Robert Leonard  01:14

Sterling, I always love, always love your energy. For those listening, who may not have heard your energy before; may not know who you are, walk us through your story how you were able to acquire 400 rental units in less than four years, and just how you got to where you are today?

Sterling White  01:29

Yeah, I would say, 587 to be exact. And that’s comprised of single family and multifamily, but we’ll start all the way from the beginning with the younger version of Sterling. So had some humble beginnings; was born on the east side of Indianapolis, where people when they drive through the neighborhoods, where I had my upbringing, they tend to lock their doors. And so, I remember one instance. I grew up with a single mother, had a fraternal twin brother. It was just us. We grew up in Section 8 housing, food stamps, and I’m sure any other type of government assistance my mother didn’t tell us about. And I remember one incident that we actually had cages on the outside of our house, and there would be times, where we would just hear gunshots, and we would have to get on the floor. But to fast forward a little bit more through that is where the entrepreneurship spirit came to existence was I wanted as a kid, the clothes, the shoes I believe to impress people. So that’s where that–my first product was Kool Aid; second was Pokémon cards. And then, I got started real estate 2009, where things weren’t going so well. I got into the construction. That’s when I fell in love with real estate. Shortly after, found a mentor. That’s how I got really a knack for the single-family home investing. Brought the value to that relationship through working for that person for completely free; scaled up to 150 single families. 2017, transitioned to multifamily; was able to get up to 587 units, total. And that is the spark note version of my life.

Robert Leonard  03:05

So sorry to shortchange you there on the units. 587, that is, that is very impressive. Now, it’s often noted that having a mentor is a huge help, when trying to build a business. And I seem to hear this the most from people in the real estate space. I know you had a mentor early on that really helped you get started. What is the best way for someone to find a mentor?

Sterling White  03:26

So for my particular case, it was one of those instances, where it was, “When the student is ready, the teacher shall arise.” And it just happened to be at the CrossFit gym that I was at. My mentor was there, and I actually bartered my way into the CrossFit gym by cleaning in exchange for the membership because CrossFit is super expensive. But through that is–it just goes back to that quote specifically for me, and I was seeking out mentors, but not on the real estate side. So mentors that I was able to obtain were individuals like a Tim Ferriss, Earl Nightingale, Jim Rome, but this was all through their audio content and reading their books. And then, it just happened to be the right timing. And that mentor just happened to present themselves and happened to be at that CrossFit gym I was working out at.

Robert Leonard  04:15

Do you think that someone should continue to focus on finding a mentor? Or should they take a more passive approach like you said because I’ve actually spoken with quite a few listeners from the show that are having trouble finding a mentor, and they’re really kind of getting discouraged, and not sure if they should continue actively searching for one, or if they should just kind of like you said, take some time, and just let it kind of flourish as it does. What do you think is the right way for that?

Sterling White  04:41

I would say I would love to dig deeper into those individuals and see the amount of efforts that they’re putting into finding the mentor. I believe if–I wonder the steps that they’re taking on that side. But one route is you would just simply map out all the individuals that are in your market that you would want to emulate, and then reach out to them, and see what type of value proposition that you can get to them. I just happened to be in a scenario with a mentor I had. He was in a situation to where I could work with that individual or work for completely free. But you may have to go through–it’s just like prospecting, in essence, is you just have to have your list. And you may have to reach out to a hundred people, and then, all you need is just that one yes. And that person may not be, where my mentor was specifically to where they have the time to have someone work with them and be behind the scenes with them on the day-to-day, but you can still obtain that access to them, but maybe not as how I have that.

Robert Leonard  05:43

Does it even need to be one-on-one anymore? I mean, there’s so many people putting out so much great content, whether it be through books, podcasts, social media. I mean, you put out a ton of great content. I feel like if somebody followed you closely enough, they could get mentored by you without even talking to you. And I think it’s that way with a lot of people. Do you think that’s a good route that people could go as well?

Sterling White  06:05

Yeah. And that’s what I was mentioning towards the beginning is having Tim Ferriss, Earl Nightingale, Tony Robbins–those individuals as mentors. Not working directly with them, but still able to obtain that content; read their books. I personally wrote a book. There are people who have–trying to think of other investors that are in the marketplace, who have written books–who are in the space, too. And that’s another form. I believe it’s a misconception that people have the thought that they have to work with someone one-to-one and direct to really get the biggest benefit. Yes, you do get a benefit. But if that’s not working, then you have to just pivot.

Robert Leonard  06:43

Yeah, I mean, you can definitely do the books and the podcasts in the meantime until you find that one-on-one mentor. And to your point, I mean, there’s Brandon Turner as well, right? He posts a lot on social media. He has books, his podcast. I mean, he’s a great person that you probably can’t get him to mentor you one-on-one, but you could be mentored from him and from his content. I think that’s a great way to go about it.

