Insider Secrets Podcast Season 2, Episode 20
Guest: Emma Powell
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Emma Powell is a seasoned commercial real estate investor specializing in multifamily properties. With a strong belief in the importance of knowledge and risk mitigation in investments, Emma has dedicated their career to mastering the art of passive real estate investing. Leveraging various financial tools, such as self-directed IRAs, 401(k)s, 1031 exchanges, dividend-paying whole life insurance, HELOCs, and discretionary income, Emma has successfully built a diverse portfolio while enjoying passive cash flow, tax advantages, and substantial returns.
Emma’s passion for real estate began in childhood, as they honed their graphic design skills by drawing floor plans on the family computer. This early interest led to a 10-year career as a real estate photographer before transitioning into the investor role. Having accumulated wealth through personal home investments, Emma expanded their real estate endeavors by acquiring multifamily properties as a solo owner, and later, partnering with others to invest in large commercial apartment buildings as their niche asset class.
Driven by a natural inclination for teaching, Emma enthusiastically shares their knowledge and experience with passive income capital partners. Through comprehensive education, Emma empowers fellow investors to make informed, responsible decisions, maximizing both financial returns and efficient use of time.
Areas of expertise include large multifamily real estate investing, value-add real estate, rehabbing, rentals, landlord responsibilities, asset management, project management, and content marketing. With a proven track record of success, Emma is a trusted authority in the commercial real estate investment field.
Real estate success is not just about profits; it’s about achieving time and financial freedom to lead a more purposeful and playful life.
You have to be able to balance success with your personal life or it’s just pointless.
It’s hard in the moment when there’s uncertainty, but once the problem resolves itself, it’ll either work out or it won’t.
Our ability to affect the future of the deal is enhanced with us being able to be in there and protect the capital that we’ve put in there.
I’m a human. I’m going to make mistakes, but I can actually go back and change history to set us up in a better place moving forward.
Vetting involves SEC checks, criminal background checks, Zoom meetings, and local members physically inspecting properties; transparency is key for trust.
“High Rise Capital isn’t just a capital-raiser; it’s a strategic consultant. We collaborate, bring expertise, and solve problems to protect the capital invested.” – Emma
“Coaching goes beyond business strategies; it transforms by revisiting the past, identifying core intentions, and communicating effectively for personal and professional breakthroughs.” – Emma
“Commercial real estate is stable, with lower volatility; you can rinse and repeat business plans, taking smaller amounts and diversifying across deals.” – Emma
Our vanilla deal is average value-add multifamily, primarily in the Southwest to Southeast; optimistic about Houston due to the oil industry and shale revolution.” – Emma
“Our fund is evergreen, allowing investors to pick specific deals; the focus is on mid-value-add multifamily, and we avoid blind funds for transparency.” – Emma
[01:28] Intro to episode guest
[02:52] One word that describes Emma personally and professionally.
[04:07] Why don’t you let us all know about Emma, your background and how you got into multifamily?
[07:29] Emma talks about her company High Rise Capital and what they do.
[10:47] What specific breakthrough or turning point occurred in your coaching relationship that significantly impacted your perspective and performance?
[17:38] Do you have a particular market you like or a particular asset class?
[23:15] As a potential passive investor, what information do you seek and how do you vet operators before investing in your fund?
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, what’s up everybody? Good morning. Glad that you’re here this morning. And if you’re new to the show, make sure that you like us, love us and hit the subscribe button if you’re on YouTube watching us right now. But I’m excited about our guest this morning. Before we get to that, though, what have you been working on this year?
Here we are getting into the end of [00:01:00] January already. Can’t believe how fast time goes sometimes. And my question for you is, are you on track off track? Have you lost those New Year’s resolutions that maybe you set for yourself already?
But more importantly, I always ask you about what you’re intentional about. What are you trying to be intentional about? What are you trying to accomplish? Are you taking the necessary action to move forward personally in order to grow professionally? And that’s something that we need to be working on every day.
So this morning, my guest is Emma Powell. Emma’s with High Rise Capital Group from Salt Lake City. Interesting story. I’ve watched Emma for a while on social media. I see what she does out there and her involvement in the multifamily space, and I’m looking forward to having this conversation this morning.
So let me bring Emma in. Hey, good morning, Emma.
Emma Powell: Hey, thanks for having me on Mike.
Mike Morawski: How are you?
Emma Powell: We’re doing well. We’re doing some scary stuff right now that I’m just trying to stay on top of emotionally, but what [00:02:00] you said about developing yourself personally so you can excel professionally. We’re definitely putting that to the limits right now.
Mike Morawski: Good. I’m gonna be interested in diving into that this morning because you know that kind of might be the new thought for everybody this year is let’s do something different. So, I always start and I ask one question in the beginning and that’s in one word, what best describes you personally and professionally?
Emma Powell: So my word of the year for 2023 is playful. I would not say that’s a very good description of me right now, but I asked my kids to describe me in one word and they all said stressed. And so I knew I needed to make some changes because we’re doing this passive income journey so that we can be more present and spend more time with our loved ones.
And why do you want time freedom? Why do you want financial freedom? Why do you want any of these types of freedoms? It’s so that we can play more and we could be more playful. And I heard that word and it just jumped into my gut and I realized this is what I’m working towards and I need to [00:03:00] start living why I’m doing this. So the word is, or will be, playful. So we’re working on that this year.
