Do you have an income problem? Whitney Sewell is a General Partner in close to 1,000 units and he did it all with his "never give up" attitude. He knows that if you want something bad enough, you'll find a way to make it happen. And real estate syndication was the answer for him and his family when looking for an additional stream of income. With real estate syndication, you can have your money working for you while you sleep. You don't have to be a real estate expert to get started. Whitney is passionate about helping others achieve their financial goals. In addition, 50% of his company's profits go to families looking to adopt. Listen and learn how a police officer making $20,000-$30,000 per year grew his real estate syndication business to where he now easily raises millions to purchase multifamily communities!
Table of Contents:
- Where To Listen To The Podcast
- From Federal Agent To Real Estate Syndication
- How Real Estate Syndication Solved an Income Problem
- Morning Routine
- Commit Your Real Estate Syndication Profits To Greater Good
- Different Business Partners For Real Estate Syndication
- Who Will Have Exponential Success in Real Estate Syndication
- Sophisticated Real Estate Syndication
- Creating a Track Record in Real Estate Syndication
- How to Reach Whitney Sewell
From Federal Agent To Real Estate Syndication
Darin: Whitney Sewell served in the military. Then, he became a police officer and a federal agent. He loved serving, but he was also looking for a way to provide more income for his family. So he started investing in real estate and made the decision to start a daily podcast focused on real estate syndication. He started with two triplexes and now, he easily raises millions for large-scale multifamily communities.
It was probably over two years ago, I was a guest on Whitney's show and that's how we first came about. I see him all over social media and he's doing great things. I'm excited to learn about what he's been up to since the last time we talked. Typically, the first question I ask is how many properties and how many units are you currently invested in?
Whitney: We are managing about a thousand or 900 to a thousand units right now. It's six or seven projects because we have three developments happening right now also. There's a lot of different deals. We just closed a large fund and another project last week that was not in that count. We have two more under contract as well, that should close over the next two months.
Darin: I listened to an episode that you did with BiggerPockets. I didn't know your story about what you did before you started getting into this industry. If you could share with the listeners a little bit about that, that would be fantastic.
Whitney: I would love to do that. I appreciate you listening to that show as well. Looking back, I thought, "Man, the Lord just prepared me for lots of things."
The Hard Times
Whitney: Hard things change a person, and prepare people for things. I'm thankful for some of the hard things. I go back to March of 2001 because it was March of that year when I decided to join the military. We all know what happened about six months later.
I bet most of us if you were alive then, you can remember where you were probably at right on 9/11. So I joined the military. All of a sudden our nation was attacked. I found myself shortly after spending a year in Iraq, toting around a machine gun. Never have I imagined being in that situation. I'm thankful I was able to serve, however, not everyone in my squad made it home. Obviously, some hard lessons. You learn lots of things in situations like that, that help prepare you for other things.
One thing I'd say the military taught me was to have a never give up mentality. It is just not an option to give up. When you're in combat, other people are depending on you for their lives. Your life depends on you performing and you're performing the way you were trained. You can't just quit, you get knocked down, it's not an option not to get back up.
That’s probably some of the first taste of that. Came home, I was still trying to figure out what I was going to do as a career. Remember, I was raised to think that I really need that piece of paper that says diploma at the top to have a good "J-O-B," have that security, and have those benefits. I didn't have that. And so I didn't feel like college was for me. I thought, "I don't know what I'm qualified to do."
A Great Transition To Real Estate Syndication
Whitney: I didn't mind working hard, but policing was a great transition for me. I left and came out of the military. Then I came home. I was still in the national guard at that time, but I started with Kentucky State Police. There were 1,200 applicants for five positions. I was blessed to have one of those. I’ve loved working the road as a police officer, I would've done it for free probably the first two years if I could have.
Then I got married, probably about a year and a half into that. We ended up passing each other in the hallway the first whole year of marriage. It was obvious pretty quickly then, "While I enjoy this, this is just not what is best long-term." Many of my friends are in policing. It's such a difficult family position, unfortunately.
Many of them have been married, divorced many times or just have no hopes of getting remarried. It is so difficult for a family, but I just said, "You know what? I don't want that for my wife and I." We also wanted her to be able to stay at home when we had children. That's going to be difficult on say 20 or 30,000 a year salary at that time. So I had an income problem, and I wanted to fix that income problem.
That was probably one of our bigger focuses then in looking for some means to supplement my income. I still felt pretty helpless, I had such limiting beliefs thinking, "There's nothing else I can do." Policing is now all I feel qualified to do. That's when I started looking for something and then came real estate, this was like 2009 timeframe.
A Beneficial Requirement
Darin: First of all, I want to thank you for your service. I'm 51, and I didn’t serve in the military. This generation, my generation, and younger generations have not had to go unless you signed up. There hasn't been a world war that we've been part of. Sometimes, we just forget that people are voluntarily signing up for service.
Secondly, that never give up attitude and philosophy that’s ingrained in you in the military. I know how that helped in real estate, but I also want to get your opinion. There are some countries that require every individual to serve in the military at some point. Based on your experience, do you think that that would be a wise and beneficial requirement in the US?
Whitney: I do not believe the military is for everyone. However, our nation would look a lot different if all of us, especially our young men went through bootcamp alone, much less even if they ever saw combat. That seems very tough. When you're 17, 18 years old, oftentimes you've never experienced somebody yelling at you like this, or just experiences of being so tired. More tired than you've ever been in your life and still having to perform.
Doing things that you've never had to do before, putting yourself in situations where you have to overcome things. That helps you to grow in ways. I talked to my boys about this all the time, about bootcamp and that experience. That drill Sergeant is yelling at you, saying things to you that most kids have never heard before, and have never been spoken to that way. But you have to realize that he's there to help you.
