Don’t ever give up! Are you looking for some inspiration to achieve your goals? Ellis Hammond is a successful real estate investor who achieved his success by staying consistent and never giving up. In this episode, he talks about the importance of investing in the right vehicle, money flows to value, and the power of mindset. If you’re looking for some inspiration to achieve your goals, then this is the podcast for you.
Table of Contents:
- Where To Listen To The Podcast
- Where Ellis Hammond’s Don't Ever Give Up Attitude Lead Him
- Money Flows to Value
- Pick the Right Vehicle and Don’t Ever Give Up
- Multifamily Is Hard But Don’t Ever Give Up
- Commit to Your Calendar or Commit to Your Wallet
- Stress-Test Your Plan and Don’t Ever Give Up
- How to Reach Ellis Hammond
Where Ellis Hammond’s Don't Ever Give Up Attitude Lead Him
Darin: Ellis Hammond lives in California. He went from being a college pastor to owning over a hundred million dollars in multifamily real estate. And he had to work very hard to develop a reputation in the multifamily industry. He points to his never giving up attitude as a major factor in making it happen.
This is the first time that Ellis and I are actually talking. We've corresponded through email and through instant messaging. It's taken a while for us to get here, but here we are. I know of Ellis from social media. He's all over the place. He talks at conferences. He's got a lot going on. So, I'm very interested in this conversation.
With that said, Ellis, can you just share with the listeners how many properties and how many units you're currently invested in?
Ellis: You told me you were going to ask me that so I went to go pull that up. Honestly, man, because we've been growing so fast.
Darin: It was not a surprise question.
Ellis: I actually was like, "Well, I actually don't know."
Darin: Just ballpark it, man.
Ellis: No, I'm looking at it right here. So we just sent out a new packet, 817 units, 124,550,000. How's that for an answer?
Darin: Awesome. 817 units. So we have people on the show that have thousands of units and people on the show that are just getting going, but you come from a unique background. You're the first person I've had on the show that comes from this background. Can you share with the listeners your background and why you made the shift?
From a Full-Time College Pastor to Multifamily Investor
Ellis: Yes. It is crazy man, to look at that and say 817 units, $124 million. That's been about three years of really, really hard work and really consistent, massive action. Because before that, I was a full-time college pastor.
Darin: Did you guys hear that? A college pastor.
Ellis: Yes. My family owned a boat shop. That was about my entrepreneurial experience. I don't have any of my family in our deals, very few of my friends or former network in our stuff. My whole network was 18, 19-year-olds. That's what it was. I really had to build this from scratch. We wanted to accomplish something massive.
Anyways, I say that first of all, if anyone's listening and you're like, "Well, I'm trying to get there too, on the active side," it's possible. You can absolutely do it. It just takes consistent action. It takes making connections and building your network and recreating that identity. We were able to do it. It's not come easy though and I can say that.
I would say this and I think there's been several times where I've been almost completely out of money. The nice thing is, I've never been with money. So it's been, I'm okay with it, in the sense that I was a missionary. I never had money, man. So, that's not a big deal.
I was just telling my wife this last night because we've recently had some great momentum and there's some big rewards coming our way because of that. We were just kind of celebrating at dinner last night.
Stick With It and Don’t Ever Give Up
Ellis: I just told her, I was like, one day I'm going to be able to tell these stories of, we've almost been broke, really broke, bad broke, not know how to pay our bills broke, three times. I would say, most people just don't stick with it long enough. They would've given up already. I think that's the difference.
Are you okay, in terms of being an entrepreneur, to stick with it? Because it's just very, very difficult. Maybe it's because I was a bad entrepreneur early on, and I didn't quite know all that I was doing.
So, maybe not everyone's journey has to be that, but for me it did because I didn't know much. I didn't know how to really build and create a business and run a team and how to build a sales cycle and all of these different things. That was a huge part of it.
Darin: You said a lot of great things there. One, a lot of people don't stick with it long enough. I went to a conference in California, called Secret Knock and the guy who puts that on is Greg Reid. He's also an author, and one of his books is Three Feet From Gold.
So he knows a lot of people that are billionaires and multi, multi, multimillionaires. A lot of people say the same thing you just said. They just stuck it out long enough. They just kept plowing forward. That's something I also say to people that reach out to me about getting into the business.
The Message of This Episode: Don’t Ever Give Up!
Darin: I joined a mentorship group. I don't know if you've been in a group or not. But there's people that will just stroke a check, and then they expect it just to happen for them. I tell them, save your money because that gets you in the door. But you still have to fight, kick and scratch to get the first deal done, to make your way.
So, talk about building from scratch. I mean, I think that that's huge. One, you had to have mindset, that you believed in yourself.
Ellis: I love this conversation Darin because a lot of this has very little to do with real estate. I think that's the point that I hope everyone can get out of this. All my partners know way more about real estate than I do. I'm just the guy who's like, I'm relentless in what we're trying to accomplish. I am pushing everyone as hard as I can to get there.
Our success, no doubt, and my partners would agree on this, has a lot to do with me at the head. Without them, we would not be there either. So, we need each other. But my point is, I'm not the big, experienced real estate guy. I'm just the relentless leader, who's like, I believe that we can do this. How hard do we got to push? I won't let us give up.
So I just want to encourage anyone who's listening. You don't need decades of real estate experience or entrepreneurship experience to figure this out. You just can't give up. If there's a message in this today, that's it.
Do Something Big and Don’t Ever Give Up
Ellis: I definitely think that comes from faith, man. My faith in God and my faith that my identity is not tied up in what we accomplish. I'm very, very secure in who I am because of my faith in Christ and because of that, I just want to do something massive. I feel, why would we not?
If God is our creator and we're made in his image, why would we not try and go do something big? What else do we have to lose? I know where my eternity rests. And I don't really want to just pedal down here. I want to be able to have something to present, with the gifts and the talents that I've been given.
