From Zero to 400 units by Sterling White

FROM ZERO TO 400 UNITS How I Found Another Path & Discovered Freedom Through Real Estate STERLING WHITE

From Zero to 400 Units FROM ZERO TO 400 UNITS How I Found Another Path & Discovered Freedom Through Real Estate Copyright © 2019 by Sterling White All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means without written permission of the author. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor the authors shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. 2

Sterling White From Zero To 400 Units How I Found Another Path & Discovered Freedom Through Real Estate By Sterling White There were a lot of other things on the other side of the glass for me growing up in some of Indianapolis’s tougher neighborhoods. We didn’t have much money as kids. Yet, I found a path that got me out, and has probably taken me to enjoying far more rewards than most novice real estate investors. Life didn’t stand still much when I was a kid. I had a hunger to improve my situation. I hustled. Then I found real estate. In just a few years I went from college dropout, to having over 400 properties under my ownership. I try to live modestly. Though I never have to worry about my debit card being declined or needing a government subsidy for housing or food stamps anymore. I now operate multiple businesses that are giving back to communities by transforming neighborhoods, giving people great places to live in. 3

From Zero to 400 Units Whether you are barely paying the bills every month or you’ve been doing very well investing in houses, but want to do better, perhaps this book can can give you a few clues on the next steps to get where you want to be. Regardless of if you just got out of college and don’t know what you want to do, or are doing 4 house flips a month, but just aren’t stacking up the real wealth or enjoying the time off you anticipated, I hope my journey can help you to multiply your results and enable you to finally be able to really live! Wherever you are on your journey, this is my story, and I hope it will inspire you, show you what’s possible, and give you some clues and practical action steps and strategies you can use to get to your full potential. 4

Sterling White About the Author Sterling White is a real estate entrepreneur, co- founder of Holdfolio, partner in one of the most innovative real estate syndication software solutions, and property market expert who is frequently sought out for his perspective and commentary on trends and deal making. Sterling has been featured in the Indianapolis Business Journal, is a frequent special guest on many industry podcasts, and is one of the top writers for the largest forum of real estate investors, BiggerPockets. He’s gone from growing up without much, to completing millions of dollars in real estate deals, providing investment opportunities and software solutions to hundreds of other investors and real estate deal makers, and operating apartment complexes. He has a huge heart for giving back on many levels, and through this book he continues to inspire and inform both those just starting and flush accredited 5

From Zero to 400 Units investors so they can achieve more of what they really want. 6

Sterling White Inside This Book: 1. Entrepreneurial Spirit - From young hustles to 8 college, crossfit & construction 2. The Biggest Financial Mistake I Made - College versus the million dollar internship 11 3. Called to More - Is this what your life is going 13 to be about? 4. Discovering Real Estate - Learning new ways 17 to make money 5. Reality Check - The challenges 26 6. Awake - Life can be so much easier than you 31 think 7. Going Bigger - Scale and multiplying your 38 success 8. Multi-Family - The superior advantages of 47 multifamily real estate investing 9. Staying Sane - How to survive and enjoy the 49 journey 10. Choosing Your Path - Finding your path to 56 real success 11. Additional Resources 61 7

From Zero to 400 Units CHAPTER ONE Entrepreneurial Spirit From young hustles to college On October 31st, 1990 I made my way into this world, just two minutes after my twin brother. It was a cold day in Indianapolis. Especially, entering the world in to be brought home to one of Indianapolis’ notorious lower income housing neighborhoods. My father was really never in my life. At least not that I can remember. My mom tried to give us the best of everything. Yet, being a single mother, and trying to do it all herself in those days wasn’t easy. We lived on housing vouchers, food stamps, and probably plenty of other assistance she didn’t even tell us about. Ultimately, I had to figure things out for myself. If I wanted anything, it was up to me to figure out how to make it happen. At school I would do anything that wasn’t illegal to earn money. In and between classes I would sell Pokemon cards, Koolaid, and just about anything else I could get my hands on, and resell for more. 8