Breaking You Down To Build You Up
Darin: It doesn't feel like it at the moment.
Whitney: It doesn't feel like that at that time. He’s breaking you down and before long, they're building you up. They are there, pushing you and before you know it, they have taught you so much about yourself. They’re just giving you abilities that you already had, but you didn't know you had. You've never been put and pushed in those situations. It would be beneficial, but I'm not one to say that it should be required for everyone.
I would say too, bootcamp and military are a lot different now than it was when I went through, much less 20 years before that. It would be beneficial for most young men and women. But most young men have never experienced something to help push them into manhood. Let's take more responsibility than probably you've ever had in your life. Let us have a push over that wall. When you are so tired and have to do things even in team situations and work together that you just haven't had to do before that.
Darin: I love the entrepreneurial spirit. I love being able to choose what you want to do in life and where your focus is, but there's a lot in our country that is me-focused. The younger generations, I don't think they're getting exposed to team and responsibility and discipline with things like bootcamp or a period of service. I've never done it, so it's easy for me to say, "Yes, everybody should do it." But that's why I wanted your opinion because some people that are growing up, they don't get that. They don't get that discipline, they don't get that responsibility.
How Real Estate Syndication Solved an Income Problem
Whitney: It's their loss too. They're losing so much because of not being pushed in those ways early on and realizing, "You can accomplish more than what you really think you can."
Darin: It's a completely different way of growing up, but I've talked to some people that have grown up on a farm. As a young kid, you're having to do chores that a normal kid wouldn't have to do. We digress a little bit, but I wanted to get your viewpoint on that. You served as a police officer, and you said you were only making 20 to 30K. You got married and although you love what you're doing, you had an income problem. Where do you go from there?
Whitney: I also grew up on a farm. I was mucking stalls before school. That was me then and maybe that was part of that military. But in law enforcement, that never giving up mentality was still so important. It had to show from the way I wore my uniform to the way I responded to every dispatch. I would never know this 100%, but I do believe that there are times where my uniform saved my life.
Meaning, the diligence and the time that I took to make sure my uniform looked as good as it could. The creases were perfect, the buttons were shined, because guess what? Professional bad guys notice those things. They know who an easy target is and who is squared away. Guess what? They want to make sure they're bigger and better than their opponent just like anybody else.
Wealth Comes From Real Estate Syndication
Whitney: They're really good at that. Typically, not always, but they are. I had to make sure that, "I was ready to have that mentality, obviously in everything I did there." Like I said, I enjoyed that, but I did have the income problem. I started searching for what else is going to supplement that and in came real estate. It was the 2008, '09 time period when I started reading and learning that not only one or two people built wealth in real estate, but the majority of people's wealth had been built in real estate. Not only at multi-millionaires or billionaires in my thinking at that time, it was so much smaller.
I realized so many people had built extra income just through some rentals. They may have 10 rentals and that helps supplement their income and their retirement or it puts their kid through school. And so I thought, "Okay, if all of these people can do it, I can do something, I can have a few rentals." I never imagined owning an apartment community at that time.
I would have said, "You were nuts," if you'd said that was going to be me one day. What I did realize is that, if all these people can do it, I can do it too, I can do something. So we did. Pretty quickly, we bought two triplexes and I self-managed. I was policing at night, I was managing these apartments during the day. We also bought a home we were living in it and remodeling it at the same time. You talk about stress on a new marriage, it was intense.
Lessons Learned From Real Estate Syndication
Whitney: At that time, it was like our own bootcamp really. But my wife, she had to wash dishes in the bathtub a lot longer than I would like to admit. She's just an amazing woman, and we learned a lot. We made a ton of mistakes on those two triplexes. I tried to lead and manage with my heart and I just got taken advantage of by these tenants. What happened soon after is, I learned about a federal agent position. I became a federal agent soon after this. Again, I thought that policing was the only thing I was qualified for.
The Lord opened an opportunity for me to meet a guy who was a federal agent. I was in a scale facility on the interstate one day with a bunch of other officers talking. I waited for all these other officers to leave and this guy was still there. So I was talking to him, he ended up helping me through the entire hiring process. But all that to say, I became a federal agent that moved us to Roanoke, Virginia.
Becoming a federal agent is not easy, going into law enforcement is not easy in other bootcamp. Going in the military and going overseas, all these things helped shape me. The Lord used them in big ways to help me to become an entrepreneur. Better to do many other things, but becoming a federal agent. That increased my income and gave me a better schedule and benefits. Soon after, I started training horses professionally. I still had a few rentals and I even had a partner where I had a 15 unit. But this has been a passion of mine since I was a little boy.
A Cycle of Madness
Whitney: I loved training and it became pretty easy for me. So I built a brand and started selling horses for more money than I ever imagined. I mean doing tricks and all kinds of things that I never believed were possible for me to do. What happened is, I was a federal agent during the day, and I had another full-time job of training horses at night.
I would run home, change clothes, load the horses up, and go to the arena. I’d have four or five horses to ride, I would give lessons as well. I would be literally riding horses at midnight, then come back home. It's just this massive cycle of madness, never seeing the kids or my wife. My wife Chelsea and I were on the beach one fall and we were walking, we were praying. That’s what I call now, thinking time. It's so important that you do this every day, if you can, to some extent, to have thinking time.
Have time where you can reflect, where you can say, "You know what, is this working or not? Is this where we're both trying to go or is it going to do that?" That's ultimately what we did. We were just praying, walking on the beach and thinking about, "Is this what is best?" It was obvious at that point to both of us that this is not what is best. I’m making more money, I’m even training horses. I am making more money doing that than I ever imagined, but it was never going to be passive. It was never going to build massive wealth. If I get injured, it's over with.