Sterling White  07:02

Yeah. And these individuals, too, is you can reach out to them. And I like to say, “Slide into the DM if you have specific questions,” but one thing that I get oftentimes is someone reaches out and says, “Hey, I’m just getting started. Can I pick your brain,” where there’s no type of value exchange. So that’s one thing I would mention, too, is if you’re reaching out asking someone, you would want to pick their brain, and get some type of mentorship, whether it’s very tactical questions of challenges that you’re facing; if you can do some type of value exchange and then you’re able to get something in return versus a take-take situation.

Robert Leonard  07:39

I think too many people are doing that without providing value, and they don’t realize that people’s time is super valuable, especially people who are going to be your mentor.

Sterling White  07:48

Yeah, exactly.

Robert Leonard  07:49

I know you’ve accumulated a lot of single-family rentals. I think over 150 of them. Why did you choose to go with the single family properties over, over multi-families in the beginning?

Sterling White  08:01

I would just say it just happened. So, I was in the construction, and then I wanted to get investing, and single family just, it just happened. I didn’t really have any strategy, when I was getting started. The mentor who I was working with, they were looking to diversify for whatever reason for multifamily to single family. The problem that he had was he had the capital; have the credit, but didn’t have the time to find the deals. I didn’t have the credit when you would pull my credit score. This is when I was 23 years old. You would pull my credit score; it wouldn’t even register. And my bank account, I had negative funds because I over withdrew it. But I was able to look at my weaknesses, and then, look at that person’s weaknesses, and then, strengths. And then, bridged the gap.

Robert Leonard  08:50

It seems that single family properties are just notoriously difficult to scale and time intensive. So I was surprised to see that you went with so many single families to start. How were you able to scale your business and how did you not get burned out?

Sterling White  09:03

So me, I have a Why, which one of the fuels that I have is the upbringing that I came from. A lot of people, especially close to me tell me that I wasn’t going to make it out of that. And then, out of that specific environment, tell me I would amount to anything. And then, the people who are in that environment, I want to be a pathway to where majority of times there’s the not so good path that people take. Unfortunately, my brother took that path, and is facing hard times due to that. And I decided to take another path, so I want to be a blueprint or essentially an ideal for those people. So that was one thing that allowed me to not burn out because working towards that ultimate achievement or that mission.

And then, with 150 single families, it is very difficult to scale that, and so originally, how it was being done was using friends’ and families’ capital to purchase the properties. Indianapolis is very affordable in terms of the houses. You could buy a house at that time for $25,000, and then put another $25,000 into it, and rent it for about $800 to $850. And then, we would partner and I at that time would buy 10 of those. And then, we would be all invested into those. And then, we would go to get outside investors to cash ourselves out, and then go do it again. So, the “BRRRR Method” as many people would say, but instead of using a lender, we used outside investors across the country; outside of our friends and family. And then, those new investors would get a return on their cash from the income that’s produced by the property. And then, snowballed. And just did that same thing over and over.

Robert Leonard  10:37

There are two parts about that that I want to dive into a little bit. The first is: How did you structure those deals with outside investors? What did the terms look like? What is the structure of those deals?

Sterling White  10:47

Yeah. So it was a straight equity split at that time. Kept it very simple and straightforward. And it did vary upon each portfolio, but majority of time, it would be either an 80/20 split. 80% of the equity going to the investor partners, and then, the 20% going to the general partner or let’s say, the company for putting the deal together, both my partner and I, and that is of the net income that comes out; that gets to the investors, and then to the company. And then, out of the proceeds, when the properties are sold, that’s how it’s split too often that 80/20. Some other ones would be 70/30. Other ones would be at 85/15, but just straight. And returns between 9-11%, and some would be about 12-14%. It really just varied on that, too.

Robert Leonard  11:36

And your investors were okay with those return?

Sterling White  11:39

That was just on the cash-on-cash alone. They would look to double their money in essence, including the cash flow, as well as the sale of the property at five to six-year period.

Robert Leonard  11:54

I think the breakdown of the equity is really interesting as well because–I mean you’re doing a lot of the work, and you’re not getting the majority of equity. And I think a lot of people that aren’t specifically new into real estate, I don’t think they would do those deals because they’re like, “Oh, I’m doing all the work. And I’m only going to get 15 or 20% of this deal.” But I think the way you went about it is absolutely right. I mean, having a small percentage of all of these deals adds up to 100%, time over time, over time, and I mean…

Sterling White  12:18

It compounds.