A lot of that came when I was a college pastor, how I even got here. I went into ministry for many reasons that were good. And I wanted to help people. I wanted to have an impact. I wanted to see lives changed. But I also went into ministry because my parents divorced when I was 10. My dad and mom always fought about money. It was always the issue. I was always the mediator. My dad retired when he was 40, had a couple of bad business transactions after that, and just complained and worried about money until he died when he was 55.
So to be honest with you, I just didn't want anything to do with money. I just hated it. I just thought I was a bad steward of it. And I thought it just destroyed relationships. I was like, what can I do, that I don't have to worry about money. I'm just so naive.
Don’t Ever Give Up, Someone Is Depending On You
Ellis: About four years into our ministry, one of the young men on my team who had graduated from the college, who was now come on our staff team. We were all kind of missionary style, where we were raising all of our funds to support our nonprofit. I remember about four years in, we've been building this team and had a ton of momentum. But I could feel like there were some constraints and some financial hiccups coming our way.
He just came to me and said, "Ellis, I don't have enough money this month to buy groceries." That hit me like a ton of bricks because just there was literally nothing I could do to help him because I was barely raising enough support. I was uncomfortable asking people for money because I didn't like it.
So, I was asking people for $1,200 a year, which is funny to think that we've raised $6 million in the last six months. I was scared to ask for $1,200 back then because it was a terrible money mindset. That's when I realized that, I cannot spend the rest of my life ignoring money, because here was a guy who wanted to live his life for a great purpose. The only thing that was really stopping him was capital and access to capital.
So, that was just a turning point for me. I think if anything, it's one of the reasons why I just haven't given up because I'm like, we have a lot to do. And if I give up, what about all these guys that we're trying to help? What about all these people that depending on us? So, you can't give up.
Are You Motivated Enough?
Ellis: Grant Cardone, who's a mentor of mine. You know, he says most people just aren't motivated enough. You give up on your goals because they're not big enough. That's what he says. I so resonate with that.
If you just have a small goal and it only really benefits you and your personal situation, is that really going to keep you motivated when things get really, really tough?
Like when your wife is saying to you, "Hey Ellis, why don't you just go get a job?" That the one that you trust, the one that you love, the one that you hope is going to be there through thick and thin and she's like, "Maybe it's time to start thinking about just going and getting a job."
Darin: Tail between your legs, my friend.
Ellis: I was like, the one I need, that's not what I need to hear. So, are you going to be motivated to say no? "No. Thank you for your suggestion. I know you care about our family, but that would be like death." Is your motivation big enough to carry you through the moments like that? I think most people, the answer is no because they haven't dreamed big enough.
Darin: Yes. That's huge. The other thing I'd like to get your take on, coming from your background is, so I've sat in church, where I hear the pastor talking about some kind of community event. People are going to go and clean up garbage or rake lawns in the neighborhood. For one reason or another, I just have never felt like that was something that I really felt strongly about doing, in terms of service.
The Mission of Multifamily
Darin: But the syndication world, I'm like, I don't know if everybody looks at this way, but I look at it as serving. You bring in all these investors, and you help grow the wealth of all these families. My first syndication deal had 44 limited partners. Well, we more than doubled money like, well, that is growing the wealth of all those families. They have different needs.
Some are going to college. Some are maybe buying a new car or go on vacation. But I look at that as service. The other side of it is the residents. You're improving the property. So, you're serving those, tenants by providing them a better place to live.
What's your take on that? Going from being a college pastor. Look, you were serving. Part of that service, you even said it, was getting paid very little to do it, but you're serving in one way and now you're doing it in the business sense. Do you look at it as service?
Ellis: Yes. A hundred percent. I wrote a book called The Mission of Multifamily. You can get it for free right now.
Darin: No, go give it. No, hey, it's free. You're giving out a gift, man. Tell people where they can get it.
Ellis: Yes. You can grab a copy of it, MissionofMultifamily.com, www.missionofmultifamily.com. Honestly, I wrote the whole book in a weekend because I had been saying it so much that it just flowed out of me. One of the things I talk about in that book is my money mindset and the things that I had to overcome in order to get to where I am today.
Money Flows to Value
Ellis: One of those things was that money flows to value. The church is and has been an awful example of really helping entrepreneurs understand this principle, where most of what you said is kind of fear-based, in terms of money. Mostly because it's taught by pastors who never had any money either or only had negative experiences with money. So, there's never really good teaching around wealth creation and money.
One of the things you're right, man, money flows to value. Those who can create value in the world are typically very successful. I mean, look at Elon Musk. Look at the Jeff Bezos’s. Look at Apple, Steve Jobs. Regardless of what you think about them as an individual, the reason they're freaking rich is because the entire world uses their products. They've created massive value for the world.
So if we change the conversation from not how much money should you make, but how much value should you create, well then anyone, regardless of their faith, regardless of their religious beliefs would say, well, as much as we should. Or as much as we can create value. I mean, that's a no-brainer.
So if you connect well then if money flows to value, then those who create more value are also going to make more money.
So yes, from your question to the service standpoint, yes, man, that's what we're in the business with doing. How do we add value to our investor base? Well, we provide them an alternative option to really build and create significant wealth.
You Are Accountable to God, Don’t Ever Give Up
Ellis: As a matter of fact, I think I can probably help you retire a decade or earlier than you ever would in a traditional wealth-building approach, hands down. Then from our tenants, I believe, the reason I know this is true is because I walk deals all the time. It is shameful to see how much owners and operators overlook the small details that really impact people's lives.
I rent. I live in San Diego. We sold our place because someone paid us ridiculous amounts of money. So, we rent. It's important to me when I walk outside to take my dog for a walk, that there's no trash laying all over the ground. That it's safe, that it's well lit, that there aren't homeless people on the side of the street, out in front of my place.
