Ep #319 – Nathalie de Vos Burchart – From Passive Investor to SoloPreneur with 3500 doors
Here is some of what you will learn:
The advantages of passive investing
How to identify skilled operators (Syndicators)
The importance of a real estate resume
Building your courage muscle
Discovering your Why
“What gets checked gets done, what gets rewarded gets repeated.”
The value of having your own legal representation
Full Transcript Below:
Natalie de Vos Burchary – From passive Investor to Solopreneur (Ep319)
Intro: Hi! I’m Rod Khleif. Each and every week I record an interview with a thought leader that I know you’re gonna get a ton of value from. Now here on YouTube are the video versions of my podcast, Lifetime Cash Flow through Real Estate Investing. Now to make sure you get the latest information please subscribe and hit the notification bell. Let’s get started.
Rod: Welcome to another edition of “How to Build Lifetime Cash Flow through Real Estate Investing”. I’m Rod Khleif and I’m thrilled you’re here. And we are in for a real treat today. We’re interviewing Natalie de Vos Buchart. And Natalie, once she closes on what she has under contract, she’s gonna be in over 3,500 doors. Yes you heard me right and it’s just so rare that we get super successful multifamily investors that are female on this show. So this is just a real treat for us. Natalie, welcome to the show!
Natalie: Thank you. Thank you for that introduction.
Rod: Oh well it’s very impressive. It is very impressive
Natalie: I’m delighted to be here
Rod: Awesome so what we usually do is I have my guest kind of speak to how they got into the business a little bit of background prior to the business and then how they got into the business and you know to the success that they enjoy today. So if you could give us you know expand on that bio please
Natalie: I’ll start with my formal education. I’m a chemical engineer. I find that there are a lot of Engineers IT types in the space. So I like I like the number of side of things. I have an MBA as well so I’ve paid my tuition in terms of the educational institutions. But I consider myself an oil and gas person my background. So really my background’s business specifically downstream so refinery onwards and supply chain operations logistics. And I am also entrepreneurial started a commodity trading company with one of my co-workers at ExxonMobil back in 2006 and built that company with this gentleman from the ground up so that’s kind of my business back and really did that until about a year and a half ago. So very much employed full-time and nose to the grindstone doing that and I fell into real estate because I had cash distributions and liquidity coming from that activity. So that’s how I’ve made money was that business. Back in 2009-2010, I didn’t feel comfortable having any of that in the stock market so it was all about buying real estate literally in my zip code in Houston here. And I just kept buying because everything looked great so I got up to 30. I call it doors but really that’s all single-family 30 properties in a single zip codes are no geographic diversification and more or less self-managed that not from day one but after going through hiring and firing property management, I decided to have full control and self manage and about I guess it would have been 2015 when I was expecting. So pregnant with her son decided I needed to either go bigger or do something else to scale it and turn it truly into a business so that I would be able to balance family life, work life, and I guess real estate life. And it’s at that point in time kind of a fork in the road for me that I started attending different events, getting more educated, and several of the events. It was total of five different weekend events but several of them were apartment specific and my aha moment was an apartment is a business I was like well wait I’ve been involved with growing a business for the last 11 years for the last two years in my company. I’ve been buying businesses we closed on five different type of assets ranging from storage terminals to full-blown metals companies. So I’ve done the M&A and the type of analysis involved with those types of acquisitions. I was like, apartments it’s kind of, I don’t want to say snooze but
Rod: It’s a no-brainer. It absolutely is
Natalie: And then you know having gone through and knowing what single family was and the lack of ability with that and the headaches but yeah I mean there’s a lot of small things that involved in terms of
Rod: Sure. Well let me say this you know the fact that you didn’t have geographic diversity with your single family is absolutely a plus okay. The reason I crashed and burned in 2008 was I had way too much single family diversity, you don’t know my story I didn’t , by the way those are you listening we met in Houston just last weekend at a one-day event that our friends Kenny Wolf and Faris Musa had and we just got to talking sat next to each other and got to talking and that’s how I was like, “Man, I’ve got to get you on the show” but you know my story that you don’t know is I owned 800 houses here in Florida. They were two hours one direction I had multiple apartment complexes and because of that geographic diversity, I crashed and burned in 2008. So you know the fact that you’re in the same zip code was absolutely a plus because one of the biggest things that killed me was if we had a maintenance issue. I’d send a maintenance guy, drive an hour to get there, he’d have to see what was wrong, find a home depot or lowes, drive back and forth and what would take an hour in a apartment took all day at a house. So you know multiply that times 800 and that’s why I got my butt kicked but my multifamily did just fine through that period. So that’s kind of one of the reasons I started the podcast. So you went to these events and I know that you started passively. So let’s talk about that. You actually start investing passively which is just a fantastic way to get started. A lot of my students have done that, you know a lot of people you know start that way. Can you speak to that a little bit?
