Insider Secrets Podcast Season 2, Episode 10
Guest: Whitney Elkins-Hutten
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Whitney is a real estate maven who, after purchasing her first rental in 2002, and hitting a homerun, then nearly losing it all on her second deal, took control and figured out how to invest in real estate the right way. She realized that success must leave clues. So, she studied and replicated the very personal finance and wealth creation strategies the wealthy use to create financial freedom.
Today, Whitney is a partner in $700M+ of real estate —including over 5000+ residential units (MF, MHP, SFR, and assisted living) and more than 1400+ self-storage units across 7 states—and experience flipping over $3.0M in residential real estate.
In BiggerPockets’ Podcast Episode #340 you can learn more about her story, including how she managed to grow her empire using the BRRRR-strategy, and how she funnels that forced equity into other passive strategies. Now, Whitney spends her days helping aspiring, new and seasoned real estate investors creatively navigate the world of wealth building through real estate.
In 2018, Whitney founded ASH Wealth and the Investor Accelerator Program, which helps investors develop a clear workable plan that gives them the results they dream of, solves their business startup or scaling issues and drives massive progress towards their real estate and financial goals.
Whitney wholeheartedly believes that she’s living proof of just how successful anyone can be at real estate investing; all it takes is a little grit. When she’s not out scouting a new deal or meeting with clients, she enjoys trail running, mountain biking, camping, and spending time with her family.
Overcome obstacles with determination and a growth mindset.
Real estate offers diverse income streams for wealth creation.
Utilize other people’s money to invest in real estate with limited personal capital.
Investors exercise caution while seeking higher returns in the current market climate.
Explore alternative investments like express car washes for income potential and risk diversification.
Invest based on operator expertise, market analysis, and risk mitigation, rather than being influenced by market sentiments or doomsday predictions.
“Real estate was not on my radar when I went to school, but I fell into real estate investing completely by accident.” – Whitney
“There’s so many ways that you can make income in buy and hold real estate. It’s very flexible even if your business model does change.” – Whitney
“People take better care of their cars than they do their apartments sometimes.” – Mike
“Self-storage is a recession-resilient asset class, though not necessarily recession-proof.” – Whitney
“If you could position yourself in front of the next bull run, that’s where you’re going to really see the benefits.” – Whitney
“People take better care of their cars than they do their apartments sometimes.” – Whitney
[00:40] Intro to Podcast
[02:37]] Intro to episode guest
[03:23] One word that describes Whitney personally and professionally.
[04:36] Could you let people know who you are, what you do?
[11:00] Let’s talk about people who want to get into the real estate space as a passive investor.
[13:40] Not all investors want to be in multifamily or want to be in self-storage and car washes could be an alternative for them. What type of a return is the investor looking for today?
[17:10] What is the current investor sentiment regarding yield expectations and the likelihood of achieving a 20% return in today’s market given the prevailing interest rates?
[24:00] How has the technology of dryers in express car washes improved compared to the past, and how does this improvement make it more appealing to use an express car wash instead of a hand car wash?
[28:27] How about self-storage? How much self-storage are you doing? And what markets do you like for self-storage today?
Kristen: [00:00:00] Welcome to this edition of Insider Secrets, the weekly podcast that turns real estate investing goals into reality. Each show we interview guests who are seasoned real estate professionals, actively closing and managing real estate deals. Mike is the founder of My Core Intentions and would like to help you make your real estate investing dreams a reality.
Mike coaches you to buy investment real estate, creating short-term cash flow and long-term wealth. Your host and real estate coach, Mike Morawski, has more than 30 years of real estate investing and property management experience. Here’s your host, Mike.
Mike Morawski: Hey, good morning everybody, and how are you today? Hey, if you’re new to the show, I’m glad that you’re here. We bring you something about multifamily or somebody in the multifamily space or some variety of that where we bring great content and information. People who have gone before us and really [00:01:00] built businesses, whether it be multifamily or other type of commercial businesses, raising capital. And today we’re gonna talk about all that.
So I’m excited about our guest. But before we get to that point, hey, you know what, are you being intentional? I always talk about intentionality, right? And are you starting your day out? Are you starting your weekend out with intention? What are your plans? Are you planning to spend more family time this weekend? Do some things around the house. Are you still working? Putting in that time, how about during the week while you’re building your business? Are you being held accountable? Are you being intentional about your activities and your actions?
