Welcome to The Accelerated Investor Podcast with Josh Cantwell, if you love entrepreneurship and investing in real estate then you are in the right place. Josh is the CEO of Freeland Ventures Real Estate Private Equity and has personally invested in well over 500 properties all across the country. He’s also made hundreds of private lender loans and owns over 1,000 units of apartments. Josh is an expert at raising private money for deals and he prides himself on never having had a boss in his entire adult life. Josh and his team also mentor investors and entrepreneurs from all over the world. He doesn’t dream about doing deals, he actually does them and so do his listeners and students. Now sit back, listen, learn, and accelerate your business, your life, and your investing with The Accelerated Investor Podcast.
Josh: Hey, welcome back to Accelerated Investor and welcome to 2020. 2020 everybody’s talking about 2020 vision and having focus on their new goals and objectives. I hope you’re off to a fantastic part of your year by the time that you get this podcast. It’ll probably be a month or so into the year and we’ll be off and running on our 2020 goals. So think 2020, 2020 vision, focus on your goals. I would love to see you say as you listen to this now in the early part of the year, I would love to hear you say at the end of the year in November that you were still focused on the goals that you set for yourself back in January and December of 2019 you’re still working hard and have accomplished those goals and leveled up because you stayed focused on what was important to you. You know, business, real estate, multi-family investing, single-family rental properties, raising capital.
Josh: It’s just a tool. It’s just a path to ultimately give you the lifestyle that you want. And that’s what we’re going to talk today about. My guest today is Sterling White. Sterling has been a full time real estate investor for a long time. He’s got over $10 million of equity capital invested in his portfolio, owns a $26 million portfolio of income properties, both residential and commercial. And we’re going to talk today with Sterling about his entrepreneurial journey. We’ll talk a little bit about property acquisition, raising capital, but we’re going to talk to him about some of his fears, overcoming his fears and staying focused on his goals and is a massive contributor in the Bigger Pockets world and has been featured as well on their podcast. So welcome everybody. Welcome Sterling White to the Accelerated Investor podcast. Sterling, what’s going on? How are you?
Sterling: Welcome. Welcome everyone. Get your popcorn ready. Absolute golden nuggets and bombs. And we’re here to provide the value and make 2020 your year.
Josh: Yes, I love it man. I love it. So you come to us from Indianapolis, indie, but you invest all over the Midwest. So why don’t we just start real quick, Sterling, by telling our audience, what is your focus for 2020? What is your key and primary investing strategy?
Sterling: Yeah, so my primary strategy that I have is value add apartments. I know value add is very loosely thrown around. So it’s older class assets that are generally built between the 1970s and 1990s that need work. And these departments are workforce housing between 75 to 160 units.
Josh: Got it. I love the fact that you’re really dialed in 75 to 160 workforce, the age of the property. Fantastic. So why are you specifically investing in those like specifically 1970 to 1990 workforce housing 75 to 160 units. I love the fact that you’re so specific. What about your investing has pushed you down that path to be that specific? How has that worked for you to be kind of, be aligned in your goals?
Sterling: Yeah, I would say one, the workforce housing or you could say workforce housing is the technical term for it, but it’s blue collar type residents that you have. And I feel that you’re just not able to build that type of product in today’s environment just due to the rising costs. So there is a shortage of that. So that’s the bread and butter. And then also working in that is you’re still able to find mom and pop operators. So for my, I work with brokers but haven’t had much luck. So I’ve always gone direct with the owners to beat the brokers to the punch to find the deals. And that’s where I’ve had the most success between that 75 to 160 unit, a range. And then in addition, you can get the economies of scale, as most people are aware of that to where you can have an onsite manager and then also a maintenance guy. So I could have an apartment that’s in a whole other city and be able to have boots on the ground that is able to oversee the day to day.
Josh: That’s great. Fantastic. And I think a lot of people like that idea of knowing they can go to direct to owner, especially those folks that are straddling the fence between resi and commercial. They’re used to going direct to sellers. So let’s talk about that for a minute, Sterling. How has going direct to owner and beating the brokers to the punch, what are some strategies that have helped you get there and beat, you know, brokers to the punch. Maybe a couple of favorite techniques without giving away every single secret. If you want to hold a few back, I respect that.
Sterling: I’ll give it all away.