100% Serious With Real Estate Syndication
Whitney: Right then, we said, "I know real estate can do this for us." We had dabbled a little bit but never been 100% serious about the real estate business. So we said, "It's now or never, we're going to go do this." We came home in September and between Christmas and New Year, we had sold our farm and our house. And we were moving out of that, and pulling out of the driveway.
Darin: Was the farm and the house on the same property?
Whitney: It was. So it was a place we had always dreamed of. When we were pulling out, I'll never forget my wife and I were both bawling like babies. It was a big day for us. We were venturing off, but we were committing. I stressed that because it’s really that level of commitment that it took to make us go do what was next. That was commercial real estate.
At this same time, I started going to some conferences and I was looking for a mentor. I started going to conferences to talk to different people who are mentors. What I found though is similar to what I found a few years earlier, that so many people were buying a hundred unit complexes or bigger. They had only been in the business a few years. That was mind-blowing to me.
I said, "If all of them can do it, I can do this too. I'll figure this out." And so we did. We bought a small house in town. I built an office in the basement and that's where I practically lived for the next three years. It was quite madness.
Whitney: We quickly started the daily podcast. There were times I would record 12 to 15 interviews in one day, back to back to back. Two days a month, I would have recording days like that. But for a time period, it was still more than two full-time jobs. Just traveling to conferences, more interviews, investor calls after work. It was quite madness. However, it didn't last forever. During that time, it was just crucial, that morning routine was more important than ever.
To my wife and I, that was a time when we could connect. Early in the morning, that was when we could say, "What's happening with the kids? What's happening this weekend? How's the business going?" But just to say how are you doing? Because other than that, she would literally pack me lunch to go to the basement to work. I'm not proud of this, but my boys knew they wouldn't see me until maybe Saturday afternoon or Sunday even though I'm in the house.
It was a time of quiet madness, but it was very intense. Thankfully, it didn't last forever. That story ended on a high point because we are back out on a farm now. Believe it or not, I have bought back my best horse that I ever sold. He's teaching my boys now. It's just a sweet story, just the Lord's kindness to our family, I just never imagined it. When we got started, how many units did we have? Our team's growing like mad, we're hiring an asset manager starting next week. That's just amazing. An Acquisition Director on the way, Investor Relations people, we're fixing to start hiring. The Lord's been kind, a lot of growth.
Thinking Is Key In Real Estate Syndication
Darin: You're the first person who said this and I'm a big believer in it. I've tried to tell my kids, but they don't see the value in it. Think, go to a quiet place, and just think. So many people are just caught up in busyness that they don't ever have time to think. I don't know if people are afraid to think or they don't know how to think. It's like when you tell people to pray for the first time, they may not know how to pray, but thinking is so key.
One idea can completely change the trajectory of where you go and where you focus. So talk a little bit about why you see value in thinking. How do you do it and do you form it as part of your habits and that sort of thing?
Whitney: I didn't know this book at this time, but I'll recommend a book where we're talking about this. This is where I got that term thinking time, and it's called The Road Less Stupid by Keith Cunningham. He's a real estate guy, and a business guy. He lost it all one time and came back. Every chapter in this book is like its own business segment on, "You need to be doing these things." But at the end of every chapter, he says, "Now, go have thinking time." He just encourages that.
I didn't know that at that time, but what going to the beach caused was that space. The time to forget about the farm, the horses, the day job, and us to just be there together. There was nothing else pulling on us at that time. It allowed space for thinking time.
Having the Time To Think Sparks Creativity
Whitney: What I see now, when I have time to just think, when I know there's not a ton of appointments lined up, I can be the most creative. I'll have new ideas. That's when I can start implementing new things, or see things in the business. I've never noticed that before, but you have to allow space for it. At first you feel like, "Well, that's just not productive enough."
Darin: Some people think it's not productive.
Whitney: But when you can get in a routine of that, even I started writing down a few things. Even in the book, he talks about thinking time and some specific ways to do it. He has a chair in a specific part of the house with a specific notepad, and a specific pen. He'll even put dots on the page and the way he even says the dots on the page start requiring his mind to think of something to put there.
It's like, "Don't just have a blank page, at least put a dot or put a number or something." Or have some things you're working on. You can start jotting some things down just to get the mind going. I have seen that time and time again, I've not been as faithful to do it every day. However, in the morning time, I still see that, "My wife and I, we'll be praying or we'll be reading together a scripture. There are times we're talking about the business and it's just so cool. She's not in real estate, but it's pretty cool how she will have insight into things that matters.
How God Can Help You Win in Real Estate Syndication
Darin: She has a different perspective. The coolest part about being an entrepreneur is that you can take it in and say, "I understand your view, but I'm not going to do it." Other things you're like, "Wow, that was a great idea. I'm going to try to implement that." I remember last January, my wife and I went on vacation. We went to a really nice resort and I get up early. She sleeps in and I'd go down and I'd read. After that week, I was like, "I just felt so charged and I had a completely different focus on where I was going. If I didn't have that time set aside, I may not have done that." So it's so important.
You've mentioned God probably four or five times. God's influence in your life in the hard times, and in everybody's life, we have crossroads and decision points. It sounds like you and your wife are people that will seek guidance from God. So I want to hear your perspective on that.
Whitney: No doubt about it. We are followers of Jesus and our marriage, our business, our life would not be like it without him guiding and directing us. That is one of the biggest things that when I was talking about asking my wife, she's not in real estate. If you are a Christian, then you'll know what I'm talking about. But the holy spirit lives in her, Christ, he knows everything about our business. He knows everybody I'm going to talk to today, every in and out of everything, every detail of our life. But he speaks to her as well, or he speaks to my business partner, who also knows the Lord.