Robert Leonard  12:18

Exactly. And I think, I think it’s Mark Cuban, who says on Shark Tank all the time, “Having a small percentage of a watermelon is a lot bigger than having a whole percentage of a grape,” or something like that. I think that’s definitely, definitely interesting. It’s something that people should take into consideration, when they’re putting deals together.

Sterling White  12:34

It’s just about thinking long-term. And this comes down to your specific investment strategy, too, is where you’re wanting to go. Because what I see most people, they tend to get tapped out, using their own cash. So if you want to build a larger portfolio, it’s best to be able to use other people’s money, and that’s what I’ve learned from the high achievers in success in this industry is they tend to use other people’s money as well to really scale their operations, and they preferably would like to have a small slice of a larger portfolio.

Robert Leonard  13:07

And to that point, I mean, you have to build those relationships. If you don’t take the smaller equity at the beginning, you’re not going to build any relationships, and then you’re not going to be able to have that other people’s money to do bigger deals down the line. So, I mean, it’s really a relationship thing. You got to think long-term, just like you said.

Robert Leonard  13:20

That first deal that I put together–another long-term view–I could have brought that deal: single family house; 23 years old; I could have taken a simple wholesale fee of let’s say, four to five grand on that specific asset. What I decided to do was instead of taking that fee, I retained equity, while I requested equity. And it was 85/15, I believe, was that structure. But that was the long-term thought that I had even on that first deal. And I believe that came from just all the audio books and all the teachings that I was able to accumulate was for them to always think long-term.

Robert Leonard  13:57

Yeah, that’s so important. I mean, having that four or five thousand dollars, essentially ready to go in your account must be so hard for somebody, who is young, to turn down. So to think long-term, I mean, I think that’s so important to take into consideration. And I mean, outside of just the monetary value, right? I mean, you had that deal, you were able to learn the whole process. Now you have a relationship with that investor. And all of that is, is far more valuable than the four or five thousand dollars. Just that alone has probably earned you 10 times that in the next five years.

Sterling White  14:25

Gosh, I don’t even know. I would say the two and a half years I was working with my mentor is the 20 years of knowledge that I was able to obtain. At least I was able to get–I would have paid a million dollars for that if I had it. And from my student debt and me going to college, I got nothing absolutely from that, and was able to get some real, tangible, tactical things that I could use and still use to this day.

Robert Leonard  14:49

Yeah, if you’re listening to the show today, I highly recommend you really, really listen to that point because having that four or five thousand dollars deposited feels good at the beginning, but it’s just not worth that, that million dollars like Sterling just said that you really would get on the back end. Now, the second point that you mentioned that I kind of want to dive into a little bit more is, you mentioned that you had grown up in Section 8. Now, how has that impacted your real estate investing in terms of renting to Section 8? Do you do renting to Section 8 or how do you view that?

Sterling White  15:18

I’ve had one–nothing against Section 8. I’ve had one property that I went with that program. It was an absolute nightmare for me personally, and did not go that, and everything else was just market rate working class.

Robert Leonard  15:32

What happened in that deal, specifically?

Sterling White  15:35

The resident that ended up getting in there, they were late paying, so that could have come back of course at the screening, but screening can go either way. And also, the inspections up front was a little bit of a hassle. So if you have the right systems in place, and the infrastructure, then Section 8, I know people that make a killing on that, but for myself, personally, it just wasn’t a good fit.

Robert Leonard  15:58

So we talked about the single family units over 150 of them from the beginning, but I know you’ve scaled into multifamily since then. So today, do you prefer single family or multifamily properties and why?

Sterling White  16:10

I prefer multifamily. If I were to go–and I know this is most likely one of your questions in the future–if I were to do it over again, I would still go with single family. Nothing wrong with it. But I looked at the things ultimately, where I wanted to go long-term. So having that many single families is very management intensive, so I didn’t just have them in Indianapolis, but had some in Dayton, Ohio as well. They were all throughout the cities. So it’s very–when a maintenance request comes in, they’re scattered throughout. So there’s that, and then also, the ability to control felt it made more sense for the multifamily. So in single family, when you look at exiting, for instance, that property across the street, so for that, that so for that across the street, mine will sell for this. Versus on multifamily, it’s all based upon NOI, so your net operating income. So it’s more sophisticated buyers, who would tend to look at the assets. So if you could push up income, that’s how someone will look at it from an exit. They look at it from cap rates, and the economies of scale. So literally, went from purchasing single family houses, and then jump to a 46 unit. And after that there’s one buyer and 46 units all in one location. So it just–after acquiring that first deal, just absolutely shifted from single family all together.

Robert Leonard  17:30

That’s a big jump from single families to 46 units. What did that look like? What were the big differences?