Josh: Yeah, that’s awesome. Tell us a little bit about that and in building relationships, because often, you know, these people that I’ve met with, we own 2,400 units of apartments with joint venture partners. You often see people that are, you know, in their late sixties, seventies, eighties in there. They just want to get their cash out and become completely passive. They’ve been owner operators for a long time. So tell us about getting to them. What are some strategies and then what about building relationships with them? So they trust you because often they’re building is their baby, right? They don’t want to just sell it to anybody.
Sterling: So I would say the overarching idea and one that really helped me be successful in terms of going to the, and there’s always improvement of course. It’s just overarching idea that even when you’re buying, you’re still selling. So it’s a sales process in a way and you have to be willing to get kicked in the face. I know it’s tough to hear for many people, but I, one thing that has allowed me to get these deals off market is persistence and consistency. So I’m willing to get hung up on by an owner and then show up the next day at their office and say, hey, I just happened to be in the neighborhood, wanted to touch base. So just doing what others won’t do in an ethical way. I have to mention that to everyone of course. And yeah, that’s a strategy is finding distress assets. Pull the public records, find out who the owner is, which majority of the time it’s in an LLC, so you have to take the additional sense of find the owner information, find the owner contact, and then just to pick up the phone and give them a call.
Josh: That’s fantastic. I love the fact that it’s just sort of old school. Get in the dirt, get the lead right. Find the phone number, give them a call, talk to them, follow up. Anybody can do that, right? There’s not like some silver bullet software or some thing that you’ve got to have. What you just described anybody can do if they’re willing to put in the effort and like you said, get kicked in the face a little bit and have persistence because they’re going to get a lot of no’s or stop bothering me or stuff like that. But look, it just depends on how big your goals are, right? Are your goals bigger than your fear?
Josh: Are your goals your why more important than some, you know, being turned away. So let’s talk about that Sterling a little bit. So now that we know kind of what you’re focused on and what some of your strategies are, let’s go back. Let’s take a journey back to when you first got started in real estate. When you first started to think this is something I want to do with my life, as opposed to everything else you could be doing. So what was your background? Where did you come from and where did your passion for real estate begin?
Sterling: Yeah, so I’ll start all the way back, but give a very, a spark note version for everyone. So my upbringing, humble beginnings, had a single mother, a fraternal twin brother, and the type of environment that we grew up in the neighborhood is, I remember one instance, my brother and I were actually sitting down at a little picnic table inside our apartment and were about six or seven years old. And when we went upstairs, when we were done eating a bullet came in right through the back patio where we were. So he or either, I may not even be here. So that was the type of environment, section eight housing a welfare, but decided to ultimately use that as fuel. So the whole entrepreneurship came into existence for me at an early age because I had to figure out how to earn money.
Sterling: And my first product was Kool-Aid. Second was Pokémon cards and then transition into how I got started in real estate was the construction side in 2009 where things were not going so well. And that’s when I fell in love with real estate but not so much the construction element. And then shifted to buy and hold investing purchased first single- family house. And one of the, just taking a step back, the limiting beliefs that I had and fears before even actually jumping into the buy and hold side was I thought you had to have a large amount of capital and that was only for the wealthy. And that if you didn’t know what you were doing, you could just lose everything. So those were some fears that I had in limiting beliefs.
Sterling: However, I was able to find a mentor that combat that very first deal, bought it for $25,000 with his cash because I didn’t have any cash at that time over withdrew my bank account, just not being financially smart and uh, and he funded the rehab. And through that is, that’s when I got thrown into the fire with property management, managing the whole transaction with the title company. So got up to 150 single-families and then in 2017 made a complete shift to multifamily where the first deal was actually a 46 unit.
Josh: That’s fantastic. So the self -imiting beliefs for you felt like you had to have a large amount of capital to get started. It was only for the wealthy and you could get totally wiped out basically if you screwed things up. So what did you learn from your mentor to overcome those self-limiting beliefs? What did he tell you? What did he remind you of? What did he kind of, you know, pound into your brain to say, you know, look Sterling, this is not, you don’t have to have a lot of amount of money. This is not just for the wealthy and you’re not going to get wiped out by a single transaction. How did you overcome that? Because you don’t go to zero to 150 single-families and zero to over 500 units unless you overcome those fears, right?