Those are the things that continue to keep us growing both personally and professionally. So whatever we can do to add value to you for that, please don’t hesitate to reach out. You can email me and I’d be more than happy to network with you and see how I might be able to help.
If you are following us on social [00:02:00] media, like us, love us. We’re always bringing out content to help you learn something new. I always say that if you get that one little golden nugget, that that will help you to grow and maybe do something different in your business. That’ll help it explode.
If you’re following us on YouTube, smash the subscribe button because our channel is just filled with content hours and hours of information that you can go back and get. And tips every day that we put out to help your business just grow. So I’m excited about our guest today. She’s back again.
So we must have done something right for her to come back again. So I am excited to introduce Whitney Elkins-Hutten. She’s with passiveinvesting.com. They’re in South Carolina, and Whitney’s calling us today from Colorado. So let me bring her in. Hey, good morning.
Whitney Elkins-Hutten: Good morning Mike.
Mike Morawski: Morning. Good to see you again.
Whitney Elkins-Hutten: You too.
Mike Morawski: Yeah. Here’s what I remember. I [00:03:00] remember last October when you spoke at our summit and had a breakout room. Man, everybody went to listen to you. So I know that you always bring the heat and bring something good. So I’m gonna just tell people buckle up this morning. Because I know we’re in for a ride. Cause you always bring some great stuff. Hey, before we get started, I always ask, in one word what best describes you personally and professionally?
Whitney Elkins-Hutten: There’s so many words. I hate to be pigeonhole to one word, but I guess the one that really kind of defines me in a way is driven. And there’s all sorts of levels of driven, but long story short, I don’t know when somebody says no to me, that doesn’t register.
Mike Morawski: Oh, that’s awesome. You know what I’m gonna do is I’m gonna go back, from the last time you were on the podcast, cuz I think I had you on the podcast early last year before the summit, and I’m gonna go back and see if that’s the same word you used then. I’ll let you know when I figure that out.
But driven, I’m the same way, right? I don’t like, [00:04:00] no. And I think that no is just a reason, gimme some more reasons why I should say yes.
Whitney Elkins-Hutten: Exactly. Yeah. I equate it to what Robert Kiyosaki describes in his book, The Cashflow Quadrant. The mindset of going from, I can’t to how can I? And so when I finally like equated the two together and I’m like, oh really? When somebody says, no, there’s a reason behind it and I need to dig deeper. And then, maybe in six months or a year that answer will change.
Mike Morawski: Yeah, and no means not right now, right? So listen, for our listeners that don’t know who you are or don’t follow you on social media, could you let people know who you are, what you do?
Whitney Elkins-Hutten: Yeah. I’m the director of Investor Education and passiveinvesting.com. But I didn’t start off here. I didn’t start off in private equity real estate. I don’t have a real estate degree. Actually, my background is in public health. I have a PhD, or actually I have an MPH in epidemiology and a PhD in community health and nutrition.
So [00:05:00] real estate was not on my radar when I went to school, but I fell into the real estate investing completely by accident back in 2002. I bought a house with a significant other and the relationship fell apart and I had a house. Kept it full of roommates, completed the rehab, and about a year later, walked away with a $52,000 check in my pocket.
But what was even more astounding is that I realized I hadn’t been paying for any of my bills, my roommates had paying, covering the principal interest, taxes, insurance, and everything. And I was like, how many more of these deals can I possibly do? Cause this is a good side hustle. If I can eliminate my housing bill and make more doing this than I do at my day job.
Like, I saw the possibility of my financial world cracking open for me. But, it wasn’t always a smooth. I did several more living flips in house hacks, and then eventually one day, I was trying to puzzle how do you make cash flow? One of my friends said, well, why don’t you put a runner in and keep your foot?
I’m like, oh, [00:06:00] that’s genius. That’s what people have been doing for millennia. So I do down that rabbit hole, and then we hit another level of achievement is that we wanted our timeline, because when you manage a portfolio of 30, 40, 50, single family rentals, even if you have property management, it’s not passive. It might be passive income, but it’s not passive with your time.