Sterling White  17:36

The biggest learning, especially on that first deal was structuring deals. That was one huge game-changer from the investors tend to be more sophisticated, and they have a different appetite on the multifamily. So I was able to bring some of our investors from the single families to the multifamily, but a lot did not jump across because they didn’t understand because that’s a whole different animal.

Robert Leonard  18:03

Did you stay in Indianapolis for that 46 units or did you have to go outside of your local market?

Sterling White  18:08

I stayed in Indianapolis. I would say another thing that on the multifamily side that ended up encountering was–this was in 2017. So, everybody wanted to be in multifamily. So, what I experienced was going through brokers was absolutely not working by any means in terms of the deals penciling out. The, the returns just were not there. So I decided to–and this is one thing that I want to mention to people, too, is, and also take notes is that depending on your original plan to take pivots, and instead of looking at that as an obstacle, look at that as a problem to be solved. So, I took a step back and said why not take the approach, and go on direct to the owners versus going through the broker. So essentially, beating the brokers to the punch, and that’s where I’ve had the most success.

Robert Leonard  18:58

Let’s dive into that a little bit more. I know, I know you’re a pro at finding off market deals. And in a hot market like we’re experiencing today, it’s increasingly important to be able to do that. So what does your system look like for finding off market deals?

Sterling White  19:11

Cold calling does work. And I know people right now are getting a little bit squeamish by me mentioning that. But I would say I acquired a 46 unit to 80 units, a 50 unit, and then also 156 unit in the past two and a half years. All started with the cold call. So, I–one limiting belief is I didn’t think that owners above 100 units, you would be able to go direct, and then, through a cold call buy the deal, so that shattered one of my limiting beliefs. But I would say, yeah, that’s the primary strategy is cold call, and then being creative with the follow up. So a lot of these owners are not interested in raising their hand. So you reach out to them, cold call, give them the pitch. I’d say 100% of the time, they’re not interested then and there. So then, this is where the whole follow-up comes into play, whether that’s sending Happy Birthday cards, actually just send it around to owners. It may not even be their birthday, but it’s just a way to stay top of mind. So it’ll say a small note. It will mention, “I may be a little bit late or maybe a little bit too soon, but just wanted to make sure I didn’t miss it. And P.S., if you happen to change your mind about selling your property, I’m your buyer.” So just little things like that to constantly stay top of mind.

Robert Leonard  20:29

And I know you do something similar with a Rubik’s cube. Talk to us about that.

Sterling White  20:33

Yeah, so the Rubik’s cube is by far my favorite gem. And so, when an owner goes; absolutely goes or falls into the twilight zone, as I like to say, you don’t hear from him, is I love to send a Rubik’s cube to him with a small note that says, “Hey, let’s figure this out.”

Robert Leonard  20:50

I haven’t put it into action yet. But I remember the first time I heard you say that I told myself that I was going to use that strategy eventually. And so, what are your cold calls look like? How are you finding their contact information, and what are you saying to them?

Sterling White  21:04

Yeah, so this is a process in itself and this goes back to finding mentors and through books. And so I learned this exact system through a book called, Predictable Revenue. Jim Rosser, I forget his name, specifically, but he was the VP of Sales within Salesforce. So their infrastructure is formally I was the one that was–I’ll just be transparent with the criteria is apartments between 75 to 150 units that are in markets within Indiana. What I’ll do is I’ll determine–I’m going to market; have that criteria. Then, I’ll pull all the data from somewhere you can say a co-stars a source; list source is another one that you can go to; reanime. So these are the types of large data providers that you can put in your criteria, and they can pull it for you. And then, from that will come through all of those properties to find the ones that are in working class settings that are not subsidized housing and not luxury. And then, from there, majority of them are owned in an LLC. So we’ll have to skip trace to LLC. And then, from there, we’ll have to make the call. So that’s how the process works. But going back to the Predictable Revenue, the model that I learned that they do is they have three roles. Someone who researches to find the property. Second is a person who does all the outbound calls and numerous people that does outbound calls. Once the person is qualified, then they set the appointment for the person to close. And formerly, I was doing all those roles, but until that, read that book, decided to put a system in place. And then, now I’m the person that comes on the back end that once the person raises their hand. They’re interested, and they meet specific criteria. That they’re motivated that’s when I come into play.

Robert Leonard  22:51

What does it look like once they answer the phone, and you, you start talking to them? What, what types of things are you saying?

Sterling White  22:57

All right, well, are you ready to do a simple role play on here?

Robert Leonard  23:00

I’m not very good at it, but I’ll give it a shot.

Sterling White  23:03

Okay. Roleplay I’ll just be along the lines of your, I’m calling you, Robert. And you’ll just say, I’ll give you a quick pitch and then me looking to buy the property and then you’ll say not interested. And then we’ll carry the rest of the dialogue from there. So you ready? Okay. All right.