It's amazing how many people, as an owner, don't care about that and don't realize you own someone's home. I think we at Symphony take that very seriously. So, when we're walking deals, I'm looking for that. I'm paying attention to that. What do we need to fix? What can we change? You know what I'm saying?
Darin: Yes, it's huge.
Ellis: I realize I don't have to just answer to my investors, at the end of the day. Yes, I got to give them a great return, but ultimately, I got to answer to God. That's way more important than a 15 to 17% return. Does that make sense?
Ellis: I think that's really significant.
Darin: Sometimes you'll just be walking the property and a tenant will know that you're one of the owners and just walk up and say, thank you.
A Great Example From Ellis Hammond
Darin: You're like, "Thank you for what?" And then they'll tell the little things that you did, that have changed their lives for the better. So, it really does happen.
Ellis: Yes. I'll give you a great example. We bought a couple of deals in Kansas City now, pretty distressed assets. One deal we own, the woman before owned it about 30 years. We had a couple of investors kind of worried. I mean here everyone there's no and, ifs or buts about this. When we buy a deal, we got to as rents, man. You know that. I don't care what anybody says. Rent's got to go up, for us to make money in this business.
I think a lot of investors can have issues with that. And buying a very distressed deal, our rents probably need to go up significantly. It's like, well, what about the current existing tenant base? So, a lot of folks maybe didn't invest in that deal with us because they knew, hey, we're going to come in there. We're going to have to clean this property up. Those who just kind of want a handout are probably going to have to leave.
What's interesting though, we took that deal over. We had eight people illegally living there, that just completely picked up shop and left. So, all of a sudden, we had eight units vacant. We had the property owner who literally saw the property manager stealing from the owner. He was running a furniture store out of one of the units. So now, all of a sudden, we have nine.
Create Enough Value for People
Ellis: Over the first two weeks or something, three more people ended up moving out. So all of a sudden, we were a hundred percent occupied, that everyone was worried about we were going to kick out, to now we're 75% occupied.
So we got to work, renovating those 15 units. As we started doing that and cleaning up the exterior, painting, putting in new carpets, new exterior lighting, making sure it's really safe. All of a sudden we start getting calls from current residents who are saying, "Hey, can I get on the waiting list to move into those new units?"
I think that's the story that doesn't get told enough. People really want a nice place and a safe place to live and are willing typically to pay, to be able to afford that. By the way, our rents were still under 900 bucks. So, it's not like we came in and jacked rents up. I mean, we still made it very affordable.
My point is that, money flows to value. That is what we do in the business. If we create enough value for people, where they see that I'm willing to pay for that, because there's enough value tied to that, then that should be our goal. The rest will kind of work itself out.
Darin: Yes. Absolutely. I mean, now there's some benefits. Like when I took over, I remember I had a bunch of syndicators tell me, "Hey, Darin, man, once you close, you're going to have a bunch of people that are going to move out." I'm, "Ah, no. It's not going to happen." Sure enough, it did.
Some People Are Scared to Take the Step
Darin: It's kind of similar. Occupancy dropped more than I thought it was going to, but the benefit was, we were able to renovate all those units and get new tenants, new paying tenants in quicker. So instead of it being phased in over, say six months, we had all these units available. We turned them in three, four weeks and got new tenants in there that were paying. You had that revenue for a lot longer, through the year. So it can feel scary at first, but then it could end up turning out to be a good thing in the end.
Ellis: Yes, a hundred percent.
Darin: So another thing, you mentioned fear. I talk a lot about this for listeners. You have a faith-based background, one, for what you were doing, in addition to just your personal values. But I think God has given all of us unique talents and capabilities. We all have a gut feel.
There's just so many people out there, I think, that have that gut feel that they want to take a chance. Whether it's real estate investing or starting their own business, or somehow providing that value that you're talking about. Providing that value back to other people, but they're scared to take the step. They stay in what they think is the safe zone, their W-2 job.
Look, some people love their W-2 job. That's great. But then there's others that I know, that just go on year after year and are unhappy. How did you make that shift? Because I think that that's so important for people, to be able to take a chance.
Pick the Right Vehicle and Don’t Ever Give Up
Ellis: Yes. Well, I think it's probably less important how I did it and what's replicatable for how others can do it. I think step one is, pick the right vehicle. Our first deal was a duplex. We would never be where we are today if we'd have stayed buying duplexes.
Darin: Let me jump in. You may not be where you are either if you didn't buy that first duplex.
Ellis: It's true.
Darin: Some people have to take an action step.
Ellis: Yes. A hundred percent. But maybe the action step can be just listening to this podcast, so I can save you from the heartache that I went through. I think that's part of it, is you want to pick the right vehicle.
Well, how do I know it's the right vehicle? You make sure you have good mentors and people you're listening to, to tell you what the right vehicle is.
Because what I just did is, was the first thing that I could get into. It was a duplex. And like I said, it got me to where I am today. But my point is, it wasn't the right vehicle. Because here's the thing. Nine months later, I bought my first 144-unit apartment building. Nothing changed, except I just had new knowledge.
My network was still the same. I just knew something better. I learned a different vehicle. Is the vehicle that you're picking, is it scalable? Has it been proven, in the sense of, are other people using this vehicle to get the type of results that you want to get to?
Don’t Ever Give Up and Invest in Yourself
Ellis: That's a really good question, if you're trying to start out. Am I picking the right vehicle? Are other people proving that this is something that works? Real estate, large commercial real estate is a very proven vehicle, that works. I'm doing it. Darin, you're doing it. We know so many other people doing it. So, picking the right vehicle is really, really key. And then yes, I mean, you said this already, finding a good mentor or plugging into a great network.
