How to Raise Money for Real Estate Investments with Julie Lam

Sean: [00:00:53] Thank you very much for coming on the show today. Really appreciate it. Go ahead and introduce yourself and let everyone know who you are and how you got into real estate investing.

Julie: [00:01:00] Sure. So my name is Julie Lam and I got into real estate investing back in 2009. So about 10 years ago and I got into it kind of accidentally. I wasn’t actually getting into it per se to be a “real estate investor”. I was just more really doing the traditional narrative of get married and buy a home. That’s what people do when they get married. And my real estate agent told me, “ You can either buy this townhome or you can buy a loft. But if you buy this townhome with all of these bedrooms, you can do what we know in the real estate investing world as house hacking.” And so I said, “Oh that’s really interesting. We’re totally going to do that because that sounds really interesting and let’s try to save some money. We’re going to start a family.” My introduction to real estate investing was house hacking on my first property in Oakland, California, and we ended up buying a few more properties here in the Bay area around that same time 2009-10. Little did we know that it was a fantastic time for us to get into the real estate market. We’re looking at selling those properties in 2013 and 2016. We were looking at exiting those properties. And as we look to exit them we were trying to figure out what the highest and best use was going to be for us to basically grow and accelerate our wealth. And so that’s when we started to look at getting into multifamily. And I very quickly realized early on in the multifamily space that there’s a lot of work that is required to take down a multifamily apartment building. And so I found out about the opportunity to be a passive investor in a deal first and that was how I initially started in the multifamily investing space. And then after I was a passive, about half a year later, I started being on the active side on the general partnership side and started bringing equity to a general partner sponsor’s deals. That was kind of my introduction, this was in 2017, to doing what I do now at my company Good Egg Investments. I met my business partner about a year ago at a conference in Denver and we co-founded Good Egg Investments together and over the last year and a half or so between Good Egg Investments and some of the other money-raising I did on my own, we’ve done about 11 deals in an 18 month time period. So, that’s my story and how I got into it.

Sean: [00:03:27] Very cool! Can you talk about how you got into the whole money-raising part of the business because it seems like it’s something very scary for someone to do especially if you’re not in control of the deal. How do you ask someone else to raise money for someone else’s deal?

Julie: [00:03:39] Yeah, that’s a great question. So I got into it because I started out as a passive investor and I kind of learn the ins and outs and did a lot of the due diligence to do my own deal in 2016 and it was really through that vetting process where I started to understand how the deals work and started to understand from a passive investor standpoint all of the questions someone would want to ask. So I didn’t approach this from the standpoint of “Well, I’m going to set out to be an equity raiser.“ It was just more kind of just happened accidentally where I took the information that I had learned about, understanding how the deals work and then talked about that with family and friends. It was one of those things, again, I didn’t intentionally set out to do. I more just really wanted to share my knowledge and provide value to friends and family and let them know about the Investments I was getting into. And then they said “Well the next time you do a deal let me know. I might be interested in partnering up with you.” And I thought, “well, this is interesting. I didn’t expect that.” And so I was offered the opportunity to join the general partnership and bring some equity to a deal. And so I did what people do when they start businesses. You get a website up and you start blogging and educating folks. I started to gain a little bit of a following there with family and friends and their interest. And then I also simultaneously chiming in a lot of mothers groups locally here in the Bay Area and just talked a lot about alternate investing strategies. I think what people traditionally do when they think about real estate investing is they buy their primary home and then they buy maybe a rental or two. But not a lot of people know about the opportunity to invest in a crowdfunded deal that has become more popular in the last couple of years.

Sean: [00:05:38] So I guess for your first few deals that you helped raise money, you were probably going to friends and family. Did you have any outside investors as well?

Julie: [00:05:47] So on my first deal, I think it was just friends and family. And then it was the second deal that I did where I then had a little bit of a “track record”. And then I could leverage that first deal that I did and then I took that to various places like meet ups and events that I went to and Facebook posts and sharing what I knew and sharing the knowledge that I had and then now I was able to say, “Okay, I have investors and I have already closed one deal behind me.” And then I think it was on that second deal that I had folks that I didn’t immediately know within my network prior to starting that.

Sean: [00:06:29] Makes sense. So I guess for the first one you kind of just tell them how well you did on your first passive investment, how the whole structure works and then kind of say “Look, this is a good way to increase your wealth.”

Julie: [00:06:39] Right! and it was great because it was a way to gain a little bit of a track record for me without actually having a track record other than having done a deal of my own. But, I think that’s a great place for people who are looking to do what we’re doing and it’s to start first with your immediate network.

Sean: [00:07:00] Right. You can’t discount your sphere of influence.

Julie: [00:07:02] That’s right. Yeah!

Sean: [00:07:05] If you’re starting out fresh as a passive investor. And you start thinking, “Maybe I’ll start raising money.” How do you even approach these sponsors who even allow you to have the opportunity to raise money for them?