Sterling: Yeah. And that’s a great question to. How I, how it happened was I just ended up, saw that he had the need he wanted, he had the cash but didn’t have the time to find a deal. So I had the time to be able to find the deals and my limiting belief was just shattered ultimately. Because I actually moved forward with just figuring it out. So by buying that first deal and he actually funded it, that’s when the limiting belief was replaced with a more empowering one that said, hey, you don’t have to use your own cash. You can actually use other people’s money.
Josh: Yes. Yeah. When I was coming out of my surgery, my big surgery that I had for pancreatic cancer back in 2011, I borrowed money from private investors. I had done private lender deals before, but my audience knows that that was the big pivot point for me because I realized that even though I was in the hospital recovering from this massive surgery, I was able to buy two deals, work with my brother, who was essentially our boots on the ground to get those deals done. We made about $80,000, and I was able to control a pretty significant amount of that deal because I was able to get the capital and the capital. I was able to control the deal. So I will tell my audience, funding equals freedom. And it sounds like your journey is very much the same way it was your private investor that you know, funded that deal.
Josh: So funding allowed you to create freedom over time because you realize you don’t have to have a large amount of capital. It’s not just for the wealthy. And you can do deals with other people’s money. So what was it like for you Sterling, when you realize after this first deal, the second deal, the 10th deal, you’re like, wow, this really could be my go-forward future. This could be my plan, this could be my plan to be wealthy, my plan to create financial independence. What was the excitement level like after you realized that these self-limiting beliefs were not really true?
Sterling: Gosh, I would say to this day and I know it’s the cliché thing that people say you do something you love. You don’t have to work a day in your life. Yes, I enjoy real estate. Having the financial freedom, I already, I’m a minimalist so it doesn’t take much for me to get to that figure and well it hasn’t taken much to get there and but myself personally, what I really enjoy most is the actual work itself. And so when I just recently acquired 156 unit apartment, I took that from start to finish. Of course there was a team involved still. However, I was the main point of contact. And even during that, when it was actually closed, I was like, yay, I went to the next one, first type thing. So that’s the enjoyment. I get more out of that side.
Josh: Nice. So what about the work? Like how does the work make you feel? Like when you’re in the middle of a deal, you get ahold of an owner, you get an LOI out, a PSA signed, you take the deal down and then the real work begins, right? You don’t really jump into this business. And if you think you’re going to be able to just outsource everything and sit back, you and I both know that the boots on the ground operator, the guy that’s there every day filling up units, turning over units, doing value add improvements that that’s the guy or the gal that makes pro formas become profits. That’s the real work, right. So what’s that like for you to say the work is very fulfilling? You liked the work. Tell us a little bit more about that day to day process.
Sterling: So I’m more on the front end with finding the deal. And then I hand it off to the COO of the company, and she’s an absolute monster in terms of when it comes to the day to day operations of property management and had far more experience working as a regional. So I have a full 14 that has a construction manager, a leasing manager a COO who manages all the onsite property managers. So that’s how that comes into play. I’m more of just finding the deal, executing on that. Because formerly I was in the day to day of the property management and that is not my, and this is self-awareness, which is one thing that has really helped me along my entrepreneur journey is determining what areas that I am strong in whether that’s God given talents. I’m more of an extrovert, love marketing love. Well, I wouldn’t say get kicked in the face, but I’m not as…
Josh: I’m really good at getting kicked in the face.
Sterling: Yeah, exactly. I don’t internalize it, but there’s things that on weak in, which is managing people. That’s not something I enjoy or numbers that’s not something I like to do as well. So ended up putting people in place to offset those weaknesses to where I can further focus on my strengths and that allowed the company to scale even more.
Josh: Love that self-awareness. So let’s go a little deeper there. So what would you say right now is your top one or two or three strengths and how focused are you on a day to day, week to week basis making sure that you’re working in that swim lane?
Sterling: I would say sales is my primary one. I do, I train sales on a day to day basis and that’s also what I enjoy about the work itself is the process that it takes to take these deals down because you have to improve as an individual as you start. Because there’s different levels is the way I view it. And so you have to pick up the necessary skills to be more value to the marketplace and cost. There was another question. What were you asking? What was that question one more time?
Josh: Well just how do you stay focused, like on a day to day basis on those things that you know, that are in your swim lane?