How Your Life Can Change by Knowing Christ
Whitney: The Lord has changed everything for us. My wife and I were raised in church, but we never had a relationship with Christ. We were "Christians" if you ask us, but if you'd ask me who Jesus was, I couldn't have told you hardly anything. My life didn't reflect that either. The Lord used some friends of ours in a massive way to show us what that looked like and how sweet that relationship with Christ is. But really, just the depravity of sin and my need for a savior, our eyes were opened in a whole new way.
The Lord saved us and everything's been different since then. Our relationship, my wife and I taught everything. I didn't share about it when I shared our story, but even our desire with three children through adoption, the Lord has used that in a massive way to put a big “why”, a big mission behind our business. When we moved to Roanoke, my wife and I had been married for maybe a year, two years, two and a half years.
We heard a pastor talk about how they had adopted. We’re pretty new to believing in Jesus or as our savior at that time. We'd heard this pastor talk about how they had adopted. How there's 150 plus million orphans in the world, how it can cost 40 to 60 grand to bring a child home to adoption. We couldn't believe it. We'd never been exposed to adoption. We were raised in a one-stop plot town, we didn't know anybody that was adopted before, never even talked about it. On our way home from this event, we were just thinking about it, praying about it.
Commit Your Real Estate Syndication Profits To Greater Good
Whitney: We were like, "Why would we not adopt?" It just seemed like the right thing to do, it seemed that simple to us. I'm thankful for our ignorance in the process because the process is quite daunting. We started the process a week later. Within a week, we had turned in our application to adopt from Ethiopia. Two years later, our first son Samuel came home from Ethiopia. A year later, our second son Elijah came home and then we also have a daughter, Eden Joy, who's two and a half. She also came to our family through adoption.
The first couple of processes though, you imagine that expense on that first salary I told you about or even as a federal agent. It's like everything I'm making in a year. It's like how are we going to come up with this? But the Lord would provide in just amazing ways that we could not even expect. We did fundraisers, we raised over $38,000 for our second adoption and numerous other fundraisers. What we started to figure out is, obviously there's such a big need. There's so many children that need families and need parents.
But most people who would be great parents, it's that exact response. They say, "Whitney, that's more than I make in a year. Where would we even start to do that?" So it's just not an option. They don't even second guess it. So we created a foundation that helps these families financially. We committed half of our personal profits to this foundation. We're giving grants now to families, big grants to help them financially through this adoption process.
Building a Loving Home For Kids
Whitney: We've hired a guy who's helping us with the foundation so we can do that well. I can't physically be everywhere and help all those families, but we want to make sure we're taking as good care of them as possible.
We partnered with 10 families last year. Nine of them have actually brought a child home. It's so encouraging to see that happen, and I hope we triple that this year. We've just started more marketing for the foundation. I see our investors, I see lots of people, they want to partner in that. 100% of their donations goes towards helping a family.
Our goal is for these children to be placed into families where they can hear about Jesus. That is their ultimate need, more than water, more than shelter, they need Jesus. That’s our goal for these children. They need a loving home too, and so that's our goal through the foundation.
Darin: What is the name of the foundation?
Whitney: Life Bridge Foundation. We're in the process of rebranding that. You can find it at lifebridgecapital.com. Go to the About page all the way at the bottom. You'll see a little story about my wife and I, and be able to find the website there.
Darin: So you've got the Life Bridge Foundation for the adoption. Then you have Life Bridge Capital which is an investment arm into multifamily. First, that is phenomenal. That's probably another way that you saw God at work. You decided, "I'll put 50% of the profits to this and had no idea it would grow to this level." So I live in the Dallas area, I've been here for 11 years prior.
It’s Amazing How God Works
Darin: I'm originally an East Coast guy from Connecticut. I lived in South Florida for 14 years before Dallas. My wife and I got associated with a foundation called the Sheridan House. There was a gentleman that started that foundation, Bob Barnes, and he said something similar to what you did.
He laughs about it because he's like, "Okay God, I'm going to write a book. I'm going to put all the profits from the book to help the missions." He's like, "I had no idea that I would write 10 books and that it would be published all over the world. The amount of money that came in through those books, 99% of it was given away. But, he got to see God work through that which was pretty amazing.
Whitney: Stewardship includes not just that 10%, but it's like what do you do with the other 90%. In scripture, there's tons of places that show where God honors people who are faithful or faithful stewards with their resources. That's not just financially, but that's their time as well.
Darin: You get into the real estate side and you fully commit which is an important piece too. Whether you're going to be a passive investor or you're going to try to get into buying real estate, you have to commit. So you actually made the decision and you committed. You sold your house and your farm, now what do you do?
Whitney: At that same time, we were starting our third adoption process. We knew that there was going to be a massive expense there. I was hiring a mentor to help me. We were like, "I don't know where all the money's going to come from to do these things."
Be Committed To Real Estate Syndication
Whitney: So selling the farm was helpful, but that was a passion of mine. I enjoyed doing that, but I just stressed it to say, "It was helpful to cut that off." To say, "Somebody calls me to train the horse." I just can't now, I don't even have the stuff anymore to do it. So I have to be committed to the real estate business, and it just took that level of commitment.
The daily podcast was born and I started going to conferences, and started meeting all these people. I was just encouraged in so many ways, I would come home so motivated. "If all these people can do it, I can do it too. I can figure this out."
It’s just growing my network. That podcast pushed me to hire people and to grow a team. It grew my network very fast, seven days a week. You imagine all the people that I was connecting with, very fast, 15 people in a day. I couldn't remember all of them. But you can remember the ones you want to connect with again, or you want to follow up with. A lot of those people become mentors as well. They didn't know it, but even through the podcast, it became my own university.