We run a Mastermind called Kingdom REI, for faith-based investors and leaders. The thing I get the most is, well, I'm not there yet. Why would I spend thousands of dollars to join a Mastermind or community or coaching?
Just to tell you my story, I knew I found the vehicle, commercial real estate, but the problem was, I knew I didn't have a network. I didn't have good mentors. How was I going to go do this? I looked at my wife and said, "Hey, I need to spend the money now, in order to get to where we want to go?" We had $10,000 in the bank. I said, "I need all of it and I need all of it."
I need to put it in my network, my education, and mentors. Because the network we have around us today will never get us to where we want to go in the future. We took that 10 grand and I just spent it on events, conferences, mentorships, masterminds, whatever I could. Some stuff, I blew it on bad stuff, but it taught me. I was still investing in myself. And I think that's what most people are worried about.
Invest Now and Don’t Ever Give Up
Ellis: I don't want to spend this 5k or this 10k because what if it's the wrong thing? Who cares? Because the reality is, if you really want to get to a million dollars a year in revenue, and you're worried about 10k today, the mindset is off, man. Who cares about 10k? You're making a million dollars a year, in three years. That's what I did. The next year I made $144,000 off of that 10k investment. And the following year after that, I bought a hundred million dollars in multifamily real estate.
I knew it would work, but I had to go put other people around me. So, I think that's step number two, is invest now, unless you want to kind of figure it out yourself and take 10 years. If you live life with urgency, which I hope most people do. I'm sure if they listen to the podcast, they do, you don't have 10 years to waste, man.
So, if your goal is to make a million dollars a year, let's say, why are you worried about spending 10k today, even if that's tight?
Because you need to start acting like you're making a million dollars a year today, in order to get there in three years. Really, the best way to do that is to put yourself around people who are already making a million dollars a year.
For example, today I am making an offer. I want to make a counteroffer. We have a counteroffer in our inbox for a $48.7 million multifamily deal in Dallas, Texas. Darin, in full transparency, I do not have the $14 million of equity to be able to purchase this deal. But you know what I have.
Spend Money to Get Attention
Ellis: That's why I've been on the phone all morning, phone calls after. I know who to call. I know who to pick up the phone and give a call. Guess what? They pick up my phone. Why? Because I spent the money to get their attention. That's the only reason why. I've spent six figures last year, joining masterminds education, to be able to be in this spot. I was just taking a walk earlier and I'm like, you know what? If we can get this deal, this is the culmination of all of this.
Now, it will be the first step and there'll be multiple, but this is what I'm saying. This is the culmination of, now I know who to pick up the phone to and call, to try and take down a $48 million asset.
Darin: That's huge.
Ellis: I'm mindblown when I close on this $50 million deal. Because first off, if this deal was on market, every institutional buyer would be trying to buy this deal. I'm going to walk in there, former college pastor, never bought in the city of Dallas, and take down an asset that everyone wants their hands on. I'm going to get someone's attention. That's the whole goal. It's a really exciting time.
I share that story to be like, but we had to get really uncomfortable early on, my only 10k. Well, what else do I got to lose? I only have $10,000 in the bank. What I'm doing right now, currently isn't working. Let's spend all of it to be in a new financial situation.
Darin: That's huge, man.
Forget the Hundred Thousand Dollars
Ellis: That's the strategy man, spend it all today. Because if you look at your bank account, you're not happy with it, spend it because that's what's keeping you from the next level, is that you're worried.
Darin: When you say spend it, I would maybe change that word to invest it. Invest in yourself, because you don't want to go out and buy clothes and fancy meals.
Ellis: Clearly not. But my point is that most people are trying to manage a hundred thousand dollars when that's your biggest barrier. That hundred thousand dollars sitting in the bank is your ceiling because you're so worried about what to do with a hundred thousand dollars.
Dude, forget the hundred thousand dollars. Get rid of it, invest it, go do something with it. Figure out, okay, now I got zero. Now what? But you've put that a hundred into things that are going to accelerate you faster. I've been there, man. Even now, now that we have some more money in the bank, I look at it like, oh, okay, cool. We got some money coming in.
It's still a ceiling. It's like, oh well, now that I got some money to manage. Should I start managing this money? How do I invest this money? I lose that edge of, I'm nowhere near where I know we can be. Forget the couple hundred thousand dollars we have sitting on the sideline right now. It's like, we got new targets, new ceilings. I hope I'm making sense, man.
Darin: You totally are, man.
Ellis: This is the stuff though, that only really comes out on a live interview.
Find Deals or Raise Capital
Ellis: No one will really listen to this. My family's not going to listen to this. My wife barely listens to this. So hopefully this is speaking to somebody, because if you're like me and I know some people like this are listening, it's so possible, man. It just is all right here between the ears. If you can fix this and you really truly have faith or someone just has faith in you, you can do it. It's possible.
Darin: That's a crazy story. I'm older than you. I'm 51. I got involved like four years ago. I had the capital. We have listeners that are just passive investors, that are looking to grow. And then we have syndicators, that are looking to scale.
But it's important for people to understand that, look, Ellis had $10,000. A lot of people think, to get in this game, you have to have a million dollars or $500,000, to get into the game. Really, you said it on the head, is in between your ears. Your mindset, that you believe that you can add value is huge.
You focused on the part of the business where you had skills, where you had skills and you weren't lacking. So, you doubled down on your strengths, rather than focusing on your weaknesses. And then you just partnered with people that had the other things that you needed.
Ellis: That's exactly the strategy. That's what we, even inside of Kingdom REI, is what we help folks do is like, forget trying to learn the whole business.
This business is very, very simple and it comes down to two things. It comes down to finding deals or raising capital and that's it. In fact, figure out which one you want to do.