Julie: [00:07:18] Really what you want to do is you want to try to create a business and create a following so that you can show that you would be potentially valuable for someone else who is looking for some equity to be brought to their deal. And so it’s not enough to really just say “Well, I think I could raise money”, or, “I think I’m interested in this. What’s that process look like?” But just going through the motions of creating a website, creating a thought leadership platform, identifying your target audience, engaging some investor interest first, and then be able to take that to someone and say, “Hey this is what I’ve done already. Is there interest on your part of potentially working together on a deal?” or something like that.

Sean: [00:08:07] I see. You have a platform set up like your website, you’re blogging, and you say, “Look I already have things like 10 or so verbal commitments that can help you for whatever project you have.” And they say, “Yeah, sure. Next time I have a good deal, you can come in and help me raise equity.”

Julie: [00:08:21] Right, and that says so much to me. It shows me that they’re really committed. Right?They’ve gone through the process of creating a website, they’ve thought about what kind of thought leadership platform they’re going to have, they created a blog, they have videos, they’ve identified their target audience, they’ve engaged investor interests. That person is ready to go. So, that’s very much of what I did when I got into this. I made that commitment and I did all of these things to show my partner that I was ready and I was committed to partnering with them on a deal.

Sean: [00:08:57] Is there kind of like a minimum that they’re looking for? Like if you only coming with “Oh, I’ll help you raise 200,000” and they’re like, “Nah, it’s not really worth our time.” What kind of a equity raiser are they looking for?

Julie: [00:09:08] So it varies from operator to operator. I wouldn’t say that it’s the same for every operator. Each one is going to have what’s worth it for them. And I think a lot of it is going to be deal size. That’s one thing. And then I think, secondly, what their capacity is there being the operator for working with how many ever equity raisers there may be. So in other words if it’s a two million dollar raise and they just want to work with one person, well they’re going to work with one person who can bring the whole two million to the table. But if this is an operator who doesn’t mind working with maybe 10 different folks then the minimum would obviously drop. And I think it’s from what I’ve seen in the industry. It’s really dependent upon how many people the operator wants to deal with. Because if you’ve got like 20 equity raisers in the deal, it can be a lot of work. Whereas if you just have one person who’s managing the equity raisers then it’s a lot less time commitment on their end. But, there’s not really a minimum. I would say it’s just on operator by operator basis.

Sean: [00:10:16] I see. Because I know for like a 10 million dollar raise it might make sense to have five raisers or so. For 1 million dollars maybe just one.

Julie: [00:10:26] I would say that half a million is probably like the lowest that I’ve seen. But I do know that there are other situations where it’s been less than that too. So it just like I said, it just depends.

Sean: [00:10:39] So how do you go about getting the sponsors themselves?

Julie: [00:10:42] This goes back to the due diligence that I did when I was trying to find deals to get into of my own and really what I was looking for, and I had talked with so many sponsors and, was a track record. So it doesn’t mean that they have to go back to before 2009. I know there’s a lot of investors out there that would love to work with an operator who have been investing since 2009, but it wasn’t that. It was just more that they had a year or two and that they had closed at least three to six deals to show that they have identified a particular niche and that they are able to execute and perform on those Investments. So I wasn’t really looking to partner up with someone who is doing one deal or had only done one deal. I was really looking for a little bit of a track record. Any of the sponsors that I talked to, one big indicator for me that I would always look for is how responsive are they to my questions. And in their response, are they answering my question or are they dodging my questions. And how much attention to detail is there in their response. Believe it or not, I think that that tells you so much about a person and an operator, someone who’s going to be managing the investment, their management style. If they don’t have attention to detail, they don’t respond to you timely, they’re not answering your question, it’s going to be a long ride. Where as on the opposite side of that, If you email them with a question, the response is concise, it’s to the point, and everything may sound funny but the words are spelled correctly, you’d be really surprised how much of a difference those kinds of things can make. Those are some of the things, I think when you think about markets, I look for an operator who was investing in one market. So I don’t want to invest with someone who was doing a deal in Tennessee, and a deal in Florida, and a deal in Dallas and Atlanta. I really wanted to partner up with an operator who identified a market and knew that market like the back of their hand and they’re not operating in any other market. Do these operators have a full time job? Are they doing this on the side or is this all they do all day long? Preferably it would be that they don’t have a job on the side and that this is all they do all day long; managing this investment. I think another thing is how conservative are they in their underwriting. So when I’m sent an investment summary, do I see that their underwriting is really aggressive. At this point in the market cycle, you don’t want to see someone underwriting these huge rent increases year over year. We’re just not at that point in the market cycle, right? So you would want to see 3% or less. So that speaks to the conservative nature of their underwriting. You would want to see long-term debt, what kind of debt and financing. And this is going more into the deal rather than the sponsor, but I guess more on going back to the sponsor would be transparency. So when you’re asking questions, are they getting to the point and really letting letting you in on what’s going on, or do you feel like they’re kind of like skirting the question and things like that. And I guess the last thing would be what did that person do in their previous career. Was it related to this, was it not related to this. Preferably, what they’re doing now is somehow related to what they do in real estate investing in some way. I think it’s very helpful. I think that goes back to leveraging, folks shrinks and what not, and I think that’s really important.