If we're working on a project and I have a question, we’ll guess what's probably going to come up during an interview. That became my own university. It costs as much as a university, a degree as well, but that pushed me in ways that I never imagined. I got to speak in front of more people than I ever imagined in larger stages.
Different Business Partners For Real Estate Syndication
Whitney: I just never saw that coming when that happened. I started being able to raise money, meeting all these investors and working on all those connections and showing them. Just building the relationship so we can eventually work together more and more.
I met a business partner who was focused on the deal side, focused on acquisitions and broker relations. When we were able to partner, it's like you turn the jet engine on. All of a sudden, the igniters came on and I had this part of the business and he that part. We were like, boom, we could move forward. Our first project together was 28 million, 30 million and so that's not common. But we raised around 7 million for that project which is also not common. I'm so grateful you asked about the Lord in this, because that would not have happened. All the connections the Lord has allowed me to make and I see that even more now.
People that want to partner with us now, it doesn't make sense. They could partner with anybody in our industry and they partner with us. Some of that, everybody listening would know if I said their name, but it just doesn't make sense other than what the Lord's hand in it. That's something he did through the podcast, me traveling, meeting people, following up with people and just going and not giving up.
Darin: Not giving up, that goes back to the military stuff. So, if you don't know Whitney Sewell, he's got a podcast. It's The Real Estate Syndication Show with Whitney Sewell and you are up to close to 1,200 episodes.
The Biggest Lessons
Darin: You've talked to almost 1,200 people about real estate and learning on each one of those interviews and building your network. Talking to 1,200 people or just shy of it, what are the biggest learning lessons?
Whitney: That's a hard one. A lot of people say what's been the best show.
Darin: It's like I don't know if you've ever read Tools of Titans by Tim Ferris. He had two books, but one of them I thought was better, not the four-hour work week. It was the one with the interviews, he took off his podcast. I thought it was phenomenal because you feel like you're getting into the heads of all these other people, and so there's wisdom there. Just a few nuggets, a few learning lessons.
Whitney: It's hard to remember them all as well. Some definitely stand out and oftentimes, I would say it's helpful to guys who have been interviewed a bunch. They're very polished on presenting and whatnot. Oftentimes, it's one set. It's not always this amazing piece of advice either, it's like these three things helped me to do this thing.
One of these very early on was Michael Becker. I've had him on numerous times now, but I remember he was like the third or fifth person I interviewed or something. I was so thankful because he was very polished at that time and I was very new to interviewing. He made it very easy and he produced a good show, quality content for the listeners. I've had him back since then, but he's not the only one, there's been numerous. Oftentimes, it was through the ones who were speaking into what I was dealing with at the moment.
How To Conquer Your Fears in Real Estate Syndication
Darin: I'll give you one example. I'm in the 80's and one thing I talk to people a lot about is fear and how they conquered their fear. How they took action even though they were afraid. Most of these highly accomplished investors, they'll admit to me, "Yes, I was afraid of the first single family deal I did. I was afraid of my first multifamily deal. Now I'm doing 30, 50 million deals and I'm not afraid because I've done it so many times."
Here's what they say is I've heard it consistently from a lot of different people. They thought to themselves, "What is the worst thing that can happen? Am I going to die? Can I live with that worst case scenario?" This is for the listeners that are just thinking about getting into the first passive deal, but they're scared. Or the investor that wants to buy real estate for the first time, but they're scared. All these other people were scared too, but they think what's the worst thing that can happen, and can I live with that?" Then they think the opposite, "What's the upside?" And they're like, "The upside is so much better."
Whitney: I can remember some specific times where somebody said that to me early on. It's so helpful because early on too is when you receive the most opposition. They’re from family or friends who aren't willing to take that leap or that so-called risk that you feel it's a big risk anyway. But it's exactly what you just said, what's the worst that can happen? Living in America in most of our families, you're going to have a place.
What If You Never Tried
Whitney: Even if you lost your home, you're still going to have a warm place to sleep at night and probably food too, more times than not. Yes that stinks, but, what if you never tried? That's why we were willing to sell the farm. It's like, "We'll have another farm one day. But, if we don't do this right now, we're just going to keep in this daily grind. We're going to keep the W-2 and just be content with that."
We will always wonder what would have been? Could we have done it? I'm so thankful that we did, that we were willing to take that so-called risk and not listen to all the naysayers who had never done it before. During that time, I met with two people that everybody would also know, probably listening to this in our industry. There's very big names. I was at two different conferences sharing with them that I was going to do a daily podcast.
Both of these individuals said, "Whitney, you're crazy. Don't do that." Up to this point, I had been very gung ho like, "No, I can make this happen. I'm going to do it." But considering who these two people were, I thought, "Well, maybe I should reconsider this?" I was speaking to my mentor about it. This is why a mentor is so crucial, somebody to speak to you when this happens.
He said, "Whitney, that's why you have to do it because it's too much work for most people." I was like, "Okay, now I'm back on track. Now I'm back in, I got it. We're going to do this." I needed that kick in the tail every once in a while just like anyone else.
Who Will Have Exponential Success in Real Estate Syndication
Darin: The people that will do things that most people won't are the ones that end up having exponential success. From my learning, this may be helpful to me more than some other listeners, but you do have a daily podcast. I have a weekly podcast and I just think that that is a ton of work. What's the biggest thing you did to save yourself time?
Whitney: If I told you that six months from now you were going to run a marathon or let's say just the 26, whatever miles. For most people, they'd be like, "I don't know that I can get that done." But, let’s say we got to that day. And then I say, "You know what? It's only 12 miles." If you've been practicing for 26 miles, you say, "Okay, no problem. I can do that for 12 miles." But if I just said 12 miles in the very beginning, you'd have been still just as stressed about that.