How a Radio Ad Impacted Ellis Hammond
Ellis: You can be very, very successful and very, very wealthy, if you can get good at one of those two things. If you're going to pick deals, make sure you have someone lined up to buy that deal. If you're going to go raise capital, then make sure you have opportunities to bring that capital too. I knew which one I was going to focus on. I got started.
The nice thing is, now that we're a couple of years into this, we can raise the money. We can manage the money. We can communicate the story. Now we can go find deals. Now we can operate those deals. So, that's why we have access to the deal I was telling you about earlier. But yes, early on, trying to figure out this whole business, it'll take you a lifetime. It really will.
Darin: You keep learning.
Ellis: A hundred percent.
Darin: Why do you think that this is the right vehicle?
Ellis: Well, it's just proven. So many people have done it. I didn't tell you this story, but I walked into, when I was a pastor, I was like, how do I do this? I was just open and I was finally open. I'm like, okay, I'm looking for opportunity. I heard a radio ad. And it said, if you want to learn how to build wealth through real estate, come to this seminar. Literally, man. That's where I realized, the radio ads are for desperate people. There's a lot of desperate people out there, and that's why this stuff works.
Multifamily Is Hard But Don’t Ever Give Up
Ellis: I don't know if I ever really took them up on that offer, but I went. It was the first time that I saw with my own eyes, regular people, didn't come from big money, non-institutional, building beau coups amount of money, wealth through real estate. I was just like, if these jokers can do it, I can figure this out. I think that's why I'm convinced because I've seen other people do it.
It's not going anywhere. I questioned multifamily syndication for a long time when I got started. Because it didn't seem very predictable because it's hard to find deals, and we're a very competitive market right now. But the more I've learned is this, is we're in the wrong markets. They weren't very transactional. We didn't know enough people. We didn't really know what it meant to go find deals.
Now, I realize there's opportunities everywhere. There's capital everywhere. If you’re in it and you're seeing enough opportunities, you have the right people showing you opportunities and enough people know you, it's just constant. We are so busy. I mean, we're making an LOI a week right now, on deals that we're like, we would love to buy that project.
So like I said, just don't give up. It looks hard. It looks difficult. I mean, really. Even I thought I had the right vehicle, a year and a half in, I'm like, I should have went into eCommerce or something or marketing. This is ridiculously, stupidly hard. I'm not making any money. I know entrepreneurship is the right way, but maybe I should not do real estate.
You Got to Take Action
Ellis: I stuck with it because I saw mentors where I'm at, and they've not been it for very long. I'm like, "Okay, that guy's doing it. That guy's doing it. He's there." Someone like yourselves, follow these guys on Instagram. Okay, he's doing it.
I'll ask. I've asked my mentors, "Hey man, how much money did you make this year?" I wanted to know that because if it wasn't millions of dollars, I'm in the wrong place. They would be like, "Yes, I made this much." I'm like, "Okay. That's worth it." And just staying with it man, that's it. I mean, to answer your question, that's I know it's the right vehicle because I've done my due diligence. I've asked the right questions.
Darin: Yes. I mean, I think that a few things. Look, you heard that radio ad, and as enticing as it was and as desperate as you were at that time, you took a step of action. You maybe didn't invest in that, but that got the ball rolling, just like when you talked about you bought a duplex, and then nine months later you bought 144 units.
I tell listeners, at some point you got to take action. That action could be go to a free meetup group or go to a multifamily conference or buy your first real estate deal. There's a quote out there that says, like 90% of millionaires are created through real estate. One of the reasons why is because there's so much leverage on the deals. I mean, so a bank is providing anywhere from 70 to 80% financing, and the equity owners are getting all of the upside. That's huge.
Find Deals or Find Money, You Can Do Both
Darin: Secondly, there's massive tax benefits that can shield any distributions and provide the ability to roll gains forward, tax free. So, massive ways to grow wealth, that if you're not in the game, you just can't fully understand. But once you surround yourself with other people, and once you start asking other people, "Well, how'd you do it?" then you're like, "Oh, well that makes sense. I'm going to stick it out."
Ellis: Yes. So if you're there, let me just be really clear, this is very hard. I would not quit your day job and try and figure this thing out.
But what I would do is realize, business in its very simplicity comes down to finding deals or finding money. You can do both. I would encourage you to start building both. If you don't know anyone with money, then start associating yourself with people with money.
I had to change my identity. People saw me as the pastor, not the real estate guy. So, how do you change your identity? The internet is a great place to change your identity. Associate yourself with people who are where you want to be. Start a podcast. That's what I did. Actually, it was LinkedIn, first. I just was interacting with people on LinkedIn. I would ask people for quotes. Literally, this is the grunt work man, I did early on.
I would DM people on LinkedIn, who are in the real estate, commercial real estate industry and say, "Hey, I'm doing this challenge. I want to spotlight you on my LinkedIn. Can you provide me a quote for early real estate investors?"
How Ellis Maximized LinkedIn to Change His Identity
Ellis: They were happy to do it. Why? Because I was giving them free promotion. I would create a quote card on Canva and I didn’t have a designer back then. I would put that on my LinkedIn. Slowly, over time, it's like Ellis, I see you everywhere, talking about real estate. Are you in real estate? It's like, yes, I am. Here's what I'm doing. I changed my identity, honestly.
Now, most people really don't know me as a college pastor. They know me as multifamily investor, who was a former college pastor. If they know me as a college pastor, it's just only because they realize, well, look where he is from. It's not, oh, this guy's a pastor anymore. He's the real estate guy.
You can change that. You can start there. But I would say the big thing is, is aligning yourself with the opportunity. So, finding the deals, great. If you're going to go be a deal guy and you're in a market that has good transactions, you can go find deals. Well, you're still missing the other link.
You need to be a part of a community, probably a mastermind, maybe a big coaching program that has investors. Where it's like, hey, I've identified my investor group. I know these guys are looking for this type of deal. And then go find that type of deal.