And so then we got into larger scale multifamily real estate, both actively and passively cuz I didn’t know which one was going to work for us. And today my husband and I, we personally have a portfolio of 6,500 residential units in partnership. 2200 self storage units, seven express car washes, and several other business ventures. But a good chunk of our portfolio is completely passive.
Mike Morawski: Yeah. Interesting. You talk about Robert Kiyosaki, right? And before Robert Kiyosaki was a guy named Robert Allen. And I dunno if you ever read any of his books, but he talks about that. He talks about no money down or other people’s money and being creative [00:07:00] financing. And when you said, man, I walked away from that house and realized that my roommates paid all my insurance and my taxes and everything, instantly made me think about OPM.
Other people’s money and that’s so true cuz people think, well, I don’t wanna get into real estate because I don’t know how to do it. Or what if I can’t pay the bills? But they neglect to think about that, where somebody else lives there, somebody else cuts the grass, pays the bills, and they pay your mortgage down for you and that’s how you build the equity.
Whitney Elkins-Hutten: Oh, absolutely. Yeah, I mean even back to that initial deal, I didn’t have the down payment. My grandfather lent me the $7,000 that I needed for the down payment on the property. I had zero money in that property. Like it would, none of it was mine. And it was able to make an amazing return on it, made my grandfather back too at the same time.
Mike Morawski: Did you get him interest on the money?
Whitney Elkins-Hutten: I did. I did. Yeah. But Mike, I realized a [00:08:00] few years later my grandfather must really have believed in me because he liquidated. I think it was a CD, but I think he was making 10, 11, 12% on that cd, and I think, I’m pretty sure I only paid him back 8%. So there was a lot of love there. He lost on that deal.
Mike Morawski: Well, here’s what I can say is kind of dating yourself because back then, 10, 11, 12% on a CD, that was a while ago.
Whitney Elkins-Hutten: Well, I’m not necessarily dating myself. I’m dating my grandfather because that was a CD that when he went to liquidate the bank, I’m sure the bank was like, yes, yes, please. We’ll liquidate you now. We don’t wanna pay this to you anymore. But you talked about moving expenses to the tenant. Normal housing expenses. I mean, we’re in a situation with a personal property that we own where it’s been an Airbnb, the Airbnb market softened, and we’re exploring how can we no longer take on, you know, have $35,000 in [00:09:00] expenses every year, but get that debt closer down to eight or nine and cash flow to different ways.
So I bring that up because there’s so many ways that you can make income in buy and hold real estate. It’s very flexible even if your business model does change.
Mike Morawski: Yeah. So did I hear you say that the Airbnb market is changing?
Whitney Elkins-Hutten: Oh, that’s not news, but yes. I mean, in certain markets, yes.
Mike Morawski: Ok.
Whitney Elkins-Hutten: Yeah. It’s become grossly oversupplied in certain markets for sure.
Mike Morawski: Yeah. But it’s still a viable opportunity for people they’re just getting less nights. Is that?
Whitney Elkins-Hutten: They’re probably getting less average daily rents per night and then also probably less occupancy. Especially if they bought in the fervor of like 2020 to 2022. Everybody was pent up after covid, so you really couldn’t take that travel pattern and extrapolate it out over time. And then a lot of markets where Airbnb is really hot, there’s also a lot of building. Because if you have a lot of investors [00:10:00] going in, snapping up single family homes to turn ’em into Airbnbs, now you’re removing a lot of housing supply that would go to a normal renter.
Mike Morawski: Yeah. It’s interesting. As much as I like that model and, I’ve stayed in some Airbnbs, I still like staying in a hotel. Especially a hotel where you get breakfast in the morning and as part of the room fee. I’m cheap and would rather take the easier road sometimes.
Whitney Elkins-Hutten: It depends on your travel. I mean, for us, our last trip in March. Well I shouldn’t say our last trip, but we went to San Diego in March and we were gonna stay there for about a week. And we have a family, so staying at Airbnb so we could spread out and cook. That was more enticing than staying in a hotel. But I will tell you, there’s no quality control. Cause the first night skunk sprayed, not only the front door but the air conditioning unit. So all we had all night long skunk and then we had to leave the next morning. Guess where we ended up, a hotel.
