On today’s episode, we speak with Whitney Sewell, an expert in syndication and business, who hosts the Real Estate Syndication Show and founded the Life Bridge Foundation, an organization that helps couples to grow their families through adoption. We kick off our conversation with Whitney offering us an overview of his career, starting in the military and later entering the world of real estate investment. He tells us a bit about the Life Bridge Foundation and why its cause is close to his heart and how he first discovered multi family investment as a way t make money to fund this. He emphasizes the value of just getting started and tells us why prioritizing and building a strong team is the only way to get things done. Next, we dive into the story of how Whitney met his business partner, Sam Rust, and why they have chosen to focus on investments in Colorado Springs. We ask Whitney how he is navigating new challenges in a post-pandemic world and he tells us why he believes that real estate is the best possible way to invest. We talk about the importance of reserve budgets and Whitney tells us why it is so important to explore an operator’s character and how they became who they are. He tells us what he is most proud of in his career and gives us some recommended reading for self-development. Tune in today to be reminded of what’s most important in life and a hefty dose of practical advice on how to make it possible.
Key Points From This Episode:
- An overview of Whitney’s career in the military, the police and as a federal agent before entering the world of real estate.
- A bit about the Life Bridge Foundation.
- How Whitney first discovered multi family and then moved into syndication.
- The value of just getting started.
- Why prioritizing and building a strong team is the only way to get things done.
- Why Whitney has chosen to focus on investments in Colorado Springs.
- The story of how Whitney met his business partner, Sam Rust.
- The details of why the partnership came together and why it is effective.
- How Whitney is navigating new challenges in a post-pandemic world.
- Why Whitney believes that real estate is the best possible way to invest.
- The importance of reserve budgets.
- The most important question to ask as a first-time investor: what is the operator’s character and how did they become who they are?
- What Whitney is most proud of in his career: gaining the freedom to be in charge of his time.
- Book recommendations from Whitney: the Bible, The Power of Self-Discipline by Brian Tracy and The Road Less Stupid by Keith J Cunningham.
Tweetables:
“The faster we get started, the faster we learn, the faster we improve our processes, the faster we reach our goals, right? Even if it means failing a few times along the way.” — @whitney_sewell [0:12:04]“Everybody has the same 24 hours in a day. It’s all about where you spend your time, how you justify the most important tasks that you’re working on, and building your team around that to help you get those things done.” — @whitney_sewell [0:13:33]
“What you believe at your core shapes, how you operate your business, and how you present yourself, how you work and prefer others over yourself, all those things.” — @whitney_sewell [0:18:48]
“I still don’t know a better asset or better thing to invest in, than owning that physical piece of real estate.” — @whitney_sewell [0:22:42]
“For folks to come in and clean [homes] up and put some money into them and make them nice and new again, I think there’s always going to be a ton of value there.”— @whitney_sewell [0:23:36]
“It’s difficult things that people have to go through and persevere through and accomplish that mold who they are, and gives them the ability to do hard things, later in life as well.” — @whitney_sewell [0:28:23]
Links Mentioned in Today’s Episode:
The Real Estate Syndication Show
The Power of Self-Discipline by Brian Tracy
The Road Less Stupid by Keith J Cunningham
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—Full Transcript Below—
“WS: And that’s what I tried to keep in mind, just tell me where to get started, like let’s just get the ball rolling. The faster we get started, the faster we learn, the faster we improve our processes, the faster we reach our goals, right? Even if it means failing a few times along the way. Some of that’s going to happen no matter what unless let’s do the fast and let’s improve and move forward.”
[INTRO]
[00:00:17] KR: Welcome to Ritter on Real Estate, the show about how to passively invest like a pro. On each episode, I interview real estate experts who give their top investing advice, strategies, and tools that break down into insights and practical steps to avoid the pitfalls and make better investments. I want to help you passively invest like a pro. This is Ritter on Real Estate, and I’m your host, Kent Ritter.
[INTERVIEW]
[00:00:40] KR: Hello fellow investors. Welcome to another episode of Ritter on Real Estate where we teach you how to passively invest like a pro. Today, my guest is Whitney Sewell and Whitney began investing in real estate in 2009 and then in 2017, founded Life Bridge capital, which is a multifamily syndication firm. And in just a few years, Life Bridge has grown to over 900 doors, and 150 million worth of assets under management. He also started the Real Estate Syndication show which is a daily podcast, where he has interviewed over 700 experts. I think probably more than that now, probably 900 –
[00:01:17] WS: Almost a thousand.
