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Episode #34: Women in Real Estate Investing with Good Egg Investments

In this episode, Millionacres editor Deidre Woollard sits down with Julie Lam and Annie Dickerson of Good Egg Investments to talk about their journey from direct investors to syndicators and educators.

Julie Lam and Annie Dickerson are the founders of Good Egg Investments. They both have over a decade of experience investing in real estate including multifamily buy-and-hold rentals, private lending, and passive investing through real estate syndications. Together are mentoring and educating women in real estate investing. Learn more at https://goodegginvestments.com/

Transcript

Deidre Woollard: Hello, I'm Deidre Woollard, an editor at Millionacres. Thank you so much for tuning in to the Millionacres Podcast. I'm really excited to share the journeys of today's guests because they have experience in so many areas of real estate investing. Julie Lam and Annie Dickerson are the founders of Goodegg Investments, and they both have over a decade of investing in real estate, including multi-family buy-and-hold rentals, private lending, and passive investing through real estate syndications. Together, they've created the real estate accelerator mentorship program, and are the authors of the book, Investing for Good: How to Build Wealth While also Making an Impact. Welcome to both of you.

Annie Dickerson: Thank you so much for having us. We're thrilled to be here with you and your listeners.

Deidre Woollard: Let's talk about the title of your book, Investing for Good: How to Build Wealth While Also Making an Impact, because that really appeals to me. Why does that also appeal to you? Why does it impact investing matter?

Annie Dickerson: I think as women and as moms, our priority is on leaving the world a better place than we found it. That's through everything that we do, through raising our kids, through our jobs, and through how we spend and invest our money. When we discovered that we could invest in real estate and not just have an impact on a single rental home, but have an impact on a whole community, because often we're investing in these larger assets that are 200, 300 units, we realized, "Hey, we can make a great return on our money, put our money to work for us, and also make an impact in the world." that's when we were poked.

Deidre Woollard: I love that. The two of you, you're both entrepreneurs, how did you meet? How did you both discover that you shared this interest in real estate investing?

Annie Dickerson: Well, let's see. We met a few years ago now at a real estate investing conference. If you've ever been to one of those, you would know there are very few women. It's one of the very few places in the world where you go to a place and the line out the men's room is longer than the line out the women's room. It's a very fascinating thing. Julie and I, not only where we both women, but we were both Asian women, we really hit it off at that conference. We were both moms, working moms. We wanted to start a business to help other people invest in real estate. At the time when we met, Julie already had her business. I had just literally quit my job the week before and I was getting into it. We hit it off. We didn't think about forming a partnership. We were just like, "Hey, let's stay in touch." In the months following, we started to have more and more conversations. Through that, we realized we had very complementary skill sets and we were trying to help the same people, namely busy moms and parents to build passive income for their families. We said, "Hey, why not just join forces and we can go further faster?"

Deidre Woollard: What were you doing before you started your business?

Annie Dickerson: Well, for me, I had started out as an elementary school teacher and then transitioned to get into educational games. Then I got into instructional design, creating corporate training for companies. That was the last thing that I did before this curve ball life threw at me, which was real estate investing. I was a creative director in the learning and development space.

Julie Lam: This is Julie speaking, and I worked in the legal field for probably the last 10-15 years before I got into real estate. On the admin side, was an attorney, went to law school for a year and quickly realized within the first year that the ROT, I guess the return on my time, wasn't there for me and continued to pursue it. But yeah, that's what I was doing.

Deidre Woollard: How did you both find real estate? Because obviously you were both in real estate before you met. What was that journey like for you first, Julie?

Julie Lam: Yeah. I started investing in 2009 and it was a great time to get in just because the market was way down here in the San Francisco Bay Area. I was just doing the traditional, you're taught to get married and buy a home. That's how we're taught to grow our wealth. That's what we were setting out to do, my husband and I, or fiance at that time. We realized through that initial purchase, that maybe we could do more of this because if we had bought it at such a discount, and we bought that first property and then we bought a second property. As the market cycle started to mature, we started to see that equity come back that was once they're like a year or two before, and then it became a question of, "Well, what is the next thing that we could do with this money that would allow us to have at work as hard as possible with the least amount of risk that would serve us in our lives today?" That's what led me to getting into out-of-state investing, which then eventually lead to multi-family investing or multiunit investing, and then let us to what we do now.