Mike Morawski: Okay. So before we get to playful, I need to know why your kids think you’re stressed.
Emma Powell: Because I go around looking like this all the time with my eyebrows down and I don’t have time right now. I have a one and a half million dollar problem.
And I just was making too big of a deal out of my deals, and they all have problems. They will never stop having problems. And I realized that I needed to remember why I was doing this in the first place. I was trying to go so fast, which is fine. I’m glad we went fast, but I was losing sight of the quality of life during that. And we’ve been sacrificing for so many years of frugality.
And I thought, okay, this is finally our chance to break out of that and to really build wealth. And I’ll just sacrifice a few more years. And I thought, we’re just getting to the age where that has to end. You have to be able to balance the success with the personal life or it’s just pointless.
Mike Morawski: Okay. [00:04:00] So I’m sure that in your history and how you got into the multifamily space, we’re going to hear a little bit more about this. So why don’t you let us all know about Emma and your background and how you got into multifamily and what you’re doing?
Emma Powell: Yeah, it’s a similar story that a lot of people tell you spend a lot of time spending your wills and missing opportunities. I was talking to somebody that just this morning that I need to put together my failure resume because every attempt that I made to do something, all the missed chances taught me something and helped me to gain some experience. So that when I was finally ready to take that leap, I had a lot of these experiences to draw upon, whether they were failures or just learning experiences.
I don’t know. You can call them what you want. I was a stay at home mom. We have six kids, they’re homeschooled and I was running a small, basically cottage business as a real estate and wedding photographer. And I had done graphic design. I had taught graphic design online. So e-Books and courses and all of that, and just always trying to find ways to be able to bring some more money into the family so that we could go on [00:05:00] vacations or my kids could have lessons. You have a big family and sometimes you have to get creative about how you give your kids the opportunities that they’re seeking, especially as homeschoolers.
I really wanted to make sure that they had a rich variety. And when my husband was laid off in 2017, we had been in Austin, Texas at that point for 20 years and suddenly, one day he had no job. And it wasn’t his first layoff, but his previous company was based out of California and so they had to give him 60 days notice.
So it’s 60 days of still working while he was looking for a new job. So this was our first layoff that was just like surprise dump. He shows up early from work one day and just tells me, Hey, I’m unemployed. And we were not ready. And I remember he got a letter of recommendation from one of the executives at the company that had laid him off.
And one of the things that she had said was that he is the sole income earner or sole bread provider for six children. And really hit me hard because I was working really hard on my business, but I was part-time. I was making decent enough money for a lifestyle bump, but I [00:06:00] wasn’t making good enough money to basically take over the ship even in a lean way.
And we were lying there in bed one night and this letter just kept going through my head over and over again. And I woke up and I told him, I said, honey, I am so sorry that I have put you in this position and I will never let this happen again. And he was, that’s nice, sweetheart. Appreciate it. But it wasn’t instant action.
It wasn’t an instant type of money coming in. And so we scrambled and hustled and hurried and he got a job and we just picked up our lives and moved to Salt Lake City in, I don’t know, a couple of weeks time. And that gave me the opportunity to make good on that promise because I had to completely redesign my life.
I couldn’t bring my business with me. I wasn’t working online. I had to start over. So I was back to just being a stay at home mom with no business and figuring it out. And so I started attending business networking meetings. And fell into real estate clubs and real estate investing clubs as part of my need to figure out what I was going to do with the next 10 years of my life.
And I thought, I’ve always wanted to invest in real estate. I’ve tried to invest in other things. I just don’t understand them or like them. And so I just jumped right in, [00:07:00] started learning and signed up for a couple of our local RIA clubs. Bought a couple of inexpensive courses and just got started making phone calls and just doing what I needed to do to build the network. Everybody says their best deals come out of their network. And I said, well, if that’s what they all say, then I’m going to go get myself a network. So that’s what I spent the first year doing.
Mike Morawski: Wow. Good for you. God, we could probably talk a couple of hours about that you just said now. So what’s your company’s high rise capital? What is high rise capital do?
Emma Powell: We raise capital for commercial real estate deals, specifically multifamily. We also offer a couple of diversified opportunities into some short term rentals. And some debt opportunities. So basically we go and find great operators and who know what they’re doing and who have been experienced in doing this before.
And we know how to identify that because we did it ourselves for a couple of years. And we put together groups of partners, whether it’s limited partners through our fund, we also have an investing club for people who want to be a little bit more hands on in a joint venture in that investing club [00:08:00] format.
And we basically just all look at deals together and decide independently, if we want to invest in it or not, and if enough of us want to go into it, we’ll pool up and we’ll use that pool to basically go and negotiate for better terms.
Mike Morawski: Interesting. And so what was the million dollar or million and a half dollar problem?
Emma Powell: So, I don’t know what number property this was. It was actually the last one that I bought before we really shifted over to just raising capital and investing club model. But we had this small apartment building. I think it was 26 units and we had paid, I don’t know, maybe a million, 1. 1 or something for it. And we were trying to refinance it and it had been appraised for 2. 5 million, which was a ton of equity that we’d stepped into it.