Sean: [00:14:27] Do you mind if they are actually in the actual place where the properties are or do you care that they live in California but operates in Texas? Or do you want them to be based in Texas?

Julie: I think that there needs to be some connection to the market that they’re investing in. So let’s say even if they didn’t live there but they grew up there and they know that market like the back of their hand, personally, that would be comfortable. Ideally, I would say if the person lived in the market it’s probably better but I wouldn’t say that that’s a deal-breaker. I would say that, you can achieve that same goal by having regional management boots on the ground. You have your property managers. So long as you live close enough to fly over to the investment and that market, I think that it’s okay. So, someone’s in California and they own a property that’s in Jacksonville, Florida, it’s a long flight and it’s hard to get you. It’s not how often are they going to go back and forth. So, yeah, I don’t know, not a deal breaker, but …

Sean: [00:15:34] What are your deal-breakers?

Julie: [00:15:35] I think really it’s the track record; lack of a track record. I’m just not at this point in the market cycle where if this is your first deal, I’m just not in a position to partner up with you even as a passive. I think that and the ability to conservatively underwrite. So if I see their investment summary is super aggressive, no, not going to do it. I think at this point in the market cycle, you just have to be very aware of where we are and you have to make sure that everything that you’re doing is conservative. I think that’s my opinion just because I think something’s coming in the next 12 to 24 months. But who knows right? I mean, I remember saying this in 2016 that something was going to happen in the next 12 months. And here we are in 2019 with no signs of slowing down. Right? So who knows .

Sean: [00:16:32] Let’s talk about the deal itself. What do you look for in an actual deal?

Julie: [00:16:40] The number one thing that I look for when I think about investing in a deal is, and this is specific to multifamily apartments, I want to invest in a market that has strong job growth and strong population growth. So I think those are the two fundamental things you look for. If a market doesn’t have those things then to me it’s potentially risky. Again going back to where are we on the market cycle, you want to make sure that you’re hedging any potential risk of decrease in occupancy. Job diversity. Is there one industry that makes up the entire economic job force there? Or are there a number of different industries? And if there are a number of different ones, you want to make sure that no one industry makes up more than 20% of the overall industry. And that again is to hedge any kind of recession. If, let’s say there was a tech recession and you’re investing in an area that has nothing but tech companies, like the Bay Area, or Austin… One of those types of areas, you want to look for that job diversity. Cash flow, that’s another thing that you want to look for or that I look for when I look at a deal. I look for cash flow from day one. So if I’m presented a deal and I have been where they say , “You won’t receive the first distribution until 12 months”, what that means, the reason you won’t receive a distribution, is because there’s not enough cash flow in the deal to start paying the investor until 12 months and that’s because it’s probably a pretty big reposition and so they have to go in and make all of these renovations in order to get market rents up to where they needed to be to start paying you. And so again that goes back to being very risky. So I want to make sure that I will see what distribution preferably on an 8% preferred return, 30 to 60 days after closing, because that tells me that the strength of the deal is enough from cash flow perspective to start paying me, the investor, from day one. And when you think about a potential recession happening you want to make sure that that cash flow is there because then you have the ability to absorb any kind of decrease in occupancy or a drop in rents and still maintain the property and not have to be foreclosed on or what not.

Sean: [00:19:02] Right. So usually the preferred returns are 8% and you’re expecting the deal to have that complete 8% year one?

Julie: [00:19:11] Yes. That’s right. Yeah, because I think in my opinion, any deal that doesn’t have that in day one, it’s potentially going to be a little bit of a riskier deal, not as strong, because the cash flow isn’t there to pay out. I would say the other thing is that you want to make sure that, and this isn’t a deal-breaker, but you want to make sure if possible that there’s long-term debt on the property. So, if it’s a five year projected hold, you want to see that there’s at least more than five-year, seven-year term, ten-year term greater if possible because what you don’t want to happen is that you hit some kind of recession in your five. And let’s say it’s a five year projected hold, on the loan and then you’re forced to sell at a time when the value of the property isn’t there right? It’s a bad recipe. But it’s not necessarily a deal-breaker. I have seen some deals that are structured with an interest only for a certain period with a couple of years extension after that. I just think it’s a little bit riskier because, if you’re in your two or three and you want to refi out and you can’t, then at least you have a few more years cushion to wait and ride anything out. But what happens in that fourth year and fifth year If you can’t refi out, you’ll be forced to sell . So long-term debt. And the third thing would be cap-ex reserves. So whenever I look at a deal, I want to make sure that the operator has raised enough capital prior to closing. So I don’t want to see that they need 5 million to do the cap-ex repairs, but they’re planning on getting that money after closing. I want to know that we have that money sitting in the bank account, ready and waiting for us to execute at closing. Because if we were to hit a recession or have some kind of a correction, then money as we all know can get very expensive, right? So if you’re then trying to chase money to implement these capital expenditure repairs, it’s a quick downward spiral. Water heaters go, roofs go. You can’t get the money because it’s too expensive. You didn’t plan for that. So I would say that those are the three big things: the cash flow, long-term debt, and then the cap-ex reserves that you want to make sure is in place when you’re looking at any kind of a deal.