Annie Dickerson: As for me, let's see, actually, Julie and I have a very similar parallel background with real estate. We started with duplexes, my husband and I. We house hacked those. We lived in one unit. We rented out the other. We were living in Washington DC at the time. We bought a couple of those duplexes. We named them after letters of the alphabets, Alpha and Bravo. Thinking that we would collect all the letters of the alphabet in our lifetime, we set about that trajectory. We collected Alpha and Bravo in DC. Now we live in Oakland, California. We bought Charlie and Delta. Then Echo was the first time that we invested out-of-state, and the first time that we did a total rental property that we did not live in or house hack. We invested in Huntsville, Alabama, and we did Echo and got Fox, I'm forgetting my letters of the alphabet, Echo, Foxtrot, Golf. We quickly realized, and this is where I think this is really relevant to your listeners, is we quickly realized that investing in rental properties, especially out of stage, even when you have a good team, which we had a fantastic property management team, it still can be a lot of work as a landlord. Because you still have to manage the asset, you still have to make those key decisions. I remember this one time my property manager calls me out of the blue, and she's like, "Are you sitting down?" I'm like, "This is not going to be good.".

She's like, "Well you know those tenants we were going to evict tomorrow because they hadn't been paying for months." I said, "Yes." She said, "Well, you're going to want to sit down because what happened was she stuffed up all of the sinks and the tubs in the unit, and she flooded, not just that unit," but it was a fourplex. She said, "Well she flooded that unit and the one next door and the one next door to that.".

Annie Dickerson: Three out of the four units were offline for that entire summer. Here I was, busy mom. I've got all the carpool, the kids activities, and on the side I've got to be calling insurance companies and filling up paperwork. That was when it really hit home for me, that at this stage in my life where my focus is on parenting and raising my kids and growing our business, that passive real estate investing is really a better fit for me and for us at this point in our lives.

Deidre Woollard: That is really interesting because on our Millionacres team, we have a bunch of people of different ages and two of the investors on our team, they both have young kids and they both had Airbnb rentals for a while. Both of them are now at that stage where they're like, "Maybe this isn't going to work for me when I've got a toddler running around and I want to have a different kind of lifestyle that I wanted to have 10-years ago." that makes a lot of sense. What's it like to take that leap? How does an investor get started going from single properties to real estate syndication?

Julie Lam: I would say the first thing that somebody needs to do, and this is what I did, was I spent a ton of time just educating myself just because it's pretty complex. But there's a lot of resources out there now. Four years ago there weren't. But nowadays there's a lot of free resources out there to help you break down what syndication is, what apartment investing is, and how it all works, the terminology and all of that. But I would say that that's really the first thing that you want to do. What you don't want to do is find a deal or start getting your email inbox stuffed full of opportunities and just dive right into looking at a deal and seeing if the deal makes sense from your perspective, because it'll be really difficult to understand the risks that are presented in these deals and there are risks without really understanding exactly what it is that you're getting into. I spent probably a good eight months or so really trying to educate myself, trying to understand who the players were in the space, what made a good market, what made a good deal, what made a good team, and then started putting deals in my inbox by networking and letting people know I was looking for opportunities and then doing like a trial run and just looking at the opportunities and doing my own underwriting. That's something else that I think even as a passive investor upfront, you should know on a very high level how to do underwriting and what that means. Then looking at the opportunities and seeing what are the differences between the two and really trying to distill down for yourself, what are the important things for you because for every investor it's going to be different. Maybe for you it's cash flow, maybe you're not so interested in taking on a lot of risks, maybe you want something that's nicer. There's a lot of different things and you get a feel for that as you start to look at more deals. So really, I recommend anybody who wants to get into this space, spend a good amount of time upfront because trust me, it will pay off dividends down the road and really help it become what we call a passive investment after you spend that time upfront to do that work in that due diligence now.

Deidre Woollard: Do you have to be an accredited investor in order to participate in these types of deals?

Julie Lam: No. You don't. It really depends. There's different types of offerings. Without getting into too much legal jargon, there's basically two types of offerings. There's one that's a 506b offering. Either way you still have to be sophisticated whether you're not accredited or not. But that will allow you to come in as a non-accredited, sophisticated investor. Usually there's a cap. I think it's around 30-35 people that can go into any one deal as a non-accredited investor. But for the most part they're only open to accredited investors. Then there's another section or offering type that's 506c. If it's a 506c offering then yes, you would need to be accredited and those do not allow any sophisticated non-accredited investors.