Mike Morawski: That’s funny [00:11:00] actually. Hey, let’s talk about people who wanna get into the real estate space as a passive investor. Cuz I know that you bring a lot of product to the marketplace, whether it’s a car wash, a multi-family self-storage, and you raise capital and you bring investors in to partner with you to share in their returns. So talk about that investor today.
Whitney Elkins-Hutten: Yeah. So, I would say that the investor today is probably a little bit more cautious than they were even a year ago, right? In the first half of 2022. And rightfully so. I mean, we’ve seen once happen in the past 12 months with rising interest rates. And asset prices, either flat lining in some markets coming down, maybe 10 or 15%. So I think is a little bit more cautious. I will say at the same time, while they’re cautious, they’re still trying to chase yield and because they want their money working hard, and that is a kinda [00:12:00] dangerous formula in some aspects.
They wanna continue to invest. They see the power of investing. They believe in real estate as an asset class. They want their money outta the volatility of the stock market. Maybe they have a high income job, like, they’re a lawyer or chiropractor or dentist, tech worker. And so they don’t have a time to build their own portfolio, so they wanna place their capital with somebody else, but they wanna get just as high a return in the run up to 2022 today in this market.
So for us that’s been kinda challenging need to meet and really help the investor orient around to what’s in the market now and being able to find those fully well underwritten properties that would yield a higher return to the investor. Because yeah, you can totally get it. How much risk do you need to take on? Now that leads into one of the things that we added to our portfolio over the past 12 months, and this is something that we were doing prior to [00:13:00] us even realizing what was happening with interest rates.
And that is on high cash flow business that owns their own real estate. And that’s the express car wash. And so that’s a really unique thing. I know we’re mostly focused on multifamily side. You wanna take a tangent, we can. But that is definitely a good income producing asset. And it can be very risk mitigated if you’re doing it the right way. Like with direct ownership, honing the land, owning the brand and the party company like we do.
Mike Morawski: And I don’t mind talking about car washes cuz I think it’s just one of those parts, just another asset class that somebody could look at. Cause not all investors wanna be in multifamily or wanna be in self storage and car washes could be an alternative for them. What type of a return is the investor looking for today?
And I ask this because, like we just rolled out a multifamily deal. And we’re paying mid-teens [00:14:00] IRR to back to our investors and I’ve gotten pushback from people saying, that’s not enough. And I’m like, well, do we understand what the climate of the environment is today? And that we’re trying to be a little bit more conservative, but what are you seeing investors looking for today as a return?
Whitney Elkins-Hutten: Well, let’s talk about this private equity environment. This retail private equity environment has only been around in a stellar market since 2012 really. But, really got going in 2015 and after. So these investors, retail investors have only seen really go up into the right. They have never seen cycling in the real estate. So I think this is the first time the retail investor has seen the actual cycling. We talked about it all the time, but this is the first time they’re experiencing it.
Now, we are experiencing kinda the same [00:15:00] thing when we have a multifamily deal out. We’re probably underwriting to 15, 17 class asset with zero cap ex for me on it. And there’s a lot of risk mitigation there. Like, that’s a really healthy return for an asset that we have to really do nothing with, but clip the coupon and then increase the rents and maybe put a few more people in the building.
There’s really not much that we have to do in the business plan. But people are like, yeah, where’s the 20% return that you would get on a value add asset? And I’m like, do you know how much risk you have to take on that to give that 20%?. That’s one of the reasons why we brought on the express car wash, cuz we know that investor’s out there, they’re still chasing yield and with their car wash portfolio.
We’re scaling 250, 300 locations and when we put out a deal to date, we’re about to launch our car Wash six fund. You know that IRR is between 20 to 23%, but the reason why we can get there is because it’s a high intensive, high cash flow [00:16:00] goes attached to the real estate.
Mike Morawski: Yeah. So you guys with the car washers, you are owning the real estate and the business, and do you show it all as one or is it two different entities that you hold that in?
Whitney Elkins-Hutten: Yep. The only thing that’s in a separate entity is the management company. We’ve built out a property management company to manage this portfolio and grow it. And that’s because that management company is into just all car wash that go the portfolio. Because at the end of the day, we’re looking to IPO that portfolio, 250 to 300 locations, or roll up and do a large sale exit to or a private equity group.