Sean: [00:21:30] So your partners acquire the properties through long-term debt right away or they’re doing some kind of Bridge Loan?

Julie: [00:21:38] So it depends deal to deal; not even operator to operator. It’s a deal to deal. Some of the deals we’ve done do have longer-term debt but there are others that don’t and that have the bridge loan. And traditionally you’re going to see like a two or three-year bridge and then a couple of years extension after that. So it’s not a deal breaker in my opinion. I’ve invested in deals that have that structure. It’s just something to be aware of and if possible you’d want to get that longer-term debt. I think as long as you chat with the operator and you say, “Hey, what’s the plan for this property? “, I mean if we had some kind of a recession, what are we going to do? As long as it’s top of mind for them and they’re aware that they need to get in and refi out either into a new loan or exit the deal, as long as that’s top of mind for them in your two or three, then you have a couple of years if we’re in a recession at the time that they consider to do that to figure out what you’re going to do. So I think a lot of it is just about communication and making sure that like I said earlier, is that sponsor or operator being responsive to your questions? And so those are the kinds of questions you want to ask and see how they respond in that kind of thing. So not a deal-breaker, but good to have if possible.

Sean: [00:22:56] About the deal itself. Are you looking for a certain cap rate, IRR?

Julie: [00:23:03] I would say that anything anything under a 15% IRR probably isn’t going to be that attractive to me and the only reason is because I’m still seeing deals out there that are still at the 18% IRR. So when I see a deal that’s a little bit less or could indicate that it’s less risky, but as long as I can get the highest return for the least amount of risk, then I’m going to chase whatever deal that is, right. So I can find that, I’m going to stick with that. So if it’s 15%, why would I do 15% when I can get 18% here with someone who has a strong track record and has identified a niche and they’re just closing deal after deal and project, hitting returns and all that kind of stuff right? I’m going to do the 18%, right? So I would say 18% iRR is still something I’ve seen. And I want 20% returns. So I personally like to invest in deals that have that 8% preferred return. I know that there are other operators out there who do the 80/20 split and it could potentially be a greater return to me as the investor but I like the 8% preferred return as a passive because that ensures that I’m going to get paid first before the general partnership takes anything, right? So that’s another thing that I look for.

Sean: [00:24:19] And that’s 18% on the investment side, right or that’s the whole deal?

Julie: [00:24:23] Yeah, as a passive.

Sean: [00:24:25] That’s actually very impressive that there are operators out there in this market who can still acquire property turn around and make 18%.

Julie: [00:24:32] Yeah, I mean honestly the reason I think the only way that they’re able to find those deals, and the only way anyone will be able to find those kinds of deals at this point in the market cycle really, is by having either a great broker relationship where that broker’s bringing them pocket listings or they have a connection with someone who’s just sitting there cold-calling mom-and-pop owners. And they’re able to access these really great off-market deals. And so, anything on-market I think, they’re good deals. But I think the only way you’re going to find these homerun deals with a 18-20% IRR, with 8 percent preferred return and all that kind of stuff where they’re paying out day one, is really from having those good broker relationships and off-market deals.

Sean: [00:25:18] Yeah buying in a steep discount. Right now, can you walk us through the entire process of how raising money works starting from what’s the order do things go? Do you get verbal commitments first, you get a deal first, you find operators first, or how does it all work?