Annie Dickerson: I think the main thing that listeners should be aware of as it relates to accredited versus non-accredited is if you're credited, the doors are open for you. You can pretty much invest in any type of these syndication deals. For non-accredited investors who are interested in these types of deals, you should know that the deals that are open to non-accreted investors cannot be publicly advertised. So you're going to have to do a little bit more work, a little bit more digging in that networking that Julie was talking about, you're going to have to talk to more people because you're going to have to form those relationships with the sponsors or the operators on the deal in order to get a spot in the deal because they cannot be publicly advertised.

Deidre Woollard: That's a really good point. Then of course, when you're looking at these syndications, like Julie said, it's hard to know what you're looking for starting off with. How big a factor is trust then for individuals as they are first getting started and trying to figure out what deal is right for them.

Annie Dickerson: Trust is everything. When you start looking at these investment summaries for these syndication deals, it's super easy to get lost in the beautiful photos and the numbers. Anybody can get swept up in that. The truth of the matter is, yes, it's really fun to look at all that stuff, but when the deal closes and the rubber meets the road and the operator actually has to perform and actually execute on that business plan, that's where you really need to trust that team. Because as a passive investor, you're not going to be the boots on the ground. You're not going to see that property day-in and day-out. You're not going to be renovating and making those calls and hearing from the residents. You're not going to be on the front lines. So you really have to be able to trust the people who are the stewards of your investment. That's why, as Julie was saying, it's so important to form those relationships and really educate yourself upfront so you even know how to form that trust and what questions you need to ask to vet those operators.

Julie Lam: I just want to add on top of that, that in order to form that trust, how I did in the beginning was really to build a relationship as much as I could without taking up too much of their time. One of the ways that I was able to do that was if they have a podcast out there or if they frequently appear on podcasts, listen to all of the podcasts because that's going to give you a really good feeling for the types of questions that they ask, how they respond to those questions. It'll give you an opportunity to almost to get to know them. I spent months listening to the person that I ended up investing with first, listening to their podcast and listening to the questions they were asking like I was saying it. I think that's such a great way to get to know somebody without having to say, ''Hey, can we hop on a call? I'd love to tap your brain for the next hour or two,'' and them saying, well, maybe or maybe not. But that's also another thing. If you're interested in working with a group and you have a bunch of questions for them and either they ignore your email or and don't respond or they reply to a list of 10 questions with a one liner, that's a sign and it was for me, because there were a lot of people out there who did do that in the beginning and I didn't get a response and then a week later they would circle back and ask if I was interested in investing. I would say a lot of it is just intuition too. Learning to trust your gut. Does this feel right or not? Asking all the questions you have because if they're interested in developing a relationship with you then they're going to put in the time versus are they just interested in taking money from you?

Deidre Woollard: That's really good advice. Let's talk a little bit about your business. Goodegg Investments has two different arms: you've got your investing side and you've got your education side. Let's start with the investing side and tell me a little bit about how that works.

Julie Lam: Yeah. When somebody is interested in investing, running through the process that we're just talking about, we have many different avenues for people to get to know us. That's really what we encourage people to do. That's what I'm here talking about as well. But it would be to go get yourself educated. We have a ton of resources on our site. Learn about what it is that we do, hear about us, listen to us on podcast, get to know us. Then once you're at the point where you think you're ready to engage in a conversation with us, you sign up for what we call our Investor Club. Once you sign up for that, then you start to go down a path of more education. Again, getting to know us, who are we? What is our background? Then you jump on a phone call with us, then you learn a little bit more about us, we get to learn about you more importantly on that initial call. We don't always have to do that with the 506c deals. We don't have to always have that pre-existing relationship, but we want to know who you are, and we want to know that you guys are a good fit for us. That's the process there. Once you're on our list, then you start to see deals, and this is typically, by the way, for most operators out there. This is a similar process that you would go through. Once you get through that initial vetting process, so to speak on both of our ends, you would be privy to see any opportunities that we have. Once you see the opportunities, then it becomes a question of, is this the right one for me? Which is not something that we can advise you on, but is a decision that you would have to make on your own. Given your goals, we can talk about the deal specifics, but we can't talk about whether this is a good fit for you. That's the process in a nutshell. Once you've identified an investment opportunity, then it becomes a matter of whether you're really seriously interested, or you're just checking things out. Once you say you're really interested in investing, then it becomes a matter of reviewing legal documents and funding. That window from the time we announce the deal to the time funding happens is usually about 30 days. Then it's about another 30 days to close, then it's another 30 days till your first distribution. All-in-all, it's about a three month window from the time you hear about it to the time you get your first distribution. But that's in a very high level, what happens in the process.