Natalie: Yeah I think it is really a great way to get started and I’m not saying that as syndicator either it’s one of those before you even go and go into the more active route you want to make sure that you like the space, that it’s something that you can be committed for the long term because it is a long term play. And for me it was both for the capital preservation, capital growth aspect but also educational. Another words I sought out some people call them, sponsors, leads,
Rod: Operators, KP’s, general partners, they’re all the same thing right
Natalie: So I sought out folks that have a track record and that we’re in different markets because with apartments I was like, oh this because of how they’re run. I can have geographic diversity which are left family side and sought out experienced syndicated leads
Natalie: There I could lean and gain best practices from, see how the reporting, communication was done, and yeah
Rod: No no that’s all
Natalie: And also put access to them, that’s proved itself invaluable. We were talking before we started recording this session about the things I wanted to maybe focus on but for me as an engineer my soft skills and all the best and that’s all we’ve been a growth area but the end of the day this business is all about the people, the connections you make, and that incremental edge ends up being I find another person that you’ve interacted with
Rod: No question and I wasn’t clear on what you meant by soft skills and now I get. It’s your it’s your ability to you know to communicate and develop relationships and I beg to differ by the way on what you just said about your soft skills you know you’re in my opinion an anomaly. A lot of Engineers truly have difficulty communicating. They’re very introverted. They don’t enjoy it at all and you had no issue whatsoever at least based on my experience in Houston when I just met you. But you’re absolutely right you guys have heard me say it on the show, time and time again “This business is a team sport” “It’s your network is your net worth” and you know who you know really does matter and you need to be out there making relationships. So there you have it from a super successful woman that speaking to that the importance of that. So back to what you just said about you know identifying skilled operators you know seeing how they operated, the reporting they gave you as a passive investor and the communication like you know one of the things that we do in our syndications is I spend a lot of time educating our investors. We do regular webinars. We talk through beyond just what’s happening with that specific asset, of course we update on the asset, but then we get into you know some of the whys and some of the things that we’re doing which you just you know I can’t teach from stage in my live events there’s just too many little nuances. And so you know it’s just a great way to get the behind-the-scenes, have access to people like yourself and myself and you know which is really sometimes very difficult to have. And then also be able to put it on your resume. So when you approach brokers and you can say you know I’m in thousand doors or a few hundred doors. Yes would you agree Natalie?
Natalie: Yeah and it’s amazing how there’s a snowball effect to the whole thing where you feel like you’re just getting started and if you ask me I am just getting started. It might sound like a lot of doors but it is just yeah building on itself which is which is great
Rod: Well the other piece I’m sorry I interrupted the other piece is your confidence as well. And by investing passively you’re also enhancing your competence number one which of course equates to confidence would you agree with that as well?
Natalie: Totally. Anecdotally, before when I was buying all those single families, I did reach out and go on property tours of apartment complexes, like brokers. I saw a deal not too far from me in Spring Branch it was a Laura it was big when I was like really liked it I loved it. But I didn’t have any I just didn’t have all the pieces to pull something like that off, some knowledge was lacking and then and it was I had too much fear and a lack of knowledge to be able to take action that month I regret not jumping on that opportunity. That was 2013-2014 it would have been a great deal but you know there’s a I think you call it like a courage muscle.