Sterling White  23:19

Ring-Ring-Ring-Ring. Ring-Ring-Ring-Ring.

Robert Leonard  23:21

Hello.

Sterling White  23:22

Okay. And then, sometimes I gotta get a little bit warmed up. So this is why it’s always good to do role playing. So from that stance is what I like to tell the people on our acquisitions department that role play before you actually get on the field. Same with what people in the sports industry do. So let’s role play one more time. So Ring-Ring-Ring-Ring. Ring-Ring-Ring.

Robert Leonard  23:41

Hello.

Sterling White  23:42

Yes. Can I have the pleasure of speaking with Robert.

Robert Leonard  23:44

This is he.

Sterling White  23:45

Yes, Robert. Sterling here. Did I catch you at a bad time?

Robert Leonard  23:48

Uh, it’s all right.

Sterling White  23:50

Yeah, completely understand. I know I called you out the blue. Let me tell you what, give me 30 seconds if you don’t like what you hear I hang up on myself. Sound fair?

Robert Leonard  23:58

Sounds fair.

Sterling White  23:59

All right, perfect. Well, the reason for the call, Robert, is I wanted to personally reach out. I just bought bit wood apartments across the street from yours and wanted to see if you consider selling.

Robert Leonard  24:09

I’m not really looking to sell right now.

Sterling White  24:11

Gotcha, completely understand. And if I were in your shoes, I’d say the same thing, especially in today’s market. Let me ask you this: If I were to offer you the right price, then would you be open to selling?

Robert Leonard  24:21

Maybe. I mean, there’s always a price for everything, but I’m not really looking to sell.

Robert Leonard  24:25

Gotcha. Okay, I hear you. And so one thing I want to mention is, yeah, I, I just purchased bit wood apartments across the street from yours. And one thing in order for me to provide a great offer to purchase your specific property, all I would need is the financials, as well as the rent roll. And so we’ll be out of the role play, but we’re out of the role play, Robert. So one thing I would mention is if someone is really not interested, and there’s–so I look for three things, when reaching out to an owner–level of motivation, meaning, they may have just inherited the property. They may have just relocated. And through that is they’re trying to manage the property from afar. Third, is the price is relatively close for, if they just say, “Well, I’m open to selling if you, if you offer the right price,” and then also, condition of the property. If the property, they just renovated it, then it’s not going to be a good fit. So in that scenario, I would just ask the simple question, “Completely understand you’re not interested. Do you happen to have any other properties that something that may need a little bit of love?” And then, if they say no, from there, I ask, “Do you happen to know anyone in your network that would be interested in selling their property?”

Robert Leonard  25:35

And then you just kind of take the conversation from there?

Sterling White  25:38

Yeah, and if they say no, then just end it. It’s just about–the thing I’ve experienced, it’s a volume game.

Robert Leonard  25:44

Yeah, you’re definitely going to have to make a lot of calls and overcome a lot of rejection. But it is a good way to find deals.

Sterling White  25:51

Yeah. So looking at between, I would say, 185 to 200 properties to snag one or to take that one.

Robert Leonard  25:58

So that’s the success rate that you see?

Sterling White  26:00

Yes.

Robert Leonard  26:01

So once you’ve found these off market properties; you’ve been able to reach an agreement with the seller, how do you raise the money to close on these properties? I know we talked about this a little bit before about how it’s a relationship game. And you’ve been working with these investors on other properties. But from the very beginning, how do you get those investors in your network? How do you start building those relationships? And just how do you raise that money?

Sterling White  26:23

The way that I’ve been able to do that and build a network is one I’m on biggerpockets.com, so a contributor on there. So that’s one way to drive traffic. So I give a lot of value. And then in return, people see what I’m doing. And they say, “Oh, well. I’m looking for passive investment. I want to invest with him.” So that’s one route; being on podcasts; and really building a brand. So that’s a lead generator. And then, on top of that, attending local real estate meetups. That’s a, a huge one that I see many people neglect because those people at those real estate meetups is a great way to find–it all comes down to value exchange. There are people, who are one looking at to getting; who are looking to put their capital to work, and also looking to find deals. But if they’re not able to find deals, they’re still looking to put their money to work. And then, that’s the value that you bring to the table.

Robert Leonard  27:13

I’ve heard from a lot of new investors that go to meetups, that when they go to the meetings, there’s just a ton of people there that are just like them, and they’re all looking for capital, too, which makes it hard to find capital. But I think it can still be a good strategy, and it’s still really a numbers game. You’re not going to get a private lender; you’re not going to get an investor at your first meeting. You could, but it’s probably very unlikely. So you have to go a lot just like making those cold calls. You have to make a lot of cold calls; you have to go to a lot of meetings; you have to build a lot of relationships. And again, you’re building a real relationship, not just asking a bunch of people for money. You need to build real relationships, and that money will follow.