Annie Dickerson: What I would add to that is, on the business end, behind the scenes, if you will, the reason why Goodegg Investments is unique is that over the last three years we've done over 25 of these real estate syndication deals, and we've been able to partner with excellent sponsors in really great markets: Dallas, the Southeast, Florida, the Carolina, all of these great, growing markets with excellent job growth. What we do is, we know it's hard to find these types of opportunities. If you type into Google, real estate syndication, it's going to take some digging to really find who are the good operators, where are the good deals, what are the good markets? There's a lot of work that needs to be done there. What we do on behalf of our investors is we are in the know, we are networking with people all the time. We are in this space. What we do is we look across the industry, and surface the cream of the crop of those opportunities. That's what we present to our investors.

Deidre Woollard: Excellent. Thank you. I looked at your portfolio on your website, and I saw a lot of things in Sunbelt cities. Part of our investing thesis on Millionacres, we've been really noticing multi-family in the Sunbelt seems to be a place where there's just so much opportunity, there's so much migration, increase in jobs. How was that strategy been working for you, and how did you decide that that was one direction that you wanted to go in?

Julie Lam: Yeah. I think it's been a great strategy for us. We did our first deal four years ago, and we're just exiting those early deals that we did earlier on, and returning a good return for investors. Initially, why we decided to invest in those areas is really because it really boils down to one thing, and a number of things happen after that. But really it boils down to, are these states business friendly states? Because if they are, what's going to happen is, all of the corporations are going to create jobs in those business friendly states, then as a result of that, what's going to happen? Our people are going to move there for those jobs. Then what ends up happening as a result of that is that is it drives demand for affordable housing in those areas. That's exactly the space that we're playing in, is we're looking at these affordable housing type of units. Most of the time, we're not going after high end what we call A-Class luxury product, we're really going after what we call workforce housing. It goes back to supply and demand. If there is a lot of demand from all of the population growth in these areas where there is limited supply because you can't build something that's an older product, then that's been our philosophy. But a lot has changed since we first got into this space four years ago. We were at a different point in the market cycle, so there was more room at the time, to take on a little bit more risk where we would do what we call value-add deals, where we're going in and we're making improvements. It's like a fix and flip, the way we did it. But right now, there's a lot of uncertainty with all things going on. We've shifted a little bit and we're really looking at, not necessarily the top-tier luxury stuff, but we're looking at more of things that can be a nice, solid buy and hold, with not a lot of deferred maintenance and things that would cause a lot of money over the hold period. It's evolved over time, but as far as where we're investing, we're still focused on those same Sunbelt states.

Deidre Woollard: Yeah. I think workforce housing is absolutely where it's at. It's definitely something that we've been looking at too, because there's so much demand, and it seems like there's a bit too much supply maybe on the luxury side, certainly in major cities right now. I think that's a concern for a lot of investors. Well, you guys are both based in the bay area, San Francisco, what are you thinking of that market right now? We saw rents dropped dramatically last year, looks like they're starting to tick back up again. Is there any window for investing, do you think, in San Francisco and in Oakland?

Annie Dickerson: I think it depends on what you're investing for. If you're investing for cash flow, then this is probably one of the last places that you would want to invest, [laughs] because you would be lucky if you could break even after mortgage and expenses here in the Bay Area. That being said, there are people who do it, and there's a ton of potential appreciation. Some people do get a little cash flow, if you're a little creative, but it's a little bit riskier on the cash flow front. For the appreciation, again, that's not something that's happening today, that's something you've got to wait it out and see over time. But there are a lot of people who still believe in the potential of this market, and so they're investing here not for the cash flow today but for the appreciation down the road. If that is what you're looking for, then I would say that the Bay Area could very well be a good place to invest.

Julie Lam: Yeah. I would just add on top of that, that I think it's really dependent on what your investing style is, what your comfort level is. Within the real estate investing world, there's so many different things. It's not just department syndication, and rental properties. You can do flips, which I know a lot of people in the Bay Area make hundreds of thousands of dollars on flips here, just because the price of homes are so high. Other people I know are into zoning, where they buy a piece of land and they research the zoning, they go ahead and make zoning changes, then they flip it and they sell the land to a developer. There's lots of investing happening here in the Bay Area of for sure. I think it just really depends on what your goal is, and specifically tied to what we do, investing for cash flow, financial freedom, life by design, and all of these things, probably wouldn't be a good fit anytime soon. [laugh] Yeah, I think it's really relative on what your goals are, like Annie is saying.

Deidre Woollard: Yeah, makes sense. One thing that I've seen my friends that are up in the Bay Area do is adding ADUs as a way to increase income if they're buying a property.