Rod: Sure that’s exactly what it is
Natalie: Yeah and and it’s just like working out. You’ve gotta be you know sticking with it and building it over time. And now, you know if I saw that deal today I totally equipped to run through it you know offer go back and forth negotiate and get it closed
Rod: Sure sure well you know I know that, so you know use again you started passively, a lot of those doors you know I think you said you’re about half and half limited partners and general partner. And on those doors and again this is just such a great way to start as a limited partner then you know become a maybe a co-sponsor on a deal. And then ultimately sponsor deals. I mean for other people that other people bring you and that’s just a natural very organic progression. So I know that I’m pretty sure the bulk of your portfolio is Texas. It looks like you’re also in Oklahoma and Arkansas and so let’s drill down a little bit about how you operate. So you got in passively, then you started building relationships, what was your initial target market? where did you focus first?
Natalie: in terms of my target passive market?
Rod: No no no, active, sorry. When you’re active.
Natalie: So I started as a passive active, if there is such a thing, and that was through partnerships and relationships, particularly two people one of which isn’t still as full-time and based out of Oklahoma and because I lack of proximity to that, I was what our attorney Jean Trowbridge called more of an enhancer but I was part of the team but not a day-to-day asset manager if you will. Those are the Oklahoma and Arkansas deals and those relationships are still strong and we still do deals together and in terms of active, I actively look in what’s called Texas triangle. So you’re Dallas, San Antonio, Houston. I’ve struggled to find deals in my own backyard but very recently this week on Monday closed on a 174 unit deal in San Antonio that I’m really excited about. That’s an hour drive away and I’m gonna be intimately involved with the operations
Rod: You live in Houston right?
Natalie: I live in Houston
Rod: Okay yeah yeah and that’s where we met. And yeah you know I’m looking at the map and I see that triangle and certainly very very doable that range of geography they’re absolutely doable. So I mean you’re really blessed to have that much potential, effectively in your backyard because it you know effectively it is your backyard
Natalie: Texas is a great market
Natalie: Between those three cities I just mentioned they generally ranked in those top ones for for the job growth population the things you look for
Rod: Absolutely yeah absolutely. We’ve got a we’ve got an asset 208 doors in Dallas. We’re raising equity for right now you know. If you’re accredited please reach out to us
Natalie: I hope it’s a 506C
Rod: It is, it is yeah by the way guys I couldn’t have said that if it wasn’t a 506C okay 506 C means you only deal with accredited investors. If it’s you know back when I first got started in this business pretty much it was just 506 B and you had to have a relationship before you could even bring up an investment opportunity and you know the back then it was called the three touch rule now it’s really just need to have a comprehensive relationship and really have some financial understanding of the person you’re dealing with. And so there’s some scoops you have to go through but because it is a 506 C just to accredited investors, I can bring it up which is incredible because that’s you know in the overall scheme of things it’s fairly recent in least in my 40 year history it’s fairly recent. So let me ask you this, starting out in this business, any aha moments come to mind for you is like lightbulb moments where you’re like, wow, well you mentioned one where you saw that it was really a business which was your skill set already you got an MBA, you bought businesses you build businesses so that was one. Anything else maybe more well not even more just real estate specific
Natalie: Well that it’s a unique business. You’re not, sometimes in business or like how many people do I have to hire? when do I hire them? and things like that, where is this the type of business where you can you can leverage third-party professional property management. You can really fine-tune and dictate how we build that team and what it looks like. If I start having geographic concentration again on apartment say in San Antonio or down the line in Houston, then I could get to a point where I could justify having property management in-house right
So I love that part of it and that there’s, another aspect guy enjoys being able to choose who you work with and I feel like that’s a huge luxury it’s not so much an aha moment but it’s one of those things that you keep coming here
Rod: Yeah no I couldn’t agree more. I mean guys this business is not a get-rich-quick thing. It’s become very freakin wealthy over time thing. So as you develop relationships realize they’re gonna be for decades and focus on people you actually enjoy you know
Natalie: That’s a big one. Life is too short for bad partnerships
Rod: Thank you couldn’t agree more
Natalie: You put money on the table than being in a boat with somebody that will make you miserable because it’s a long ride
Rod: Yeah now tell me you know in your core team not the brokers and the and the third party people, you know how do you have an infrastructure, just have an assistant, do you have someone you know that does investor relations, do you handle it all, are you a team of one, what
Natalie: I’m still a team of one, I consider myself still that infancy, that earlier ramping up of but I’m also I won’t call it control freak but I like that that level of control on the investor side because those relationships are so valuable and so important, I would get uncomfortable
Rod: Sure no get it yeah no totally totally agree they really are. Let me ask you this,
Natalie: And that’s and that’s really my favorite part and I want to encourage people particularly engineers that might not feel like they’re extroverted. I’m actually extremely introverted. You might disagree that’s fine but you know my MBA class we did this horseshoe formation of all of the MBA students and there was only one gentleman more introverted than me who had worked with me on a project. I looked at the room and I looked at the horseshoe. I’ve got to push myself so every time I’m doing this I’m doing these videos. I have a month monthly meetup. I’m pushing myself. It exhausts me, it’s hard, but you do it for a reason.