But that was when the rates were just going up and the loan to values were dropping like a rock. People were coming in saying they had a 75 percent LTV quote from their lender and they were coming back with a 45 or 50 percent loan. And it was maybe a couple of days before closing. And oftentimes if [00:09:00] you’ve raised a certain amount of money for that down payment and they suddenly reduce the amount of money they’re going to give you, you have three days to go come up with this extra money. And so basically what this was happening to us, they had come in and said that they would loan us 1. 8 or nine or something against that appraisal.
And it dropped down that we were only going to get like 1. 35 or something crazy. Like that’s almost what we paid for it. That doesn’t even cover our renovations cash out. It’s like the burr backfired on us. And so we’re just trying to figure out how to make up basically this one and a half million dollar difference.
And on top of that, the loan took three months in underwriting that doesn’t include the six weeks of applications and all that, and that doesn’t include once we got cleared to close before they actually got us to the closing table. So, we had months and months of months of paying out distributions out of our pockets that we can afford paying out a hard money loan on an apartment building that the building was barely supporting.
It was just a very, very stressful couple of months and that’s when I kind of came out with my kids that I looked stressed and I [00:10:00] finally started working with a performance coach because I was just tired of crying all the time. We had some personal losses, some deaths in the family that were very shocking, young deaths and I was grieving and just wasn’t really doing a good job of grieving those losses as well as focusing on my kids and focusing on my business and things felt like they were just spinning out of control.
And so I started working with a coach and it really turned the corner and made me realize, I’m not doing this right now for the right reasons. I started out with the right reasons, but I had lost focus on that. So that ended up working out. We got our loan. It wasn’t that great, but we ended up making it good and the property stabilized and cash flowing now. So it’s hard in the moment when there’s uncertainty, but once the problem resolves itself. It’ll either work out or it won’t. There’s no use being stressed out about it when you don’t know.
Mike Morawski: So you said something very interesting. You said performance coach. You started working with the performance coach and that’s what I do. And so what about that really made a difference? Where was the turning point [00:11:00] for you in that coaching relationship that helped you see things differently?
Emma Powell: Wow. It’s like bombs dropped every single week when we talk. I found him through a mastermind that I was participating in. And one of the leaders of that mastermind had a PhD in psychology and was going through some really tough times in his own life. And so when I realized like, I’m in a bad place and it’s affecting the rest of the family. So I reached out to him. We’re actually partnered on that deal I just described.
And I said, I need therapy and I know you are connected in that area. Who can you connect me to? And so he referred me to this performance coach and I said, no, I need a therapist, like a licensed therapist. Like we are not looking forward, like crush it in our business or any of that kind of stuff.
And he said, no, trust me. This is the guy. So a PhD psychologist tells, you listen. So I called him up and he was very expensive. And so we basically had to haggle a little bit to come up with something that we were both comfortable with to negotiate what would work. I had known him for about a year and he was wanting to work with me.
And I think that that part of it where we were able to kind of come up with an [00:12:00] agreement that worked for both of us really helped me to get started and get over that hump of indecision. And then he talks to me about, we always talk about how time is our most important resource and it’s time is slipping away and we can never get back more time.
And so I was struggling with a lot of regret of not spending more time with those people in my life who had passed away, focusing on my business and not spending more time with my kids, even though they don’t need me 24 seven, they’re older, right? And so he basically taught me how to go back in time.
And to talk through those situations that happened and what would I do differently if I could go back and do that again, and then to communicate that to the people that I love. And the magical thing happened when they realized, and here’s where the name of your business, the core intentions when they realized my core intentions and that if I could go back and do it again, here’s what I would have done instead.
It heals those traumas. It plants in new memories and you’re able to recapture that time. And so instead of feeling stressed out, like time is passing me by, [00:13:00] I recognize that I’m a human. I’m going to make mistakes, but I can actually go back and change history to set us up in a better place moving forward. And that’s been the biggest breakthrough that I’ve had through this.
Mike Morawski: I love that. Cause I’ve had a coach in my life for 20 years. And right now I just want to tell everybody that’s listening to rewind what you just said, because you know what coaching’s not. So many people would say, Oh, I don’t need, I know how to do everything.
I know how to syndicate a deal, or I know how to raise capital, or I know how to underwrite. It’s so much more beyond that. Why would I still need a coach in my life after 30 years of being in the business or 20 years of having a coach? Because we get in those situations, we get those things in our life.
The coaching I have in my life today is about living more of a playful life. So I get that. And that resonates with me when you said that. So I love that. So thanks for sharing that. When you raise capital, and place capital with another sponsor, what type of return is that [00:14:00] capital looking for today?
Emma Powell: The returns definitely are eroding as the interest rates go up and the loan devalues go down. It’s kind of two opposing forces that are driving returns. So I’m finding that they are going down, but because we’re taking out such small loans and our debt service is much smaller than we intended, even at these higher interest rates, you’re able to basically do better on sometimes the cash on cash return will change.
But I’m definitely finding that the ratios of how these things that you’re looking at are changing in relation to one another. So we are still looking for things that are doing 15 percent IRR or better, but we do adjust that based on the age of the property, the experience of the owner, and the location.
And so if it is a premier property that is basically turnkey, you’re taking a class, former class A that just needs to be updated versus a heavy lift on a low class C in a rough area, that’s typically going to have to get much higher [00:15:00] returns in order to justify that risk. Like I said, with a newer operator or with a bad area or an old building.