Annie Dickerson: Got a small lot. You have got to add every bit of space that you can, [laughs] and get really creative.

Deidre Woollard: All right. I am back with Julie Lam and Annie Dickerson of Goodegg Investments. Let's talk a little bit about the other part of your business, which is your real estate accelerator program. Why do you think it's important to learn how to raise capital?

Annie Dickerson: Our real estate accelerator program is geared towards people who don't want to be passive they want to be active. They want to roll up their sleeves and they want to do a syndication deal of their own. Now, what we see most newer syndicators do is they'll say, "Okay, I want to syndicate a deal and okay, I've got to talk to brokers. I've got to figure out how to do the underwriting. I've got to find a market and a property manager," and they go through all of those acquisitions steps. They finally do all this work. They get a deal under contract and they are like, "Yes, I finally, I got one." Now what? [laughs] They're, "Okay well, I need let's say a million dollars to close this property. Surely I can talk to my uncle Frank and my cousin Bobby" and [laughs] they go down the list and they're like, "Surely they don't want to invest with me. I'm a really good person. They know me." They start reaching out to their friends and family. The time is ticking because they may have 60 days, 90 days to close. They're in a rush. Maybe uncle Frank, cousin Bobby, whoever have never heard this person talk about real estate before. They're like, "What? You're doing real estate now? I don't know? Well, this deal looks okay, but I don't know enough about it right now. Maybe I'll sit this one out and I'll come in on the next one." We see this happen all the time. People do all of this work to get a deal under contract, which is not easy and then they lose the deal because they didn't do the work upfront to build up their investor base so that they could raise the capital to close the deal. That's why we focused on that piece in particular, is because building capital is the piece that takes off and it takes the longest. Because as we touched on earlier, you've got to be able to build that trust with your investors and you've got to have a steady flow of new investors coming in. That's what we teach through our program, is not just how to talk to investors, but how to build an entire platform an entire brand as we have a movement that people really want to get behind. That's what's going to take those cold leads and turn them into loyal investors.

Deidre Woollard: Do you feel like it's harder for women to raise money as syndicators. You mentioned before being at that real estate conference and not seeing a lot of other women there, I feel like there is a little bit of a disconnect between women in real estate. You have so many real estate agents that are women, but not as many women on the investing side. Is that something that you've noticed too?

Julie Lam: I think it really depends on the approach that you take as a woman. I mean, I think if you go into it thinking that I think that you're going to find that you have more obstacles. But I don't know that Annie and I ever thought about that, that we thought, well, we have something against us because we're women in the space. I think we really went at it. This is what I see with other women on the space who raise money and there are a handful of us, is that they really let their passions guide them and when they let their passions guide them through this space, inevitably they end up having a lot of followers and a lot of interested investors who want to work with them and who trust them. I think if there's anybody out there who is a woman, who's thinking about getting into the space. I think you need to ask yourself the question of why. Why are you doing this? Because I know the one thing, the one single threat that I've seen across every female in the space who's raised money is that they're very, very passionate about what they do and about helping not just their investors, but other women in the space as well. I think it really depends on your goals and how you're looking at it. But I don't know that it would be any harder per se. I think it's all in how you frame it and how you approach it.

Annie Dickerson: The other thing is it also comes down to your target audience. Because just as there are women syndicators, there are women investors. That was one thing we did earlier on in our business as we really sat down and we said, "Okay, who exactly are we trying to help? Is it doctors? Is it engineers? Is it men? Is it women? Young? Old?" We really sat down and figured out exactly who our investor avatar is. It's not everyone. We thought it was everyone with money at first, but that wasn't it. We defined it down to a busy working mom living in a city like San Francisco who has a good job, her husband has a good job. They're making all this money, but they don't have the time to invest in real estate. They're trying to figure out other solutions that maybe they don't even know about passive investing and syndications. How do we then reach them and connect with them? When you think about it that way, it almost becomes this fun little challenge. Where are those people currently hanging out and how can I reach them, not as somebody who's trying to sell them on something, but really as a friend, as somebody who's trained to extend them an opportunity that they might not have access to otherwise. I think when you think about it that way, it sort of takes the intimidation factor out of it. I think women, one advantage is that often we're natural teachers. You need to be a good teacher in the space because there's so much to explain and so much that investors need to understand before they can confidently invest with you. It's funny because we have a lot of investors who will come and say, "Oh man, I invested with this other company before and I thought I understood it, but now I really understand it." I think that's also an advantage to all the education that we offer is that people aren't afraid to approach us and to ask us those deeper questions.