[00:01:19] KR: Almost a thousand and has over 100,000 downloads each month. Man, that is incredible. Whitney, and I personally know each other. We’ve known each other for a couple years. So, I am so excited to have you on the show today. Thanks for joining Whitney.
[00:01:32] WS: Yeah, my honor to be here, Kent. It’s great to see your growth and what’s happening. So, just kind of go through this at the same time and watch it happen.
[00:01:40] KR: Yeah, absolutely. I mean, you are several steps, I would say along the path. So, you’ve been great. giving me advice and as the show has grown and very much appreciate that. So, before we get into kind of the the nitty gritty, why don’t you tell the listeners just a little bit more about your story and about yourself.
[00:02:00] WS: I go back to march of 2001, and say March specifically, because everybody knows what happened in September of 2001. In March, I joined the military, and it was just something I just thought I should do. At that time, I think I was 17 and I thought, “You know what, this is just the right thing to do.” So, joined the military, and not knowing obviously, we’d be at war shortly, and then found myself all 2005 in Iraq. It’s such an experience, right? I mean, it’s life changing to be in combat or to be at war, especially for a year at a time. Unfortunately, not everyone in my squad made it home. But I thank the Lord every day that I was able to come home and be 100% really. I mean, so many guys and gals are injured in ways that affect them the rest of their lives and I’m thankful that I’m healthy.
But thankful to have served and I came home and quickly became a police officer. It was an easy transition, love the structure, and the discipline, the uniform, and just the service mentality. And so, I became a police officer with Kentucky State Police. The first couple years, I would have done it for free. I mean, I love working the road as a police officer, however, I was not married then either. Things change, right? You picture having a growing family and a bride. Soon after being married, I discovered that, you know what, this is really difficult. We just passed each other in the hallway, the first whole year of marriage and I could see quickly that it was just not what was best long term.
So, it made me start to look, think about what other streams of income can I start to have, or what do I do to create more income because I noticed guys were retiring, after 25 and 30 years, and we’re still making about $35,000 to $40,000, as a police officer. So, I mean, I just couldn’t believe it. So, the first couple years, it just wasn’t even on my radar because I enjoyed the job, I would have done it for free nearly. But all of a sudden, things change, you get married, you start thinking about a family and we could see that it was not what was best.
So, after doing some research, now, we’re in probably 2008, beginning of 2009. I noticed that you know what, not only had like one or two people don’t wealth in real estate, but hundreds of thousands. I mean, so many people build wealth in real estate. I’m like, “Okay, if they can do it, guess I can do it too.” So, we started educating ourselves the best we knew how. I bought a couple triplexes in the local town where we lived and we learned a lot the hard way. We made a lot of mistakes, I mean numerous things. But you know what, we didn’t quit there. Thank the Lord, we did not quit there. I soon became a federal agent and so that gave me a better pay, better benefits, better schedule, all those things. But we did make this move to Virginia where we still live now, but kept pursuing real estate and whatnot. I even had another business on the side and my wife and I had a farm we’d always dreamed of and it’s a whole another story.
But then we decided to, like the farm and other business that I had was never going to be passive and I had some rentals on the side, I had up to 15 units at that time as well. And it finally hit me, you know what, it’s going to take so many doors to build that level of income, where I can be passive or I can have that time freedom. I mean, the writing was on the wall, again, it’s like, “Okay, wait a minute.” It’s still not going to get us there as fast as I would prefer. And then all of a sudden, I learned about syndication business and I could not believe that I hadn’t known about this so many years earlier.
[00:05:25] KR: I know.
[00:05:27] WS: But the more I learned about the structure, and just growing a professional brand, and business, and also just working with professionals, that was very attractive to me. I can work with professional investors, I can work with professional management, I can build a professional team, all those things, as opposed to me personally looking for more tenants and dollars. In managing that, just that grind in myself and trying to scale that and how difficult that is, while I can build a team to do it much better and much more efficient, and just do a better job long term, not only for me, but for lots of people, our investors.