Julie: [00:25:35] So the work that we do is always ongoing, and I’ll explain what I mean by that. But really what we’re doing, this goes back to what we were saying earlier, is how does somebody get into this really? How someone gets into this is by providing value first, right? And so that’s really what we’re always looking to do first. We’re always looking to add value for people and we’re looking to do that by educating them whether it’s through blog posts or videos or whatnot. And then once people find us and they read up on our website and they learn a little bit more about what we’re doing then they go through a funnel. We’ve created this funnel which is something Annie and I set up. Annie is my business partner. The educational component is kind of like a lead magnet, if you will, and then they funnel down through, they sign up for our what we call Investor Club and once they sign up to the Investor Club, they receive a series of automated emails. And then after that, more education, thank you for joining emails, if you haven’t read these blog posts, here are some things you should consider. And then it’s schedule a call with me. And then as you know, in order for us to work with investors, we have to have a pre-existing relationship with them. And so that conversation is required. And so they’ll be prompted to set up a call. I use MeetingBird. That’s an app that I use to schedule and it’s great because they move through that funnel and people end up on my on my calendar without me having to do very much work. After we get on the phone and we have a conversation and I understand whether our investments are appropriate or not for them, then they are officially in our Investor Club. And then any time we have a new opportunity we email the opportunity out to everyone who we have that pre-existing relationship with. And then in that email, after announcing the new opportunity there’s an option to put in what we call a soft reservation and what that does is it allows investors to kind of hold a spot in their deal, it doesn’t guarantee the spot, but that allows them to hold a spot in the deal. It’s kind of like expressing interest. And then after that we send out the investment summary, we hold a conference call and then that’s really like the two pieces of information that they get to really do their due diligence and assess if it’s an opportunity they want to get into or not. And then after that a couple weeks later, we look for firm commitment. So we reach back out to everyone on the soft reservation list and we say, okay, we’re looking to firm up our commitments and there are inevitably a few that drop out and that opens up some space for new investors. And then they sign the legal documents, they fund, and then that’s pretty much it. They get an email in the day that we close letting them know that we closed on the deal. And then they get an update every month letting them know where we’re at with our occupancy. And then where we’re at whether we’re meeting or exceeding our projected rental income. So if we projected $150 rent bump are we meeting that or we exceeding that. And then we just talk about stuff that’s happening in the submarket If anything and where we are with the renovations and things like that. And usually like I said, we try to start distributions anywhere from as soon as I’d say like 60 days after closing to… One of the deals we did six months, after closing was when it started. So like I said before I wouldn’t do a deal, we wouldn’t partner with an operator that propose anything longer than that. To us that’s kind of the max. But yeah, that’s kind of start to finish how we find investors and that’s kind of the process they move through and then, getting to the point of actually investing in a deal.

Sean: [00:29:22] So we go backwards in time. You send a newsletter once a month. Since you guys aren’t the operators, do the operators send the whole thing out or does it go through your channel? Does Good Egg Investment send out those deals to those investors or is it that operator send that email?

Julie: [00:29:39] Ah no it’s Good Egg Investments

Sean: [00:29:40] Because I guess like they’re your people so you take care of them now.

Julie: [00:29:43] Right. Yep, and that’s part of what we do when I talk about investor relations. That’s what we do as we continue to keep the investors updated about the investment and we also triage any questions that come up and things like that. I mean that’s one of the big rules that Good Egg has in the co-syndication of the deals we do.

Sean: [00:30:01] And if we talk about a timeline, so I’m guessing the new opportunity starts when a general partner that you have already have a pre-arranged setup, like, “Look I’m going to bring in the say maybe a million dollars to your next raise. Let me know if you have a new deal” and then let’s say two weeks later he says, “Okay I have a new deal. Help me raise money”.

Julie: [00:30:19] Correct!

Sean: [00:30:21] Then right there, you send your email out to your list and ask for soft reservations. And how long do you wait between that time and that firm commitment time?

Julie: [00:30:32] So I would say it’s usually about three weeks or so. And not just more of a function of, when do we have the conference call completed. Usually from the time we announced a new opportunity, usually the investment summary is already available at that point we announce it. But then the conference call usually happens within a week after announcing that and then usually about, two weeks after that we follow up and look for firm commitment. So I would say it’s like a two to three week window after making the initial announcement.

Sean: [00:31:07] So the conference calls are like a webinar, right?

Julie: [00:31:11] Correct!

Sean: [00:31:11] Does anything make more of a difference, like the email makes more difference or the webinar makes more of a difference?

Julie: [00:31:17] In terms of getting the firm commitments, I would say that it’s the conference call / webinar is a critical component to getting investor firm commitments because it gives the investors a chance to hear your voice talking about the deal and it also gives you an opportunity to shed some more light on the submarket that you’re investing in and also the deal itself and to talk a little bit more about yourself. And so I would say that the webinar, and if you did it live and you had a Q&A, it’s very helpful because then it gives investors the chance to listen to other people asking questions. So it’s not even so much valuable that they have the opportunity to ask questions. It’s the ability for other investors to hear other folks asking questions they may not have known to ask. That’s the feedback that we’ve gotten from our investors. And the investment summary itself, the PDF document that we hand out,I would say is critical as well. If anyone tries to ask you to invest in a deal and there’s no investment summary be wary.

Sean: [00:32:24] Can you talk about the funnel itself? Out of however many viewers you have, how many actually go to your subscriber list, which goes down to the conference call and so on?

