Ashley Wilson is a multifamily investor and real estate operator who knows how to win. She has been a big contributor to the Bigger Pockets community. One of her videos on YouTube has over 30,000 views. She believes that repetition, a strong mindset, and operations will win the day in multifamily real estate investing moving forward. Listen and learn!
Table of Contents:
- Where To Listen To The Podcast
- Who Is Ashley Wilson?
- Flipping High-End Homes
- Family Offices Refinancing
- Why Ashley Wilson Is Big on Social Media
- Tax Laws Related to Real Estate
- How to Reach Ashley Wilson
Who Is Ashley Wilson?
Darin: Ashley Wilson lives in the Pennsylvania area. She was a collegiate athlete and is extremely competitive. Ashley started with single family and scaled up into multifamily. She knows the value of hard work, how to mimic game-like situations, and how to win.
Just a little bit about how we know each other. This is actually our first time talking, but I know of Ashley through social media and through her affiliation with BiggerPockets. She's just killed it on YouTube with different videos so I'm interested to hear about that. With that, how many properties and how many units are you invested in?
Ashley: Actively, I have three properties currently, a little under 800 units, but I have invested in a few thousand both actively and passively. We sold a few properties last year, so that was great to go full cycle on a couple of deals. I'm also passively invested in about a few hundred units as well outside of my company's portfolio.
Darin: Your company's name is Bar Down Investments. Where did you come up with that name?
Ashley: My husband and I co-founded the company together, and my husband was a professional ice hockey player. I also was a division one athlete and compete nationally in riding. Being involved in sports and having that team mentality is very transferable to the business world. We really like team concepts and wanted to play off of our sports experience in naming the company. Bar Down is the best shot.
The Best Chance of Success
Ashley: It's the most difficult but also the most beautiful shot that you take in hockey and also in soccer. They use that terminology too, where it hits the top of the crossbar and then goes in the net. We wanted to incorporate that as when you invest with us, you are giving yourself the best chance of having success and we're doing things the right way. It encapsulates everything we want our company to stand for.
Darin: I'm assuming when you said you were a collegiate athlete, it was for riding?
Ashley: It actually was for field hockey. I was a field hockey player in college. Most people don't know this, but I had the opportunity to also play ice hockey and lacrosse in division one as well. But it's challenging enough to play one division one sport, let alone three. So I opted to play field hockey because I was still competing with riding as well. I still compete today and actually just got back from nationals yesterday for the year. It's a very time intense sport, and having two sports going on at the same time was enough for me.
Darin: Where did you go to school and where do you live currently?
Ashley: I went to Colgate University, which is in upstate New York, in Hamilton, New York. I live currently in Radnor, Pennsylvania, which is about 30 minutes outside of Philadelphia.
Darin: A few things before we get into kind of the multifamily world. Being an athlete, playing at the college, and your husband at the professional level, a lot of that is transferable.
Competing in Multifamily Deals
Darin: I'm thinking of persistence, determination, and competing, in these multifamily deals. There could be 15 or 20 different buying groups that are participating and bidding on the project. Having that perseverance, can you talk about how that helps all the work that you put in as an athlete? How do you transfer that into having persistence and determination and being able to compete in the business world?
Ashley: When you're an athlete, a lot of what you do very successfully comes through repetition, and to your point, persistence. When you run through a drill, you're trying to mimic a game-like situation. You're constantly taking scenarios in a game and then replaying them on the practice field. With multifamily, you're doing the same thing. It might not be as transparent to someone who is not or doesn't have athletic background experience.
But in reality when you learn about multifamily, when you're listening to podcasts and reading books and attending conferences, that's almost like your practice setting. The practice setting is mirroring what it is you're gaining from other people's experiences. It’s going through the repetition of, let's say, for example, underwriting and deal sourcing. That's a lot of repetition.
Pre-COVID, we had a 200:1 conversion ratio. Post-COVID, it's looking more like 400:1 where I guess today, it's not really exactly post-COVID. But I don't think there will ever be a post-COVID. I don't know when that day starts, but we're probably looking at more of a 400:1 conversion. If you are not having a very strong mindset and you are willing to persist through adversity, I don't think being an active investor in multifamily might be the best fit.
The Best Fit for Ashley Wilson in Multifamily
Ashley: Maybe the role of sourcing and underwriting isn't the best fit in multifamily. You might be better at let's say investor relations or operations of the actual asset. But it takes a very strong-willed mindset to be on the front end of acquiring properties just because there are a lot of no's.