Sterling White  27:51

And there’s–at those meetups, there’s probably only two to three people that you actually want to…I mean, you want to build a relationship with as many people as you can ’cause really having those connections is good. But in terms of a number standpoint, there’s only–if you’re looking for money, there’s probably only two to three people, who have the capital that could invest alongside you; if you’re looking from that side.

Robert Leonard  28:14

I mean, in reality, you just never know, who somebody is; what they know; who they know, you know? I mean, you could be talking to somebody, who has an extremely rich uncle that wants to invest in real estate. I mean, you never know. So just all about building those relationships and just building a strong network. What are some of the most common mistakes that you see investors make that really kill their profits once they have a property?

Sterling White  28:36

Oh, once they have a property? I would say the property management. That can truly make or break a deal. And I’ve had–when, on one of the deals that I had, so I had some difficulties with the property. So I self-manage, so I had some difficulties with the property management company; had a key personnel end up leaving because our previous company offered her more salary, then actually ended up bringing her back on offer equity of, in the company. She was an absolute superstar. But through that is–that experience, when I was still looking to acquire, but at the same time was still trying to manage. So that was a difficulty and kind of backlog some of the, I would say, projections to investors, when it came to what is it quarters? But ended up rebounding on certain things. But property management is very crucial; is what I–one thing that really…so when it comes to managing, it’s just treating it like a business, which most people don’t.

Robert Leonard  29:36

So would you recommend that people self-manage or should they look for a solid property manager? Which leads to a better profit margin for them? Because, I mean, when you hire a manager, you’re probably going to give up between what 8-11%, give or take. So I mean, that could be a lot, depending on the amount of rent that you have. So some people might see that, and say I could do it myself, so could they end up ultimately hurting themselves more than that 8-11% if they do it themselves; if they don’t know what they’re doing, and maybe they should go that route or what do you think?

Sterling White  30:05

Yeah, I would say that’s a great question, and one that I’ve heard from people that say, “No one’s gonna manage my property like I am,” which is completely true, but the thing is up on self-reflection is, are you a good manager? So it comes down to that because it’s a completely different skill set. I myself I, it just comes down to where you’re looking to go. So for myself, if this is one thing I would actually change, I would say as a possible I would consider, when scaling up to 587 units. I believe it would have made more sense to outsource the property management, when scaling a portfolio versus trying to do it. I believe, when reach 587, then to bring it in-house. But getting up to that point, it would have made the most sense to outsource it because those are two different animals acquiring and managing, specially when you’re trying to do it all in-house.

Robert Leonard  31:01

Yeah, focus on one of those animals at first. Master that, and then, and then, you’ll have the economies of scale, and then you can really deploy a whole team to manage all of your properties.

Sterling White  31:11

Exactly. But through that whole process, learned a lot.

Robert Leonard  31:16

Yeah, right. I mean, that’s the best way to do it is to–I mean, audiobooks, podcasts, all that they’re great, but you don’t learn any better than just actually get out there, and doing it, and taking action. Through your years of experience and working with new investors, what have you found to be the most overlooked part of real estate investing?

Sterling White  31:33

Mindset. From that standpoint is–and this is just my personal experience. That it’s 95% mindset, and then, the remaining is 5%. So entrepreneurship is not easy by any means. I know on Instagram, Facebook, it’s a lot glamorous as people make it out to be. It’s not. I mean, just me personally, and other entrepreneurs I’ve spoken with is not what that is. It’s a lot of things that you have to do that you don’t want to do to get to where you’re going. Of course, you can, once you start to build things, you can put people in place. But I believe that’s the, the main thing that I believe people don’t have a grasp on because there’s limiting beliefs that even still to this day that I have, but I believe that for the longest time, I thought, I, I always thought for some reason that only investing in real estate were for the top wealthy. And that was one limiting belief that I shattered at the age of 23 years old, when I bought my first deal. And another limiting belief is that you have to have a large amount of capital or you have to use your own money. So I believe a lot of it’s just–mindset is the biggest thing.

Robert Leonard  32:46

I actually had that exact same limiting belief. I was always a stock investor my growing up because I, I didn’t think I could invest in real estate. I thought it was a rich person’s game. I thought you had to have a ton of money for it. I never thought that that was possible for me. I always said, “Yeah, I’ll get into real estate once my stock investing, you know, takes off and I have all kinds of money, then I’ll dump it into real estate.” But ultimately, I ended up learning that was just a limiting belief. And I bought my first property at 21. So, yeah, I mean, it’s definitely just a limiting belief. And actually, I bought my first property before I walked to my college graduation. So how have you seen people get over that and get into the right mindset?