Deidre Woollard: You mentioned something really important here, which is communication, and one of the things that I've noticed in looking at various deals on crowdfunding platforms and things like that, is the amount of communication between syndicators and developers and the investors themselves can vary quite a bit, and that can be scary for investors. So what do you feel like is a good communication strategy for syndicators, and can you explain a little bit about what that responsibility is like?

Julie Lam: Yeah. I think that, and this goes back to what I was saying early on, you really have to develop that trust with people and communication in our business is huge, not only with our investors, but internally with our team as well. I think it really starts on the front end and that's the thing that I personally never liked about crowdfunding sites is I don't ever feel like I have the opportunity to talk directly with the people who are going to be the stewards of my money. It's through a platform and that worries me. I don't know exactly because I've never invested through a platform, but I don't know exactly what the communication is limited to but I would say that it's huge. The person in the group that you're going to invest with, even on the onset isn't being responsive to emails, you're going to be on a long term relationship with this group, 5-7 years sometimes. If it's not like that in the beginning, it's like any other relationship. If it's not going in the beginning, it's likely it's not going to get better when times are tough. I think really paying attention to that level of communication, the frequency, the attention to detail in your questions, and then once you've gotten into a deal and they have the money, are they still responsive to your emails? Because that's a big one. [laughs] They could be just like, "Okay, I've got your money now on that one deal now. Okay, onto the next," but really it's just paying attention, the responsiveness, the rate of responsiveness and the sense of urgency, I guess you can say. Like within our team if one of our investors sends an email, it's like myself on it, it's another team member on it, we've got a number of people who respond and reply and are available. In every communication I send out, I always put my cell phone number at the very bottom so people can call me [laughs] any time of the day if they have a concern. I think communication is one of the things that is so important in this business and in life too like I was saying, but it's something that we, I think, are good that really sets us apart from others is our attention to that piece of it. I just think it's so important.

Deidre Woollard: I really loved that you mentioned not stopping that communication after you get the money because I feel like that happens [laughs] far too often and that's really important because, like you said, it's long term hold, 5-7 years. That is a long time. It's not a liquid investment, you're putting your money in and you're waiting. Let's talk a little bit about that. How do you prepare people for that idea and for making them really understand, okay, this isn't the stock market. You can't take out your money when you get scared.

Julie Lam: Yeah. I think a lot of it is just about setting the expectations upfront, and this is what I was talking about in the beginning, really knowing what you're getting into, spend the time, because the last thing you want to do is get into an investment and then something happens in your family and it's in your liquid investment and you call your sponsor and you say, "Hey, I need to get out" and they say, "Well, it's in a liquid investment but what is the situation?" So really, I think just like knowing upfront, which is why Annie and I are so big on education, it's something that we don't want people to get into deals and not understand what they're doing. So the education piece upfront, before you even hop on a call with us, you will have been given all the pieces of information that we feel are the most important pieces to understanding what syndication is before we ever hop on a call, but yeah, I would say that a lot of it is just about getting that education upfront and framing what it's going to look like once they get into it.

Annie Dickerson: As far as those expectations go, a lot of what we're doing in those early days is we're getting to know potential investors is not only are we looking for a good fit for them, like whether they should invest, but we're looking for reasons that they might not want to invest in these deals. We're not just going to take anyone and just say, "Okay, you've got 50,000? Okay, let's get you in this deal." Were really looking for that fit because it's going to be a 5-7 year hold, and that's going to be a lot of back and forth and what we don't want is somebody to invest and then regret it the day after, or then say, "Oh no, I made this huge mistake" or not understand all of the risks. That's why we take so much time upfront and we say, "If this is the only $50,000 you've got, maybe now is not the best time. Maybe you take some time, here are some other opportunities that you could invest in if you did want to get into real estate, maybe grow that net stake a little bit and then come back, and then once you have a little bit more cushion then that $50,000 becomes more play money and then you can invest in syndications."

Julie Lam: They don't always like that answer. [laughs] That's a hard conversation to have, because people are so excited about working with us, maybe they love the brand and they want to work with us, or they like the idea of syndication but at the end of the day, if I was in their shoes, I would be so grateful for somebody to have given me that advice many years ago as opposed to saying, "Sure, come on in. I will take your $50,000," but really explaining to me why it might not be a good fit or why now might not be the right time. That's something, again, that I think really sets us apart from other groups is that at the end of the day, this isn't a job for us, Annie and I left our jobs three years ago. We weren't looking for another job, Annie and I do this because we're passionate about it and we really want to help other people. It's a hard conversation to have but one that I think is essential.