Sterling White Still, we were growing up in gangland. I was not too immersed in that. I was always a good kid. Yet, you are aware of it. It’s all around you when you live in that environment. As a kid one day I was playing basketball with a friend. The next day he was gone. Shot by the local pizza delivery guy in a robbery attempt. Ironically, when I met my partner in Holdfolio, he’d been mapping out areas we could focus on investing in. He just so happened to highlight all my old neighborhoods that I had grown up in, as “red zones” the high crime areas to be wary of investing in. I had to agree laughingly. Until high school I was pretty much bounced around from school to school pretty frequently. It wasn’t until the second half of freshman year that mom was able to pull us out of the inner city, to the suburbs where there was less crime, violence and drugs. A lot of people don’t believe the cliched complaints about the differences in these school systems. I can tell you first hand, at least from the schools I attended that the suburban schools were significantly better. The teachers cared more. Most might consider the living standards as still being subpar, as we were still in 9

From Zero to 400 Units subsidized housing, but it was a step up from where we started. I thrived in that new environment. I’m not a huge fan of our school system in general. I still feel it just sets you up to be a worker bee, not a free thinking business owner. I got through high school as a pretty good student. Unfortunately, my brother was drawn back to that life in our old neighborhood, and it eventually cost him most of his freedom. I had little direction in high school. There was really little direction after high school either. No one in our family had gone to college. It wasn’t pushed on me. Though seeing a bunch of friends applying for college, it just seemed like the thing to do. Hitting Google, the University of Indianapolis stood out. Science had always been interesting, so I was soon on my way to study for a degree in human biology. 10

Sterling White CHAPTER TWO The Biggest Financial Mistake I Ever Made College, crossfit & the million dollar internship College was probably the biggest financial mistake I ever made. It probably isn’t for most people today. Especially with the new student debt crisis America is grappling with. I had chosen a human biology degree. Not entirely sure why looking back on it. I was going into the fifth year of college on a four year degree. Chemistry 1 and 2 had to be taken five times! Though I was just short a few credits from my degree, I dropped out. School didn’t excite me at all. Perhaps with the exception of one elective class on bird watching and understanding birds. I still haven’t found a way to make a living on that. Maybe, there is a market for bird watching shacks or camping spots? I wanted to focus more on business. Still, today a lot of people ask me why I didn’t finish 11

From Zero to 400 Units or don’t go back for those few extra credits and get the degree. Why would I? What is that piece of paper going to do for me? I didn’t pick up any real skills in college. It wouldn’t add a cent to my income making abilities, or bank account. I probably made more money in side hustles in college than that degree could pay me. Back then I was starting multiple businesses. I was on Amazon. Buying low and selling high. Yo-yos, and then Elsa dolls when the Frozen movie came out. The one thing I am truly grateful for from those years is getting into construction. It sparked something in the back of my mind and a new curiosity and passion. I owe a quick shout out to my old roommate AP! His father owned a construction company. He saw I had some freetime and offered me a job in ‘real estate’. That was carrying mortar to the bricklayers among other things. It was a huge grind! I have great respect for those guys. It’s not easy work. I began to fall in love with real estate. I just knew getting my hands dirty every day and lugging things around construction sites really wasn’t my dream job. There was something better out there. 12

Sterling White CHAPTER THREE Called to More Is this what your life is going to be about? My big ‘ah ha’ moment came one night out on a boat. You can call me crazy, I’ll blame it on the cheap beer, or someone spiking it. During that construction gig and juggling classes, we managed to fit in some modest partying to blow off steam and socialize now and again. That’s the best part of college, right? So, this night I find myself away from the crowd. Sitting on a boat on a lake, in the dark. I had this spiritual moment, or whatever the hell it was. This burning question came to me, “Sterling, is this what your life is going to be about?” In other words, was this it? I didn’t want where I was to be it. I didn’t want that to be the limit or to just keep on going through motions. In my heart I knew I wasn’t living up to my full potential. There was more out there. Though I wasn’t on the right path to get there. Maybe you feel the same way right now? I needed to take drastically 13

From Zero to 400 Units different actions and a new direction if I was going to change this cycle or trajectory. It was a life changing moment for me. It was then that I committed to changing my direction in a massive way. I cut off all my friends. And I mean all of them. Because while they weren’t the hoodlums of my youth, they just weren’t going where I aspired to going. Plus, I just needed to switch things up drastically. I jumped in knee deep, determined to find a way to what I wanted to achieve. Chances are that you are capable of a lot more than you think. A lot more than where you are right now. You might need to learn something new. You may need to take a leap outside of what you think is a comfort zone right now, but is killing you, your long term finances, dreams and legacy. It’s funny how sometimes others can see more of what we are capable of than we give ourselves credit for. Though there are many who will hold you back in some way, for a variety of reasons. Who you hang out with is certainly a huge factor. They say you are the average of the five people you spend the most time with. I saw that with my 14