And what we’re able to do through our investing club is to come in as consultants, especially for people who are at that growth phase where they either need to hire employees and they can’t do any more deals because they’re just maxed out with what they can handle an asset management. We can be an extra set of hands to come in an experience set of hands to just help out with the asset management and help them work through problems that maybe they haven’t seen before.
And that same thing applies to newer operators. We can come in and be the more experienced person on the team. And even though we’re not doing the day to day running of it, we have a very small amount of equity, but basically just having a board and some consultants. And so our ability to affect the future of the deal is enhanced with us being able to be in there and protect the capital that we’ve put in there.
So those returns need to be adjusted for the area of the property age and the experience of the team. But I’d say 15 percent or better and the cash on cash needs to be better than 8 percent [00:16:00] right now. We’re starting to see it go down 7, 7. 5%. Those big debt payments will get you every time as the interest rates go up and up, they’re eroding those profits away. And so that’s what we’re looking for right now. But that would change if we were looking at a different kind of deal. That’s our core multifamily model, but we have different numbers for every different type of deal that we look at.
Mike Morawski: Yeah. And how has the changes in the last six months with rising interest rates and cost of goods and everything else impacting the returns that people can see and really impacting the deals. We underwrote 87 deals in the last 6 months. Wrote 10 LLIs, finally have 1 we’re going to get over the finish line here. It’s an interesting environment. What are you seeing from that perspective?
Emma Powell: It’s the 1 percent rule it flipped around in the fact that you will maybe buy one or invest in 1 percent of the deals that you look at. Now we’re in a little bit better position because we’re looking at deals from experienced operators who have already run them through their underwriting and the due diligence process.
And [00:17:00] so what we look at for the most part are some average base hit deals. So we’re looking at a lot of base hits and we’re really just holding out for something that’s maybe a second or third base. If we find a home run great, but we don’t need it to be a home run in order to invest in it because the nice thing about commercial real estate is it’s a very stable, their volatility is lower because it’s not liquid.
And so you’re able to take that business plan and just rinse and repeat over and over again. And that’s what we like about it. You can take smaller amounts of money and spread them out across a wide variety of deals. And if you just keep getting base hit after base hit after base hit, eventually someone’s going to get hit home.
Mike Morawski: Yeah, for sure. Do you have a particular market you like or a particular asset class? Talk about that a little bit.
Emma Powell: Yeah, our vanilla, our bread and butter deal is your average value at multifamily that’s being run by experienced operators, but they’re not so big that they oversubscribe in like 10 minutes, because then we have a hard time participating if they’re funding that fast.
But people who could use a little bit of extra help, [00:18:00] we can come in through our fund. We have a 506T fund for accredited investors and that would be a limited partner share. Like I said, we can come in a consulting role. And so really wherever they are is where we want to be because the operator to us is much more important than the location, but they tend to congregate in great markets.
And so we’re just finding a lot of things available in Houston. I’m very bullish on Houston right now. I feel like with the oil industry and the shell revolution, Houston is really just shine over the next couple of years, even though I always said I would never invest there. Because being from Austin, there were so many hurricanes and we just cleaned up so many floods that I was like, it was almost like PTSD after that experience with all those hurricanes in the years that we lived there.
But now I’m looking at it and I’m seeing a lot of these buildings have come back from these major floods and they come back better than before because they had proper insurance. So that’s important to look at in Houston. We are seeing a decent amount in Dallas. It’s kind of the multifamily Mecca. But I think it’s hit its peak.
It’s very overpriced. And so it’s harder to find a deal there, but people do still bring us good deals from Dallas. We do have a building in Austin. [00:19:00] We have a building outside of Orlando, Florida. We are doing another one in North Carolina, which is just on the beach. It’s more of a vacation hospitality type of property, which is part of our diversity package. So our vanilla is basically the Southwest to the Southeast, basic value ads. And then we’ll throw in a couple of other things here and there.
Mike Morawski: So you said you had a fund also, in the fund, do you raise money in there for a specific deal or do you spread that fund money out over multiple deals?
Emma Powell: So we’re in pre launch phase right now. So the fund is an evergreen fund, but we have the ability to have our investors pick which deal they want to go into because we don’t want to raise for a blind fund. Because you have to get your investing thesis really tight when you want a blind fund. People have to know, even if they don’t know the specific deal they’re going into, they really want to know the type parameters.
It’s not just like, Hey, I trust you to put my money in anything, go buy a crypto mining, go buy a debt thing. Go buy this or go buy that. So the way that we’re doing it is to be able to split each [00:20:00] deal off into its own little offering. And then people can choose what they want. So again, the bread and butter is going to be the mid value add multifamily that we specialize in.
But then if we have a diversified offering like the short term rental thing that we’re doing in
Emma Powell: in North [00:21:00] Carolina. We can offer that for people who are interested. They can invest in it if they don’t want to, they don’t have to. So it’s really a fund that allows people to have a wide access to deal flow, but they can pick and choose where they want to invest their cash.
Mike Morawski: Okay. And who underwrites on your team to make sure that the deal will meet those guidelines for your investors?
Emma Powell: Our CEO is a very experienced CEO. And so he does a lot of the initial underwriting. And then I have usually a financial manager on every deal that I do. And so bringing in my financial manager who their day jobs are underwriting deals for either commercial real estate funds or debt funds, and they have a lot of experience doing this and I’ve partnered with them on previous deals.