Deidre Woollard: I really loved that aspect of caring and responsibility because someone's money is their future, it is their work, it's more than just the dollar figure. We talked about multifamily and Sunbelt, is there anything else, any other investment ideas that you're looking at right now? This has been such an odd series [laughs] of mini cycles within the major real estate cycle we're in. What do you guys have your eye on right now?

Julie Lam: I think one of the things that we're really focusing on right now is diversification. Just because there's so much uncertainty right now and it's not really the time like it was even two years ago or even a year and a half ago to take on a lot of risk. As I mentioned, we're moving away from the value-add opportunities and we're really looking at potentially building out a fund, so that's something that we have on the table for this year. A fund, what it is, basically is a collection of various investment opportunities that will allow investors to not just invest 100,000 into one asset, but it will allow them to invest in 5-7 different assets, sometimes across different strategies as well. In the fund, there could be a nicer A-Class property with no value-add, and then maybe if that fund structure will allow us to have a little bit more risk in something like a value-add or a B-Class deal, and so looking at funds is something that we're personally looking for, for our own portfolios and as a way for us to still generate returns, but hedge all of the craziness with everything that's going on right now. That and as well as different asset classes, so not just diversification amongst multifamily opportunities, but also diversification across different asset classes, self-storage, and mobile-home parks is something else that we're looking into, but those things take time to build those relationships and get a feel for what's happening in those spaces as well but those are some things that we have coming down the pipeline.

Deidre Woollard: Interesting. Mobile-homes is something that I'm looking at as well, and we've had some like Blackstone is making deals in mobile-homes, which anytime Blackstone does something. I'm like, "Okay, what's coming next?" [laughs] Definitely something to keep an eye on.

Julie Lam: Yeah.

Deidre Woollard: I wanted to bring up this other things. I noticed on your blog you had a post on whole life insurance. I interviewed another syndicator recently and he talked about it. I'm really curious about how this works and I think it's something a lot of people don't understand, so can we discuss that a little bit?

Julie Lam: Yeah. Oh my goodness, this is one of our favorite topics that we've just talked about many times on our podcasts as well. It's something that Annie and I both do as well. I wouldn't say that I'm the best person to explain it in absolute detail. But on a very high level, the way that Annie and I use it is really as an alternate banking strategy; that's kind of the way that we look at it. The way that it works is you buy what they call whole life insurance policy, meaning that it's good for your whole life, and you pay a certain premium to have a certain cash value build as the years go on for your whole life, basically. It's so flexible in the way that you can set it up. Really the reason that we do it is because, within the policy, you're able to build that cash value, and as your cash value grows, you are also collecting a return or an interest on that money as well, somewhere usually between 3-7 percent, it just depends. You can actually take loans against the policies, so as your cash value begins to stack and build over the years, as it will, you can pull out a loan to then reinvest into real estate and that's how Andy and I use it. Then once we reinvest, now an investment that had an eight percent return or a seven percent return, now becomes a 10 percent return, because of the additional interest that you're getting within the cash value in the policy. But one of the cool things that I did is that I started a policy, and then I took a loan against the policy, and then I took that money and invested it into a single-family home. This cash flow from the single-family home then pays for the policy premiums for the time that I have it. So it's actually not me paying for the policy premiums, but it's actually my renter who's paying for it. That's kind of a unique little work around as anyone who's digging into this. Ask your advisor who is putting the policy together for advice that way. That's another thing I would say too, is make sure that the person that you're hiring is aware of what they call Infinite Banking approach or strategy, because how you set up these policies is everything. If you set it up the wrong way, in a way that's not made for this approach or the Infinite Banking strategy, it's not going to have all of the benefits that it could otherwise have with the exponential cash value growing over the years and things like that. That's in a nutshell, the best way that I could explain it, but there's certainly some info on our website as well about how it works, but yeah. Annie, you have anything to stack on top of that?

Annie Dickerson: No. Just kidding [laughs]. You did great. I always get tied in knots when I try to explain this because, like Julie said, we both use these policies ourselves, but then it's funny when I try to go explain it to people. I'm like, "Oh, how does it work again?" But what I would add is that not only do Julie and I have these policies for ourselves and our spouses, but we also have them for our kids. It's never too early to start. We're building up on these cash-flow whole life insurance policies for our kids as well, and so we're getting them a head-start on building that equity over their lifetime.

Deidre Woollard: That's fantastic. Thank you both for that. As we wrap up, I wanted to ask you if there are any books you'd recommend or any other podcasts other than your own that have inspired you and might be good for investors to check out?