But, when somebody goes into one of these fields, they’re invested in say three to seven assets, however many go into that particular fund. Our last fund had four in it. We had one last year that had seven. And it’s just based on how many we can group together, and so long story short, they go into all those assets, so [00:17:00] they’re instantly diversified over the market, over the deals, and that LLC that owns those assets, not only the operating business under that business.
Mike Morawski: So I wanna just circle back for a minute on the yield that investors are looking for today. Cuz, even in a value add, I don’t know that I’m a hundred percent convinced that somebody’s gonna still see a 20% in today’s market, especially with the way interest rates are. So what’s the investor sediment that you’re seeing around that?
Whitney Elkins-Hutten: For the express car washes, I think it’s very attainable because one, we’re not doing any sort of refinance and trying to extract capital. I think that is a huge issue right now with value add deals. And we can talk about that primarily, they make sense right now because if somebody’s trying to extract deals through refinance, guess what they’re paying
they’re not paying a hundred thousand dollars more on a cap, interest rate cap, they’re paying 3.84 million on a interest rate cap for the exact same property, it doesn’t make sense. For this, we’re baking in all of the CapEx upfront on the asset, we’re holding onto the [00:19:00] asset, and then we’re harvesting the cash list so that IR remember, it’s a combination of the cash list and the underlying equity in the deal.
That’s what gets you to the IR upon repositioning and because the express car washes are such a high cashflow asset, it is very attainable for us get that 20, 22% IRR. Now here’s the thing, we’re offering a 10% preferred return and our first hurdle is at that 20% IRR. Then we have a second hurdle at 30% IRR, and then we leave our investor in after that for if we participate in an IPO or a large rule sale.
So we are highly incentivized to grow that customer base to get it actually over 30% IRR now that’s five years from now, right?
Mike Morawski: Right.
Whitney Elkins-Hutten: We try to help our investor really orient to what’s realistic with today’s numbers in today’s market.
Mike Morawski: What markets do you like with the car wash business?
Whitney Elkins-Hutten: Yeah, right now our [00:20:00] portfolio is primarily on East Coast and in the south. So as far north as Maryland, all the way down into Florida. We’re looking at deals all the way out into Alabama right now. And so we will continue to build out that portfolio, but also, go into the interior of the United States.
And so we actually have two brands, along the eastern and southern coast. The hurricane brand resonates really well with people, but as we go into the interior of the United States, like, if we build in Kansas City, Missouri, the hurricane brand is not gonna probably resonate with people as much. And so we have a second brand called Sparkle.
Mike Morawski: Okay, interesting. And, you’re doing ground up development on those.
Whitney Elkins-Hutten: Primarily we’re actually acquiring assets from existing express car wash owners because right now this $33 billion industry that’s growing at 8%, just under 8% year over year. And that’s for express car wash space only. Okay.[00:21:00] That is the space that’s growing the fastest. Majority of the people that own in this space are mom and pop owners with fewer than five car washes under their belt, which means they don’t have the ability to scale their employees. Or scale with a regional manager or even negotiate very well on their chemicals that they use in the carwash.
And so that’s one of the ways that we are scaling, is buying up these smaller portfolios and rolling them into our larger portfolio so we can help drive down operational expenditure as well as grow the income by moving these things to a new brand, moving it to a monthly recurring revenue model. There’s a lot of great value adds we can do on this type of asset.
Mike Morawski: Yeah. And what I find interesting about that is I don’t know any other business out there that you can do that with, right? So, I’ve talked to people that buy businesses and a guy will go buy a [00:22:00] landscape company and then that maybe he’ll buy a brick paving company or an asphalt company or another landscape company.
But you can’t scale it like that. And you only get so big or buy so many of those ancillary companies to create this portfolio. But with the car wash business, I’ve always been intrigued by that and it seems like it’s gotten bigger over the last several years.
Whitney Elkins-Hutten: Yeah, definitely. And also it’s moving into more locations, so you’re not only seeing growth in existing markets, you’re seeing new markets come online. And so, a lot of those expressed car washes are gonna crowd out the DIY carwash where you drive your car into like a little cement garage and you wash your own car, right? Drop the quarters in the wall. And then they’re gonna crowd out the automatic car washes, which are generally attached to a gas station.