Being an athlete and you're on teams that struggle and then you're on teams that win championships. To have that experience in such a dichotomy between what you do in different situations. They call on different tools to be pulled out. It’s very similar to when things are really tight as they are today in multifamily versus when things are more frothy. What we saw in the three to the five-year run-up to where we are today.
Darin: When you're talking about that, I'm thinking of learning how to win. I mean, learning how to win in sports, learning how to win in the multifamily investing world, and getting that first deal is so difficult. But then once you get that you can repeat it. People have always said that the second, third and fourth are so much easier. So I love that you talk about repetition and a strong mindset. When did you start investing? What's your background besides you're a collegiate athlete?
Ashley: I started investing in 2009. We started looking into real estate in 2007. My husband was the one who actually brought it to my attention. I was working in clinical pharmaceuticals, so I worked in clinical R&D and for Santa Fe Adventist Wyatt. It is now Pfizer and GlaxoSmithKline. At the end of my tenure in pharma, I was the director of global project management for the vaccine division at GlaxoSmithKline.
The Golden Handcuff Industry
Ashley: We ran clinical trials prior to regulatory approval. So we would run clinical trials, get them submitted, and especially, everyone is more familiar with it today with the current pandemic of COVID. But essentially, we were running all of these trials pretty quickly to provide vaccines across the world. There are countries that are still having high death tolls due to chickenpox, which we take for granted.
Living in the US, it's a non-life threatening virus, but it actually is extremely life-threatening, especially in third world countries. Those are things that we worked on in pharma. While I was working in pharma, obviously it's the golden handcuff industry. It's very drilled into me that your investment options are solely the stock market. I grew up thinking I would just work my little tail off and get to a corner office and hopefully have a pension that would carry me through retirement. That is just not reality. My husband was the one who really awakened me to a different world of real estate.
Darin: What prompted him?
Ashley: He also was doing well very early on and he's Canadian, and I tend to find Canadians overall to be more fiscally responsible. I think it's because of how their credit system is structured, which ties into debt. The US credit system is based on the belief that in order to establish credit, you must have debt.
The Canadian credit system is based on the fact that in order to build credit, you have to have zero debt. That philosophy, I believe, creates more fiscally responsible individuals. They don't buy off debt for right or wrong. You could argue that there's good debt and leveraging debt, especially in an inflationary time is very advantageous to one's wealth building.
The Alternative Investments of Ashley Wilson
Ashley: But overall, when you're first starting out, it creates very fiscally responsible individuals, my husband being one of them. So he looked into alternative investments. He wasn't a firm believer in the stock market essentially because of two reasons. One is it's not an asset-backed investment, and number two, it has very little to no tax advantages.
Those were the two drivers that had him look for alternative investments in 2006. In 2007, he stumbled upon BiggerPockets, which eventually turned into Rich Dad, Poor Dad. Obviously, we drank the Kool-Aid and couldn't ever turn back. Now we knew of all these different investments, not even just related to real estate but different investments in general. He got me listening to BiggerPockets in 2007 and that's when we really started to dive into it.
By 2009, we were ready to make our first investment. It coincided with the tax advantage that the Obama administration had implemented for first-time home buyers. It was really advantageous for us to buy a home at that time because as a tax credit we also got into short-term. We house-hacked that, but we also got into short-term rentals at the time. Today, everyone calls them Airbnbs. At that time, especially in the market, where Vrbo was the dominant source, no one used Airbnb.
We utilized that platform and start investing while we were working and we did very well. I look back on that. I'm shocked that, I don't know why we didn't go into short-term rentals. I think we were so distracted by our careers. My father's a general contractor. He's had his own business for over 40 years.
Flipping High-End Homes
Ashley: I left the pharma industry and started three different companies, non-real estate related. Eventually, I started a company with my dad flipping high-end homes in 2014. My dad and I started that business all in the suburbs of Philadelphia. We grew that business to a pretty large undertaking in terms of per volume that's in this area. We’re known as the only company focusing on high-end full gut rehabs of historic homes, which there are a lot in this area. Philadelphia used to be the capital of the United States.
It just lend itself really well to our lifestyle at the time. When my husband retired about five years ago, we knew we always wanted to get into commercial real estate. We realized that it was a very relationship-based business. But because at the tail end of his career we were living in Europe and Russia, we couldn't be here in the States making those face-to-face interactions. Today we have so much. The normalcy of utilizing technology to foster relationships wasn't the way it is today, five years ago even. This is surprising to say, but you'd think just five years ago we would've utilized technology more but we really didn't. We didn't leverage it as a society.