Sterling: Gotcha. Yeah. So I would say sales and then marketing with when I mentioned sales is just a property acquisitions, that’s my main go-to. And then the marketing with being the face and the brand of the, with bringing investors on board. So that’s my main focus with content marketing which is value. It’s exactly what we’re doing on this podcast is being a value to individuals and some investors that’s good lead generation for investors. And then secondly is the acquisitions with building up that team on that side to where they make all these calls now and then they set the appointment with me when the owner’s now interested and raises their hand.
Josh: Yeah, I love it. So help me understand your content marketing strategy. Is it primarily podcasting, blogging, Facebook, Facebook lives? What’s really the goal of that? I, you know, it’s branding, acquisition of properties, relationships with private lenders. And maybe if somebody has never raised any money or somebody who’s never created a brand, maybe they’ve just, you know, they own 10 units or 50 units, but they’ve primarily done it on their own, never really raised any capital. Talk about the importance of content marketing. What benefits come out of that?
Sterling: Gosh. I don’t even know where to, I know, okay, I need to calm down, I’m getting jazzed up. And I would say the content marketing in the whole, I believe that era that we’re moving into is that the personal brand has been very crucial because working to brand under a company is even more, I feel just personally in this is the way I’ve done things is even more difficult to build a brand through yourself. So you would be the brand and then everything would funnel up to whatever companies that you have. So through the digital marketing side, so being a contributor on Bigger Pockets with videos, blogging, and then also through social channels using video content as well, and then having a podcast. So all that is just lead generation to value creation, push the brand myself out into the marketplace. Because the overarching thing is people do business with who they know.
Josh: Right. That’s fantastic. What’s your favorite content marketing strategy? Is it podcasting? What do you like to do the most to get your face out there, your word out there to create new relationships, make new contacts.
Sterling: I would say video at this present time. It is huge. And I saw one of your videos where you were talking about the, it’s even just as powerful as sitting down with someone on a one to one basis, but the power of video, right? And so if you’re someone who is not shy to it, the power of it right now, and especially with all the algorithms out there on Facebook, LinkedIn, they’re more inclined if you post a video content to push it out as much as possible.
Josh: Yeah, I love it. Yeah. So Sterling, switching gears over a little bit to your actual deal structure. I’m curious to hear not only for my audience but also for myself as we talked about kind of getting ready for this podcast. I love to invest in apartments at, we’re primarily a debt and equity shop that we fund deals on the debt side. We fund equity as well. We invest with teams, we invest with JV partners and operators. So walk us through a deal. Walk us through a deal that you’ve done in the past. There may be, there are some private investors, lenders on this line that are looking for deal flow. I’m always looking for deal flow debt and equity.
Josh: Help us understand a deal that you’ve done. Was it something that you bought at a steep discount and a bunch of value add improvements and then refinanced and a permanent financing, you know, started with a bridge loan, maybe we went to permanent. Is it more of a traditional syndication where you’re maybe the GP ends up with 20%, 30% of a deal and the LPs end up with eight 70 or 80. Help me understand your deal structure. What’s your favorite kind of deal to do?
Sterling: Yeah. So I would say the very traditional route where there was one asset just recently got it at a discount because went direct to owners saved about between about $400,000 or $600,000 on that by going direct because we were able to ask the brokers, Hey, what do you believe you would have been able to list this for and actually get out of it? So I believe actually saved more than that. So it was $3.3 million in terms of purchase price and then the lender came in and we put down 25% and that was equity from our, we put down a co-investment as a company and then the remaining came from investor partners and then raising an additional amount of cash to take care of improvements. This was a lighter, a rehab in terms of, it was about $300,000 worth of a renovation. So yeah, not even are. The other ones I’ve been involved with are a lot more heavy lifting than that. And so on that I believe the split was either 70/30, or 80/20. In terms of how the split works .
Josh: Got it. and is the plan, did you walk into it on day one with permanent financing and you’re going to hold it for five years and exit your refinance after three, five, seven years? What’s the longterm plan?
Sterling: Yeah, so on that specific one, the strategy is always buying hold versus going in and flipping. So that the term on that is seven years. If I’m not, it’s either six or seven years on the actual debt. And within that, going to push up the value of the asset because it was under rented about 75$ to $95 per unit. So push up the value and then in the fifth year which is about three years from now, plan on refinancing out return all cash investor partners and they earn infinite cash cause they’re still invested into the deal.