And they’re probably gonna crowd out the full service car washes, the ones that are very labor intensive where you [00:23:00] drive in, there’s army and people ready to vacuum your car. Goes through a short tunnel and then an army people the end to wipe down your car. The express carwash really just leverages technology to be able to provide a high touch product, like a full service carwash, but give it the convenience of an automatic type carwash.
And so, giving you that product in say like five minutes or less. And that’s what customers are after right now. They want high touch. When you talk about good, faster, cheap, pick two, right? The express car washes, actually we can make it good, fast and cheap. We can actually achieve all three points in that triangle because if somebody is in a membership, they can use that membership however many times and it makes sense to them in that month. And the average user only uses that 1.8 times. Investors that naturally are like, well, are they washing their car every day? And I’m like, who has [00:24:00] the time to wash their car every day?
Mike Morawski: Yeah, yeah. Right. So, the thing that’s interesting though about those express car washes today is the dryers. The dryer, I think are better today. The technology around those are better today than they have been in the past. And that makes it more advantageous for using an express car wash cuz I was always a hand car wash guy, wanna go to a hand car wash because I didn’t want the things on my car. And then the dryers weren’t that good, but now it seems like the dryers are so much better.
Whitney Elkins-Hutten: The equipment really overall in the last five years, I mean, there’s been leaps in the technology. And so that whole tunnel, they’re like a 60, 80 foot long tunnel. It can pre-wash, wash, do all the undercarriage wash, it can wax, it can shine, it can do the tire shine, it can dry, like it can do everything. And you can program the technology that overlays onto the tunnel. Like, the tunnel will [00:25:00] scan the barcode on the car, the members and understand, okay, this member is a $45 a month tier, so they’re gonna get everything every time they come through. Whereas the next person might be in the $25 chair, it scans it and it knows, okay, they got a tire shine last time, so three times from now they’re gonna get the next tire shine.
Or two months from now they get the next tire shine. So the tunnel knows what product to deliver. The other unique thing about this technology, and I think what is sometimes a hesitation for people to really get into investing in car washes, they feel they might be perpetuating water issues within certain areas. But the tunnels are really fantastic at reclaiming the water, pulling out the chemicals before the chemicals are disposed of, and we can actually reutilize that water multiple times before we send it into the city supply.
Mike Morawski: Yeah. Interesting. And so is the [00:26:00] investor that invests in a carwash different than the investor that invests in a multifamily product?
Whitney Elkins-Hutten: No. I would say they’re generally the same. And because somebody’s been investing in a multifamily for the past three to five years they’ve got a portfolio. They’ve built a portfolio. And now they’re looking for diversification. They wanna maybe go into sell stores, they wanna go into car washes. And I think it makes natural sense. Like, what do people need?
People need a roof over their head. That’s why multifamily still makes sense even in today’s market. And then, what do they need next? People love their things and they love their cars. And so those are the two things that they’re not gonna give up. They’re not gonna give up their things. And quite honestly, people take better care of their cars than they do their apartment sometimes.
Mike Morawski: Yes.
Whitney Elkins-Hutten: Those are kinda like my core investing portfolios, if I think of it like a target. But people that are just entering into this space, maybe they’ve heard from a family friend or somebody like that, and they were like, [00:27:00] oh, this person’s been making a killing in multifamily in the past few years. And looking at multifamily deals and going, Ooh, that’s not what my friend guide. This could be a good alternative for them to start their portfolio as multifamily through its cycle.
Mike Morawski: Yeah. Interesting. I’m laughing when you said, people take better care of their car than they do of their apartment that they live in. And I have to agree, but all of a sudden made me think of a couple of my tenants that drive big BMWs and Maseratis that are living in workforce housing, but have these big fancy cars. And you always know the car is clean, but you can see the junk out in front of the place. So it’s interesting.
Whitney Elkins-Hutten: I mean, people see you all over town, getting in and outta your car, friends and coworkers, but how many of them are actually coming to your apartment?
Mike Morawski: Right.
Whitney Elkins-Hutten: Like you can control who comes to your door, but you can’t [00:28:00] control who sees you in the parking lot. So, I personally don’t subscribe to that. Up until like two days ago, I drove around a 2011 outback with peeling paint. My husband finally was like, that’s it. This car’s gone.
