’ve got to get where you want to be. You can also find me on YouTube. I have a YouTube channel as well with Erika B: Owning It and Living It.

David:
Well, thank you, Erika. This has been awesome. It’s been insightful. It’s been educational. It’s been inspirational. It’s been a lot of als, and I want to thank you for putting your time into speaking with us today. I’m sure it was a little nerve-wracking to come onto the podcast that you’re a big fan of. I’m really glad we have you. We also have a mutual friend, [Christina Minao 00:53:17]. Shout out to Christina and Andy.

Erika:
Shout out for Christina and Andy.

David:
Yeah. I was speaking with her and I had no idea that you were a BiggerPockets fan. And now I get to speak to you for just as long as Christina, so that’s awesome.

Erika:
Yes. Awesome. It’s so great. Thank you for the opportunity to be here.

David:
Our pleasure. Henry, anything you want to say before we get out of here?

Henry:
No. Just thank you so much for being here, and thank you for sharing your story, and being vulnerable with us and with the audience. Hearing that backstory is inspirational for a lot of people, and I love that you were willing to put that out there.

Erika:
Thank you.

David:
Thank you, Erika. This is David Greene for Henry Tell-Him-What-You-Can-Do Washington. Signing off.