Don't go find a deal and then say, hey, who wants to buy this? That's starting at the wrong place. Line up your investors, line up your capital before you go and try and find deals.
Don’t Stop, Don’t Wait, Don’t Ever Give Up.
Darin: That's smart. A few things on that. One, you started doing these DMs on LinkedIn. I have people that say, "Well, I want to wait until I get my first deal before I start posting on social media." I'm like, " Look, there's certain people that can connect with Ellis.
There's certain people that will connect with Darin, but there's other people that trust you. Actually, they feel more connected to somebody that's just newly going through it than somebody that's been in the business for a while." You didn't wait. That would be my advice to other people, is look, just tell people what you're doing. You don't have to say that you're an expert right away. But eventually, they come back to you and they realize that you have more knowledge than they do.
Ellis: Yes, a hundred percent. Yes. I mean, share the journey. Don't stop. Don't wait. It definitely matters. Here's the thing. My mother-in-law is like this. She runs this art gallery. She's doing well, but she could do a lot better if she was any good at marketing. She just doesn't want to post because she's like, well, I don't want to be on everyone's news feed.
Her mindset is a mindset of so many others. It's like, well, I don't want to post bad content. Let me give everyone a tip. If you post bad content, no one's going to freaking see it anyways. Because there's so much content out there, that if it's not good, no one cares. They won't see it because, one, the algorithm won't push it. So, just keep creating.
Commit to Your Calendar or Commit to Your Wallet
Darin: That's fear again, man. I was afraid. Four years ago, I had no idea what the heck Instagram was. I remember, I hired a guy to teach me how to do it. I didn't even know how to create a profile. He told me, "You have to post every day." And I was like, "Oh, what am I going to do?" The first day I had my finger over that post button and I was scared.
Like you said, after you do it, you just realize that it's not a big deal. It really is not a big deal. You're trying to educate other people and bring other people into the fold. If it's bad content, nobody's going to see it anyway. I love that. That's great.
Ellis: Honestly, to go back to coaching, I actually hired a content coach early on, like that too. I hired a guy and I was like, "Hey, can you help me change my identity on LinkedIn?" I was like, "I just need someone to push me."
And I was paying him like a hundred bucks a month or 200 bucks a month, which back then, was a lot of money. This was when I was still college pastoring, trying to change my identity on LinkedIn.
If you're uncomfortable with it, get uncomfortable. You make commitment. I always say this. You make a commitment with either your calendar or with your wallet. And if you're not willing to make one of those commitments, either put it in your calendar or spend the money on it, probably nothing's going to change.
Darin: Yes. I hear you. So look, three years, you guys have been going hard, hard, hard. Any top one or two learning lessons?
The Bigger You Go, the Easier It Is to Find Sources
Ellis: Yes. I mean, you just don't know what you don't know. I mean, there's just levels.
Darin: Would you do anything differently?
Ellis: There's levels to this business. Would I do anything different? I mean, not really. I would just say this. It's really hard to even set goals and know this business until you're in it.
I mean, I'll just say what I'm learning right now. I'll give you some great takeaways. One, on the capital side, I've watched a lot of guys kind of grow through syndication, raising through individual LPs. That's always been the model. I don't know if that's the best route. I don't know if we'll stick to that. We've been doing that. But dude, there's a lot of private equity and there's a lot of money out there and there's a lot of guys.
Most of the big buyers in Dallas are not syndicators. There's a ton of business. There's a ton of syndicators in Dallas, but there's two groups. I'm not going to say their names because I want to be bigger than them one day, but they're doing a different approach. They got private institutional equity.
Most of what I've learned through this business is don't do that because they want more control or they'll take your lunch. Maybe that's true. But if they can help me buy $15 billion of real estate, what the heck do I care? I don't know.
There are multiple ways to do this business. It's even hard to know that until you get in. But I'm just learning, there are multiple equities and multiple equity sources. The bigger you go, the easier it is to find those sources.
The Smaller You Play, the Fewer Options You Have
Ellis: The smaller you play, the less options you have. The bigger you go, the more people you can call. The only reason I'm able to make all these calls and I'm getting people to respond, we're going after a $50 million deal in the hottest market in the country. A lot of people who were like, oh, that sounds interesting. If this was a duplex, no one would care. So go big and get big as fast as you can, because it's a lot easier.
Darin: I'm in agreement with you, but that goes with the mindset thing too. A lot of people think that they have to do the duplex or the fourplex first, before they go bigger, because their mind will only let them go that big. So, I would say two things.
If you can't get over it, then just do the duplex and then move on. But if you can, you can go straight to doing hundred-plus unit deals. Most people will tell you that it's easier.
Ellis: Again, just pick. The duplex, you do everything. You want to go do a hundred unit deal, you probably can't do that on your own. So, you're going to need partners. You're going to need to figure out where you line, in the business.
The other thing we've learned, man, I think I've learned just even recently, is on the deal finding side of things. We kind of formed a joint partnership with someone who's local to the market, broker experience. They've taught me a ton about what it takes to find deals and how much you have to see about being on the ground, looking at deals, how to underwrite quickly, how to make offers.
Make Sure You’re Picking the Right Market
Ellis: I think for a while, the reason, like I said, this business isn't very predictable. It’s because we just clearly weren't doing enough. We weren't seeing enough deals. We didn't know what a good deal looked like.
I think that's a big one. It just takes and especially in a competitive environment, you have to look at a lot of stuff. But there's a lot of stuff out there. If you're consistent and you're making enough offers, you're going to build enough momentum.
The key to this, and this is where I messed up early on, is we were making offers in Tucson. I like Tucson. They got great margaritas in Tucson, but there's just not enough transactions happening in Tucson. There's about five buyers, that's all, in Tucson. The fifth buyer, they bought two deals last year.
