Learn by doing.
Emma Powell is the owner/operator of Highrise Group along with her husband of 23 years, Troy Powell, acquiring 92 units in their first 18 months. They currently live in Salt Lake City, UT after 20 years in Austin TX, and are parents of six homeschooled children ages 8 to 22. Recently, she has 122 more units under contract in a new development high rise in a downtown Salt Lake opportunity zone.
Emma was one the first women I had a true one on one with after I started this journey. She was a breathe of fresh air and was very honest about her experience thus far. She gave me guidance on the difficulties of raising capital and recommended education on how to learn more about it. Emma gave me blog and content advice, and explained how easy I can make it, with the right planning. I hope you enjoy her interview and get some great bits of information to help you with your real estate journey.
How did you decide to start investing in syndications? What is your reasoning behind these choices of investments?
My original plan was to buy 10 houses in 5 years. I bought 5 properties the first year and then realized that we were quickly running out of money. I told myself we would buy 1 property a year, for the next couple of years and I would reach my 10. I knew commercial real estate was what I would rather be doing so when I started running out of money and realized I had to slow down on buying properties, my husband told me that I didn’t have to slow down on buying properties because I should be using other people's money and raising money for the deals. I then decided that I would have to pursue the bigger commercial deals because there's not enough meat on the bone when you use other people's money or partner with people on duplex rentals. I wanted to use the money from actively investing to retire early and passively invest, and I knew syndications would help me achieve that faster.
How did you educate yourself? What advice do you have for people who want to go straight into MF without a mentor?
I'm not in a paid mastermind group and or mentoring program but I bought Adam Adams course on raising money secrets and have attended several conferences. I am a fan of paid masterminds but NOT as the secret solution to success. It's buying into a high level network, but the member still has to do the work by searching for deals, underwriting, and lining up capital in advance. The issue is when people believe it will have secrets. There are no secrets. The network is important but it can't replace constant hunting and learning on one's own. The only people I've seen be successful whether they're in the mentoring program or not, are people who are really self-motivated, self-taught, and great networkers. They're really self-motivated to learn how to underwrite successfully and they are consuming a lot of content, whether it's inside their paid group or through YouTube education, books, podcasts, and conferences. These future syndicators just eat, breathe, and sleep real estate. People still have to do the work, so my advice would be just get the first deal done. Brandon Turner, from Bigger Pockets, is really into this concept as well. He advises people to get the first deal done, it doesn't have to be the deal of the decade, and it doesn't even have to be your ideal deal profile. Getting your first deal just changes everything.
What do you look for in a GP team that you want to passively invest with?
I look at the returns, I want to make sure I am not getting scammed. A person running a Ponzi scheme can’t admit to themselves that they are running a Ponzi scheme. New investors needs to learn and know what average returns are for different assets classes. There are thresholds to typical syndications: A “B” class asset should be somewhere in the 12% to 14% range. A “C” class apartment complex should be somewhere in the 15% to 18% range. A “D” class is going to be riskier is going to be somewhere in the 18 to 20% range. A mobile home investment should be somewhere in the 20% to 30% range. You just have to learn what the typical returns are for these kind of deals and so if you're seeing something much higher than that, it's either too good to be true or it's much riskier because there's a lot more work that needs to be done.
I look for roles and experience within the team. I want to know who is doing what and what other projects they have done. I want to know who has construction management experience if there is going to be a lot of rehab to the property. I want to know who has accounting experience and who is going to be keeping the books for the asset. How much access am I going to have to the deal? When I am in town can I tour the property? What can I expect in terms of investor update emails? How often will photos be sent to me? Will I receive emails monthly or quarterly? I am more than willing to work with a new team but I will be asking more questions and let them know what I will be needing from them to feel more secure about the investment.
Describe a major goal you've set for yourself.
A major goal I have set for myself is to syndicate a $20M deal and passively invest $50K a year for the next 5 years.
If you could flip a switch and get everyone to do one thing related to their personal finances, what would it be?
To have $0 in consumer debt. The debt that you have should be used to obtain more cash flowing assets. Live simply, have a simple house that does not have a large mortgage payment. Work on building your financial freedom because that will give you time and that is nothing money cannot buy.
What was the greatest lesson you learned while investing in real estate?
Measure twice and cut once… double check your numbers. Before you buy an asset or put earnest money down, have someone check your numbers who know the numbers better than you do. So many people in this industry want to help others, so don’t let your pride get in the way of asking someone for help.
Number one thing that has contributed to your success?
Learn by doing, having an experienced person as part of the team gave me the confidence to get it done and get it done well. My own hard money lender was my partner on my first couple of deals so even though I was paying for the deal, he was teaching me the insides of the deal. He was the person I could have double check my numbers. There were deals that he told me not to buy because the numbers didn’t work. There were deals that he would provide different insights on and those ideas were ideas that I wasn’t thinking of. So even though I was giving him money for the deals, he was providing me with so much education because I had something that he needed and wanted. I surrounded myself with the resources and the people who could help me get the deals done.
I would love to know about a goal you have set for yourself recently! Please comment below and tell me more.
Explore more. Adventure awaits!