Sterling White brother. I saw that with people I went to college with. Though imagine what would be possible if you could spend your days hanging out with the five people you consider the most successful and admire the most. You’d be in that circle, with the benefit of their knowledge and connections. That may sound hard if you are a teenager in the projects, or if you are already retired and are trying to stretch every dime of your retirement savings. Though it can be much easier than you think. Perhaps all you can do today is surround yourself with those people in the form of books or YouTube videos, in online forums or social media.. Do that. I chose to hit the library. I began going to the library every day and consumed as much advice and clues from the successful as I could. I’d hangout with Earl Nightingale and Tim Ferriss, Tony Robbins and anyone else who seemed to really be onto something better. I listened to Earl’s CDs so much that they developed scratches and skipped when I played them. He was a big influence on my mindset. My life wasn’t just going to be about working another mediocre job and watching the years go by as I 15

From Zero to 400 Units barely put away enough to retire on after decades of working for someone else. I was determined to find a better path. 16

Sterling White CHAPTER FOUR Discovering Real Estate Learning new ways to make money I committed to self-development and improving my mindset. I wasn’t sure where I was going yet like many, or how I would get there. I just knew there was something better if I kept improving in every way I could, and put myself in the right positions. Since getting into the entrepreneurship realm, and really since discovering Earl Nightingale I’ve found self-improvement addicting. I believe you have to be doing something every day to learn. If it’s not strategies for negotiating and learning how to better communicate with others, it is new technology and AI, how to structure deals and improving understanding of investments. Or sales and selling yourself, because if you aren’t you are the one being sold. Next to the library I was visiting daily was a crossfit gym. I was training my mind and body. I was trying 17

From Zero to 400 Units to stay in proximity to the most healthy and positive people I could find. Clearly I was never the type to shy away from attempting something new, or to buck the status quo. Yet, looking back there was certainly still some resistance to taking some really big leaps and risks. Maybe it was thinking that some of the things I was reading about were too hard for someone in my position, or that I really didn’t want to fail that hard. Certainly a fear of failure was a main theme. Today, I consistently see that as the main thing that holds people back from what they could have and be. That changed pretty fast for me, after attempting to break a world record. Maybe I was a little too confident then. A friend had recently passed away from cancer. I wanted to do something about that. I’ve always loved supporting others and good causes. There was an opportunity to compete for the world record for the world’s fastest fireman carry. I jumped on it. I was really motivated by Tim Ferriss’ book The 4 Hour Work Week. The idea that you should choose something so big that it scares you. It’s the only way to make the leap to something better. Anything less, 18

Sterling White inside your comfort zone just isn’t going to take you far enough forward. I applied this to my friend’s passing and raising awareness for the cause. All the proceeds that were raised from sponsors went going to cancer research. I was ready to stretch myself to new limits. Someone was willing to coach me, and we put in a year and a half of training to take on the record. Unfortunately, my training partner bailed in the process. The last month before the event to be exact. The big day came. It was a total flop. Big time. I only made it halfway through the attempt. Talk about epic failure! My friends and family were there. News reporters were there. I failed in front of them all. The funny thing was that instead of crushing my spirit or will to keep stretching myself, I realized failure wasn’t so bad. I trained, I tried, I fell flat. Yet, it wasn’t the end of the world. The not making it part didn’t define me. Instead it taught me that the fear of failure and not trying is much worse than the actual downside itself. I would have felt like a coward and would still be kicking myself for not trying if I hadn’t attempted 19

From Zero to 400 Units it. Instead I gained a valuable experience, and a lot of exercise and conditioning. This became a big breakthrough for me. One that still fuels me today. I kept going to the gym. I actually bartered my way into that crossfit gym. Membership isn’t cheap at these places. But it was important for me to train. So, I thought creatively of what value I had to give. All I had to offer was my time and muscle. I offered to clean the gym. In exchange I got to use the facilities and work out basically free. I guess they saw something of promise in me too. The gym owners took me under their wing. I got to see behind the scenes and how they were running the business. In a sense that was my first glimpse at mentorship. Since then I’ve found mentors, coaches and trainers invaluable. Not the cheesy guru type. People you can really learn from. You have to make sure you are getting good value, but if you want to go big and far and master something new, it’s far easier and more efficient leveraging someone else experience. 20