I think COVID definitely amplified that and accelerated our use of technology for fostering relationships. Today, I'm able to work outside of Philadelphia, but all of our portfolio are actually in Houston. That has been a significant change on the technology front. We got into commercial real estate in 2018.
Initially, I was partnering with other folks. People really liked the fact that I had this management coupled with construction.
Ashley Wilson FInds a Natural Fit in Asset and Construction Management
Ashley: It was a natural fit for me to go into asset and construction management. Fortunately and unfortunately, I was in a challenging partnership situation, which really focused on just getting the deal to close and then nothing from there. So I spent a lot of time learning every single detail.
Darin: What do you mean by that? People in the multifamily world partner with lots of different people. I've talked to a lot of syndicators. When it comes to partnerships where I've heard kind of the disconnect where people have said, "I've had a bad partner." It has been not as much to do with the actual deal, but just the view on their moral compass. Like how they look at things. Were you in one of those situations?
Ashley: I think that people can either play the victim and say, "Poor me, and I'm in this difficult situation," or they can look at it as a huge opportunity. The opportunity that I took from it is I'm going to learn everything there is to know about investing in multifamily because I'm going to bet on myself. That meant I'm going to learn every single aspect of sourcing deals and every single aspect of underwriting deals.
Every single aspect of providing the debt and the equity on these deals to get them to close, due diligence, title, insurance. Then once we close, the hard work begins. That's when you have to operate. It wasn't just the partners that I had picked, but there were a lot of folks that were able to get by focusing on just acquiring the deal.
The Cap Rate Con
Ashley: The cap rate compression that we saw over the past three to five years carried them to really fantastic returns. I actually just spoke about this at the BiggerPockets conference. There were about 400 people in attendance for the conversation I was having. The title of my presentation was The Cap Rate Con: Speculation, Manipulation of Cap Rates, and What to Look Out For. I surveyed an audience of 400 people.
One of the things I talked about is, "How many people have invested in an apartment deal?" Almost everyone raised their hand. I said, "How many of those deals have come full cycle recently?" About 50% of the audience raised their hand. Then I said, "How many of those deals returned more than what you expected them to return over what was originally proforma’d?" Everyone kept their hand up.
I said, "Okay, out of everyone that has their hand up, how many people asked for the proforma? The actual proforma versus what the underwritten proforma was down to the projected cap rate on exit." Only two people in the audience have their hands still up. The reason being is investors doesn't ask for that information if their returns are outperformed.
But when you look at a sensitivity analysis table, you can clearly see that really cap rate compression was what carried the deal out, not NOI performance. In fact, the metrics that I used were something to the effect of I had a sample property. Let's say for example at a four-and-a-half cap, it was a 14 IRR if you hit your target NOI. But then if your cap rate compressed to 3.75 and you underperformed by 8%, so negative 8% on your NOI, you still ended up with a 20 IRR.
A Trickle-Down Effect
Darin: That has saved a lot of people. We're going forward and we're in an inflationary environment. Real estate's supposed to be a great hedge against inflation. If there's wage inflation in my mind, that can continue to have rents go up, but if interest rates keep going up, then you'd think cap rates are going to follow and rise as well. What's going to have a bigger impact, inflation, and rents, or the negative impact of increased cap rates?
Ashley: That is honestly a brilliant question and I think it's a question that a lot of people aren't asking. I think, if I knew the answer to that, I'd be getting more than I’m being paid. But here's the thing, I think there are a lot of factors. You hit the nail on the head, you have an inflationary environment, you have interest rates rising, and you have cap rate expansion going on. It is a trickle-down effect, but you also have the permits issued.
You also have to take into consideration the supply. The supply of apartments is also going to have an impact. One of the things that I look for is also building material cost. If building material costs, it has started to cool down. I recently wrote a post on this on LinkedIn actually last week on where we're at in terms of the building material costs.
Material costs have significantly come down in most cases are at pre-COVID rates for certain materials. But the point is that watching those building material costs is going to be a huge deterrent or catalyst for whether or not developers continue to build. It's not going to be as lucrative.
Ashley Wilson Faces the Riskiest Investment in the Multifamily Space
Ashley: Let's face it, new development is hands down, the riskiest investment in the multifamily space. In terms of if you're going to go for a value ad or if you're going to buy already existing versus developing, it is hands down the riskiest investment. In part because right now, as a developer, how are you proforma’ing out your interest rate when you refi into a permanent loan?