So it just goes to show you, if the fifth-largest buyer in Tucson bought two or three large multifamily deals last year, it's not a big enough market. The things I learned is, not just a vehicle, but make sure you're picking the right market.
I really like a very highly transactional, competitive market. It's why Dallas is a market we really like because people are in and out of deals all the time there. So, there's always the next deal to look at. That's really important.
Darin: Absolutely. So you're not a big-time economic guy, from a background, but you are in the business. So, I want to get your take on, we got rising interest rates, we've got rising inflation. What's your take on how that's going to impact multifamily and commercial real estate, going forward?
How Rising Inflation Can Impact Multifamily Going Forward
Ellis: Well, it's interesting though. Again, you're right. I'm not an economist, but I talk to a lot of people. I got to convince a lot of people to give me money, even with all this happening. Here's the thing. We have to protect our capital. That's the most important thing. We're not doing stupid stuff.
So a great example, we just closed on our Kansas City deal. We got a five-year note, fixed interest, 4 1/4. So we got fixed debt, rising interest rates, inflation's at 10%. We're going to make a lot of money on that deal. Feel good about being fixed into that deal.
However, I'm not a big fan of fixed interest rate. I like floating debt. I'm okay with it. If you look at historical data, historical trends, about 3.1 years after the Fed raises interest rates, is about how long it takes for interest rates to drop back below to where they were.
You look at from a history standpoint, interest rates are going down. Are there some things that are happening in the middle of that? Absolutely, like anything. Right now we're in a rising interest rate environment. But come back to this episode three years from now and according to the historical data, interest rates are going to be lower. It just is true.
So, if you have a business model, and that's what value-add multifamily guys do, so interest rates are high right now. Okay, cool. Fine. But we're going to go in there. We're going to make sure we run a stress test on our cap rates, make sure we're covering our cashflow. But at the same time, we don't really care because we're flipping units. We're increasing revenue through our value add strategy.
Stress-Test Your Plan and Don’t Ever Give Up
Ellis: In about two or three years, when we're ready to exit this deal, interest rates have probably settled down, and there's another buyer ready to come take down this deal. So as long as we've stress-tested our plan right now to, hey, if interest rates go up 200 basis points, well, our lender's going to make us buy cap insurance anyways. So, we're going to have to go spend a lot of money, $500,000, to make sure we cap our rate, and then we're just going to go execute our business model.
In three years, when we're ready to exit this deal and things have settled down, then there'll be another buyer rate to go. So, that's how I see it. I do think it's something to pay attention to. It's really key in underwriting. You want to make sure that you can cover your debt service. But really, that's the most important thing. From an asset level, there's so much money that want to be in this. That want to be in Texas multifamily right now.
I mean, there's institutions, equity groups from all over the world, that are taking 10-year bets on this market. So from an asset standpoint, I feel great about owning this stuff. I feel great about buying this.
Do we need to be weary and cautious and at least in our underwriting, make sure we can cover our debt, and over a short-term level, as we're renovating and doing units? Absolutely. But from a 3, 5, 10-year level, we're backing up the dump truck and trying to buy as much stuff as we can, just because from a long enough standpoint, just look at the data.
Interest Rates Go Down
Ellis: There's not enough housing. It gets harder and harder every year to buy a house. More people are renting. More people are moving to Texas. So, that's where we're at right now. That's our thesis.
I think it would be really hard to kind of prove me wrong in that because I'm only just saying what's happening. And if you're worried about interest rates, I think it's hard to be worried about them for longer than about four years, because historically, consistently, they go down.
Darin: All right, so all great points. Yes. I mean, look, with inflation at 7 and 8%, if you put a hundred thousand dollars in the bank and you just hold it and do nothing with it, then after a year, you've got 92,000 or 93,000 worth of buying power. I mean, that's in one year. So, it doesn't seem like it makes sense.
You hear the term cash is trash, to just keep your funds in cash. Putting it into multifamily now, I think that without having a crystal ball. I am still bullish in the sense that, look, if we do have inflation and especially if we end up having inflation on the salary side, on the wage side, people have more money, so rents can continue to go up.
So you have your revenue going up, but then if you fix debt, you have your debt service locked in. Even if you have floating rate debt, it's significantly less than your top line rent. So, you're going to increase your profitability.
The question mark is, will cap rates go up to the point where it eats into all that additional profitability? I don't think anybody knows that, but I think it's still an attractive place to be in.
It’s Going to Be a Relative Value
Darin: I live in Dallas and I see people are moving here every day. The roads are getting busier. The town that I live in, Prosper, Texas was like 7,000. Now it's like 35,000.
Ellis: I just don't see a future where cap rates in Dallas are at five, ever again. It will just be really, really hard to convince me of that. There's just too much happening there.
Darin: Well, it's all relative value. So, if it comes down to the 10 year, the treasuries. Look, if treasuries go up to 4 1/2%, then cap rates are going to go higher than 5%. I mean, because nobody's going to buy commercial real estate, take on additional risk, when they could buy treasuries and get that.
So it's all going to be relative value, but I have very smart people, that think that there's no way that the Fed is going to be able to raise rates as much as they are, without damaging the economy. Like you said, they could end up doing a few interest rate increases and then all of a sudden they go back the other way. So, nobody knows.
Ellis: Yes. It is already what they've done. You got a great point. Who knows what the Fed's going to do? I mean, I think you're right, though. I mean, at what cost do they do that? It's like, I think they've already proven COVID, that they don't want to see another '08 or '09. So, at what costs do they do this? It seems like, not at the cost of destroying or wrecking the economy, but I don't know. I mean, we've seen crazier stuff. It's true. It's the risk we take.
The Next Big Stretch Goal for Ellis Hammond
Darin: But you got to put it someplace. You got to put it someplace. I think that it's a great place to park capital and a great place to build wealth.