Sterling White That’s been true for training for Spartan races and improving my skills in different roles in business. There was one guy who was often there working out at the same time as me. I’d always overhear him on the phone talking about construction, real estate developments and apartment buildings. I already had a passion for real estate, though I had decided carrying mortar wasn’t going to be my thing. In my reading I had learned about how so many successful and wealthy people used real estate to make their money and stay rich through investing. Though at the time I didn’t have any credit. Literally, you would pull my credit report and it would be blank. No score, and no borrowing or buying power. I could walk by homeless people in the street, and think how much richer they were than I was. At least they might have a few coins or dollar bills in a hat. Meanwhile I was going overdrawn in my bank accounts and was in the negative. There weren’t many venti frappuccinos or steak dinners on the menu in those days. From all my reading I had also learned that these things cannot be an excuse. They certainly weren’t for many of history’s and today’s wealthy, investors and business leaders. They were resourceful. If you are going to get anywhere, or change what you’ve got or the cycle you are in, you have got to learn how to 21

From Zero to 400 Units solve problems. Construction and investing in real estate sounded great, but I didn’t know enough yet. I didn’t have the credit or capital to get started. It was up to me to solve the problem to find someone who did have these things. So, one day during one of our crossfit WODs(workout of the day) I asked this real estate guy to lunch. I wanted to know what he was doing that enabled him to do all these things. I wanted that in my life. So, despite barely getting by, I offered to buy him lunch. I asked questions, and I listened. I wanted to get into investing. He told me that he actually wanted to diversify from apartment buildings to investing in single family homes. That sounded a little more doable for my situation. So, I asked, “How can I help you?” I said I would work for free. I would help him in anyway he needed. My friends thought I was absolutely crazy. At the time I was wondering if I was a little crazy too. Who would work for someone for free? Why not be taking it easy in college or just go to the building site every day and at least put some tangible cash in your pocket at the end of each week? Yet, here was a guy who seemed to know what he 22

Sterling White was doing. He had 20 plus years’ experience in the industry. He was making money and still had time to do lunch and hit the gym every day. He could afford his own gym membership, which alone was better than I was doing. He owned several apartment buildings. Rentals that other people were working so hard to pay rent on. They were paying him every month. They were paying for his investments and were building up his nest egg and retirement account. While those things pretty much remained out of reach for my friends. He had the knowledge. He had the contacts and experience. He had the money. What he didn’t have was more time to find deals. I did. I had lots of time. So, by solving his problem and providing value to him in giving my time, he solved some of my problems in terms of all the other things I needed to see a big change in the results I was getting. Most people still wouldn’t do something like this. Yet, it was probably the best move I ever made. I compacted 20 plus years of his experience and work into just 2 to 3 years. There are people out there right now spending tens of thousands of dollars each year to learn this stuff. 23

From Zero to 400 Units Some are dropping $40,000 for a weekend of rushed bootcamp training and a few follow up phone calls. Though I didn’t just get theory. I got the real deal, right in the trenches and hands on experience from someone really doing these deals, not just selling books and courses. To me these 2 years of mentorship or internship were easily worth more than a million dollars. It was far more valuable than college ever could be for me. I got it all for ‘free’. Or to be more exact, I traded and invested my time for it. I’ll never get that time back. Time is our most valuable asset. Though it’s the currency I had at the time, and I earned a substantial return on it. Returns that I keep compounding and multiplying today. It’s okay to recognize what you don’t have yet. Maybe it’s not credit or cash. You may have a great income and good sized IRA, but you might not have much free time. Or you might have some money, but not enough experience. There will always be someone out there that can balance those things. They need you too. Look for where you can add value, and receive fair value of some type in exchange. It may be returns on your investment or knowledge or even contacts with the right people to partner up with to do a bigger deal or just get started. If you’ve got $10,000 and you can get introduced to 10 other people in the 24

Sterling White same situation, with one of them having the time and expertise, you can start gaining some traction, Without having to take on much risk or adding more to your schedule. 25

From Zero to 400 Units CHAPTER FIVE Reality Check Time The challenges There is a lot to learn in real estate. I took away some very valuable lessons and insights from those early days. It equipped me to do a lot better once I was out on my own. Otherwise some of the mistakes I would have made would have probably had bankrupted me in a far bigger way. I still made mistakes, but the learning curve was far shorter and the level of detail I gained was unmatchable by any course or book. Bandaids are Expensive One of the great things I learned early from this mentor was to avoid cosmetic band aid fixes, and how it was better to replace things or fix them right the first time. Versus, going back with a new band aid every time. Preventative maintenance can go a long way to minimizing problems and costs too. All of this can create a much better experience for tenants, and ultimately your bank account and returns will thank 26