So developers when they're building, they're under a construction loan. But they have to proforma, well it's going to take me, let's say, 12 months before I can refi into a permanent loan from today. What is that interest rate environment going to look like? If it's too high on land costs, the sellers of raw land are just out of touch with what the land value truly is, then developers are going to pass. That is another variable that comes into play. The challenge is what variable outweighs. It's one of those things where it's like two years from now we're going to say, "Oh well that was an obvious answer."
Darin: It's much easier looking back.
Ashley: It's so much easier. But if the answer was something else, we would have the same response. It's obvious, that that outweighed it. But right now the reality is it's not obvious. In terms of trying to figure out, what is going to carry more weight, I don't know the answer to that. What I'm trying to do is look at all the variables and just understand that they're all impacting. It's not just happening in this vacuum, where only two variables are at play. I think there are multiple variables at play.
Where the Capital Goes
Ashley: At the end of the day, capital goes to where it's treated best. I heard that from someone I interviewed. That was not my quote, that is something that someone once said to me. If capital's not attracted to multifamily anymore, I think a lot of family offices and institutional investors are a little hesitant to place capital today in multifamily coupled with the debt market.
The debt market is still on hold. They had such a good Q1 and Q2 that they're not as bullish on placing their capital. That is another reason it's harder to get deals done, not only because of interest rates but because of LTV. When you have a higher LTV, that becomes challenging. But at the same time, when interest rates get to a certain point, are they going to be at the point in which maybe it's better to invest to fund the deal strictly with equity? Because equities cost hasn't gone up as much as the debt has, so I think that's something to take into consideration as well.
Darin: I've only been in this market for about four years. I've heard that in really troubled times, people do go to 100% equity and raise everything. I've also heard that some people, some institutions that have raised large funds, huge funds, have to deploy that capital. Some of them are considering, maybe we just buy this asset 100% cash, wait for the debt markets to come back and then put a loan on it and then leverage it up. That definitely can happen. Now when you said that the cost is lower, I'm not sure if I understand that. Most of the returns on equity have been mid to mid-teens to 20% plus, annualized.
Family Offices Refinancing
Darin: Even high-interest rates of 7% or whatever are much lower than the equity returns. Where are you getting that the equity is lower than the financing?
Ashley: Let's say for example that you have a debt that's charging 7% on the debt. Today, you can typically get investors anywhere from a four to six pref. If you can pay out four to six pref, then your debt is lower than institutional debt. Now to your point on the sale, and you preluded to it when you talked about family offices refinancing. Once the debt market cools off, they can refinance into a perm loan.
What you can do is let's say you buy a property today and you pay out even a six pref annualized to your investors. You bought it in all cash, you have a six pref to your investors, and you get the property performing. Then you refinance the property once the debt market is cooled down. I would argue that the best way to return the highest "IRR return" would be when you refi its return of capital versus return on capital.
Darin: It's a non-taxable event.
Ashley: What ends up happening is that those investors then have money to deploy an additional investment, whatever their initial shares of the investment are still in. But it's based on what capital they have remaining in the deal. That's one way to structure it. It doesn't necessarily mean you structure it that way. That's one way you can get those returns.
Darin: I wasn't thinking of it that way, I was thinking about the total return. But you're looking at it like, well the cash outlay, the debt service would be X at 7%.
What Ashley Wilson Thinks of Refinancing
Darin: But if you can get a four to 6% pref, your actual cash outlay would be less. Then you get the performance up and when the debt markets are better, then you can leverage and return capital.
Ashley: You're almost treating it like a short-term loan in a sense, even though it's not a short-term loan.
Darin: No. That's an interesting concept. It's harder to do because the basis of everything has gone up so much that the capital raises are quite large. To go all equity could be a big undertaking and people are getting more cautious. I've seen it. People are getting either all the news about there's going to be a recession coming and could be a really difficult one. Investors are starting to get a little bit wary. Should I just hold my cash and wait? That becomes a concern as well. You are very seasoned, you're a smart girl, and you know a lot about what you're talking about. Why did you get the name I see on your Instagram Bad Ash? You seem like a nice person, you don't seem like a Bad Ash.
Ashley: Bad Ash is more originating from being super savvy in real estate that you're extremely knowledgeable and well-equipped to do something to the highest level. That's more the thinking behind it. It's not a personality thing, it's more of an actionable. I think I'm pretty well known in multifamily as being incredibly savvy in all aspects of multifamily. Even though I started specializing in asset and construction management, I can do every single aspect of the business and I can do it well.