Rod: Interesting. No that’s very inspiring because there a lot of I mean a lot of ears of people just like that and that was me honestly as well. I was terrified and hated interaction. I just it was exhausting for me and painful and you know and fear of humiliation, fear of rejection, all of that stupid stuff that pops up and and honestly at my live events my three-day live event, I shouldn’t say this cuz it’s probably scare some people from actually participating but I make people get up and meet each other. I mean I forced it because it’s so critical in this business it really is. And it’s and it’s very interesting to me to hear that you know you downplayed your soft skills and you’re the one that does all the Investor Relations, I love that. So you push through that fear and you just made it happen you realize the importance of it I love it. So let me ask you this
Natalie: The other component is knowing the reason why you’re doing it
Rod: Sure it’s the why you know one of the things that you know I do regularly as a goal-setting workshop which is what I did at the Houston event. I started that I did the first keynote regarding the why and the goals and knowing exactly what it is you want and why you want it and for most people it’s their family. And that’s a beautiful thing. So you know a lot of my listeners are aspiring they want to get into this business. They listen, they’re encouraged, they’re inspired, what words of wisdom would you give them? the people that are listening that haven’t taken action yet that know they want to do this, know they deserve more, you know what would you tell those people?
Natalie: Get educated. It’s not a great feeling to see something that you want to go after like I mentioned that one deal and just not have the toolkit and the relationships and in place to go after it. Put yourself out there. We’ve said it so many times already but it is about the people and the team that you built and it’s third party management, its fellow cosponsor, investors, it’s a long list of work
Rod: Sure like that led at that Houston event. That was three guys that they’re all in my mastermind and they you know they connect and they put together these events and it’s a great opportunity for them to meet potential investors, connect with other people in the industry, and it’s just really how you build this thing and I know that’s intimidating for some of you guys like it was for Natalie but she pushed through it here and made it happen. So let me ask you this
Natalie: I have a couple of other points sorry to interrupt. So one thing I feel some people think they can come in with little money and that they’ll be able to build a vast fortune. And I find that that’s you know folks saying that that can happen are somewhat dishonest. It is a business where in order to be successful you need capital and it shouldn’t be sugar-coated because if you’re starting off with very very little you’re just not gonna go very far. So capital is required and I don’t know if that’s advice or not but at least it’s I feel like it should be straight
Rod: Well I agree. I agree let me just add one thing though let me just add one thing because I know successful operators that started with very little but aligned with people that handle that had money so because it’s a team sport. Now of course to be able to do that to be able to influence someone to invest their money and put it at risk like at risk capital you know the earnest money that the due diligence costs the you know the financing costs, requires a level of competence and confidence so you can influence someone to invest in your deal but normally yes it absolutely requires capital some money to get started. So thank you for that what was the next point not to rush it. In other words I talk to a lot of people who haven’t done a deal yet and the first one they were looking at is two hundred and forty one doors in a primary market ba-ba-ba-ba-ba and I’m like … yeah so a good friend and actually one of the first passive investments one of my first passive investments was with him. He calls it climbing the rungs of a ladder. Don’t try and like skip them just go one at a time and be patient but you’re learning things on that smaller deal and you’re better off paying your tuition. I think you call it a seminar having her seminars early on smaller deals that than you know crash because you know you don’t get another first deal
Rod: No no if you screw up the first deal there won’t be a second deal especially if you’ve got an extra zero or two on there so particularly in the multifamily space larger multifamily space. Single family you you know you can get away with mistakes but you know the knowledge is critical, the relationships are critical, you know in most cases you need some capital don’t rush it all great great stuff. Did you have another one?