Think about where you set your mind on those things, what are you limiting yourself by? Oftentimes, there's somebody else already doing it. There's somebody else that's already figured these things out. You don't even have to know how they did it. Just knowing that somebody else has done it sometimes is helpful to know.
However, deciding to do the daily podcast changed everything for me in so many ways. I had no idea of the level of commitment it was going to take. It was such a massive commitment for those first two to three years. One thing that helped me that I didn’t see coming was, if I had done a weekly podcast, I would've tried to have done all the audio editing.
Overcommitted In a Good Way
Whitney: I would've done all the video editing, the show notes, the posting it, I would've tried to find all the guests, all these components of producing a good podcast. I would've said, "You know what? I'm going to save some money. I can get all that done myself." Most likely, I would have gotten frustrated, I would've gotten behind and would've been halfway produced. I probably would've quit. Who knows if I'd still be in real estate today? Knowing that I was doing seven days a week, that wasn't even an option.
Darin: There's no way you could do it.
Whitney: It wasn't even possible. I talk about it often and I call it like I overcommitted. But I call it in a good way, I overcommitted in a way that it was not possible for me to do those things. This may be surprising, but I've never edited the first piece of audio or video, and I don't want to. I don't even know how to do it and I don't want to do it. It's not the highest and best use of my time.
It wasn't the highest best use of my time then, and it definitely is not now, but I had to build a team. Guess what? Immediately I had to start building processes. How are we going to get this video done? I had to personally think through those things. Then I brought a virtual assistant to help me think through that and start doing things.
All of a sudden I had five virtual assistants, and they're all doing something different for the podcasts. They're all over the world and I'm managing the show, we're managing the production. Everybody had a different skill set.
Building the Processes of Real Estate Syndication
Whitney: I had to learn how to hire people. I had to learn how to find people with specific skill sets that I needed. That's how we did it. We built that team. Probably about 200 shows in, believe it or not, my audio editor couldn't keep up. So I switched to a production company, I didn't go to the best. I switched to another one, they did amazing until I actually brought it back in-house again. We have 10 full-time VAs now in the Philippines who are producing my show. We're producing numerous people's shows now as well.
We started building the processes and then somebody just asked me, "You want to produce our show?" I was like, "It wouldn't be that much more to take on another weekly show." It's just like we're already producing so many, it's not that much to throw one more in for a week. Now it's numerous more, but still, because of the processes, it allowed us to keep scaling. It allowed me to think in different ways than if I'd tried to do a weekly podcast.
Darin: The real estate side story from one of the guests was based on what you're saying, overcommitting. Setting really big audacious goals and even if you don't hit that goal, it's still bigger than what you thought you were going to do. He was looking to double his unit count every year, so he did two units. The next year, he wanted to do four and the next year he wanted to do eight. He gets to year three and he's going to have to do eight units.
The Fund Versus Individual Real Estate Syndications
Darin: He’s like, "What if I changed that number?" I'm like, "What'd you change to?" He's like, "800. From eight units to 800 units." I'm like, "That's a huge shift. Where'd you end up?" He's like, "464," or something like that. He didn't hit the 800, but he was so much further from eight units. You answered it very similarly.
I've seen you, you're doing deals, you're raising capital, but a lot of people are focused on deal specific syndications. A few people, including yourself have moved to setting up funds. Talk about the fund versus individual syndications. What do you like and don't like, what are some of the challenges?
Whitney: It's a learning curve to say the least, shifting a business model like that. Just to give a little context, we've done single asset syndications on every project up until this large fund about the middle of last year that we launched.
Darin: How many years were you doing the syndication deal specifically?
Whitney: Two to three years. Then we say, "Because of the market, because of lack of deal flow, we could see the benefit in having a fund. It makes us that much more competitive." The brokers that we work with every day, they had already seen us raise tens of millions of dollars in a few hours numerous times. They knew we could do that. However, when they're talking to a seller and say, "This buyer, he already has $20 million ready to go." It is a very different conversation then versus, "Well, I've seen him raise the money numerous times. I know they can do it."
The Certainty of Closing in Real Estate Syndication
Whitney: But when you have a seller that definitely wants to sell, definitely needs to sell, they're on a timeline, time crunch. It often seems like they are, they want the certainty of closing. We thought, "Okay, if we can do a fund, we can have certainty of closing." So we're going to be a bigger player then, or seen as a bigger player. We're going to be taken more seriously as well even though we'd done many deals with these brokers, it's just a different avenue. But it's a change of mindset for our investors as well. People think, "Well, there's some investors that love this."
They do, however, condition your investor base. They know the types of deals that you do. Maybe many of them have invested with you numerous times because they like what you're doing. All of a sudden, you change it. You have to think through that, and obviously a 506(b) versus 506(c), I'll tell you a little trick that we did so we could do both. But what we did was launch a 506(c) fund which means only accredited investors.
We could advertise the biggest things and have to verify all accreditation statuses of every investor for the 506(c) fund. What happens though is we launch this fund, we raise a bunch of money. Finally we say, "Okay, this is the date we're closing the fund." But then what we did after that was we launched another entity. We call it a Special Purpose Vehicle or SPV. And it's an entity that is a 506(b) entity. Now, this entity, we put it back out just like a fund. It wasn't a fund, but it's like a fund, it operates the same way.
Sophisticated Real Estate Syndication
Whitney: But we will raise $5 million in this 506(b) entity, meaning now our sophisticated investors can also invest in this entity. This may be too technical, but if I can get the value of this entity to 5 million, all of a sudden, it becomes an accredited investor. Guess what, it invests in our fund. It was a way for all of our sophisticated investors.
I've had so many sophisticated investors investing nearly every project that we've done. It's so loyal, and when we launched that fund, so many of them were like, "Are you serious? We can't invest in that." I hate that, I wanted to have that opportunity for them. So I was like, "Give it two months, there's going to be another opportunity."