So, then we we did jump into the syndication business and when we decided to do that, we sold our farm, we sold everything. I sold the 15 units. I mean, just to completely commit to that business and a very difficult decision for my wife and I, but we knew it was like now or never, let’s just do it, let’s rip the band aid, help us, let’s push forward, and that’s what we did. A very difficult, a massive sacrifice, and the sacrifice that only begun at that point, just the time it took for us to do it. It was more than working two full time jobs for like two years. So, massive time loss with family and the kids and just some hard times. But you know what, we just kept the bigger picture in mind and focused on our goal and eventually reach it.
[00:06:43] KR: Oh, that’s an incredible story, Whitney. Now, that you’ve, you’ve reached this level of success, and you founded Life Bridge Capital. I know that you have just a very unique mission beyond just make money, beyond to make money for investors, which is a great thing to do. You’re improving people’s lives. But you have another mission, it’s a little more unique. I wanted to just hit on that. Tell us a little bit about what you guys are doing with Life Bridge.
[00:07:09] WS: Yeah, thank you for asking that, Kent. I’ll go back a little bit. When we moved to Roanoke, within a week, my wife and I went to this thing that’s called Secret Church by a pastor called David Platt. If you look him up, he’s pretty easy to find. But just someone we had learned a lot from followed, and when we moved here, we went to this thing and he was talking about caring for orphans and widows and how they had adopted, maybe one child at that time, they’ve been numerous now. But ultimately, he opened our eyes to not only the expense of adoption, which is like 40 to 60 grand, unfortunately, to be able to bring a child home to adoption. It’s very unfortunate. But there are things that have to be paid for to make sure it’s done legally, all those things. But also, the need, of 140 to 160 million orphans in the world. I mean, many of these children are dying from things like diarrhea that we can cure with a dollar.
So, just that need alone. On our way home, my wife and I, Chelsea, we had never discussed adoption before. And really, we’re really newly married still. I mean, maybe a couple years, three years into marriage at this time. And the biggest question that came to our mind and was why would we not? Why would we not adopt? So, it seemed that simple. The Lord just really guided us to doing that and we felt less confident in pursuing that. And within a week, we turned in our application to adopt from Ethiopia.
Two years to the month, I mean, it’s a very long drawn out roller coaster of a process, but very worthwhile. Two years later, our first son Samuel came home to adoption. And nine to 10 months later, our second son, Elijah came home through adoption. And then our daughter now who came home through adoption as well is about 20 months old. So, we’re very familiar with the adoption process and it’s just something we’re very passionate about, but also now helping other families, is that financial burden is more than enough to keep most families from pursuing bringing their child home through adoption? So, we have calls with families often. They just want to ask us about the process and our experience, and we share with them those things. And they say, “Whitney, that’s more than I’m making a year. How can we do that?”
So, that pushed Chelsea and I to begin the Life Bridge Foundation, and the Lord’s just really blessed that. We’ve committed half of our personal profits to that and other people are donating as well, and where we can help families financially, with that financial burden, so they commit to bringing their child home. So, we’re providing matching grants, to families that applied and things like that. So, they’ll commit to bringing that child home.
[00:09:28] KR: I mean, that’s incredible. You’re having such an impact on so many people through this. So, I mean, I really commend you for doing that and I’m sure that’s not easy to set up. You mentioned how much work goes into the syndication business, and you’re setting up another foundation on the side and giving so much of your time to do that. So that’s just a fantastic mission and thank you for doing that.
[00:09:50] WS: You’re welcome. Thank you.
[00:09:53] KR: So, coming back to the multifamily side, you mentioned your story, your growth into multifamily. I think that’s kind of a similar path that a lot of us take, right? You’re just like, on my own, the number of doors that I would have to build up to reach the level of financial security I would want, is just way more than it’s practical to do one door at a time or even for eight doors at a time. So, you reach this point where you say, “Okay, I want to go after larger multifamily.” You discover syndication. And then how do you set off to just have this idea or I guess, have the courage to say that I’m going to go out, and I’m going to start my own business, and I’m going to start – I’m not only going to just invest with people, I’m actually going to run these deals. I’m going to go and syndicate myself and bring others into these opportunities.
[00:10:43] WS: Yeah, big decision and massive commitment on my wife and I’s part. We had to be completely committed to be able to scale as fast as we have, build a team that we have, all those things. But when we sold the farm, it was really, it just took that level of commitment, and it’s like burning that bridge, and passionate about training and riding horses, and had a really a growing business and brand doing that. Most people in the industry do not know that side of me. But we’re selling horses for more money than I ever imagined.