Why Ashley Wilson Is Extremely Knowledgeable
Ashley: I can be in a room of underwriters or in a room of brokers. I could be in a room of operators, capital raisers, or whatever aspect of the business that you threw me in. I’m incredibly knowledgeable. I've spent thousands of hours educating myself on it. I think that’s what makes me Bad Ash. It’s because of the fact that a lot of people have certain impressions of women in real estate in general, especially in commercial real estate and within construction.
But I'm extremely knowledgeable about construction with the benefit of growing up with my father in construction and the exposure I received at a very early age. I'm very knowledgeable about the business from multiple angles. That has really helped me to understand everyone's viewpoint. So I don't come at real estate by looking at it from an investor standpoint. I also know how to look at it from a supplier's standpoint, like a contractor's standpoint.
I’ve spent thousands of hours understanding property management and their viewpoint and why they make the actions that they take from an investor standpoint. That's why I continually, passively invest to understand how investment offerings are being done. How they're being portrayed, what trends are in the market so I can speak to our investors, and what they want because that shifts as well. Then obviously operating our properties is just extremely important to us and that's what we're known for. I think that is being Bad Ash is fully having a 360 approach.
Darin: I'm glad you explained that. Without meeting you and talking to you, that name Bad Ash, I was thinking this girl's going to have an attitude.
Paying It Forward
Darin: It doesn't come across that way at all. In any event, how did you get your affiliation with BiggerPockets? I've seen some of your videos have 38,000 views. It's crazy. Talk about your affiliation with BiggerPockets. The impact that social media has played in you putting yourself out there and educating people and that sort of thing.
Ashley: BiggerPockets has been a huge influence on me. I’m a huge believer that when someone provides value to you, it is your responsibility to provide value back to others. That is how I got involved with BiggerPockets. I started writing articles and posts for BiggerPockets. So I just reached out to them and told them what I was doing. Not a lot of people were focusing on high-end flips at the time. That was something that I could speak to very proficiently. I also could speak to full gut rehabs, historic homes, and high price point homes and that was very nichey for us. That's why we were able to acquire our conversion ratio. Single family is 7:1, so in every seven offers we made, we would get at least one property.
I’m very willing to share exactly how I'm doing things. That's not the X factor. The X factor is me and the X factor is you. That's the determinant of whether or not you have success, not access to information. Access to information is part of it, but you have to have the drive and the follow-up to actually achieve that success. It's not threatening for me to share information. In fact, I want people to have success too. It builds a stronger community for us all to learn from and be successful together.
Commercial Real Estate
Ashley: I approached BiggerPockets and started writing articles for them. BiggerPockets years ago, did live videos on YouTube and I was the only woman. There were only five of us asked. I was the only woman at that time to do that. So I was really proud and I was also the only commercial real estate. I might be wrong about that. That might be incorrect because I think Paul Moore was doing commercial at that time, but there were very few of us doing that series. I started with that and they circled back to me a couple of years ago.
They asked me to do a live multifamily series. I did that for a year and a half for them. My partner, Jay Scott, so I originally mentioned that my husband and I co-founded the company together. But my husband doesn't want to be actively involved in the day-to-day of the business anymore. I brought on another partner, Jay Scott. Jay is very entrenched in the BiggerPockets. He's one of the original contributors to BiggerPockets and had a huge influence on BiggerPockets.
Jay has also helped me foster that relationship as well in a more in-depth ability. I'm really happy that wasn't the reason that I decided to partner with Jay. Jay has so much merit in his own right. I couldn't ask for a better partner to be perfectly honest. Talking about having your morals and your ethics aligned, we are 100% aligned. It's crazy how aligned we are, but that makes a great partnership. Jay's heavily involved in BiggerPockets and I'm heavily involved in BiggerPockets. We're just very happy to give back.
The Gap and the Gain
Ashley: With respect to your second question about social media, that's something I actually don't think I do very well. I think it's all about perspective because it's that gap and gain that both the gap and the gain. I'm someone who is trying to do a better job of living in the gain, but I default to the gap. So I'm always looking at I could do this so much better.
Darin: What she's referring to is a book by Dan Sullivan, The Gap and the Gain. It's a good book.
Ashley: Dan Sullivan wrote the book Who Not How, which most people I think know better than The Gap and the Gain, but they're both incredible books. Anyway, with social media, I think social media has obviously provided credibility for some reason. To me, social media is the white coat phenomenon. What I mean by that is when you walk into a medical office and you see someone in a white coat, all of a sudden they have authority.
They might not even be a doctor, but all of a sudden you just have this impression that they probably are a doctor. That to me is social media. Social media is when all of a sudden you have a blue check mark or you have thousands of followers. All of a sudden people find your information to be credible. I would caution everyone, that this is not always the case.