Mike Morawski: Did it still run good though?
Whitney Elkins-Hutten: We were getting into the too many Bills territory so.
Mike Morawski: Yeah. Ok.
Whitney Elkins-Hutten: We quickly hit that mark in the past six months, so I totally understood where he was going with it.
Mike Morawski: How about self storage? How much self storage are you doing? And what markets do you like for self storage today?
Whitney Elkins-Hutten: Yeah, so we have a self storage fund that’s currently open. And that particular fund is invested in North Carolina right now. But we look in North Carolina, South Carolina, Texas, Florida, Tennessee, Georgia, like all the same places that we’re invested with along with our multi-family.
We also really like Colorado and Idaho too, but we’ll look at self storage wherever it makes sense. You know, self storage, I think [00:29:00] it’s kinda cycling just right behind multifamily. So, we’re seeing a little bit compressed cap rates there, a little bit lower cashflow.
But, self storage is a pretty recession resilient asset class. I’ve heard people say recession proof, and I’m like, I don’t think anything’s recession proof. Those are daring words to say, but I think again, like multifamily, it’s still a nice asset to have as a core part of your portfolio.
Mike Morawski: Yeah, it can be a hedge, that’s for sure. But I don’t necessarily know it’s recession proof. I think you’re right. So scaling the car wash business, you said five years to get to 250 car washes?
Whitney Elkins-Hutten: Well actually looking to get the scaling portion done through acquisition and we didn’t touch on it. We are doing a little bit of ground up development to compliment that portfolio. But the investor gets to choose. Do they wanna be in the development deals or do they wanna be in the acquisition deals, or do they wanna build a portfolio of both? Unlike other operators, we don’t [00:30:00] force the investor to participate in both sides.
But we’re looking to get the scaling portion of the portfolio complete in about three years and then stabilize it and then get everything repositioned in five. But here’s the thing, we know we talk about returns. I mean, in five years, our cash flow on these assets are gonna be 10% to 15% location dependent, cash on cash. Many investors are gonna be really okay if it takes us a couple months extra to get repositioned and achieve that IPO.
Mike Morawski: Yeah, interesting. That’s awesome. Any comments about the market? So, where do you see the market going? There’s all these doomsday experts out there right now saying things are bad. I don’t necessarily subscribe to that, but I always like to hear opinions of people and where they think we’re headed.
Whitney Elkins-Hutten: I think I’m an armchair economist just like everybody else. So, I don’t think things are like rosy by any stretch of the [00:31:00] imagination. But for me, I really take a step back and headlines sell. I don’t invest based on headlines. I invest based on deal to deal. Who’s the operator? What market are they in? What is the deal? How well risk mitigated is the deal? How many pillars of those seven wealth pillars does that deal check? Because if I can check all seven of those wealth pillars, I’m pretty confident that I’ll make a return if the market goes up, down, or sideways.
And so I really focus myself and I help other people that I coach focus on investing based on principle rather than the headlines.
Mike Morawski: Yeah. Awesome. Yeah, I couldn’t agree more with that, and I think I’m an armchair economist myself. But I’ve been through a few cycles and as much as people say that the world’s gonna come to an end, I don’t think that’s gonna happen.
Yes, we’re gonna have this correction, but I also tell investors every day, Hey, listen, if you could position yourself in front of the next bull run, that’s where you’re [00:32:00] gonna really see the benefits from that. So anywhere now on this side coming down in this valley, before we start to come out again, wherever you position yourself, you’re gonna be in a better place.
And I’ve just brought a deal to the market and it’s not the highest return. But I also believe that I was so conservative in my underwriting and brought it out, just saying, If we just hit this metric, we’ll be fine. But I believe, and it’s one of those situations, you do the due diligence, you get deeper into it and you go, oh, this is really run dysfunctionally.
We know we’re gonna be able to turn this thing around. And I’m sure you see that in the car washes too.
Whitney Elkins-Hutten: Absolutely.
Mike Morawski: They’re businesses and sometimes people just can’t run a business well.
Whitney Elkins-Hutten: Yeah, there’s a lot of challenges there. I mean, one of the value adds in the car wash space, especially express car wash space, is a lot of the people that operators that we’re picking up the facilities from, they’re still doing single pay. So every customer that comes [00:33:00] through, they’re having to swipe their credit card to pay instead of putting them on a monthly recurring revenue model to stabilize your income throughout the year.