Sterling White you. It takes a bigger picture mindset to do this and some investment, but it’s well worth it. Just like our kids can run through a whole box of bandaids in no time. Especially when they are at that age when they think bandaids still make booboos better or take the pain away. If only they’d listen and slow down, or take the medicine right? Reputation It can take years and a lot of hard work, sacrifice and going above and beyond to build a reputation. Especially in real estate. Yet, it can all be lost so quickly too. Once it’s gone, it can cost a lot to get back, and a lot of time. If that’s even possible. If you do poor work and burn people in this business, that’s what you’ll be known for. It’s a reputation that will stick to you. It’s hard enough to gain trust and attention already. If you give people real reasons not to trust you, good luck. If you can survive, everything you try to do will take more work, be more expensive and be less profitable and sustainable. Some of the most important parts of this that stand out are paying your bills and not going back on your word after you agree to a contract. The word 27

From Zero to 400 Units will get around, you’ll be blocked from doing business with the best customers and vendors and business partners. As rare as it is today, clearly saying what you do, and then simply doing what you say can make all the difference. In fact, because it is so rare, this is where even someone completely new and green can really stand out. The Value of Good Property Management I did a lot of work inside my mentor’s property management company wearing multiple hats. I learned how much of a crucial point this was when buying and investing in properties. Many of the best real estate deals out there come up as a result of someone else managing them poorly. Then they can be bought at a discount, and you can add great value just by improving the management. Even a great looking deal that is poorly managed can wipe you out. It can turn from a super profitable property with slam dunk returns to bad by not managing it well. The reverse is also true. 28

Sterling White Alignment in Goals Another big takeaway from this relationship was to ensure that you have alignment in goals. We’re pretty alert to that when it comes to personal relationships these days. Yet, perhaps not normally as awake as we should be when it comes to business relationships and partnerships. There will be some relationships which are there for a season, others for a reason, and a few for a lifetime. It’s just a lot cleaner if you can accurately assess this upfront. You might ask a date what they are looking for, what their dreams are and where they are going. Maybe even before.You want to know what your expectations should be, what the limitations may be, and how far you have the potential of going together. Maybe it’s just for college, the summer, or to build a dynasty. Sometimes it seems we forget this when going into a working relationship. My mentor soon became a partner. I began bringing in and doing deals for myself. It worked great. Often brought in the deals and did a lot of the busy work and management, he brought the cash. He wanted to invest in more single family properties, because 29

From Zero to 400 Units there was a huge opportunity there at the time. Yet, it quickly became apparent that I had much bigger aspirations and goals. I wanted to go all out. He was much more conservative. We ended up deciding to pursue our own journeys, where we could each enjoy the level we wanted. So, always have the conversations upfront. Then make sure you’ve got written agreements for when people change or things don’t work out. It happens. It’s just much cleaner and friendlier this way. This is great advice to apply to any collaboration, from starting any new business, to one time partnerships on a project, to working with vendors in any industry, and especially if bringing in investors. 30

Sterling White CHAPTER SIX Awake Discovering a new reality I really wanted to start investing in real estate for myself. I wanted to do my own deals. I had seen how others were enjoying the rewards. Though there are many strategies. At the beginning I wasn’t sure which model was best. I ultimately tried as many as I could. The two big things I learned from these early deals were, how easy it is to make money in real estate, and secondly, how much there is to really learn and master to actually make money. I learned just how much money you can lose through mistakes too. Fortunately, I learned that through watching other people’s failures, and didn’t have to learn that the hard way for myself. On one hand, real estate is incredibly eye opening as to what you can achieve. It completely changes the dynamics of everything you’ve probably been taught about money and work. With a good system, 31

From Zero to 400 Units you can make an unbelievable amount of money, tear the ceiling off of what you thought was possible for building wealth in your lifetime, and enjoy setting your own schedule. One of the big wake up calls was learning how to make money in my sleep. Something most don’t realize is possible. A fact I was never taught growing up and in school. Imagine that. It means your income and lifestyle doesn’t have to be limited by the number of hours you can work each week. However, the more you dig into real estate the more you discover you need to learn. You can never master it in a two week class or bootcamp. It really takes years to encounter and learn how to skillfully navigate all the quirks that can come up. You’ve got to be willing to learn, leap and learn more while you earn. I am still learning new things today. I will always be learning. Real Estate Wholesaling I began with real estate wholesaling. Along with investing in rental properties and private lending it is one of the strategies heralded as an “easy way” to get started. 32