Julie: I don’t have the numbers unfortunately. It’s something that we’re working on in terms of how many people are actually coming to our site and then like signing up for the investor club and then actually investing. But I want to say maybe 10 Investor Club sign ups a week, qualified investors, not just anyone, but qualified accredited investors with a certain level of sophistication in terms of their background. And then out of all those folks, it’s hard to say. I mean on any given deal we probably have 15 to 20 investors. And I would say that about 70% of those investors are repeat investors and 30% are new. So that kind of gives you an idea to like how many people are new versus repeat. And I think really that’s happening because a lot of the investors that have been in the deals previously have started to receive their distributions. They like working with us, they like the deals and so they just keep on investing.

Sean: [00:33:50] Then they start telling their friends too.

Julie: [00:33:52] Yeah, so now that we’ve been in business for for a while, we’re definitely starting to see the residual effects of that where folks say, “I heard about you from a co-worker or someone of your investors or whatever”. We’re at the point now where we’re getting more of that. Obviously in the beginning we didn’t have that so no one was really referring anyone but now we’re getting to that point too so it’s good.

Sean: [00:34:16] You guys are now talking on conferences and I see your articles on Forbes, so yeah! Can you talk about what kind of software you guys use? Because all these are automated stuff. There’s no way you guys are doing it by yourself.

Julie: [00:34:30] So like I mentioned, to set up calls we’re using MeetingBird and that’s a Bay Area company. I looked at a number of different softwares like Calendly and number of different ones. But MeetingBird for me has been the one that looks the nicest and also functions the best and so it’s kind of the best of both worlds and it’s free . And it works with most of the platforms we use. So that’s what I used to set that up. And what I like about that one is you, and I’m sure you could do this with the other ones, but you can set up different call links. So if it’s a networking call that I had to set up I can have one calendar for that that has specified days and times that I want to allow networking calls to occur. And then if it’s like an investor call my calendar’s much more wider because I want to give our investors more opportunities to talk with me. But I like that being able to put different links in different places. And then Active Campaign is what we use for the funnel. I am not the expert. Annie, my business partner, is actually the expert on Active Campaign. She has a background in video game design so she’s really good with setting up all the funnels and automations and things like that. I just tell her what I need and she’s very great about helping me set that up so that the investor calls get on my calendar and things like that. But Active Campaign works really well with a number of different apps. For instance one thing that’s been really valuable is when we set up the soft reserves in the campaign that we send out. There will be a link so you can click a button , soft reserve button, that will link to a Google Sheets document and then it links to a website that people fill out information. Say, my name is John Doe, I want to invest $50,000, I am accredited, I’m going to use my self directed IRA, and all of those fields auto populate into a Google Sheets document. So it’s great because I don’t need to manually enter the information in Google Sheets and then I can use that document to work with our co-sponsor. It’s very easy. So there’s a lot of automations that Active Campaign can do and a lot of other programs that it can work with. So we love it and I can’t say enough about Active Campaign . Highly recommended cost-efficient and definitely worth all the time that it saves us in the automations that it enables, allows you to set up. And the other big thing that we use pretty frequently is Slack. So, I don’t know if you are familiar with that app or use it very often but, and we were not using it before, it’s been wonderful to use it because one of the best things that I love about it is that you can set up all these different channels to talk about different things. So we have a channel for every deal that we’ve set up. We have a channel for marketing. We have a channel for social media. We have a channel for SEO. And then the best thing about that is that anyone that we partner with, so anyone that we work with, like we have a Social Media girl who helps us with our social media postings. We can add her to that channel so long as she’s on Slack she will only have access to that channel not the rest of them and the three of us, Annie, myself and the social media girl can respond within that channel to discuss anything social media related. And it’s just a great way to talk about things because when I send a message to Annie in a certain channel, she already knows what deal I’m talking about. So she’s not like, “What deal is this again?” or “Where was this?” and and then going back to the conversations. It’s like, oh that conversation we had about the Huntsville deal. So I go to the Huntsville Channel and there’s all of our conversations about that deal. So I highly recommend Slack as well. And I think that’s pretty much what we use. We use Google Drive to store all of our stuff. So, Google Drive, Google Docs and Sheets. Annie and I work together, we share documents there and we’re able to link documents in Active Campaign, documents that are kept on the drive that we make public and whatnot. So that’s a good way that we were able to use that. But yeah, I would say those are the primary ones.

Sean: [00:38:58] Do you have like a CRM software or is Active Campaign doing it all for you?

Julie: [00:39:03] Yeah, so Active Campaign is pretty much that as well. It’s a CRM. That’s another great thing is anyone who signs up on our website,fills out those fields, then it automatically populates as a contact in Active Campaign with all of the pertinent information. And then when I have my call with them, I just go into Active Campaign and I open up that contact and then I’m able to add notes in there as well. And you can also see every kind of interaction that that person has had in terms of engagement with either your website or your email. I love it. I love Active Campaign. It’s great and pretty easy to use as well.

Sean: [00:39:49] So that’s how you can track who actually did a soft reservation?

Julie: [00:39:52] Yep.

Sean: [00:39:52] And you mentioned that it’s you and Annie and also the other social media person. Who else is on your table?