So again, a ton of value adds, but I would definitely agree, positioning yourself well in the cycle, making sure that you’re conservatively underwritten, you’re investing with the best operators out there that aside from sitting on the sidelines, and keep your money supposedly in your control. Long story short, like you wanna be on the right side when everything starts taking off. I mean, really, I would just make sure any operator that you’re with, and I’m sure it’s in your deal as well, but they can hang onto that deal for five years.
No bones about it. For what makes me nervous is some of those deals that are recycling out in like two years. And I’m like, ooh, I dunno.
Mike Morawski: Yeah. I’m certainly not underwriting anything at two years, that’s for sure. Cuz those days are gone right now and I don’t think we’re gonna see them for a [00:34:00] while. But good point.
Hey, thanks for being here today. How do people get ahold of you if they wanna connect?
Whitney Elkins-Hutten: Yeah, absolutely. You can reach out to me at passiveinvestingwithwhitney.com. It’s the website that’s scrolling right down there in the bottom of your screen. There I’ve got a free ebook for you “Passive Investing Made Simple” as well as you get access to my calendar and we can talk all things real estate.
Mike Morawski: And you have a podcast too, right?
Whitney Elkins-Hutten: I have a couple. Yeah. So I had the “Passive Investing Made Simple” show. And then I also co-host with Dan Hanford, “The Multifamily Investor Nation Podcast“. And then, we also have our summit coming up here in June in Charlotte, North Carolina, which I’ll be at attending. And then Family Investor Nation convention, June 12th through 14th in Charlotte.
Mike Morawski: Yeah, I was gonna try and go to that this year and it didn’t work around my schedule. I kind of felt bad about that.
Hey, I appreciate you being here, but before you go, I have a couple bonus questions. So, what is the best book you ever read? [00:35:00]
Whitney Elkins-Hutten: You mean real estate book?
Mike Morawski: Best book you ever read?
Whitney Elkins-Hutten: Oh my gosh. One of my favorite books is Ishmael. And I never would’ve picked that up. When my dad passed away and I was cleaning out his office for my mom, he read Louis Lamar books, or non-fiction or non-fiction. I found Ishmael there. I’m like, why does my dad have Ishmael? And so not only that, it was really cool to pick up the book and read it. And then he had made notes. I think a friend gave it to him and he made notes on the sidelines. And this isn’t a real estate book, but one of my favorite books that I subscribe to quite often is the one thing that Gary Keller and j. Yeah. Yeah. Gary Keller’s written a couple of great books. I, I always recommend to, investors to read, the Millionaire Real Estate Investor.
Yeah. The one thing was definitely great book and kinda made me shake my head a little bit about some of the. The activities that I do. So, how about, I do that every year. I kinda slap myself in the head. I’m like, why [00:36:00] am I still doing that? Oh, that’s funny. Hey, how about the best tourist attraction you’ve ever been to?
We went. Like I said, we went to San Diego in March and then we went to Universal Studios, and I don’t know if this is the best, but it is certainly the most recent memory. I have a 10 year old child and we went to Harry Potter World at Universal Studios. I have nailed that, so that was so much fun.
Awesome. Awesome. Well, listen, thanks for being here today. I appreciate it. And I know that, my listeners will appreciate it also, cuz you should certainly share a lot of information, which is awesome. And it’s a little bit off the beaten track, so, that’s good because I think that that’s how we all learn, right?
As we gain a little bit more knowledge from listening to somebody who’s maybe doing something different, but yet the same. In what we’re trying to do and help us to accomplish our goals. So I’m, I’m, I’m [00:37:00] confident that you’ve done that for some of my listeners today, and I appreciate you being here. Well, again, Mike, thank you so much for having me on and I look forward to, you know, having more conversations.
Yeah, me too, Whitney. Thanks.
Thank you, Mike, and thank you for joining us for another great episode of Insider Secrets. As always, Insider Secrets is brought to you by My Core Intentions. Wherever you hang out on social media, you will find Mike and My Core Intentions. Please like and follow us to get the most up-to-date real realestate investing trends.
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