Sterling White Real estate wholesaling is much like any other kind of wholesaling. Like Costco or Amazon. You buy low, and resell high. I had some experience with that since grade school, so it sounded like a good fit. With this strategy you find properties you can buy at a discount. Then find an end buyer who will pay more. This can be a regular home buyer. Though is more often another real estate investor who is a rehabber and flipper or landlord, and who will make any repairs and improvements needed. So, you still need to know the market, how much it can be worth after the repairs. This is known as after repair value (ARV). As well as how much it will cost to get into that condition and what market rental rates are. You either get paid by selling your purchase contract for an assignment fee. Or by purchasing the property yourself and then reselling it. My First Real Estate Deal My first real estate deal was a complete disaster. I received a referral to a homeowner who needed to sell their home. I contacted them and went out to visit the property. I did a walk through and made the offer. It seemed to be a really good discounted price. 33

From Zero to 400 Units Then I got to calculating the renovations. Wow, I had totally blown the math. The AC, mechanicals and furnace all needed work or to be replaced. I didn’t discover this until after I had sent the deal and numbers to my end buyer. Each of those were going to cost thousands of dollars. I wouldn’t have to pay for those myself.Though they would make all the difference to the end buyer. I had no choice but to go back and do the one thing I never wanted to have to do. I had to go back and renegotiate. It’s a bad practice. You don’t want to get a reputation for doing that on a frequent basis. In this case I just had to, or the deal wasn’t going to close. It took a while to find a viable end buyer. Everyone got together at Burger King. It was a mess, like a complete rookie deal. The seller blew off the deal and walked. Really all because I couldn’t go over a standard purchase contract coherently. I came across as a total novice, and that made the seller nervous. It was not such a fun experience. Though, that’s how you learn. I still believe the best way to learn is by doing. It’s one of those scenarios you have to experience for yourself to get better at. Reading and learning from others’ 34

Sterling White mistakes is smart, but at some point you just have to jump in and start doing. Rehabbing & Rentals After that I began exploring buying, fixing up and selling houses to retail home buyers and rehabbing homes to rent out. The first deal that I really closed on was another scenario in which I was completely thrown into the fire. The first time I actually walked into the house it needed so much work I had absolutely no idea where to start. So, I did what I do best. I found someone who was an expert and could tell me what work was really needed and what it would cost. It was in this transaction that I really learned how to work with the title company, construction team and everyone else it takes to close a deal and take it from start to finish. Once it was rehabbed I took on the work of finding the tenants and handling the property management. There seemed like a lot of steps, but it worked. I know I could get better at it, make less mistakes and be more efficient with my time with practice. 35

From Zero to 400 Units So, I bought another deal, and another and kept snowballing that momentum. I did at least 10 flips, but I didn’t find a good risk versus reward balance. It is highly risky. It’s a lot of work. It is intensive managing contractors. I also noticed how badly you get crushed on taxes when you are flipping houses. It is highly taxable! Buy and hold investing is taxed totally differently. You get to keep a lot more of what you make. I saw a lot of other house flippers taking their profits and plowing those into buy and hold properties. So, I was curious to just skip that step and get right to what they seemed to want to invest in most. This is the part where I have to squeeze in the big disclaimer. I am not a tax professional by any means. I have people that handle this side of my money and business for me. So, please don’t take this as professional tax advice! Each individual person and investor’s situation is completely unique. So, talk to some local tax pros and get their input on the specific benefits for your circumstances and goals. That first rental property deal cost $25,000. I put another $20,000 into it. Then got it rented for $850 a 36

Sterling White month after about 5-6 months, from start to leased. I was wearing many hats during that process. I put a lot of work into it. Though was able to begin getting cash returns and a good return. There were multiple delays with construction pushing leasing back. On the deal instead of taking wholesale fee I negotiated to retain equity in the property for finding and managing it. I kept 15%. Shortly after we bought another one across the street for a little more money, but that needed less work. One big lesson from that first deal was to screen tenants right. Because getting bad tenants can cost you more in the long run. 37