So we launched that entity, they could all invest in that, we get it to 5 million. Then all of a sudden it becomes an investor in the fund. It's all legal and then that's another reason too why we have an obvious close date for the 506(c) fund before the 506(b) opened. All of our documentation can be very clear. If you're in this business, you understand the SEC. You want to ensure your documentation of that when you're advertising. When you're not, when you're taking sophisticated investors or need that preexisting relationship and documenting that versus when you don't have to, is very clear. We wanted to make sure that there was no gray area there whatsoever.
Darin: So you closed the 506(c) fund. Let's just say you closed it December 31st and then the 506(b) opens on January 1st?
Whitney: There was probably a week to two-week gap there on purpose.
Answering Questions on Funds
Darin: So January 15th, 506(b) opens. But if the fund is already closed, how does the 506(b) invest in the fund?
Whitney: It depends on how the fund is structured too. Obviously we can control when people can invest and when people can't invest in the fund. Or we set those timelines on our legal docs until the end of the year. But purposely on everything else, we're not accepting another investor after November the 15th.
We said, "Okay, November 15th, no more investors are coming into the fund. It's done." Two, part of that is announcing it to our investors, to everybody, that it's obvious. If we were ever investigated, it's obvious that we blasted it out to everybody closed at this time. We're still not taking people. We weren't trying to have a back door into that. However, our documentation showed that it could be open through the end of the year.
So we had that option. But knowing that we were going to do this entity, and it was going to be closed before the end of the year, and it would invest. That was the whole purpose there. But the goal behind a lot of that, there was the documentation to show. If we're ever investigated, we can say, "This is our intention. This is what happened exactly on these dates when we could advertise, when we couldn't, pre-existing relationships, all those things."
Darin: Another question on funds. You raise capital and you close the fund. Do you raise all the capital before you go out and buy anything?
Whitney: A big hold up for your investors is going to be, "I don't want a blind fund. I'm not investing in any blind fund. I want to know what that is."
Why Relationships Matter in Real Estate Syndication
Whitney: When an investor's been used to seeing the deal and investing in the specific deal, he's going to say, "I want to see the deal first. I'm not going to invest in a blind fund." Many of them did anyway because we have a relationship with them, they trust us already. It's like, "Yup, here's another 100,000." There will be a few that say, "You know what? I want to know what the deal is."
So we purposely timed it this way. But we had two deals under contract before we launched the fund. So we could say, "Hey, it's not completely blind. You already see this is our plan. These are the types of deals we've been doing. That's what we plan to do in the fund. We already have two of those under contract. You can see those right here. They were actually in two different markets, in the two markets that we wanted to be in for the fund."
It wasn't completely blind and that was helpful that they could see those two deals. Actually, while the fund was to open, another deal closed in the fund. So there was still a little bit of time while it was open. There were three deals closed in the fund, so it wasn't completely blind. But you are going to receive pushback from that, especially depending on how your investor base is conditioned.
There's a growth transition there for most operators. Most are used to doing single asset syndications for a while. Then it's like, "We've got enough track record. We've done enough deals. We have gotten a big enough investor base. I think we can do a fund."
What If the Investors Don’t Come
Darin: I've interviewed a lot of syndicators that have a ton of units. I ask them, "Why haven't you started a fund?" And I hear silence. I think to myself, "It comes down to fear again." These people were afraid to do their first syndication, but then now they've got five or six or seven syndications done. Now, they're afraid if I do a discretionary fund, what if the investors don't come?
Whitney: I'll tell you one way that we would combat that. We had already done enough deals to where we knew we could raise 8 to 10 million in a few hours typically, or have commitments for that. Let's say we launched the fund and a few weeks in, there's like $2 million and we're getting pretty nervous which didn't happen. Thank the Lord.
But if that happens, we're going to close the fund. All of a sudden we're going to have some single asset syndications. Whoever invested in the fund will still get the same thing. We still partner on those same deals probably. However, we'd start doing some single asset syndications and raise the money that way. There's a backup plan still of course because the first time you just don't know. It's like the first time raising money.
Everybody said, "I'm looking to place a million dollars." I hear that all the time and I said, "Have you ever raised money before?" "No. But that's what they've told me." I was like, "Well, count on about a fourth of that. Maybe."
Darin: It’s a different animal. If you raise the capital and the fund, and then you keep it open for a while and you start buying assets because I've seen funds do multiple different things.
From an Investor Standpoint
Darin: Some will raise all the money and then they buy one or two or three properties, fulfill all the money that they raised. Other funds will keep the fund open for a year or two or three years, and they'll continue to buy assets along the way. From an investor standpoint, if somebody invests right away, right when you open the fund versus investing six months later when you've already bought two or three deals, how do you provide different valuations for each?
Whitney: It's two very different ways to operate a fund. Typically you invest in a large fund. Some operators may raise half a billion dollars in a massive fund and go buy just portfolios. But that may be over a couple of years. The person that invested early on is typically going to get some bonus. They're going to earn more for a longer period of time than that person that signed up a year later.
But the way we structured our fund was open. It's similar to a single asset syndication really, or single asset fund. Well, it's open for this period of time. This is when you can invest, it's going to close, you start earning on January 1st. It's like we close the deal and this is when you start earning, and so everybody is earning the same.
And so people can't invest now in the fund, it's not open to invest. You can do it both ways. Leaving it open for a long period of time is an accounting nightmare, K-1 nightmare. Your CPA is going to hate you, but it's part of the business. If you plan to do that type of fund, then fine. But we did not plan to do that.