Sterling White  33:18

I just got a cold chill thinking about that because it’s, it’s very difficult because limiting beliefs are blind spots. You don’t actually know at times that it is a limiting belief. So I believe through reading books, audio books, attending boot camps, conferences, and learning from others, who have built their business–because one thing I never understood, and this is another limiting belief that I just recently shattered for myself or replaced, was the value of time. I never realized–and using money; using capital to gain more time. So I’ll give you a prime example is–and this is an example I hope many people can relate to is–I was at Kings Island. This was with my Little because I’m with Big Brothers Big Sisters. And the, the cost to have a fast pass was, I believe it was $30 more for the ticket. So I got a fast pass for me, and then, also my, my Little, and through that is, we would stand in line for 10 to 15 minutes. And then, there were lines, where people had to wait two hours that were completely full. But I’m just going, talking through that with people that the value of money to save yourself time. And that goes with why if someone’s looking to build their business, why are they mowing their lawn? Or why–one thing I do now is I outsource my, my laundry, and also my grocery shopping. Those are things myself, I don’t enjoy, but I can buy time, and be able to focus on things that are more higher value. But that was a limiting belief that I had, too, was the value of time and how important it is, and how you can buy some additionally, and that’s hiring employees, and all that.

Sterling White  34:05

The tough part about that is you see the dollars coming out because you’re paying for it. But when you do it yourself, you’re losing net. You’re actually losing more. But because you’re not actually seeing it leave your bank account, it doesn’t register psychologically. So I think that’s hard to get over.

Sterling White  35:15

It’s a mindset, though. Yeah, exactly. Yeah. It’s, it’s great that you at your age are already have that thought in mind because many people don’t even get to that at a later stage.

Robert Leonard  35:27

I agree. I think mindset is such a hard thing. Over on my other show, Millennial Investing, I had Ph.D. psychologist Daniel Crosby on, and he told us that he still hires someone to manage his money. And this is a guy, who has studied the relationship between human psychology, and money, and investing for more than a decade; yet he still hires someone to manage his money for him because it’s just so hard to manage your own emotions. And one of the things you can do that can help get over some of those limiting beliefs you have is to follow people that are very transparent. And what I mean by that is don’t follow people that only post their fancy cars, or houses, or watches. Now, I don’t think there’s anything wrong with people showing off those items, since they’ve earned them. But when you’re trying to overcome your own limiting beliefs, these aren’t necessarily the people you want to follow on a day-to-day basis. They certainly can provide inspiration. But at least for me, it made me feel like I could never do what they were doing. I always thought that they had some better skill set, or they came from a different background, or they had some edge that I didn’t have. But once I started following people that were more transparent, and showed their wins and losses, and really how they were getting where they are and how they’re doing what they’re doing, and made it a lot more clear to me that I could do this too. And that they were no different than me. Once I was able to see that, it made it a lot easier to overcome those limiting beliefs because if they could do it, I knew I could do it, too. That’s been really helpful for me and really helped me when I was just getting started. So I think you can really help investors that are just getting started now overcome their own limiting beliefs.

Sterling White  37:06

Yeah. And that’s why it’s good to go through these conferences, or maybe if someone like myself is, and I’m not perfect by any means, and it’s one thing, I want them to attend that. If I host the meetup or someone that’s local to you that you wish to emulate, go there, and see. And this was one thing that really helped me through attending these–it’s like, that person could do that, how can I not do that?

Robert Leonard  37:29

People don’t think about it enough. I really don’t think people put enough thought into who they’re following on social media and how it impacts their mindset. And I know from personal experience because that was me not that long ago. And as I mentioned before, this was super important for me. So I think if people put more focus on it themselves, it could really help. If you could go back and start over, what would you do differently?

Sterling White  37:52

I would say…the cliché thing is, I would say, “I would not want to change anything.” But I did mention, “One thing I would consider is third partying the management.” But through that, this is me backpedaling a little bit, as I was able to learn so much through that process, and go through the trials and tribulations that got me to where I am now. So that would be one thing I would consider is just third party, while still acquiring. And I would say invest in myself more. That’s a biggie. One thing I would change is, and by investing in myself is spending more capital and more money to go to conferences; to buy books; buy programs; do mentorships. So that’s another thing. I’ve–because I do more of that now with my…with the capital that I’m able to get from the business is invest that more into myself. I believe that’s the surest bet. I have some in real estate, but more of it is actually going into myself.

Robert Leonard  38:54

What would be the number one resource you choose to invest in yourself?

