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SHOW NOTES FOR EPISODE 161: FROM FREQUENT FLIPPERS TO MULTIFAMILY MOGULS
Meet two young guys, Jacob Blackett and Sterling White, who found strength in mutually beneficial partnerships, and who started out flipping and leveraged into multifamily syndications. In this episode, Blackett and White share how their strong partnership and partnerships with others helped them create Holdfolio, a real estate investment company that has exceeded $25 million in real estate transactions and manages over 1,000 properties and 1,500 apartment units.
What You Will Learn
- About some of the amazing deals to be found in Indiana
- How they created an online platform to attract investors to their real estate projects
- How picking properties in the right “hot markets” can yield significant returns
- How to use seller-financing to overcome “multifamily barriers-to-entry” and get you the experience you’ll need for future funding
- The value of an experienced mentor
- What a “credibility book” is and how it can help get you funded
About Holdfolio
Holdfolio was founded on the principle of creating profitable partnerships. We believe individuals need to earn above-average returns, and the best way to accomplish this is by partnering with full-time real estate investors. We have excelled at creating an environment to facilitate this type of wealth creation. Holdfolio only profits from real estate if our investors do the same. Our business model allows the highest degree of aligned interests possible, as we enable investors to purchase ownership in a portfolio of income properties we currently own.
Our strategies consist of earning great returns without speculation. This means that we don’t need the real estate market to appreciate rapidly in order to realize above average returns. The income properties we purchase generate income month after month and will perform during all parts of the real estate cycle. We focus on long-term wealth while positioning our Company to thrive in all market conditions.
About Our Guests
Jacob Blackett, CEO
Originally from Reno, Nevada, Jacob began his real estate career at a young age. In 2010, as a sophomore at the University of Nevada, Reno, when most of his contemporaries were immersed in college life, Jacob bought and sold his first two residential “fix and flip” properties in Southern California. Once he made the move to Indianapolis, Indiana in 2012, Jacob fell under the tutelage of Aaron Adams and over the course of their 3-year partnership he placed over $40 million into single-family rental properties. In October of 2015, Jacob set out with his trusted partner, Sterling White, to found Holdfolio. Holdfolio was founded on the basis of creating partnerships to profit from real estate. Jacob created a low risk, high-profit model that allows Holdfolio’s clients to invest in pools of properties already owned by Holdfolio. At Holdfolio, Jacob primarily focuses on property acquisitions, financial planning, and business development. Outside of his business, Jacob enjoys staying active, volunteering as a Big Brother, and education as a hobby. The book that helped set him on his entrepreneurial course is entitled, “Secrets of the Millionaire Mind,” by T. Harv Eker.
Sterling White, CMO
An Indianapolis native, Sterling has had an entrepreneurial mindset from a very young age. He has taken his natural energy and skill which began simply by selling homemade packets of drink flavoring to classmates at nine years of age, to cofounding an ever expanding real estate company. Much of the insight and trade knowledge he now possesses, Sterling owes to his mentor Will Bates. The two formed a mastermind alliance and Bates imparted lessons from his years of experience managing well over five hundred units in historic apartment complexes. At Holdfolio, Sterling focuses his time on building strong investor relations with clients, property acquisitions and creating strategic and directed marketing campaigns to grow their brand. Sterling is hands-on about creating value for his investors, and he truly believes in the role that he and his company play in establishing a path to financial freedom for those under his watch. In his spare time Sterling enjoys learning anyway he can. One of his biggest professional influences is Tony Robbins, and his book “Awaken the Giant Within” is a cornerstone of his personal philosophy. In the spirit of giving back and community, Sterling is also participating in the Guinness World Record for Fastest Fireman Carry, where the proceeds are being donated to the Little Red Door Cancer Agency. Sterling also serves as a Big Brother in Indianapolis.
How Jacob and Sterling Met
- Sterling was attending a meet-up seminar and Jacob’s mentor was on the stage giving a presentation.
- The speaker called Jacob up to the stage to share his story
- When Sterling heard Jacob’s story he thought, “Gee, this guy has strengths in all the areas I have a weakness. I need to meet this guy.”
- Met him, exchanged numbers and ended up working together
How They Started Out
- Started with SFRs
- Jacob did fix ‘n flips in Southern California
- Moved to Midwest and couldn’t believe that there were $50-60,000 homes
- Jacobs first Purchase
- Bought house for $11,000
- Sold for $18,000 a few days later
- Continued this for 100s of properties
- Today, Jacob and Sterling now own over 100 single family buy ‘n hold homes that they rent out
- This year, they have bought over 100 apartment units
- Have grown into multifamily
Holdfolio
- Built an Internet platform to attract investors
- Syndications 506 (d) or(b)
- Took many months of research to find the right legal team
- Have legal team – Top attorney – Mark Rodrick, out of New Jersey (has a crowdfunding blog)
- They personally act as sponsors
Lightbulb Moment
- Jacob was freshman in College in Reno, Nevada
- Watching late night TV – saw flipping infomercial
- Went to free seminar, paid for some books
- Went to a paid seminar and got fully immersed
- Was working at Walmart distribution center at the time, making $20 per hour – Sat-Mon, 11-12 hour days
- Going to school full-time – working full-time
- Realized, he didn’t want to work for a company
- He started doing some quick fix ‘n flips in California
- Lost $70,000
- Over-leveraged with hard money lenders – projects took longer than expected – realtor oversold on value
- Moved to Indiana
- Jacobs first Purchase in Indy
- Bought a house for $11,000
- Sold for $18,000 a few days later
- Couldn’t believe how easy it was
- Continued this for 100s of properties
Biggest Mistake
- Not thinking big enough
- Not setting goals high enough
Biggest Successes
- The mentor he (Sterling) was able to partner with really help him get started
- Sterling brought value to his mentor
- In turn, the mentor brought his 20 years of experience to train Sterling for 2-3 years
- From a buy ‘n hold experience, did a couple dozen flips in the hot Fountain Square area
- Bought property in Fountain Square for $30K to rehab for $60K, with hope to sell for $130K
- Decided to hold the property
- Did $80K to rehab instead
- Rent at the time was around $800
- Rent today is $1600/month
- Current value – $220,000
Advice for Old Dawgs Looking to Invest
- Find and partner with experienced investors
Getting Into Multifamily With No Experience
- Convinced seller to carry back 75-80% of purchase price, thus did not have to convince a financial institution of their ability or address their lack of multifamily experience
- Apartment went to their balance sheet and demonstrated their experience
- The second apartment – it was easier to get loan approval
- They have developed a “credibility book” for bankers and brokers
What is Ahead for Their Business
- Currently, they have 200 units (half are single-family homes)
- Goal is to own thousands of units
- They will acquire much more multifamily properties
- Possibly will do some development
Rap-It-Up
- Favorite real estate books: Books by Dean Graziosi (Jacob) /As a Man Thinketh by James Allen (Sterling)
- Favorite business books: Napoleon Hill & T. Harv Eker, 4-Hour Work Week by Tim Ferris(Jacob) / Eleven Rings by Phil Jackson
- Most valuable web site for success (other than your own): Google.com (Jacob) / YouTube.com (Sterling)
- Favorite app: Inbox and GoogleDrive
- Favorite quote: “We cannot choose our external circumstances but we can always choose how we respond to them” (Jacob) / “Do the thing and you should have the power.” by Ralph Waldo Emerson (Sterling)
- If you had to start all over, knowing what you know, and you only had $1,000, what would you do to launch your real estate investing business? Find an equity partner and go chase apartments from day one. (Jacob & Sterling) /
Best Way to Reach Jacob and Sterling
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