However, I mean, I was traveling and doing clinics all over the country teaching lots of people, how to work with their horses successfully. However, I realized that it was never going to be passive, right? It was always going to have to be me. So, I knew there was an opportunity in real estate. And again, there’s so many people had done it, like, “Okay, I can do it, too.” But what I did was started traveling to conferences, and started meeting lots of people that were syndicating deals. They were buying 100 and 200-unit complexes, and they really hadn’t been in real estate very long. When I say very long, like one to two years. And again, I’m like, “Okay, if they can do it, guess what, I can do it too.” What I just try to always remember, and it’s funny that this comes out excited, just a short quote about this yesterday online was, “Don’t tell me how hard it’s going to be, tell me where to get started.” And that’s what I tried to keep in mind, just tell me where to get started, like let’s just get the ball rolling. The faster we get started, the faster we learn, the faster we improve our processes, the faster we reach our goals, right? Even if it means failing a few times along the way. Some of that’s going to happen no matter what unless let’s do the fast and let’s improve and move forward.
So, that’s what we had to do. At that time, it was like, okay, large multifamily. I can see the benefits of scaling fast, helping others, through syndication. So, let’s just do it. It’s now or never. The sooner the better. So, we did. We jumped in, started traveling, networking, as hard as I could go. Probably two conferences nearly every month and different parts of the country. So, flying somewhere, while doing a daily podcast, while doing our third adoption, while moving twice in the process. There’s a growing family. To say the least, it was quite insane. But the Lord just sustained us and thankfully, we made it to the other side.
[00:12:54] KR: That’s awesome. I appreciate your level of commitment and your willingness to just like you said, just move forward. Just take the leap and just go. I think so many of us sit on that precipice of, “Should I do it? There are so many risks.” Things that hold us back, those limiting beliefs, and it sounds like you were just crushing through those. I mean, wall after wall after wall and to be able to get to where you are today. So, I think it’s an inspiring story, Whitney. I think you’re blown away a lot of people’s limiting beliefs right now that they’ve just got too much going on. It’s not the right time and I think it’s just never the right time, right? You just got to get started.
[00:13:31] WS: It’s such an excuse. Everybody’s heard this, but it’s so true. Everybody has the same 24 hours in a day. It’s all about where you spend your time, how you justify the most important tasks that you’re working on, and building your team around that to help you get those things done. So, it’s not rocket science, but it is a matter of being self-disciplined.
[00:13:51] KR: Absolutely. I love that message. I love that message. So, getting into your business, so you live in Virginia, but you’re investing on the other side of the country, right? So, where are you focusing your investments?
[00:14:04] WS: So, Colorado specifically. Colorado Springs is where the majority of our units are, about 750 units there. Then we have 172 in Idaho as well and actually just got contract yesterday on another project there. By the time this comes out, it’ll be fine to talk about. But we’re growing in both of those markets. I’m sure you’re going to ask a lot there, “Why all the way across the country?” There’s plenty of great markets on the East Coast, southeast obviously, is very competitive. It’s where a lot of investors, a lot of syndicators are, operators and they’re focusing heavily there. They’re in California, focusing in Atlanta, Jacksonville, Florida, all these places.
One thing that happened though a few years ago was I met my business partner, Sam Rust. There’s an amazing story of how we met. I’ve been praying out to share a little bit and you’re welcome to ask about about that. I’ve been praying for business partner for a long time and lots of people and asked me to partner. They knew I could raise a lot of capital. Obviously, that was inviting for – they wanted to partner, so they can close deals, and we raised a lot of money. But I had spent so much time and money and energy on building those investor relationships and having that distrust with my investor base. The last thing I want to do is partner with the wrong person, right?
So, I said, “no”, to all those people even knowing, yes, I could have done probably more deals faster, could have made some money. It wasn’t worth it, in the long run. So, we said, “No.” But finally met Sam at a conference, and so long, amazing story, but it was obvious that he had skills that I didn’t have, I had skills that he didn’t have. He was somebody that just believed the way I believed a lot about many things, including family and faith, and just things that are very important to us. But just also, even to other levels of how we treat employees, and how we grow a brand and how we function, and how we invest first all those things. So, with those two skill sets, when we merged, it was like, “Wow, okay. I don’t have to focus on say, on underwriting as much. I don’t have to focus on deal flow as much. That’s like his lane.” Now, I can just really focus over here on what I’m good at. That just helped us to scale so much faster.