Josh: Yeah. They retain some equity, right. Maybe a point or a point and a half depending on the deal. That’s fantastic. So Sterling, if as you look forward to 2020 and you look on a go forward basis, you said you’re a minimalist, which I really appreciate. I remember the time when I was a minimalist before I was married with three kids and my bills are like this big and now they’re like this big, you know, kids in private school and all that kind of stuff. It’s really, really fun. But I remember being a minimalist. I really appreciate that. So help me understand that part of your life. You know, a little bit outside of the business world. You like to keep things simple, you like to keep things minimal, have you know, small obligations, you know and a pretty free lifestyle. So help us understand your thoughts around that. Why did you choose that route and kind of describe that to us? What does that look like?
Sterling: I would say, and it’s so funny when people, I say it to them, they’re like, you’re just so civil. I never even look at it that way. When someone walks into where I live it looks like is if I just moved in. That’s how simple I keep things. And when I traveled to, for instance, Dubai for a week, I just had a backpack. That was, yeah, just so from that I believe just in on the business side, things are so complex, so many moving parts, employees, payroll guys going direct to owner, all these different things. So I believe everything outside of that, I have a seven year old little angel too. And she’s quiet. She’s quite a bit in herself to with all of the things with that, with the kid. And so I believe if I can keep my life simple as possible that’s how I view things because there so complicated on the business side, I don’t want also my life to be as complicated and complex. So I just try and keep it as simple as possible.
Josh: There you go. That’s fantastic. It’s going to be more complicated. I promise you, as your seven year old becomes an 11 year old, becomes a 13 year old. It is quite a journey being a father. And I have three little kids, right? They’re 11, 10 and 8. And when they were, you know, just coming into grade school, it was real easy, like the preschool years and then now that they’re all in school on a regular basis it’s awesome. But you know, they’re all into travel volleyball and clubs sports and it’s…
Sterling: All girls there?
Josh: Girl, girl, boy. Yeah, Juliana, Alessandra and Dominic. And they’re all traveling with sports. It’s amazing cause I’m a sports guy. I love to coach and stuff like that. But I promise you Sterling, you won’t be a minimalist forever.
Sterling: Oh Gosh. Alright.
Josh: That is awesome. So Sterling kind of final question, you know, passing along all this content, I really appreciate you being open, honest, kind of just transparent with us today. If you were going back and talking to your former younger self, you know, the, the man that was maybe just getting started in real estate or maybe the man that was just doing residential and pivoting into commercial and you look back at those kind of inflection points. But now that you’re further along in your journey, what would you reach back and tell yourself, what kind of advice would you give yourself? What things would you tell yourself, Hey, you know, do this differently. Or hey, you did this really well, you should have done more of that. Help us understand what you’d kind of advise, you know, advise yourself looking back.
Sterling: I would say investing in myself more meaning going to, so at that time I was really in onto the self improvement side. However, attending more conferences sales. So I believe if I knew that even sooner than I do now, that how important high five and how what is it, how crucial it is to just not even just in business itself, but life. There’s negotiations where just goes back to my little seven year old daughter, my angel. I have to negotiate on why. Hey because either you’re doing the selling or you’re being sold. So she can sell me on why it’s not important to do our homework or practice her gymnastics moves. Or I could sell her on why the importance is. So I believe just looking back is Sterling investing yourself more on the sales side and then also the capital that you do earn from your business. Take that and invest it back into yourself as well. So attending conferences, boot camps, and just traveling more to further just scale up to where I can be even more valuable to the marketplace.
Josh: That’s fantastic. And Sterling, last question is, is where do you see your investing going? You’re at 500 units now, 150 resi, 350 commercial. Tell me what you see in yourself in the next one to two to five years. Where do you want to get to and what do you think it’ll take to get there?
Sterling: Gotcha. So on a daily basis, this is one thing that’s really helped me to and wish I looking back to is on a daily, I write my goals down. So one of the goals that I have is to own over 3000 units across the Midwest. And that’s owned by myself personally. So that’s one goal that I have and that’s just strictly on the multi-family side. And just to one thing that I also write is just, I am the creator of my destiny. Saw him always focused on just further being on the self-improvement and being more self aware. Because one of the things that I just recently heard that just really just hit me at that moment was that where I am today is a composite of all the choices that I’ve made up to this point. And I thought that was huge.