Darin: I'm guilty of that. I saw a video of yours that had 38,000 views. I'm like, this girl must know what she's talking about. You've backed it up here, but you may not have.
Why Ashley Wilson Is Big on Social Media
Ashley: It's true because you never really know unless you truly dive in and get to know someone. Don't always be fooled by social media, but social media is an incredible platform to grow an audience and to grow a brand. Today, if you look back, let's say 10 or 15 years ago, were you a business if you didn't have a website? People needed the credibility of having a website. Today, you still need a website. But I would say you need a social media presence and are you really a brand and a business? Is there reliability in what you do, and what services or products you provide unless you have a social media presence? That's like the business card requirement of 20 years ago to have a social media presence.
Darin: I get that. I've never heard that put that way in terms of the white coat phenomenon, but I completely understand where you're coming from. When people asked me about it, I explained, I wasn't even on Facebook. Nothing until I got into real estate about four years ago. But I started to see the value of connecting with people outside of my local market all across the country.
Then I was going on entrepreneurial conferences and people were like, you need to get on Instagram and other platforms. I didn't have any clue what to do, so I hired people to tell me what to do. But the interesting part for me has been connecting with people that I wouldn't have connected with. Somebody all of a sudden reaches out from Chicago or from another country potentially.
Coaching Versus Investing
Darin: We have a conversation that we wouldn't have had prior. Now the difficult part is sometimes I have these conversations. I have no idea if they ever take action afterward. But like you, I think giving back was a huge value so you give back to the BiggerPockets community because the BiggerPockets community helped you.
I've had so many people help me that I want to help the next guy too. I think that the industry is very collaborative that way and there are a lot of people that just give back. Before we started the recording, you told me that you actually have two different avenues where people can get involved with you. You've got a coaching avenue and you've got an investing avenue. Can you talk about those two different facets?
Ashley: Anyone listening who wants to go about doing exactly what Jay and I do, so you're an active investor. Meaning, you actually want to physically find these properties, operate the properties, raise capital, whatever aspect of the business you want to actively do. We have a coaching platform, it's called Apartment Addicts. It is a 12-step program telling you how to acquire and operate your first apartment deal. What sets us apart from other platforms is the fact that we teach you how to find, fund, and run apartments. A lot of platforms out there teach you how to find and fund them, but they don't teach you how to actually operate them.
Darin: How do you manage once you buy it?
Ashley: I'm a firm believer, and I've said this quote for years now, that operations are a very important aspect of running multifamily properties.
The Most Important Aspect in Real Estate
Ashley: But in tough times, it is the most important aspect. I think we are arguably in tough times. Knowing how to operate properties today I think is more important than it's been in a long time. This cap rate compression is not going to carry out these deals. If you have to sell a property today, you might be in a really tough spot. That's why I think operations are extremely important and something we focus on heavily in the program.
If you are someone who either enjoys what you do, I always say just because you invest in real estate doesn't mean you actually have to like it. You can actually just use it to help you build wealth.
Darin: You could like the returns, but not like actually doing it.
Ashley: You like the returns or the tax advantages, but you might not actually enjoy doing the business of it. That's totally fine. Or maybe you do but you love your job more. If that speaks to you, our company Bar Down Investments @bardowninvestments.com, you can go on there and you can sign up to be a passive investor. It means you'll have access to all of the offerings. We also, and this is for anyone really, every single Tuesday, Jay issues a newsletter out to our entire audience.
Jay is a brilliant person, but what he is really good at is taking complicated concepts and making them very easy to understand. If you're wondering what's going on with the market, our national economy, or the stock market, interest rates, he breaks down everything every single week in very relevant content for today.
Stronger Investment Vehicles
Ashley: So you know what the Fed is doing, what investment vehicles are stronger investment vehicles today. It's not multifamily, it's not a pitch fest at all, and it's really purely educational. We have a lot of people on our list that actually just want to read Jay's insights just because he's so brilliant when it comes to market economics.
Darin: In this world, there are certain words that are intimidating, but once you understand what they are, it's really not. But to people that aren't living it day to day, the word syndication scares away a lot of people like, what is that? That sounds so complicated. It's just a group of people coming together to buy an asset you couldn't buy on your own. But that word can really scare people off. You mentioned one before, alternative investments. Well, that's two words that aren't difficult words, but you put them together. I think there are a lot of people in this country that are like, alternative investments for the elite, that's for the super-wealthy. Explain what that means in a simplified manner.
Ashley: Alternative investments are really just investments outside of the stock market. That's how most people think of them.