Yeah, so we have the social media person and then we also have an SEO person that we’ve been working with to help us get higher ranked and help optimize our site for a stronger SEO. So we have that guy on our team. And then we recently partnered up with a group who’s going to help us with our underwriting and our asset management because one of the things that we’re looking to do this year is to be the lead sponsor. So in the past, all we’ve been as kind of the co-sponsor and this year we’re looking to be the lead sponsor. And so we’ve recently brought in-house an underwriter who has a background working with family offices particularly in the B-class space that we’re in and then an asset manager who used to do a lot of due diligence as a management over at Ernst & Young.

Sean: [00:40:48] So is your SEO person and your Upwork person, are they local or are they all like from up work or something?

Julie: [00:40:56] Right. Yep. I think it is. It’s from Freeeup I think and I think the reason that used Freeeup was because I think that one is it’s like the best of the best . Sort of that’s Annie. Annie handles all that. So I think that’s a legend.

Sean: [00:41:09] Yeah cool. So my next question is what’s next for you guys? You mentioned that you want to get more into the general partnership operator side. So, talk about that. You’re here in California. How are you going to do deals out of state?

Julie: [00:41:28] That’s one of the things that I mentioned earlier, it’s not necessarily a deal-breaker. We now have close to 8 deals in the Dallas, Fort Worth. Why? Because I know that market fairly well. I know the areas that we’ve already invested in and so we are looking to potentially partner with a partner who’s local to the area and who lives there just to help us… There’s plenty of things that happen in terms of the early stages and vetting the sub market that we’re in because real estates very block block block. And so we would potentially bring in another partner who would potentially help us with some of the equity raise depending on the size of the deal who is a local boots on the ground person.

Sean: [00:42:12] Pretty cool. And you said you have an Ernst and Young Asset Manager. What is his role as an asset manager?

Julie: [00:42:19] He would primarily be the one who works very closely with the property managers who are the boots on the ground. And they would work with them to ensure that any renovations that we’re doing are being done timely to make sure that all of our expenses are being kept under control and just sort of make sure that the investment and managing the asset is really performing as it should be in terms of making sure that the bottom line is where it needs to be to meet investor projected returns and things like that. So pretty important role.

Sean: [00:42:58] Do you have any advice for any new investors?

Julie: [00:43:01] I would say. Really focus on doing your due diligence whether you’re looking to be an active investor or a passive investor. Do your due diligence, network a ton, ask around about people. You’ll thank yourself later for that work that you put in. you’d be surprised what you can learn just by networking with folks. I would say when I was first getting into real estate investing more seriously, one of the things that I feel like helped me a lot was just networking. Because you have the opportunity to talk with so many different people and it’s kind of like your mind becomes like a library of different, information that you gathered over time. So I think it’s really helpful to network and do your due diligence on whoever it is that you’re partnering up with even as an active or passive. A deal is a deal. I mean you can take a good deal and it can go south really quick If you don’t have the right partners and vice versa. So I think it’s really important to make sure who you’re working with.

Sean: [00:44:03] And what about any failures. Do you see any common failures?

Julie: [00:44:06] Yeah, I would say, and this is what I’ve seen, people who are investing with folks who seem to be, who are saying, or positioning themselves within the real estate investing realm as experts, they have these courses and there were these investing gurus, and I’ve talked sadly with a number of them, and that’s not to say that all of them are bad because there are a number of them out there that are really great, but, again it goes back to doing your due diligence, but I have heard a few stories of folks not getting or potentially not getting their investment back in these are with folks who are out there, positioning themselves as like experts in the field and little do they know… I guess it’s maybe just a matter of time but again just make sure who you’re working with.

Sean: [00:45:01] Makes sense, and let’s say there’s someone who’s new. What are some actionable steps that they could do starting today to end up doing what you do in the very near future?