Natalie: It’s one that came from my father. I actually googled it before I got on this podcast and it’s what gets checked gets done, what gets rewarded gets repeated, and it’s not just the first part it’s not just it’s the whole thing together and it’s not my it’s not my dad’s quote. It’s John Jones I believe he’s a judge probably isn’t living anymore I didn’t verify that but essentially the importance of checking through your weekly meetings and key performance indicators and reports and financials. I feel like the financial literacy of being able to understand a balance you understanding the P&L is crucial you’re running a business. So verifying those things
Rod: Understanding, normalize
Natalie: Rewarding that performance. So we have a regional that that’s been outstanding on a particular deal and the discussions are can we send her owner on a cruise or so what would she enjoy and
Rod: Love it love it great stuff you know I’ve heard it’s you know you said what gets checked gets you know trust but verify what gets checked and measured improves and I’ve heard that quote said different ways as well and it’s so true you know. In any business you need those key performance indicators those metrics that you measure by you have to have optics on your business, in fact I mean I’m doing that that piece right now in my thought leadership business it’s been go-go-go you know working in the business and now we’ve you know we’re creating a dashboard and we’ve got to be able to look and see what’s working what’s not working. If we advertise what works you know how long a client stays with us and things of that just things that you measure and in this multifamily business there’s a lot of those things that you have to that you work through and then back to your what gets rewarded gets repeated no question. People love that stuff and you know any time you can incentivize someone it’s just it’s a home run so you look for ways like, like the last third party property manager we hired there’s an incentive plan they hit certain NOI metrics, they make more money you know and that’s a big company and right yeah love it
Natalie: And you were saying trust but verify. I’ve got another one on trust and this is you know learn the hard way through your experiences and business interactions, Trust is so powerful but such a powerful thing between team members and everything else but when you’re dealing with larger agreements and things like that, get it in writing this is general business advice at this point get it in writing and have your own legal representation and a lot of times you feel like it might not be necessary because but in trust, knowing each other, it’s you you’re gonna be friends forever but things change
Rod: I want it I want to put an exclamation mark on that guy’s, that quote that what she just said get your own legal representation is in every situation. Now you kind of subtly reference maybe a partnership or an alignment no question you need it there. Frankly you also need it on of course on a real estate transaction with a PSA with a purchase and sale agreement, you know if the seller has an attorney that writes the contract by God you better have one that reviews it. I mean you know we just we’re doing a couple of deals right now and there there’s lots of redlining going on and the back and forth and the and the posture and then negotiating as you’re agreeing on an agreement. So you absolutely, really glad you said that Natalie it’s so critical
Natalie: Real estate related I’m working through two deals right now that are ticked structures tenant in common, my barrier you essentially have multiple borrowers and individual owners. So they should each have their own representations a little burdensome it’s a little more coordination but so those are what 1031 exchanges are something you have the ability to 1031 out because there’s a lot that goes into that
Rod: Usually when I hear tickets because somebody’s either coming in with a 1031 or needs to leave with a 1031 and it’s a great vehicle
Natalie: And usually out of California or the west coast
Rod: Yep so besides the quote you mentioned any other favorite quotes that you have?
Natalie: Not one that’s
Rod: Poppin’ in your head okay well let me ask you this question and I know I didn’t prepare you for any of this so I know you’ll do great what’s you know as you get into this business and you start and you take off that employee hat and put on the entrepreneur hat which may you know a lot of people that are listening or have W2 income and start this you know and this becomes this is a side hustle and I’ve interviewed scores of people on my show. Some of them that have over you know a thousand or 2,000 units is still have their core job but what is it you know but you become a leader at that point okay and I really believe everybody’s a leader in some capacity but certainly as you become an entrepreneur, what’s a characteristic that you think every leader should possess?
Natalie: I mean you’re saying that you’re a leader and you’re not working but your new boss is your investors at least that’s the way I look at it and that’s how we built our trading businesses at the end. It’s fierce customer service it’s all reputation. And I still look at multifamily the same way so when it comes to decision making if there’s ever a question about what should we do, the decision should be what’s in the best interest of investors.
Natalie: I guess so yeah that’s maybe one. I’ve experienced in the past that’s not always the case
Rod: Right, good, so listen if you were to go go back and with everything you know now. I love to ask this question, if you were gonna go back and tell your 20 year old self something to do to possibly do this business differently, what might you tell 20 year old Natalie?