From Zero to 400 Units CHAPTER SEVEN Going Bigger Scale and multiplying your successes I’ve always aspired to more. I’ve never accepted roadblocks or limiting beliefs others have. While doing all these real estate deals I ran into Jacob Blackett. We had great synergy and all his strengths complimented my weaknesses. I was frequently pinging him that we should do something together. We were both wanting to branch out and blow things up. Eventually we got together, and launched our new venture out of his house on a pool table in the living room. Holdfolio was born. We had friends and family putting their capital into deals. We were buying distressed property in Indy. We renovated those homes. Once we got tenants in place they were delivering good returns. We applied the BRRRR(Buy, Rehab, Rent, Refinance, Repeat) method, but using 38

Sterling White outside investors to cash us out to go buy more deals. We packaged up those deals in portfolios of 10 income producing houses. Other investors have invested almost $7M with Holdfolio. We’ve paid out $1M in returns. Of course, there were growing pains. The first portfolio of 10 houses took about a year to a year and a half to process. That was getting through the rehab and getting everything rented. The first time raising money took a lot longer than expected too. We were expecting it to take about a month to raise $365,000. It took closer to four to five months. We had investors coming from BiggerPockets, networking, company branding efforts and events. Though we’ve learned the power of building a track record, momentum and maintaining a large amount of leads in your funnel to always have a full pipeline. There are various ways to raise money too. Originally we were going to target accredited investors only. Then we went through a big pivot to only doing business with those we had established relationships 39

From Zero to 400 Units with; this allowed us to accept money from accredited and non accredited investors. It worked out very well. Even though Holdfolio was going well, and the single family market was still heating up, a combination of the input from my efforts in self-improvement, rumors of a changing market, and the passion to see what I was capable of drove me to see what more could be done. I owe GC a big shout out for this. Grant Cardone really played a huge role in making the decision to shifting to multifamily for me. At the time a lot of his content was about raising money and syndicating real estate deals. I used to listen to his podcast while driving, working out and even in my sleep. I followed the path that has always worked for me: 1. Research 2. Commit first and figure the rest out as you go 3. Dive in and get started In addition to tuning into Grant, I would be reading BiggerPockets, immersing myself in other podcasts and networking with those operating on a larger scale. 40

Sterling White My partner and I decided to target multifamily properties between 50 and 150 units. We knew we could do those and had the funds to handle them. Our first step was networking with real estate brokers. This wasn’t at a time most would consider the best for getting into multifamily in 2016. A lot of other investors have been trying to move up to this sector. In addition to all of the international investors seeking assets in the US. There was a lot of interest. It was a hot market. We made it work. There is never a perfect time for anything. You just have to commit and find a path. Unfortunately, brokers really didn’t seem to be as profitable a channel as we hoped. So we did what we knew best. That’s finding off-market properties going direct to owners. We knew how to drive for dollars. So we started with that. Our first real apartment building deal was one we drove by in our city. The property was in bad shape. I popped the address into a public records search. Found the LLC holding company. Then hit Google to skip trace the real owners and get their phone number. We just cold called him. It happened to be perfect timing. He had been selling off other 41

From Zero to 400 Units apartment buildings, and another buyer had just fallen out of a deal on this one. There was a good amount of back and forth in negotiations. The seller started off insisting that there was nothing to talk about unless we put down at least $200,000 in cash. We kept negotiating. Then we decided to go meet the seller face to face. This is something that will separate you from the competition every time. It can make all the difference. It helps build rapport. It often helps in hashing out the terms and finer negotiations. This seller also happened to be a debt collector interesting enough. We went to his office to meet. We managed to secure seller financing of $700,000 and we put down the remaining $200,000 to acquire the deal. We talked the interest rate terms down, and were pushing harder before his wife walked in and said “Oh, no!” That’s as far down as we could talk him, but it worked out very well. Lessons Learned from Multifamily Investing These are some of the key lessons I’ve learned about 42

Sterling White how multifamily investing is different and not compared to single family homes. Longer Deal Cycles Our second apartment building deal was a 50 unit property. What we learned here was that it can take significantly longer to close on these commercial sized acquisitions. Instead of 30 days on a single home, these transactions can take 4, 6 or 8 months from first getting in touch with the owner through due diligence and negotiations to getting to the closing table. The Sellers Our presumption was that we’d be dealing with very sophisticated investors when moving up to 50+ unit properties. That hasn’t really been the case. They are often mom and pop owners. Who often don’t really know what they are doing. On our second deal the owner of this $1.4M building was writing off his vacations to Hawaii through the building.Very interesting to see on a expense report, even though their accounting was essentially just all done on a notepad. 43