And so we basically will have them come and do our final underwriting once we get it through our screening process. I’m not an underwriter. I learned how, I know how, I can teach how. And so we have an automated screening tool that once we enter in all the deal parameters, and at the beginning stage 1, you just believe whatever the operator tells you.
[00:22:00] So you just enter in those numbers and if it pops out on a green light, then we’ll take a second look at it. If it pops out with a red light, the only reason we would take a second look at it is if it’s with an operator that we really like. But for the most part, as soon as that form is filled out, it gives us an automated screening.
Then we can take a second look at it inside of the team. And if we still like it after a manual underwriting, we will send it out to the specialist and get their feedback on it, who we’re going to do more research. They’re not going to take any of these assumptions for granted, and they’re going to go in and really bet the deal out.
And if we like it at that point, then we’ll start a full due diligence phase where we have a long checklist of things that each of us will sign up for to say, okay, I’ll go check this. I’ll go check this. I’ll go check this and run it through. It’s kind of overkill. I know some other fund managers who are saying we have like a five point checklist and you guys have like a 50 point checklist.
So we may have to eventually remove some of those items. But what we’re attempting to do right now is to get a group of operators, maybe five to 10 that we know we’re going to like what they bring us. And we are [00:23:00] not going to have to do the 50 point checklist with them. It’ll just be the five point.
So right now, while we’re building up our group of really trusted operators, we are taking a much more fine tooth comb approach to it. And if it’s an operator we haven’t worked with before, they’re definitely in the 50 point checklist. Yeah, sure.
Mike Morawski: No, I understand that. When you approach a investor, so if I was a passive investor and I wanted to invest in your fund, what, what do you want to know?
What can you tell me? about the operators that you’re in investing with today? How do you vet those operators and make sure that they meet your criteria?
Emma Powell: Well, the first thing we do is an sec background check. It’s a free check at the sec website. And just to see if there are any, violations, or anything that would.
prevent that person from being able to be involved in offering securities. Usually they don’t show up on that because if you’re newer or whatnot, it’s not going to be there. A criminal background check. Likewise, we will just run the name if they have a unique name, but if their name is super [00:24:00] normal and we need to get a birthday and address or a social security number, we will ask for that.
And if they don’t want to give that up, then it’s a big red flag. You know what’s going on that they don’t want to let us do a due diligence background checks. The other thing is. Just to have some meetings with them, some zoom meetings, kind of get that gut check. And because we are a larger group, because we are running an investing club that is not related to our fund, but we just definitely spend a lot of time with people in an investing club, a large group.
There’s usually someone local who can go and meet them in person who can go and tour the property in person, take pictures, kind of bring it back to us. And so that really helps a lot. We do. We, I have flown out two things to look at them before, but we usually like to reserve that for very late in the game.
If we’re pretty sure and we just need it to need to double check, but we usually have someone in the club who’s local and wants to invest and goes and checks it out for us. And
Mike Morawski: is all the capital that you raise? Is it private capital or is any of it institutional or family [00:25:00] office or
Emma Powell: Yeah, right now it’s all retail capital.
Our investing club is basically a group of, I would say slightly frustrated investors because they want to break into real estate. They’ve been doing their They’re homework. They’ve been doing their research and sometimes it’s just a big barrier to cross. And so for those who are looking to get started and I’ve been looking at this for a while, it gives them an opportunity to get in and get some real work done and to learn by doing.
We also have people in our club who are fund managers just looking to increase their deal flow. And, piggyback on the work that we’re doing with the due diligence. So they’ll bring us deals, we’ll bring them deals. And so it’s a really nice crossover, from that aspect. And then we have other people who are like me and I’m just looking to expand my portfolio and expand my resume.
So that North Carolina is a new development. That we are bringing up from the ground. And so when I want to get involved in development deals, I’ve only done entitlements where I just get the permits and things like that. And then we sell it. And so people will say lenders or whomever, like, have you ever gone vertical?
And I have to say no. And so I needed a vertical experience so that I could say yes. And so we jumped in on that deal so I could be more [00:26:00] involved and increase my experience level. We have some people who have done some small multifamilies and they really want to break into that a hundred plus. So they’ll come and invest in a deal that have.
More units as a club. I don’t invest in every deal that the club does because we have to invest our own capital and everybody goes in and forms a club up in, in tribe vest. And we’ll go in that way. But then through the fund, it’s all retail investors. I’m not saying I’m opposed to family offices.
We actually do retain a securities attorney who works with family offices so he can share our deals with them. And eventually we may go down more that road. But it was just, it’s just not where we are right now.
Mike Morawski: Okay, let’s try this.
Emma Powell: I’m sorry? You said TriVest. Oh yeah. TriVest is a website where it’s basically a joint venture investing type of website where they take care of some of the, the practical admin stuff.
Like they’ll provide a bank account, they’ll host your LLC or they’ll get your LLC all set up. Operating account consulting refer you out to lawyers or accountants to help you [00:27:00] out. And then the platform itself is just for corporate governance. You can do voting on there, watch the bank account, you can do distributions in and out from there.
Yeah. Yeah. So it really does make the joint venture aspect of doing a deal with other people, a lot more streamlined and a lot more transparent.