Sterling White  38:58

I would say training, even with my daughter. I’ve got her to a point now–she’s, she’s saying, “All right, Dad. Let’s make a deal.” And she’s only seven. But it’s little things like that. And even what I’ve experienced going direct to owner, when you’re buying–that you’re still selling because you have to sell that person on why you would be the right fit to buy their deal. And then, it’s also a cycle, so the person is not interested in selling. Now, the whole follow up has to come into play to stay top of mind because it’s timing; leveraging Rubik’s cubes; personal visits; leveraging all these different channels to stay top of mind; and then convert that person from not being interested to then being interested. All sales. And I give kudos to investing in training, especially on a day-to-day basis.

Robert Leonard  39:47

I mean, in reality, everything is sales in life. Whether you work a sales position or not, no matter what, everything you do in life is sales. And I know, I mean, I think it was Warren Buffett. Even Warren Buffett, he said he took a sales training course, and then he’s a stock investor. What, what does he need sales training for, right? I mean, everything in life, whether it be real estate investing; just personal relationships. Everything is sales, so it’s an invaluable skill to learn. I know you mentioned mindset, but is there anything else? What do you think is the biggest thing holding people back from building a successful real estate business, and how can they overcome it?

Sterling White  40:19

I would say another one. And this was something else I learned, too, is finding people who complement your weaknesses. So self-awareness, I learned this from Gary Vee in terms of his content that he has, and…but one thing I want to mention is self-awareness. So being understanding, and this takes humility, too; being able to go out to let’s say, people who are close to you and determine; get their feedback on. So one thing recently, full transparency, I realized I’m not a good manager. For the longest time, I always wanted to be a manager. And that is, when I’m telling something, or delegating something to someone on staff that if it comes down to the third or fourth time, and tell them something. It’s just not good in terms of that relationship, and me just coming down on that person; so ended up hiring someone, who enjoys managing multiple people within the organization. So that was one thing is just being aware of the thing, the strengths that you have, and then also, the weaknesses and your blind spots, and then putting people in place to complement because if say, one of my previous relationships that I had, as far as business was the partner, he was more of a introvert, operations, behind the scenes, running financials and the numbers. I was more of the extrovert, face of the, face of the company, bringing on investors getting kicked in the face on acquisitions. That was something he was not interested by any means of actually doing, so that’s one thing is being self-aware. And that delegating in the areas that your weak in, and focusing, and honing more on your strengths.

Robert Leonard  42:00

I think that’s so important because a lot of times people tend to reach out to people that are like them. And they want to partner with people that are like them. And I mean, that’s great from one perspective because you get along well, and you know, you understand the things each other likes. But then, again, like you said, when you’re building a business, you need somebody that complements your weaknesses, so that you can build a fulfilled team and grow that way.

Sterling White  42:21

Yeah, you don’t want to constantly keep butting heads with–if you’re both marketing, then what about all the other things around that, that you hear (*inaudible*)? It’s just more holes that you have to ultimately fill.

Robert Leonard  42:34

Everybody that’s been successful that I’ve heard of, I’ve never–personally, everybody I’ve talked to; everybody I’ve read; everything I’ve ever studied, nobody has ever said, “Fix your weaknesses.” Everything I’ve read is, “Double down, triple down, quadruple down on your strengths, and go with that.” So just being able to partner with somebody that has–can fulfill your weaknesses. I think that’s so huge.

Sterling White  42:54

And that’s funny you say that, too because that was a limiting belief that I always thought it was the other way! But, yeah, you have to, and those were–I don’t know if it was books I read, but also in school, they say, “Fix your weaknesses and become better well-rounded.” It’s like, ugh!

Robert Leonard  43:12

I suppose that’s why schools build great well-rounded employees, but not always the best entrepreneurs. Sterling, thanks for your time. I think you made a lot of great points that are really going to add a lot of value for the audience. Where can people go to connect with you further?

Sterling White  43:28

Yeah, so I would say one is Sonder Investment Group. And also if you’re on Bigger Pockets, if you’re not, it’s completely free. I’m not affiliated–well, I do contribute content on there, but not getting paid by any means. But you can go on there, learn tons of things. Don’t hesitate to reach out and slot into the DM with any questions you may have.

Robert Leonard  43:49

I’ll be sure to put links to all of Sterling’s resources in the show notes, so you guys can go connect with him further. I’ll also put links to anything that we talked about throughout the episode, and I recommend you take Sterling up on his offer. Send him a direct message. Talk to him; ask him any questions you have. I know he’s more than happy to help. So I definitely take advantage of that opportunity. Sterling, thanks again.

Sterling White  44:09

Thank you.

Robert Leonard  44:10

All right, guys. That’s all I had for this week’s episode of Real Estate Investing. I’ll see you again next week.

Outro  44:17

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