Julie: [00:45:12] I love this question. I get asked this question a lot. And , it’s really not too difficult of a concept. It’s actually pretty simple, I think we talked about this a little bit earlier too. But it’s, create a brand, get a website up, it’s cost $20 for Squarespace. I think I was paying $20 a month or maybe less than that, and I am not technical at all. I am really terrible with websites and email and all that kind of stuff. I’m just not a tech person but I was able to get my website up and running in probably three weeks. Go get your picture taken. Go get a professional photo taken of yourself. Put it on a website, create a thought leadership platform whether that be blogging or videos. Speak at local REAs or meetups. Find places where you can add value and create that thought leadership platform. Identify a target audience. I think this is super important. I think this is something that a lot of people overlook and they just think I’m going to go out there and fish in the whole pond and see whoever I can get. But I think it’s very wise to identify a particular niche, like for me, I’m a mom I have three young kids. And so that’s my target audience. I want to help other moms who have children as well. And so I think when you’re able to be, as I’ve heard other people say, identify your avatar, and everything that you do should speak to that avatar. And so that goes to identifying your target audience. I would say, start to engage investor interests by asking investors as you get to know them and have conversations with them, “Hey if I have a deal coming down the pipeline in the next few months, would it be something that you’re interested in if it had all of these things?” And sort of lay the framework out and have that framework be something that you would look for in a deal. So, like I said, I look for cash flow day one, long-term debt, 8% preferred return, and then your job would then be to go find an operator who has a deal that’s set up like that. So now you have the investors who say yes, if you had a deal that had an 8% preferred return, cash flow day one, etc. Now your job is to go find out operator who can give that to your investors, right? And then that way now you can approach that operator and say, “Hey look I’ve got my website up.I speak at local REAs. I’ve had many, numerous investor conversations…”, that operator is going to be a hundred times more likely to want to work with you than if you just approach them with no website, no thought leadership platform, no target audience, and you just said “Hey, I’m thinking about raising some equity. Do you want to partner up on a deal, do you want to bring me on a deal?“ That operator’s likely going to say, ”Why don’t you start there first and then we’ll talk, later once you get that going”. So I would say, if you can get all that going, It wouldn’t take you that long. I would say probably, two months maybe to start getting all those things going, you’ll start seeing some traction after that for sure.

Sean: [00:48:12] And then you contact those operators? Like how did you do it? Cold call? Random emails?

Julie: [00:48:18] No. So the operator that we work primarily with on about like 85% of the deals we’ve done is actually the same operator that I partnered up with as a passive and they actually presented the opportunity to me. And so it wasn’t that I had to ask them. And then moving forward we actually only work with three operators in the multifamily space and the other two are people that we already had established a relationship with. So we get approached pretty frequently to partner on deals and bring equity, but it’s just not that easy. It’s like with anything in real estate, it’s all about the relationships. And so, , it’s not just like, “Well you have a deal. Great! Bring it down and we’ll send it out to our investors and hope and pray that it goes right and see what happens.” So it’s kind of a long process. But I would say if somebody approached me and had all those things done I would say, “Yeah, let’s talk.”

Sean: [00:49:14] Yeah, alright! Very detailed answer, I like it. I’m sure anyone who’s really interested could just listen to exactly what you just said and do it. It’s not that hard, right?

Julie: [00:49:26] Yeah. That’s the hardest part, I think, is actually just doing it. I think a lot of people get stuck and say “Well what if no one wants to invest with me” and what if this and what if that all these what ifs and obstacles. I’m a huge Tony Robbins fan. So if you don’t go out there… Read “Awaken the Giant Within” and go out there and have the right mindset to get where you’re trying to go.

Sean: [00:49:53] Do you have any final words that you would like to say to anybody?

Julie: [00:49:55] I guess it would just be that if you’re thinking about getting into equity raising or thinking about getting into the multifamily space, the one thing that I would highly recommend is be persistent because there’s going to be a lot of things that come up. A lot of obstacles that are going to come up that are going to make you think twice about this and so, be persistent. But I think, first maybe find your why and figure out why you’re doing this because that’s what’s going to drive your persistence. And if you’re persistent you’re going to be able to do big things in this space.

Sean: [00:50:26] Do you mind if we ask you what’s your why?

Julie: [00:50:28] Sure. Mine is easy: my kids, my family. That’s that’s pretty much it. Once you have kids it’s like nothing else in the whole world. It’s the best job I get to do and I love it. And there’s just nothing I wouldn’t do for my kids and everything that I do in my business and my passive investing is also that I can spend more time with my family.

Sean: [00:50:51] I don’t have that yet, but maybe in the future…

Julie: [00:50:55] You will. When you get there, you’ll think back and you’ll remember what I said and you’ll think “Oh my God, she was totally right.”

Sean: [00:51:02] So how they can get in contact with you?

Julie: So they can email me at julie@goodegginvestments.com and they can also head to our website and check that out. We have a lot of free stuff on there like videos and blog posts at goodegginvestments.com.

Sean: [00:51:16] Yeah, definitely check out that website. I’ve been there many times. It’s one of the most beautiful websites in the real estate space. Most of the real estate investment websites are all kind of old.

Julie: [00:51:28] I can’t take all the credit. That’s Annie my business partner. She’s amazing. She’s great.

Sean: [00:51:35] Awesome. Well, thank you very much for being on the show today. I really appreciate it. And thank you so much for giving all this wonderful information. Yeah.

Julie: [00:51:42] Thank you so much for having me Sean.

Here are some of the key takeaways I got from speaking with Julie. Learn how to properly underwrite so that you can identify if a deal is good or not. Start speaking with friends and family to see if they would be interested in investing if you happen to find a deal that fits a certain criteria. Create a thought leadership platform to build credibility. So create a website, write a blog, create videos, and show that you’re committed. Be persistent and you’ll get there someday soon. Thanks, and have a great day.