Mike Morawski: Oh, interesting. That’s the first time I heard of that. So I might have to, I might have to check
Emma Powell: that out. Yeah. It works really well for the club model because the SEC defines a club.
You basically have to have like some sort of legal arrangement and LLC of some sort. You have investors who vote on what they want to invest in, and then they take their pool of money and go invest in that. And so each. Deal that somebody wants to do our main meeting, our weekly meeting is not a legal definition of a club.
It’s just a bunch of people getting together to look at deals, but then if some people in that group would like to go in and actually invest in that deal, they can go off to try best and they will help them take it from there. So when
Mike Morawski: you go and you’re looking to raise capital, are you looking for new investors?
To join your club or you’re looking for new investors to invest in a deal.[00:28:00]
Emma Powell: The club members are there because they want to be there and they want to do deals. We don’t raise money from our club members for two reasons. One, I don’t think it’s legal to do that. And two, they don’t want to be limited partners necessarily.
They want to be more involved and they want to protect their investment and to give their experience when that is relevant. If they don’t have any place to help, that there’s nothing going and they would just have to go in as limited partners, they usually will just pass on it because they are looking for hands on opportunities.
That’s not something that we endorse or encourage or anything. I just knew that there needed to be a place where people could look at deals where the operators might be willing to entertain a conversation. Entertain the negotiation and just get them into opportunities in a small way, rather than having to be lead sponsors on their first time at bat.
That’s a huge barrier of entry. And we’re just trying to lower that because I’m listening to my network and what they’re telling me they need. And so for me, starting the club was just answering that pain point. We don’t monetize it in any way. It’s a totally free club, but it’s an opportunity for me [00:29:00] to get in the look at deals too. Cause I sometimes have my own money to invest and it is like having a bunch of gym buddies just sitting around looking at deals together.
Mike Morawski: I love going to the gym.
Emma Powell: Yeah.
Mike Morawski: So what are you working on these days?
Emma Powell: Getting that fund launched, professionally working on that fund launch, my husband left his job in November. And so we’re both basically full time investors now, no more nine to five, no more W2, no more security blanket. And so that’s what I mean about, we’re going into the scary new adventure. And during the time when the economy is not doing so well, we always thought that when he quit his job, he actually got laid off in November.
Same deal shows up to work and they’re like, see ya. Comes home, he says, they made the decision for us. Guess I don’t have to quit now, but this way, at least we get a severance. So that was nice, but we were planning on selling one of our smaller single families or duplexes this spring to basically be able to support our lifestyle for the next year.
While some of our larger investments are maturing and starting to spin off some substantial distributions, but we’ve opted out of selling anything this spring because the values are just not looking great. We’re leaving [00:30:00] a lot of equity on the table if we sell this spring. So we’re just trying to shoestring it right now over the next couple of months until we can get through it.
So professionally full time investors launching that fund, and personally just trying to write out this market because the way that you get through a recession is just don’t lose your properties. Don’t sell when they’re down, don’t buy high, sell low. And have enough cash reserves that you can support your basic lifestyle and also support any properties that may go vacant.
We’ve got some vacant ones right now. One of our tenants in our luxury home just passed away. And that wasn’t something that we had on our to do list to rent that out again. And to be paying that mortgage, while it was empty, we’ve got a couple of other units, they’re just not renting out.
And we’ve had some that rented out in five minutes. It’s just so weird right now. And so we’re in the phase of just weather the recession, hang on to your properties, don’t get foreclosed on, don’t sell low, and we will be okay. We’ve got that cash reserve, we’ll be okay for another year or so.
Mike Morawski: Basic real estate investing fundamentals. What was your husband [00:31:00] doing that he got laid off a few times?
Emma Powell: He works in the IT industry for data science startups. So basically he helps to support the developers with everything they need to get software released because you know how software is released every week now with little micro releases. So that process has to be automated. And so he specializes in software release automation.
Mike Morawski: Okay. Interesting. Which now he’s taking all that education and smart and putting it into the real estate space, which is good. What are you telling an investor today who says, well, I don’t know that I really want to do anything right now.
I’m going to just wait and see where this economy goes and what happens. And I’m just going to sit on the sidelines. What’s your conversation with investors today around that?
Emma Powell: I know a lot of people trying to talk investors into telling them like, this is the best time to invest. We’re still investing. You should be investing. And it’s always like this very positive spin on commercial real estate. You should definitely do it. I don’t want nervous money. I’ll say that again. I do not want nervous money. If you are sitting on the sidelines, then it’s probably because [00:32:00] you don’t have enough information to make an educated decision in a time of uncertainty.
Risk is mitigated by having more information and better education. And so if somebody is sitting on the sidelines, I totally respect that. I’m scared right now too. Everybody’s scared, and we just left our nine to five in the middle of all of this. I totally get it. You should never invest in something that you really don’t understand.
If you’re totally confused, walk on by. If you are uncertain. Get educated. We are asking from both sides, the operator or the fund manager is trying to disseminate information to you in a way that makes it digestible and understandable so that you don’t have to be an expert, but you could at least understand what’s coming along.
The investor on their side needs to meet us in the middle to take our information that we’ve been able to translate into layman’s terms and take some time to understand what those layman’s terms are. It’s not like we can explain it to you like you’re 10, like people say, because I try to explain this to my 10 year old and she’s like, mom, please stop [00:33:00] talking.