Darin: They're accessible to everybody now. That's part of why I have this podcast, why you have the blog, and why Jay has his blog. It’s to let more people know that you can get involved. It's accessible to all of us. I wish I had been doing it since I was in my 20s. In any event I digress.
Ashley: We all wish we would since our 20s. What's crazy is I go to these conferences now and you can't get over how many teenagers are in the audience. It's amazing.
How Ashley Wilson Builds Her Power
Ashley: If I had this information when I was a teenager, the world is really limitless, but when you start taking action on all of this information, you just have so much power. You have power because of the 10,000-hour rule and you achieve the 10,000-hour rule so much earlier. Then you can just constantly reinvest every single time. That makes generational wealth.
Darin: I'm sure you've come across a lot of millionaires in the real estate world. How many of those millionaires and billionaires, save their way to wealth?
Darin: The whole thing is we're trained, go to college, get good grades, get a good job in a good company, climb the corporate ladder, and put 10, 20% away. That's how most people are trained. I was trained that way. All of a sudden, once you meet other people and they start telling you how much wealth they're building by just owning cash-flowing assets, it's crazy. It really is. Listeners, if you have not invested in real estate, I'm telling you, you got to get around people that have to share stories.
Ashley: I always like to say that the wealthy aren't wealthy because they make more money. The wealthy are wealthy because they invest more money. And how do they invest more money? Because they keep more money that they earn through investing in tax advantage strategies. So whether that's through oil and gas, or real estate, they pick an investment vehicle that works well for them personally. Then they keep more money than the average person does. Meaning that they're not paying as many taxes through all the tax advantaged situations that we have in our current tax code.
Ashley Wilson Promotes the Importance of a CPA
Ashley: One action you can take from just listening today is aligning yourself with a CPA that focuses on real estate. Or any sort of tax advantage strategy where they're not giving you investing advice because of a biased reason. Meaning they're receiving commissions if they invest in one asset versus another.
It's really important that you align yourself with a CPA that is very well-versed because you should have a meeting every single year to structure. How do I minimize my tax exposure, and my tax liability every single year? Some people would argue, those CPAs cost double what I'm paying my CPA. They may cost double, but I'm telling you, you would probably pay them 10X based on what you'll see your returns are. Put yourself in a position where you have more money to invest. You can grow your wealth faster because you won't have as much tax exposure.
Paying that money up front to a CPA, I promise will save you in the long term what you have to pay every year to the government. The information that the CPA is giving you is applicable as long as that tax code is in effect. That information might even be evergreen for years to come just because they're helping you strategize based on current tax codes. That's something that I recommend every single time I talk to anyone that most people aren't doing. It's an easy quick fix to start down the journey of growing your wealth.
Darin: You're probably the first person that pointed to that, and that's so important. My experience is there are some CPAs out there, they're good people. They just don't want to advise you on something that you’re not educated on.
Tax Laws Related to Real Estate
Darin: If they don't know the tax law related to real estate, they tend to shy away from it. You want somebody that can give you good advice. If you get out and surround yourself with people that are doing this, people that are either passively investing or are actively investing, they’re going to tell you the same things.
They're going to tell you books to read, and podcasts to listen to. They're going to tell you, accountants to talk to and how to minimize that tax liability. Because it is how much you keep, not how much you make. You've got such a wealth of knowledge. What else would you share with listeners? Our listeners are a mix of passive investors, people that are looking to passively invest for the first time, and syndicators that are looking to scale. What's some knowledge that you can impart to one or multiple of those groups?
Ashley: For passive investors, most people look at investment returns first, then they look at the market in which the deal is located, and then they look at the team. But if rewind back to the beginning of the interview where we were talking about complications with the team, teams make or break deals. They are probably, I would guess if I have to quantify it, 80 to 90% of the reason a deal is successful versus unsuccessful.
You can have an incredible deal with a bad team and that deal will fail, but you can have a mediocre deal or a bad deal. Not a huge upside, but an incredible team makes that deal a great deal. It really just comes down to the team, the dynamics of the team, and the expertise of the team.
What Makes a Deal Successful
Ashley: The team's experience with working with that type of investment asset, and also the partners. Think of the partners in terms of the vendors, the property management company, and all of the hands that are making this project together, the lenders. The way that everyone interacts together can create synergies that make the deal very successful. That is the most important thing you should look at. Number two is the market.
The market dynamics will tell you the ability of that property to reach its full potential. If you have challenges conducting business or you have businesses, in turn, businesses are vacating that area. That’s because of difficulties of operating businesses or areas that are not landlord friendly. You're going to have challenges in terms of the operations once the property closes.