Sterling: So there’s things definitely myself that I know I need to work on business. There’s family. So one thing that I really want to hone in is just being more family oriented and building more relationships and having friends because I feel as on the entrepreneurs side, it’s been quite lonely and I haven’t been able to dedicate, put focus into that. So those are things that I really want is just key in is just being more self aware as an individual and just keep scaling up.
Josh: Yeah, that’s fantastic. And what I find too is often the people, if you associate within the circles that you run in, in business and turn those into friendly relationships, you know, football games, basketball games, going to concerts, you know, just, you know, having a meal, breaking bread with people, those personal relationships become really exciting because you have so much in common, right? So much in common when it comes to business, multi-family, raising money, owning apartments or owning rental properties and associating with them outside of work allows you to then when you’re just kind of be asking during a timeout or during halftime of a game and you know, you’re just really enjoy being around those people.
Josh: My personal relationships have definitely morphed over the years. I’m very lucky to have retained a lot of my high school and college relationships with my buddies. But I also really enjoy the conversations with people that are, you know, really business- related relationships that have turned into friendships. It’s really, really exciting. Those are some of my favorite football games and basketball games to attend because we have so much in common, so much to talk about. It’s really, really exciting. So Sterling, if any of my audience wanted to reach out to you, connect with you and invest with you, joint venture with you, learn more about your material, see some of your content what’s a great place for them to connect with you?
Sterling: Yeah, so one is you can visit SonderInvestmentGroup.com. That’s my main PR platform where I have all my holdings through. And then if you’re on BiggerPockets.com and if you’re not, it’s completely free resource, not a, what is it not affiliated by any means. I just contribute content on there and through that is, gosh, what was I’m going to mention is slide into the DM if you have any questions.
Josh: Awesome. Awesome. That’s fantastic. So, there you guys have it. Sterling White, thanks so much for joining us on Accelerated Investor.
Sterling: Make 2020 your year. Woo hoo.
You’ve been listening to Josh Cantwell and the Accelerated Investor Podcast. Leave a comment on our iTunes channel and let us know what you want to learn next, or who you’d like Josh to interview. While you’re there, give us some five star rating and make sure to subscribe so you can be the first to hear new episodes. Follow Josh Cantwell and his companies, the Strategic Real Estate Coach and Freeland Ventures on all social media platforms now and stay up to date on new training and investment opportunities to start your journey toward the lifestyle you’ve always dreamed of. Apply for coaching at JoshCantwellCoaching.com.
With over $26 million in his real estate portfolio, Sterling White, from Sonder Investment group, looks like he has it all figured out. As a contributor to the Bigger Pockets forum, Sterling generously gives advice and provides content for other real estate beginning investors.
But Sterling didn’t grow up around real estate gurus, and he didn’t think it was possible to get into it without a lot of capital. He shares with me about his journey from Section 8 housing to his growing portfolio of value add apartments across the Midwest.
As a young boy, Sterling and his twin brother lived with their mom in low income housing. His strong entrepreneurial spirit showed up early; first with kool-aid, then with Pokemon cards, and then into the construction side of real estate. But he didn’t love anything for that long.
What Sterling really wanted to do was to get started in real estate. He started buying and holding single family homes, but his fear kept holding him back. He thought you had to have a lot of capital to invest, that only the wealthy could buy real estate, and that it might bankrupt him if he did it wrong.
He had a dream, but he had this fear. And if he wanted to move forward, his dream had to be bigger than his fear.
A mentor provided Sterling with his first break. He shares how this first mentor shattered his limiting belief, and opened his eyes up to the possibility of real estate investing. As a generous contributor to the Bigger Pockets forum, Sterling pays it forward to the next round of real estate investors.
As we move into 2020, whether it’s February or December when you see this, I want you to be just as focused on your goals and dreams today as you were on January 1st.
- Why Sterling White likes value add apartments and how he finds deals.
- How Sterling’s first mentor shattered his limiting beliefs.
- How funding equals freedom.
- How you can use content marketing to build your personal brand.
- Why videos could be the best tool for digital marketing right now.
- Sterling gives his best advice for his younger self.