I don’t like real estate. I don’t understand what you’re saying. I will never be able to explain to my 10 year old what an IRR is. And so coming at that from an adult perspective, like there are some things that I need to learn about the market and about this investment. They are meeting me halfway by breaking it down to as simply as they can.
And then at a certain point, there has to be some trust kicked in. If there’s an operator that knows what they’re doing, especially if they’ve been through a recession before, then at a certain point, you just have to say, Hey, we’re going to do it. And the way you mitigate that risk or that nervousness is just to invest less money.
I tell people all the time, if you only have $50, 000 to invest and to invest. Why would you stick it all in one deal? The minimum on most of these deals are $50, 000. If that’s all you have, it’s going to keep you up at night. $50, 000 feels like a lot when it’s the only $50, 000 that you have. And even though it doesn’t benefit me in any way, I say, go find a crowd fund where you can put in a thousand dollars, 50 times.
At the end of 50 deals when that money starts to come back or when you’ve saved up another 50 grand and now you [00:34:00] have a hundred or 150 to play with, you will know what you’re doing when you have been at bat that many times. So I’m not in the fast money. I’m not looking to raise money right now. I don’t want nervous money. I want confident, decisive investors, but they don’t have to be experts.
I’m not asking for huge amounts of upfront time, but I am asking for some. Invest a little time now so that you can get your time back later with the passive income you’ll be getting.
Mike Morawski: Absolutely. Are most of your investors accredited or non accredited?
Emma Powell: Our fund is 506C, so we’re only going after accredited investors. I think there’s a big regulatory risk with unaccredited investors. That’s not to say that we may not do a 506B fund someday in the future, because if people are smart enough to find you, because you can’t go out and find them if they’re unaccredited. They have to find you. And so if they’re coming in and telling us that they want opportunities to invest, we would consider doing a 506B fund.
Unaccredited investors are perfectly welcome in the club because the club doesn’t offer securities. They just pool their money and go and buy. So it’d be like [00:35:00] a stock market investing club. It’s a similar idea and you don’t have to be accredited to do that.
Mike Morawski: Do you have deals that you have either done or will do in the future as 506Bs?
Emma Powell: We have done some 506Bs through the club. Our first syndication was a 506C. I do a lot of joint ventures. A 506 C fund investing in a 506 B deals has some hoops it needs to jump through. We have not done that yet. So we’ll see. We’ll see how that goes. Our attorneys, some attorneys are like, yes, you can do it, but as long as you meet certain criteria.
So we may still consider those. The club often, because we’re not executives when even in a joint venture and we’re joint venturing with the lead sponsors, unless you’re an executive in a 506 C, you still have to be accredited. Even if you’re on the board as an advisor, or even if you have any sliver of general partnership, if you’re not the main manager or executive, you still have to be accredited.
So the club will do 506 B deals just because that’s what they want to do. But we personally are not raising money from [00:36:00] unaccredited investors. But I would say we do raise money from more beginner accredited investors who are looking for some education and looking for some attention and the ability to get to the point where they can make those decisive investing moves.
Mike Morawski: Sounds to me like this is really in your blood.
Emma Powell: Yeah. Do I sound playful when I’m talking about it?
Mike Morawski: No. I think that sometimes there’s people who want to invest in real estate, but then there’s people who really want to invest in real estate. I actually had a conversation with somebody this week and I said, listen, I just want to work with people who want the business as bad as I do. Because then you know, everybody’s committed. It’s like, are you committed or just kind of committed?
Emma Powell: Are you in it for the money? And that’s the thing that I have to get after. Are you investing in real estate for the money? Now, I think the money in real estate is great, but I actually love real estate.
I was a real estate photographer for 10 years. I love architecture. I love buildings. I love the stories of the people who live there. The stories of the people who work there. I just think it’s fantastic. And I chose real [00:37:00] estate. I’m interested in a lot of things. But I chose real estate because it was my highest earning income potential as an active entrepreneur.
I am a real estate entrepreneur. You’re only an investor when you invest your money. There’s a big difference between being an entrepreneur and an investor. So in my real estate business, I did it because I just love real estate. And it was my highest income skill. If I was a surgeon, maybe I would have gone and done surgeries instead and just been a passive investor. I don’t know. But for me, that’s my highest income earning potential with my skillset and my background and my experience.
Mike Morawski: Yeah. I hope people got that because that makes a lot of sense. And I want people to really understand that you’re homeschooling six kids.
Emma Powell: This is how we do it. Life is school. I call it home educating. If you really want to ask me, like we don’t do anything at all that looks like a school. We just get out and we just live life and they learn things because they are excited. I want them to be playful. I want them to see things that light them up and they want to learn.
And I also want them to think about how marketable that skill is. We have some kids who want to do some things that I’m [00:38:00] like, If you want to do that skill is not a very highly paid skill. So let’s think of something that you could do around that rapid business around it somehow so that you can afford to live doing this job that really doesn’t pay that well.
So you can make a business out of it and let’s get you started investing really young. When my son was 16, he got his first job at Sonic and I was driving him to work one day and I said, if you just work at Sonic, if you just live below your means, it doesn’t matter how much money you can make.