Natalie: Everybody including myself I wish I would have done more sooner and I think
Rod: Yeah I just want my listeners to hear that to hopefully get off the fence and go take freaking action. That’s why I asked the question
Natalie: And then I mean you’ve got a set that as one of your goals and go out there and do it. I wish I would have met all the people I’m interacting with now when I was in my early 20s
Rod: Yeah nice nice, let me ask you one more thing um tell me about a time that you got your butt kicked, you may either made a big mistake or you had a had a seminar, failure or not failure but seminar that you know in this
Natalie: I paid tuition. I realized that but for the passive investors out there was it was a passive investment but one of the examples I’ve heard use and I’m basically reused it I won’t claim it as an original thought but as multifamilies, horse racing where you’ve got the horse and the jockey and a lot of people think it’s all about the horse that your that your betting on and the asset and its attributes and but a bad jockey you can ruin a very good horse but a good jockey can work with a mediocre horse though for folks initially passive investing it’s knowing your jockey knowing who’s at the helm. I think taking their time to have a relationship with, I’m surprised at how many people don’t pick up the phone and talk to each other or ready to just throw money at somebody. So having that relationship and the mistake I made was having a relationship with one of them but not knowing who, not knowing the person that was going to be I guess the boots on the ground and ultimately was supposed to be bringing the knowledge to execute that business plan which it was a bridge to HUD loan conversion and one of my higher risk higher reward type of deals and I felt like there was also a greed component in my mind where I thought the returns were gonna be good so the risk was worth the potential reward there. And everything that could go wrong went wrong and the lesson was not knowing all the all the players
Rod: Right okay oh that’s a very very solid advice
Natalie: You don’t hear that very often but that particular example wasn’t even a no distribution that we’re no distribution, there was actually involved the loss of equity as well
Rod: You lost capital yeah well that’s a painful one and I’ll tell you you know and I tell people I tried to as often as possible you know, yes passive investments a great way to start like as evidenced by you and you still don’t throw your money at someone. You know come see me in Denver if you can come to my event or go to somebody else’s event but at least get a working understanding of the business. So when you see a you know a PPM and you see somebody’s pro-forma you know you can apply some common sense. You can see what they’ve done with the different light items does it make sense does their expense ratio even make any sense at all? and and and you know what have they done as far as exit strategies? and what sort of a cap rate, exit cap do they have on their deal? and have they stress tested the deal to make sure it’ll be okay when the you know when things pull back which they inevitably always do? So you know that’s so guys if you’re thinking about investing passively for God’s sakes educate yourself. Read my free book, or come to one of my events, go to somebody else’s. I don’t care if it’s me but get educated and yeah awesome. So well listen you have been a real treat and I’m really really glad that I was able to get you on the show this quick and looking forward to getting to know you better and you know if you want to leave my listeners with one last little tidbit of wisdom what might that be? as it relates to this business
Natalie: Put yourself out there go out talk to people
Rod: Yeah yeah okay is that simple?
Natalie: Yeah but I can’t stress it enough so
Rod: Yeah it’s really, it’s really that simple. I mean my students keep coming back to my events just for that component just for the networking. It’s so critical. So you knowyou’ve got to get out there go to the REIA meetings or you start your own REIA meeting you know but get out there and make it happen. So that you’re in front of a lot of people, social media gives us such an incredible reach to be able to at least do the initial connection with people you know there’s really no excuse guys. So Natalie thanks so much for being on the show
Natalie: Even better people and it’s virtuous cycle that builds on itself and you’re also you know constantly improving I mean I just had last week where I found huge savings on insurance with a new provider and working with a national property management company that previously we weren’t working with and so we’ve gone through the pain and the brain damage, it impacts the property too when you do that of changing property management companies
Rod: Sure sure now we’re going through that right now actually
Natalie: Right people just accelerates the whole process
Rod: No question no question and sometimes you have to kiss a few frogs but you got to get started, getting started down that path. Yeah love it. Natalie, thanks so much for being on the show is a real treat and I’m sure we will speak again very soon
Natalie: All right Thank You Rod
Rod: You bet
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