But getting back to the market question is he lives in Denver. So, he already had some of those broker connections. He’d already been working in that, but he didn’t have the investor base, he didn’t have that capital behind him. So, he already had some of that there and it’s also two great markets. They’ve been growing. It’s not like they just started growing over this last year, which they have been exploding over the last year, that they’ve been growing for 100 years, very steadily. So, we love that about those markets, but also that he’s right there, right?
I am personally in those market, but at least once a quarter if not twice, especially if we’re doing – anytime we’re doing due diligence, bring another deal on a contract, I’m there for that. Even if we’re not, I’m there, touring the properties, or talking property management in person, those things. But he’s there, almost on a weekly, biweekly basis at every property. So, that was a big thing for us as well. And it’s like, okay, we’re already this close to these amazing markets. He already has connections there. Let’s hammer on that, right? So, that’s what we did and we’ve experienced great growth there and building other great relationships with brokers and property management and other people.
[00:17:11] KR: Yeah, I love that. Because I’ve always been kind of fascinated with how quickly I see people partner in this space and partner in this business. I know that a partnership, one thing that’s nice about real estate is you can partner on an individual deal, right? You don’t have to necessarily be married to that partner. But I’ve always just kind of fascinated when I see these partnerships kind of slam together, and all of a sudden, we’re coming out and we’re doing a business and things. It sounds like you were very intentional in how you went about that. You said no to a lot of people.
Two things that really stuck out to me were one, you guys have complementary skill sets, right? So, I mean, to me, that’s really the only reason to partner is if you’re going to find somebody that has skills in areas that you lack and vice versa and it’s complimentary. Because like you said, it allows you to grow exponentially beyond what you’d be able to do by creating that just that specificity of focus. You guys both do what you’re good at and there’s trust there, but allows you both to get so much more done. But also, you said that your core values align. You guys are on the same wavelength. You look at family and faith and all these different things the same way. I think that’s so critical. I think that you have to think of partnership in that way, kind of going back to the analogy like a marriage. You’re not going to marry somebody where you have different belief systems in place and different goals and things you want to achieve. Well, I mean, same thing with a partner. So, I appreciate the intentional approach that you took to get there and obviously the results are showing themselves.
[00:18:46] WS: What you believe at your core. It’s like is what you believe in business important? Well, of course it is. But however, what you believe at your core shapes, how you operate your business, and how you present yourself, how you work and prefer others, over yourself, all those things. That’s why, ultimately, in the very beginning, that was much more important to me, and to share it a little bit more. We were sitting at a large table, a couple of nights with a large group of people at a conference, I’d never met him before, maybe somebody introduced us earlier that day, a mutual acquaintance. I heard him talking about his faith and his family and things he had done in real estate. I could tell he’s a very intelligent guy. I thought, “Okay, we have a lot in common, but a lot of complementary skills.” So, the last night of conference, I just pulled him aside and I said, “Sam, we don’t know each other, obviously, at all, but we’ve had a few conversations, and we’ve been praying about a partner for a long time, and you seem to fit the bill.”
I just made it very clear up front that if you’re open to a partnership, I’m willing to discuss it. It doesn’t mean we’re going to partner, but I would like to get to know you better. Okay. So, he and his wife and me and my wife, Chelsea, we had numerous Zoom calls for hours, like over the next few weeks. And then I actually went back to his house and stayed with him and his family for three or four days, just to get to know them better because I felt like, at that level is so much more and to get to know them before we get into business. How he treats his family, how he treats his wife and his kids say a lot about who he is. I even went to church with them and got to meet other people that know them. I’ve met his whole family now. But I just mean, went to that level of depth to say, “This is someone that’s going to do things the way I would do them, as far as our core is concerned.” So, that’s why it was so important to me to do that level of due diligence and he as well. He did the same thing and Lord’s really blessed our partnership for sure.
[00:20:34] KR: Yeah, that’s awesome. And I’ve met Sam, and Sam is an awesome guy. So, congrats and obviously, it’s been the catapult for your guys’ success. So, you guys are crushing it right now out in Colorado, in Boise. You’ve grown to 900 units sounds like soon soon, you’ll be hitting over that 1,000 mark. I mean, just incredible growth. What is it, I guess framing this, as we’ve come through the pandemic now? Or maybe hopefully, we’ll say hopefully, at the tail end, and we’re in a different world than we were a year ago or even before. So, what is it now, as you’re looking out that’s keeping you up at night and how are you altering your strategy to take those things into account?