The third component is the actual deal itself and the metrics. Understanding all of the metrics and the assumptions behind them seems like a lot of work because guess what? It is a lot of work. There's no such thing as passive investing in the true sense of passive investing. You always need to do your due diligence. That due diligence should be done upfront.
You don't want to get down the line and say to yourself, "I wish I had known that this person had a felony. I wish I had known that they had never worked together before." Or, "I wish I had known that it wasn't a landlord-friendly state. Because they keep complaining about the inability to evict tenants in a nonlandlord friendly state." That's obvious. They should have underwritten for that in their business plan and that should have been communicated to me.
Ashley Wilson Explains Why You Got to Show Up Everyday
Ashley: Those are all things that you can figure out prior to actually funding and signing the paperwork to invest. That's what I would advise passive investors. For active investors or syndicators who are looking to scale, I would say be patient.
Make sure that you continue to show up every single day. It's not easy. It is actually extremely hard if you're doing it right because there are a lot of different facets to the business. Yes, it gets easier after your first deal and your second deal, and your third deal. That's just because your ability to build out your infrastructure is so much easier to achieve the larger you scale. This is a true business in the sense that the more deals you do, the easier it is to scale. The easier it is to scale, the easier it is to do more deals.
It creates this cyclical effect of it just builds upon itself. But you have to be patient, it doesn't happen overnight. Aligning yourself with people who are at the next level of where you want to be will help you see what's coming down the road in terms of, who's my next hire? Where am I going to build out tech support versus where am I going to still utilize things in-house? Those are decisions that you will inevitably have to make as you scale but don't rush to make those decisions. Don't become impatient. If you stay the course, there's a lot of truth in the saying that the more persistent you are and the harder you work, the luckier you get.
Darin: One of the things you said made me think of momentum. It takes a while to get it going, but then you could build on that momentum as you get one or two more deals. You've done so much. What's your next big stretch goal?
Ashley: We have a goal by 2030 to have a billion assets under management. We're at a hundred million now. We are about to open a fund here shortly, which will have a diversified investment offering. We're really excited about that. I actually think that's achievable in less than the allocated time by 2030. But right now, that's the goal we're focused on and we're just taking it one at a time.
Darin: Did you ever think that you were going to be a part of a group that was going to own a billion dollars in assets?
Ashley: No, and I definitely didn't think I'd be the one who had founded that company either. When I worked at Glaxo, that was just like, okay, a billion in revenue.
Darin: You have a big huge company and now it's your company.
Ashley: It's now something that we're building. We have other goals as well in terms of returns that we want to have for investors, that's something really important to us, too. This year, for example, we have a goal to return a million to our investors in distributions and profits. Every year, we are focused on all aspects of the business and not just putting this goal out there without seeing how we're actually going to get there. If we drive it off of returns to investors, the more we return to our investors, the more assets we own. That's the driving force behind it.
Fun Times with Ashley Wilson
Darin: What do you like to do outside of work for fun?
Ashley: I spend time obviously with my family. I have two little girls that I love spending time with them and playing with them.
Darin: How old?
Ashley: Five and seven. They both have their own unique personalities, which of course, I'm sure any parents listening could relate to.
Darin: You raised two kids from the same parents and they have completely different personalities. You wonder what's your impact because they're so different. You're going to be a great example for them, being a mom and building a huge company. You've got a lot of confidence in yourself and that comes from time and work and effort. You were saying spending time with family. What else?
Ashley: I compete still in riding. I have several horses and I compete with them. And I also have a horse business on the side where I import horses and train them, and sell them. It's almost like flipping horses in a sense, I guess. But yes, I enjoy doing that. I import them from Europe and then train them, and sell them.
Darin: It's important to not only grow the business but also enjoy some things in life. There are some people that just grow and grow, but their time for doing other stuff gets stretched. That's the whole point. We're supposed to be trying to build freedom, freedom of time, and freedom of money. It's awesome that you keep that as something that's important to your family and your own competition. If people want to reach out, what's the best way for people to reach out to you and get to know you better?
The Bad Ash Investor, Ashley Wilson
Ashley: You can follow me on Instagram at Bad Ash Investor, obviously we mentioned the other two sites, bardowninvestments.com and apartmentaddicts.com. But the best place is through Instagram at BadAshInvestor.
Darin: Ashley, I really appreciate you coming on. This girl, she's got the white coat phenomenon from my standpoint. I've seen her all over YouTube. She's got a great head on her shoulders, she's very smart, and she's looking to do big things. Until next week, signing off.