You could work at Sonic for years. And just be skimming money off to be able to invest it in things. And eventually you won’t have to work anymore because you’ve been investing all your money. And he looked at me, he says, I don’t have to work at Sonic forever. But the point is, no matter what you make, save some to invest and you will be fine in the long run.
Mike Morawski: That’s awesome. Listen, I really appreciate you being here today. I love your energy and I love your playfulness. I think that word will suit you well this year. I always like to end, a couple of questions. What’s the best book you’ve ever read?
Emma Powell: The one I refer back to most probably is Non-Violent Communication by Marshall Rosenberg. He’s a [00:39:00] international negotiator that helps people get through seemingly insurmountable problems and how to stop trying to control everyone and everything. There’s no amount of ways you can ask nicely or say, please, that can control what that other person is going to do. And I needed to learn that in my own life to control that stoicism of controlling what you can control and then learning to not worry about the rest.
Mike Morawski: Wow. That’s interesting. I’ve never heard of that. I’m going to have to check that out.
Emma Powell: Yeah. It’s the Bible for loose homeschoolers because we recognize that we can’t control our kids. And so that’s kind of helps. It’s a big one in the homeschooling world.
Mike Morawski: Wow. Interesting. And, best restaurant?
Emma Powell: I like steak houses. I eat a lot of meat. I’m mostly carnivore just because. I used to be a vegan and it just wasn’t working for me. And my doctor suggested I try carnivore. And so now we just eat a lot of steak. So if we go out, I want it to be a place where I can get like a big, prime rib.
Mike Morawski: Obviously, great place in Austin.
Emma Powell: Yeah. There are a lot of great meat places in Austin too. And when I’m in Austin, I’ll go and get some [00:40:00] smoked brisket. We actually bought a big smoker in Salt Lake, so we could continue that tradition here, but they don’t. The barbecue here is okay. I prefer a prime rib if we’re in Salt Lake, but in Austin, definitely some brisket.
Mike Morawski: Austin does have some of the best barbecue. And so I was just there a month or so, about six weeks ago. So it was a lot of fun. And I know that you travel around a little bit. You’ve been in different places. Best tourist attraction?
Emma Powell: Oh, wow. That’s hard. Probably the most impressive and awe inspiring and wonderful. I can’t believe I’m here, was the Great Wall of China. Just standing up there and watching it stretch out for miles and miles and miles and the history behind it. And the fact that it was so far away from where I was, that was an experience that I had already been traveling and I’d already lived abroad at that point, but that experience was like, this is what it’s all about.
Mike Morawski: Wow. That’s awesome. My girlfriend actually spent some time in China, I think two years ago, with her daughter and son and just talks about it like that also. Have to go there sometime.
Emma Powell: That one’s [00:41:00] definitely worth a 16 hour plane.
Mike Morawski: So how do people get ahold of you?
Emma Powell: highrise.group/contact. There’s no. com it’s just highrise.group/contact. I have all my socials there. We’ve got Instagram, YouTube. I love social media, so I’m on a bunch of different platforms. I have a calendar link there so that you can book a free phone call. I have a way that you can book a one to one accountability series with me so that we can put you on the road to being able to follow through with the things that you want to do.
So I, I’m not a coach in the sense that I’m giving out a lot of information or anything like that. It’s just like, let’s just figure out what you want to do. What you need to do and let’s just get it done. I’m more like a personal trainer in that aspect. We’d love to have you jump in on that accountability challenge that we run every couple of months.
And that contact page has it all. My phone number, my email, you contact me on however is best for you.
Mike Morawski: I’m going to definitely encourage people to go to your contact page, sign up for that and check it out because obviously you have a lot to offer from that perspective. I want to thank you again for [00:42:00] being here today.
I’m going to actually move you to the back room. If you hang out with me for a minute, I’m going to just say goodbye and any last thoughts?
Emma Powell: Looking forward to having you on my new podcast.
Mike Morawski: Yeah, I’m looking forward to that too.
Emma Powell: Thank you.
Mike Morawski: We want to buckle up for that one.
Emma Powell: Yeah I’m super excited about it, actually. That should be launching sometime in March, or maybe April. But yeah, it’s been great to meet you. Thank you so much for having me on your show. And I’m like smiling ear to ear. This has been really fun.
Mike Morawski: Okay, good. I’m glad I learned a lot. So thanks. Hang on one second.
Hey everybody. That was awesome. And I am just going to encourage you to go back and listen again. There’s a couple of things that Emma and I talked about here today. And Emma really talked about that it makes sense to go back and listen to it again, because when we start talking about how to invest, where to invest, how to look at deals, Emma covered a lot of ground around that.
I hope that today brought you some encouragement and enthusiasm, as Emma said, playfulness, and that you can go out and work on your [00:43:00] multifamily business, whether you are trying to do this on the active side, or you want to be a passive investor. There’s still great opportunity out there today.
I think that we are going into a time in the economy and a time that is going to really produce some really great investment opportunities. If you’re new to investing and you’re looking for some guidance, some direction, reach out. I know Emma would answer some questions for you and I certainly would as well. So either one of us, thanks for being here.
Kristen: 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 estate investing trends.
Visit mycoreintentions.Com where you can get expert coaching on all things real estate investing and property management. If you’re looking to [00:44:00] become an expert, Mike’s coaching will help you scale your real estate investment business. We’re looking forward to having you back again next week for more Insider Secrets.