[00:21:17] WS: That’s a great question. What do we see, what’s going to happen the next six months or year? Well, nobody really knows. As far as keeping me up at night, obviously, I try to stay up on politics as best I can, you can almost watch too much of it. I mean, it just depresses you. But I do want to know what’s going on and there’s a few outlets where I tried to get information, but it’s hard to even know then what’s truth, what’s really happening, what to believe. So, we have to try to decipher those things, the best we can. The markets that we’re in, I’m very pleased with, and to be there long term, as far as I can see, in the near and far future, we’re very pleased to be where we are at. Things that keep me up into thinking about it would be like, what’s going to happen to the US dollar, over the next year or five years? Or are we going to be at war with another country in the next year or two years? I wouldn’t say keeps me up at night right now. But those are things I think about. Just like massive things that are completely out of our control, that we can almost do nothing about that, that would affect us. That’s for intergeneration, you know, in a massive way. Those are things like I think about sometimes like, “Okay, how do we prepare for things like that?” Those would be the things that I would be thinking about that might keep me awake a little bit, but not yet.
But I do want to educate myself about those things, what’s happened in the past, and look what’s happening right now. As far as multifamily and real estate, I mean, I still don’t know a better asset or better thing to invest in, than owning that physical piece of real estate. Whatever happens with the dollar, I mean, people still have to have a place to live, even if we started trading some other kind of crazy currency, they’re going to have to pay us. One way or another, they’re still going to have to have a place to live. So, that’s why we love multifamily real estate, the residential side.
[00:23:04] KR: Yeah, that’s right. You keep it simple, right? I mean, it’s a core human need. It sounds silly, but everybody does need a place to live. I mean, it can just be that simple. And if you look at the supply demand dynamics in the US, we just don’t have enough housing, we especially don’t have enough affordable housing. So, there’s just a need out there and there’s a need for people to to improve these buildings that have been there for 50, 60 years at this point, a lot of these properties and so for folks to come in and clean them up and put some money into them and kind of make them nice and new again, I think there’s always going to be a ton of value there.
[00:23:47] WS: I think you hit the nail on the head too, about just the affordability issue. I think there will be an affordability issue even more so probably over the next year to two years. So, I think we need to be watching that. As we’re buying deals now, we have to be looking at things like that, like really, what do we expect rents to be two years from now or five years from now? Is this continued growth? Is that really going to happen? Is that really something we should count on? Even things like still having that long-term fixed rate debt, we do not want to be made to sell two years from now. It may be a great time to sell, however, we don’t want to be made to sell just in case the market takes a big correction or something. So, even having massive reserve budgets, I mean, I’ve just always been a stickler on having a big reserve budget. So, on our show, I always ask. People say our reserves, conservative underwriting and all that. I’m like, “Tell me what that means.”
Typically for us, I’m going to say six to nine months of expenses, if not more sometimes. So, we were scrutinized, some on a deal we did last year or actually just a few weeks before COVID. I love this example. Other operators invest with us and some are like, “Whitney, don’t you think that that hurts investor returns and whatnot? I was like, “Maybe, just ever so slightly. But you know what, for us to sleep better. It’s worth that, just that little bit of hit on returns and having that cushion there.” Often, I hear operators say one to two months, and I’m just not comfortable with that, especially right now. We’re talking about 200, 300 in a deal. 100,000 could be gone in a hurry. Actually, after we close that deal a week later, they shut the country down. And guess what, everybody’s very thankful we have those reserves.
[00:25:21] KR: You look like a genius.
[00:25:24] WS: So, we still looked like a genius before?
[00:25:26] KR: Absolutely. I mean, I appreciate exactly what you said. I’m glad you brought that out, because a lot of the listeners on this show are our passive investors, are folks that are looking to place their capital. And one thing that I just try to preach is, you’ve got to look at the downside risk, more than you’re looking at those returns. Because the returns will be there, if you’re with a good sponsor, right? The good sponsor, if they’re in good markets, the returns will be there. Asset appreciation will occur over the long term, cash flow will be there, as long as you’ve got good reserves and good things in place, so that you’re not having to pull from that cash flow for unexpected things.