Annie Dickerson: I have two books that I love recommending. I read them at perfect times in my own real estate journey and they made such a big impact on me. One was Building a Story Brand, and that one is more for entrepreneurs. That one is by Donald Miller, Building a Story Brand, or might be How to Build a Story Brand, but what he talks about is how most entrepreneurs, when they're building their brand, they are focused on themselves. So they say, "Well, we do this, and we do that, and we can help you with this," but the truth of the matter is your customer, or in this case your investor, they want to know what's in it for them, and they want to be the hero of the story. In fact, the entrepreneur, your business is not the hero of the story. You are the guide or, in the Star Wars analogy, you are the Yoda to your investors, Luke Skywalker. That really shifted our whole perspective on how we were building our business. Then the other book that I love to recommend is Emerging Real Estate Markets by Dave Lindahl. This is more for either the active real estate investor or even somebody who's looking to get into passive investing and trying to learn about different markets, because this is something that holds up a lot of investors. When they're looking at different markets, that's one of the hardest things, because when you look at a map of the United States and you're like, "Well, where do I start? I don't know. Do I just throw a dart at the map?

Annie Dickerson: Do I go with where I grew up or where I'm living now? So that book, Emerging Real Estate Markets, really gives you a good idea of the fundamentals to look for in potential markets, whether they're emerging or there are already established, but things like job growth, population growth, job diversity, and a whole lot more, so that one is a great one as well.

Julie Lam: Yeah, and I would just stack on top of that, that one of the books that I'm sure a guest or two probably has already mentioned on the show, but I'll go ahead and say it anyway because it was such a game changer for me and my husband, was Kiyosaki's Rich Dad Poor Dad. I know it's one that so many people talk about, but for me, and I think from most people out there trying to understand the mindset shift that you need to have to go from the traditional, "go to college, get a job, buy a house, work for 30 years," it takes something to really jolt you out of that and Rich Dad Poor Dad does such an amazing job at that. So that was really a game changer for me and my husband back when I told him that we were going to quit our jobs and be retired in five years, and here we are five years later and we both accomplished that, but it was really having him listen to that book. That was a good one. Then as far as podcasts go, one of the ones that are used to listen to all the time is the BiggerPockets podcast. They've got a number of different offshoots as well, not just the main BiggerPockets podcast. I used to commute 2-3 hours a day, five days a week. It was a lot of fun back in those days. I miss those days, actually, because it was the time that I had to myself, and it was a time that I was able to listen to podcasts for hours on end. Now, I don't have that time, I don't commute anymore, but learned so much from that podcast. If you're just getting into real estate and you're trying to figure out where do I fit in, that one was such a good one for me and it's real casual banter and it's good; lots of good information. I think it was really those two, trying to think if there's another one. I know BiggerPockets also has a lot of books, so if you go to biggerpockets.com, I know that there's a ton of books that people on their site have authored on all kinds of different things. I know Jay Scott is one of their popular authors and he's written a couple of books, one that I'm reading right now actually, on how to invest in any economy. That's so helpful for where we're at right now to really understand the different phases of the economy and where we're at, and how to thrive no matter whether we're at the top or the bottom. So that's another actually good book I should have mentioned, but they've got a ton of great books on their site as well.

Annie Dickerson: Can I add one more?

Deidre Woollard: Absolutely.

Annie Dickerson: I thought of one more, especially for listeners with kids, is Rich Dad Poor Dad's kids version. They actually have a graphic novel version of Rich Dad Poor Dad, I believe it's called Escape The Rat Race. I read through it with my older son last year, he was seven at the time. We've been trying to teach him these principles for years, like saving, and investing, and giving, and he just didn't really get it but after we read that book, the first thing he did after we closed the cover on that book is he went over to where he keeps his money, and he took all the money out of the spend jar, and he put it in the save jar and he was like, "I get it now, I understand it now." Like, "Yes." [laughs] That's a great one for any listeners with kids, or who want to take a shortcut and just not read the full book, can read the graphic novel version. [laughs]

Deidre Woollard: [laughs] I love that and I love the idea of teaching your kids young. I think that's so important. I think so many people forget that financial literacy is one of the things we talk about a lot at the Motley Fool, and it starts so young like that.

Annie Dickerson: Yeah because most kids, their money habits are formed by the time they're seven, which is so scary, but it's also exciting because you have that opportunity to really teach our kids.

Deidre Woollard: I love that. Well, Julie and Annie, thank you so much for your time today and a reminder to listeners you can learn more at goodegginvestments.com. Stay well, and stay invested.

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