Whitney is an investor with a wealth of knowledge and experience with multiple strategies and asset classes. She invests passively in multifamily syndications and self storage, actively invests in her own multifamily and does BRRRR deals! Joe and Whitney dive into different deals she’s either been a part of or was the lead on. There are a lot of valuable tips to pick up on in this episode. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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Whitney Elkins-Hutten Real Estate Background:
- Public health research turned operations and systems manager
- Started real estate investing in 2001 with $0 of her own
- Now controls 345+ residential units and 1,437 self-storage units across 7 states utilizing BRRR, creative financing, and syndication strategies
- Based in Boulder, CO
- Say hi to her at: whitney.elkinsATgmail.com
- Best Ever Book: Long Distance Real Estate Investing by David Greene
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Eastern Union Funding and Arbor Realty Trust are the companies to talk to, specifically Marc Belsky.
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TRANSCRIPTION
Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.
With us today, Whitney Elkins-Hutten. How are you doing, Whitney?
Whitney Elkins-Hutten: Good! How are you, Joe?
Joe Fairless: I’m doing great, nice to have you on the show. A little bit about Whitney – she is a public health researcher turned operations and system manager. She started investing in real estate in 2001, with zero dollars of her own. She now controls 345 residential units and 1,437 self-storage units across seven states, using the BRRRR method, creative financing and syndication strategies. Based in Boulder, Colorado. With that being said, Whitney, will you give the Best Ever listeners a little bit more about your background and your current focus?
Whitney Elkins-Hutten: Yes, thanks Joe. So I started off post-college in public health research; I really always just leaned into helping communities and helping people. Over the course of my career I ventured into community health and nutrition primarily, working pharmacies, and my husband actually works for the government, and he realized just a few years ago that what we were doing to save for our retirement just wasn’t gonna get us there, and we wanted to have better clarity and control.
So we took my experience in real estate investing that I learned in 2001, and I rolled that into building out a rental portfolio that we hold single-family rentals, as well as a multifamily portfolio that we control – almost 345 residential units, and then also some self-storage units across the United States.
Joe Fairless: Self-storage, residential – is the residential a part of that? Is that an apartment community, I imagine?
Whitney Elkins-Hutten: The residential — no, we actually buy single-family homes and we utilize the BRRRR strategy. So we’ll buy low, rehab the unit, put a tenant in it, then refinance out and then just rinse and repeat.
Joe Fairless: So all 345 residential units are all single-families?
Whitney Elkins-Hutten: No…
Joe Fairless: That’s what I was asking, sorry.
Whitney Elkins-Hutten: No, it’s okay. We’re coming up on 20 residential units that we’ve through various strategies, including the BRRRR strategy. Of the 345 units, 325 are actually multifamily units that are in multifamily syndications.
Joe Fairless: Got it. So were you the GP on those deals?
Whitney Elkins-Hutten: No, LP.
Joe Fairless: I’m with you, okay. Now the picture is crystallizing. So you have 20 residential units, and then separately you are limited partner on 325 apartment units.
Whitney Elkins-Hutten: And increasing month over month.
Joe Fairless: Okay, cool. And the 1,437 self-storage – are you a limited partner on those?
Whitney Elkins-Hutten: Yes, limited partner on those as well.
Joe Fairless: Okay, cool. What has been your experience in the differences between investing as a limited partner in apartments, versus self-storage?
Whitney Elkins-Hutten: The self-storage units are relatively new for me, but just looking at the business model, both multifamily and self-storage operate like a business; so you’re looking at the proforma and the P&L as if you were running your own business. Income coming in, all the expenses are figured into the numbers upon the purchase.
Now, self-storage – I think there’s additional ways, especially if you’re doing value-add, that you can bring in and partner with other entities, say like maybe who have a U-Haul contract that you wanted to bring in… So you can leverage other big names in order to build into that value-add.
Joe Fairless: And how do you pick which type of partnership or which type of deal that you invest in? I know that’s a loaded question…
Whitney Elkins-Hutten: [laughs] Great question though. I think really what has allowed me to scale as quickly as I have is to build out a trusted network, and to basically leverage that network, get to learn the people that are actually putting together those deals, and be able to build such a [unintelligible [00:07:00].28] where you can pick apart the numbers and really dive in on their particular strategy and where they’re going, their path that they’ve taken on building out their financials. So you really wanna put your money with a trusted provider.
Joe Fairless: And with the self-storage versus residential, and plus also combining with the 20 residential units that you’re doing, where does your focus go, and to what degree do you have to manage the limited partner investments?
Whitney Elkins-Hutten: Once you do the due diligence in the limited partner investments, the management behind that is relatively minimal… So just making sure that the deposits are coming in on time, and then just kind of keeping an eye on how are things trending – are they trending according to the proforma that was put together? And then just staying on top of that investment.
As far as time, the 20 single-families take up far more time… Faaar more time! But it’s something that my husband and I actually really enjoy doing, so for now we’re okay with that.
Joe Fairless: What aspects of managing 20 residential units do you actually enjoy? I’m really curious to hear this.
Whitney Elkins-Hutten: Oh, no, no, no, we don’t self-manage our units; all of our twenty single-family residential units are managed by a property manager. We just really enjoy taking a home that’s been run down in the community and rehabilitating it and basically bolstering that community in a variety of ways. We’ve just actually finished one in Grandview, Missouri, that would be a beautiful home on an amazing street, and literally nobody would touch it with a 10-foot pole.