But talking about that downside protection, I mean, I appreciate you saying that, because I think that that’s so important and I don’t think enough people focus on that. I don’t think enough investors ask those questions. What type of reserves do you have in place? What’s the war chest look like? What can we pull into? Because what that’s preventing is the likelihood for having to do a capital call, and having to come back to the investors and say, “Hey, guys, something came up that we didn’t account for, we didn’t think it was going to happen. And so, we actually need more money to keep this thing rolling.” And that’s not a good position for the investor. It’s not a good position for the syndicator. It’s a situation I’ve been in as a passive investor, having to put more money in. You kind of have that, “Man, am I throwing good money after bad” kind of feeling here.
Luckily, the deals that happened to me, they worked out. But I just think that your approach is exactly right on and I hope that more people are thinking about it that way, and asking those questions to their sponsors.
[00:27:14] WS: For sure. Better be asking some questions than understanding those things.
[00:27:19] KR: Awesome. So, that’s a great segue into what I like to call the keys to success. So, four questions that we ask every guest, the first of which is, if you only had one question, what is the one question that every investor should be asking their deal sponsor?
[00:27:38] WS: That’s difficult. One question, Kent?
[00:27:41] KR: Just one. What’s the most important thing? You’re an investor, and you haven’t invested with somebody before, what’s the one most important thing you should ask them?
[00:27:51] WS: So, what I usually tell, so I get the question often from passive investors, when I have that call, or getting to know each other, and they say, “What else should I have asked you? And what should I be asking other sponsors?” And I want to help them, right? Because you always get the questions about market and the deal and conservative underwriting, all these things that people talk about. But I think before you get to all that, the one thing you need to know, and you need to ask about are questions around the operator’s character.
So, before investing passively with the operator, I want to know how they became who they are. So, it’s really like, it’s difficult things that people have to go through and persevere through and accomplish that mold who they are, and gives them the ability to do hard things, later in life as well. You don’t have that thought process and ability to think during hard times and perform. So, before I get to all, there’s hundreds of questions you can ask, right?
[00:28:46] KR: Of course.
[00:28:47] WS: But before I get to those, I want to know the operator’s character. I want to know how they became who they are. You just ask them, tell me about your background? Where did you come from? What did you do, growing up? Obviously, you’re not probably going to care about what they did in high school. But there are some things even back then that will tell you about their mindset, pushing through hard things. It’d be hard to maybe know about some of those things, but get to know them. So, ask a question about how they became who they are, about their character.
[00:29:18] KR: Yeah, you know what I find interesting, because because you’re right, a lot of the questions that I think I receive, which similar to us sounds like are, are about very technical things, market, deal structure, things like that. But the people that I have on this show, the experts like yourself consistently say similar things, and it’s actually a much simpler question. It’s just starting with the sponsor and does the sponsor have good character? So, when you when you listen to the experts, I mean, it really gets down to starting with the sponsor, really understanding. I love the process that you talked about going through as Sam. I mean, not that you have to go through – not that you’re going to go stay at every syndicators house for four days. But at least there was a process to get to know each other, and to make sure, you got to make sure that your core values are aligning, and kind of like what you said, it’s like this idea of, where did they come from and what makes them who they are today? And based on those things, are they going to have the competency like to get you there?
I like what you said about the ability to get through hard times and make tough decisions. I mean, I’m sure your military background, your police background, all of the that background of service has kind of conditioned you to make the decisions in tough environments. So, I’m sure that goes a long way in what you’re doing.
[00:30:41] WS: That’s the thought. I mean, obviously, you’re going to ask about the deal in the market and those things. I think kind of goes without saying, but I do not get asked enough about who are you? What are you going to do when things get tough? I mean, doing deals like this, there’s going to be times where there’s unexpected things happen, and maybe not as bad as a pandemic, but it’s going to happen. That’s any business. So, you have to know you’re with someone that’s going to do right by their investors at that time.
[00:31:06] KR: That’s right. Well, you make money in real estate by solving problems, right?
[00:31:10] WS: That’s exactly right.
[00:31:11] KR: That’s exactly what we do. So, it’s how good are you, when it’s crunch time, right? is something that’s, I think, extremely important, and how well have you prepared to put you in the right position. So, yeah, I appreciate that that insight. What are you most proud of in your career?