From Zero to 400 Units When You’re Buying, You’re Still Selling Even when you are the buyer you are still selling. You are selling your offer. You are selling yourself as the best buyer. Don’t underestimate this. Securing the deal and beating out the competition, without bidding more is all about sales, and a lot less about putting the right numbers on the contract or checking the right boxes among all the clauses. It’s Not Always about the Purchase Price Every seller will have their thing. People decide to sell for a whole variety of reasons. Some will be stuck on the topline price. Understand what makes them tick, and work with that. It could be speed, specific terms, or something else. You won’t always change their mind. Though you can always negotiate something else to offset that one factor. Savvy negotiators even often say “I’ll let you set the price, if I can set the terms.” Price is a great example. If they are stuck on a $1.4M sales price, you pay be able to negotiate repaving the parking lot, replacing the roof or any other repair issues that might hold back an appraisal. These are 44

Sterling White things we have done and have had sellers agree to. These aren’t small concessions either when you consider replacement roofs might cost between $150k to $400k. It would have been smarter for them to just discount the price, but we let them have it. If the Numbers Don’t Work, Don’t Force Them Being creative can be a good thing. Though you’ve got to know when to draw the line. If the numbers just don’t work on a property, don’t force them or manipulate the numbers and fool yourself with an overly aggressive and speculative scenario. I can be tempted to do this sometimes. That’s why I have a partner who is very good with the numbers, and is far more objective. He keeps me in check so that I don’t do it. You have to be willing to walk away from a deal, even if you’ve spent money. If you can’t, you could lose a lot more. That’s why I still call my best deal the one I didn’t do. We were looking at a 120 unit apartment building. We spent somewhere between $5,000 to $7,000 on it between upfront lender fees, appraisals and inspections. All to find out the roof really must be replaced, and a patch job wouldn’t cover it. The cost difference would have been massive. We walked 45

From Zero to 400 Units away. We chalked that money up to ‘tuition fees’ and moved on. 46

Sterling White CHAPTER EIGHT Multi-Family The advantages of multifamily property investing Now having done several larger apartment building deals, having managed them for a period of time, and having been through the full cycle of sourcing them to renovating, filling and maintaining, I’ve grown to love this sector and asset class even more. One of the biggest benefits of multifamily is the economies of scale. You can buy one 150 unit apartment complex and have two or three people on staff at one location to manage it. That’s very different to the demands of dealing with the management on 150 single family homes. Not to mention the time it takes to find 150 viable houses, versus just one apartment building. It’s true that single family homes give you more exit options. You can always sell them one at a time on the retail market or flip them to other investors. Though they are also more volatile than apartments. 47

From Zero to 400 Units Once you get into a good system, you can streamline your processes and enjoy even more ROI on your time too. For example, we’ve brought in associates who focus full time on handling acquisitions. Our team has been able to beat the brokers to the punch by focusing on off market deals and using outbound calls. On the off market side for multi-family acquisitions we go with targeted criteria for filtering potential properties. We avoid high crime areas and high turnover neighborhoods. Like those I used to live in. We avoid those owned by large corporations. We rule out luxury units. We use the 80/20 rule. That is focusing 80% of our efforts on the 20% of assets that will give us the best return on the buck. Those are typically very distressed and the poorly managed. We skip trace the owners and commit to a lot of follow up and time working on these leads and relationships. Keep following up, even if they say they won’t sell. Be creative with follow up. Build rapport. In one recent deal our relationship with the seller resulted in buying a $3.25M deal off market, that could have gone to the open market for $4M. So, there are much bigger per deal profits to be found in this sector too. If you follow up. 48

Sterling White CHAPTER NINE Staying Sane Focus & Time Optimization on the Journey Why are you still cutting your own damn grass? If you are going to make great progress in business then you’ve got to find the time to take action on the items that will take you to a higher level. Lack of time is probably the number one excuse people have for not trying to improve their lives or strike out towards their full potential. I’ve found if you are too financially and time broke from what you have been doing, then you simply can’t afford to keep repeating that cycle. You’ve got to take some big leaps of faith into trying new ways of doing things if you want those dynamics to change. Freeing Up Your Time To be honest, speaking from experience, there are some parts of this you will only figure out as you 49