In addition, to your point about markets, I saw it with COVID. If we had tenants that couldn't pay, we weren't allowed to evict them for a period of time. But if they left in the middle of the night, well, there was a line of people waiting to move in. There's just a ton of people, where if you're in certain markets and somebody moves out, it may be much more difficult to find a tenant.
Hey, what's the next big stretch goal for you? Let's assume that you get this $50 million deal.
Ellis: Oh, we're going to get it.
Darin: Right. Let's assume you get it. What's the next big stretch goal for you?
Ellis: Yes. No. In my mind, I'll be like, "Darin, I got the deal." I'm going to know in about eight hours if I got this deal. This would open up a lot for us, no doubt. What we're trying to do over the next 12 to 18 months, is purchase a thousand units in Dallas MSA.
That's not just a number on the board for us. From what I've studied, it’s very calculated. From what I've studied from others, that's enough units that allow us to begin to vertically integrate a few departments, like construction and rehab, potentially property management.
What Can Happen When You Start Hitting Some of Your Goals
Ellis: Because those are things, for our business model, we need control over. We need to be able to control supply of materials. And we need to be able to control supply and time of labor. We need to get to a thousand units as fast as possible so that we're not relying on a third party. We can begin to kind of take over some of this on our own. So over 18 months, a thousand units.
Darin: You know what's so great, is if you think back, man, you had $10,000 to start. Then, you figured out how to buy a duplex. Now your goal is, I'm going to buy a thousand units in the next year, in DFW. It's crazy, what can change once you start hitting some of your goals and you start being around other people and changing that mindset of yours. So that's awesome. I look forward to watching that.
Ellis: Come be a part of it. I need partners. I need guys in Dallas who understand the market and who can raise money. I'm not trying to do this on my own. I'm talking to you right now and I'm dead serious.
Darin: All right, let's do it go.
Ellis: If you want to be a part of that, we're going to do it. There's no doubt we're going to do it. It might take us 12. It might take us 18, but we're going to do it. There's no doubt.
What Ellis Hammond Likes to Do for Fun
Ellis: We have the people behind us that want to be there. I know people want to be in Dallas. There's money all over. And right now, what they don't have is guys like us, who will do whatever it takes to find an opportunity.
Darin: Right. Keep fighting, scratch to get the deal.
Ellis: I'll tell you what. We're the X-factor.
Darin: Awesome. Well, I'm up for that. So keep me in mind, for sure. What do you like to do outside of work for fun?
Ellis: Yes, we live in San Diego. I love this area. We have a one-year-old little daughter. She's about to turn one.
Darin: I think I heard her earlier.
Ellis: You did, definitely. My nanny just got back with her. She was crying. So, she's not feeling very well today. I love hanging out with her. My wife and I. It's just been a really fun, sweet season to just be parents. So, we've really enjoyed that. I have a golf club in my hand right now. I don't get to golf enough because of my little girl.
Darin: We're recording this just after master's weekend.
Ellis: Yes. I think that's probably why I'm holding my club. Because I'm like, how much can I get out? I'm literally thinking as I'm doing this interview, okay, what time am I going to finish? What do I have next? Can I get out and play nine? So, I've kind of got the golf bug right now, it’s another thing I like to do.
Darin: Well, good for you, man. If you come into Dallas, let's definitely play some golf. I love getting out there.
Symphony Capital Group
Ellis: Let's do it, for sure. I'll be there. We'll play.
Darin: How can somebody reach out to you, if they want to get to know you better? I haven't even mentioned it, but I mean, you're in multifamily, you've got a podcast, you've got a YouTube channel. You wrote a book. You've got a Mastermind. You've done all that in freaking three years. How does somebody get to know you better? What's the best place to point them to?
Ellis: Well, yes, I mean, just be careful. You can already tell from this, get involved in my inner circle, things get disruptive fast. So yes, we do have a Mastermind. It's particularly for faith-minded folks who want to go to the next level, as a real estate operator, investor if you don't have to have experience. But if you do have experience, great. I mean, we probably have over a billion dollars in commercial real estate, just within our community. It's where a lot of things happen.
That's at TheKingdomREI.com. And then my company, Symphony Capital Group, symphonycapitalgroup.com. We have a contact form there. If you've heard this episode and you're at all interested, just like I told Darin, the invite's open to come build something with us, whatever that looks like on the deals, on the capital.
Darin: Or as a passive investor.
Ellis: Yes, passive investors. Again, you better get on some deals quick though, as a passive investor. Because I don't know how long that's going to be around, but we want to build. We want to grow. I know personally, we can't do that on our own. So, if that's of interest, then SymphonyCapitalGroup.com. I mean, that's what I say, get plugged in.
Get Out There, Meet People and Actually Take a Chance
Ellis: So if you want to do that with us, great. You want to do that with Darin, great. That's why I do podcast shows now. Because when I didn't know anyone and all I knew where to turn was podcast, everyone that I listened to on a podcast show, I would try and contact them.
I didn't know what I was going to say to them. And I didn't have anything to give them or offer them. I was just like, I want to know this guy. I want him to know me. So, I would literally reach out to every single podcast person or podcast guest that I would listen to. A lot of the relationships I have today is because some of those early conversations. So if you can get on my schedule, I hope you do, I would love to speak with you.
It is kind of hard right now. That's why I don't really provide just initial, here's the contact information, but those are how to get part of our inner circle, TheKingdomREI.com or SymphonyCapitalGroup.com.
Darin: That's huge. Well, I appreciate you coming on the show. Listeners, you heard it here. He started with next to nothing, and he's blowing up. So, you can too, but you got to take action.
You cannot just listen to podcasts and read books. You got to get out there, meet people and actually take a chance. With that, listeners, I hope you enjoyed that one. Until next week, signing off.