[00:31:27] WS: Probably, the first thing I think of there. I mean, there’s many things we could say. I mean, 100 million last year in real estate or thousand interviews in the last few years. I mean, all that took lots of dedication. Probably one of the biggest things is gaining back time freedom, and being able to leave the W-2, where I can be in charge of my time. So ultimately, I have more time with my family. That quality time with my children and my wife, where I can say, “You know what, I’m going on a date.” I can schedule a date and say these many times a month, my wife and I are going to get to go on a date, or I’m going to get these afternoons or even these whole days with my children. I think, you just can’t get that time back. And that’s probably one of the most things or biggest things that I’m proud of, that’s come from just working so hard. I didn’t get that for a couple years. I really had to say no to everything outside of almost business. I mean, I’m missing every meal, almost every meal, except for Sundays, with the family for nearly two years and my kids knew that, like Sunday was the day dad was available. So, it took that level of commitment and so getting that back is something I’m very proud of.
[00:32:29] KR: Yeah, that’s awesome. And you put in the hard work, and now you’re you’re bearing the fruits of it. So, congratulations.
[00:32:35] WS: Thank you.
[00:32:36] KR: What books should everybody be reading?
[00:32:39] WS: Well, in business or does or –
[00:32:42] KR: Anything you like.
[00:32:43] WS: I think the Bible can teach you everything you need to know. And I think you should spend time and God’s word every morning. Second to that, I think like self-improvement, and learning self-discipline, things like that are things that like no one can take from you. Even if you lose everything, let’s say your business just completely flops within skill sets, guess what, that you’ve learned, you still have. So, most can go do it again and you see even some of the biggest and most successful entrepreneurs today. Some of them have, like filed bankruptcy numerous times, and I’m not saying you have to do that to make it big, but then you hope that that never happens, right? However, guess what, they develop skill sets. And so that way, they could only improve. They pick themselves up, and they keep going.
So, to get to one book is, The Power of Self-Discipline by Brian Tracy. And there are so many books about self-discipline, and there are so many self-help things. However, if you don’t have the self-discipline to execute on those things, what do you expect to happen? If you don’t have the stuff to get out of bed every morning, you’re not going to go very far. So, I just think working on self-discipline, and to me, is a big deal. Just continuously working on self-discipline and how to improve personally. So, no matter what happens, guess what, more times than not, you’ll be able to pick yourself up and do even better the next time.
[00:34:00] KR: Yeah, that’s a great message.
[00:34:02] WS: The Power of Self-Discipline by Brian Tracy. No excuses. Another one that I have here is called The Road Less Stupid. I would also recommend that book.
[00:34:09] KR: I like that. I haven’t heard of that one. I want to check that out. And then lastly, what is your number one key to success?
[00:34:17] WS: I ask everybody that same question. I think that the willingness to be uncomfortable and step out, it’s the first thing that has happen. It is mentally, you have to be willing to be uncomfortable. Because if you’re not, you’re going to stay where you’re at, and you’re afraid of change, and it’s just never going to happen for you. You can’t improve because you’re afraid of failure. So, you never step out there. So, I think the number one key is changing your mind to look for those things and say, “You know what, I feel some fear there, I’m going to push through it. Let’s just go do it.” I see the fear coming, let’s just go towards it. I’m in a group called C12 and they call it buffalo culture. It’s like, a buffalo, they like charge the storm. So, a lot of that mindset of like charging the storm.
[00:35:07] KR: Yeah, I love that. All the growth happens outside of your comfort zone. So, Whitney, if folks want to get in touch with you, how can they reach you to learn more about what you’re doing?
[00:35:16] WS: lifebridgecapital.com. We have numerous white papers there on passive investing and different things that will help you get into this space and grow your wealth successfully through syndication. You can email me whitney@lifebridgecapital.com. Obviously, you can sign up on our Contact Us page. You can also call or text me at (540) 585-4338. Our team will reach out to your schedule call but you’re welcome to call me anytime you want.
[00:35:44] KR: Awesome. Well, Whitney, thanks for coming on the show today. Thanks for bringing so much value to all the listeners and hope you have a great rest of the day.
[00:35:51] WS: My pleasure. Thank you, Kent.
[END OF INTERVIEW]
[00:35:53] KR: Thanks for listening to another great episode of Ritter on Real Estate. Hit the subscribe button and make sure you don’t miss out on the content that will make you a better investor. Also, visit kentritter.com for articles, videos, and tools curated just for passive investors. Until next time, this is Kent Ritter with Ritter on Real Estate. Now, go out and invest like a pro.
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