Creating a Track Record in Real Estate Syndication
Whitney: Keeping a fund open from one year to the next is a tax nightmare and accounting burden, we didn't want to do it that way. But we also had a few deals under contract. We knew we were going to have it open for so long, so we wanted these deals in there and closed it. Now, we have a track record. We've done a fund, now we'll have fund II soon, probably in the next few months. That is fund number two and believe it or not, there's this psychological thing to people.
It's like, "Oh, well, if this is fund eight, they're pretty experienced." It's like this thing that happens. But if we had fund one for two years, it's still going to be fund one. What happens is your investors are used to investing in all these deals, some of our investors may put 200 in every deal. Right as we put it out. But they're going to do that with a fund as well unfortunately.
So we put a fund out and it may be across five or six projects. They still put 200,000 in, and it may be a lot larger. There's this mental hurdle that they have to get past that says, "This is their next deal. I'm going to invest in it too." I feel like for us, it's going to be this transition to where, "Yes, we'll do even larger funds. But as our network grows, our investor base grows. Even the trust and the loyalty between us and our investors grows." We're going to be able to raise more and more money in a fund.
More Acquisitions in 2023
Whitney: We'll probably have funds that are open longer like you're talking about, but I want to condition our investors a little bit. I want us to even have more of a track record because we are also learning a lot more about operating a fund during that process.
Darin: What is the next big stretch goal for you? You keep on pushing the boundaries.
Whitney: Right now, we're in a big hiring frenzy. We just hired an asset manager who actually starts on Monday. I mentioned the acquisitions guy we're going to hire and more to come on acquisitions as well. We are fixing investor relations people, we're going to start actually promoting those job positions. My business partner and I said, "We wanted half a billion in assets under management by the end of 2023." We're probably going to hit that halfway through this year. It's great. Probably before that actually.
Darin: Half a billion in assets under management, and this is all coming from when we started this story. Making 20, 30 grand as a police officer, trying to figure out how you're going to do it. Maybe I'll rent out. You bought two triplexes. You just can't see it. That's such a big thing for people to understand, if you don't take the first step, all the follow-on steps don't come.
Whether it's getting into real estate or whether it's starting your own business, you have to take the step. You have to take the risk or else, all the things that layer on top don't happen. Here we are Whitney Sewell, 500 million in assets, most likely this year, that's fantastic. So what do you like to do outside of work?
Painting a Vision
Whitney: We're very involved in our church, outreach through our church, and helping with things there. Time with family is crucial now. For those three years roughly, I almost didn't exist at home unfortunately. I’d say too, I would back that up. I wouldn't recommend most people even do that. The Lord sustained my wife and I through that and our children. A lot of that was painting that vision for them, where we're going.
I would add there too because it's beneficial to your listeners, I said my wife's not into real estate. However, she's 110% behind our mission, our focus on adoption and our why. She wasn't just supporting me in this thing that Whitney's over there doing by himself. She had a vision of what we were doing, of this bigger goal.
When you can paint that vision for not only your family which they need at first. If you're going to venture off and do something like this. But when you can paint that vision to your team, to your team members, they can see you're about something bigger than just a new car or a house or financial gain, it changes that relationship.
They can see you're about something bigger because believe it or not, they want to be about something bigger than just financial gain. Whether they know it or not, they do. Even more than that, do your investors know what your mission is? Whether they admit or not, they would love to be a part of something that's bigger than just financial gain as well. And so they invest with us, obviously they are playing a role in helping these families and helping these children.
Before Venturing in Real Estate Syndication, Think About the Mission
Whitney: It doesn't affect their returns, but they love being able to be a part of that. So I encourage people to think about that mission, that why, and that's also helped us to commit. When you were talking about that level of commitment, it did that for us.
Darin: When I started the podcast, I read two books. One was about how to start a podcast, and another one was Start With Why by Simon Sinek. That was key for me. I'd read another chapter and I'd be like, "Oh, I'm going to change this now." Because it just gave me time to think and to refocus.
Whitney: You asked me about what I like to do outside of real estate, it was obviously riding horses. I loved doing that with my boys. Teaching them to ride is just a sweet time, just teaching them, spending that time with them. We're camping now a little bit as a family and that has been great. It was 70 degrees, 65, 70 degrees, New Year's day, we went camping.
Darin: How are you doing the camping? Are you tent camping or RV camping?
Whitney: A little bit of both. I actually have a horse trailer that has a living quarters in it that we'll stay if we're going as a family. I've got my boys actually into some survival stuff. We're not at the moment because it is so cold and I don't expect them to bear something like that. I don't want to either, but once it warms up again, we want to do more tent camping. But I want to take my boys out and actually do some more survival stuff.
Quality Time With the Boys
Whitney: I got them a book and we're learning even simple things like how to build a fire. You're out in the wilderness and we go and do that. We'll read about it and then we go out in the backyard and actually do it. That's been really good.
Darin: My kids are college age now and so my wife and I are trying to figure out the travel thing. We've rented an Airstream a few times and we're trying to figure out the best way for us. We're not sure yet, but we definitely do want to do the travel thing. Listeners, if you don't know Whitney Sewell, you've got to get to know him. You've got to check out his podcast and his website. He’s just a good guy and he saw other people that did it and he’s like, "If they can do it, I can do it." So can you, if you want to do it, you can do it. Whitney, what's the best way for people to reach out to you?
Whitney: Lifebridgecapital.com, that's the best place. You can contact me there, most of our team. You can email me email@example.com or you can call or text me at 540-585-4338, we'd love to connect with you. We also have some white papers and things like that. We've written around syndication and helping passive investors we'd love for you to have.
Darin: Appreciate you being a leader in the space, helping me along the way and helping listeners. I look forward to seeing you at the next conference and go from there. So I appreciate you coming on the show. Until next week, signing off.