We went in there and really basically just removed the raccoon community. It’s just taking something that’s really run down and just making it beautiful again. That’s just something that I love doing, but at the same time it is a labor of love, and it’s not the best use of your time, but to that point we leverage our property managers in order to do our rehabs, so we’re not actually swinging the hammer or putting the paint on the walls ourselves.
Joe Fairless: And what would you say is the area where you make the most difference when overseeing your portfolio, in terms of profit and loss?
Whitney Elkins-Hutten: As far as where I have the most impact and control of the expenses, it’s gonna be within managing our single-family residential portfolio. As a limited partner, once you do the due diligence on the deal, you’re really a passive investor; depending on the relationship you have with the GP, you can maybe offer suggestions and give feedback, but as far like actually once you have bought into that syndication, you buy into it specifically for it to be passive, whereas on the residential portfolio there’s several different strings that you can pull to manage the numbers… But again, in both cases you’re really looking to buy right, and run either one like a business, as you would.
Joe Fairless: What’s been something that hasn’t gone right, that you can tell us about?
Whitney Elkins-Hutten: Well, I have a few examples. [laughs] Most recently, actually with the BRRRRR property that we just spoke about, that we just rehabbed in Kansas City, Missouri, we bought it at 95k, did all of our due diligence that we normally do up front; we were looking to put about 30k into it. Once we started tearing the walls apart, there were just things that we couldn’t anticipate based on the inspection, and we ended up putting about another 10k-12k into it. Fortunately, I build those variances into any of our proformas whenever we’re doing this type of deals, so it wasn’t too much of a hit, but it did impact our numbers in the end. We were looking for, obviously, a home run. Not all of them are gonna be that way.
We are still gonna be looking to make about 20% cash-on-cash return, and with that investment we were aiming for closer to 30% to 31%.
Joe Fairless: What were some things that came up during due diligence?
Whitney Elkins-Hutten: Well, we thought the raccoon family actually moved out. It turns out they weren’t… So we ended up putting a new roof on, and whenever the roofer was done — actually, he was almost done, and he forgot to put the soffit back on… The raccoon entered in one of the open soffits, and came back into the house, so all of the drywall that we had put up in one of the bedrooms had to be replaced.
Also, when we went to tear down the wallpaper in the living room, there was mold behind the wallpaper, so that was an expense that we had to mitigate… And to turn around and remove all that drywall, mitigate that as well. That was something that we hadn’t anticipated.
And then just the amount of work that we had to do in the kitchen, we underestimated for that, as well. But again, with any of these projects, I think anytime that you’re removing drywall, you just don’t know what’s behind it. You have to build that into your numbers, because there will be surprises.
Joe Fairless: You mentioned the variance, but I didn’t write it down… So how do you project that in your numbers, so that you have that cushion?
Whitney Elkins-Hutten: With this particular property, just due to the condition of it, I wanted to almost put in a 50% variance… So we were allotting 30k for our rehab, and I just went ahead and built in another 15k just in case.
There were things that we didn’t think that we were gonna have to actually do at the property that I wanted to make sure that we were accounting for just in case we did… Perhaps replacing the mast with the electrical, if we had to upgrade the electrical box. If we got in that situation, I wanted to make sure that we had a 5k cushion to be able to account for that.
Again, anytime you take apart drywall, you just don’t know what’s behind it, so I always put in an extra 2k-3k in. In this case, knowing that we had to mitigate the pest, I doubled that and put in an additional 5k. So like I said, when we went over budget, it was just a couple thousand within our worst-case scenario that we had planned for.
Joe Fairless: What’s another story of a challenging situation?
Whitney Elkins-Hutten: Well, I’m not sure if this would be of interest to your listeners, but we actually had to turn an inherited property lately. I can dive into the financials around that…
Joe Fairless: Please, yeah.
Whitney Elkins-Hutten: We had a family member of mine pass away recently, and unfortunately – or fortunately, depending on how you look at it – we inherited a home in Houston, Texas. We live in Boulder, Colorado, so automatically we’re dealing with distance. The home we knew had not been maintained for the past at least 8 years, and we knew that there were plenty of issues with the house. We already knew that there was gonna be HVAC issues with the house.
What we didn’t realize when we ended up to go in to clean up the house – just the extent of the damage from the various plumbing issues, the HVAC going out… [unintelligible [00:14:03].17] the water heater had gone out, and in Houston, for some reason, in two-story homes they put the water heater in the second story; I don’t know why… So we had damage in the family room, into the kitchen… And then we generally had to deal with [unintelligible [00:14:20].21] situation in the house, and then unfortunately the death occurred in the house, so we had a stigma to deal with as well.
As we were digging in and looking to reposition this property, or figuring out what we were gonna do – if we’re gonna rehab it ourselves and keep it in our portfolio, revive it and sell it, or just turn it to an investor… Surprise, the house is in foreclosure! So it really took an all hands on deck. We really dove in and leveraged our network of realtors, contractors and other investors that we knew in the area to be able to just really understand what we had on our hands, but reposition it quickly and effectively… That way we could do write by the estate.
Joe Fairless: When you were going through that process, what aspect of all those things was the hardest?
Whitney Elkins-Hutten: Aside from the emotional part?
Joe Fairless: Right.
Whitney Elkins-Hutten: Dealing with the bank, honestly. Dealing with the foreclosure was by far for me the hardest… Just getting into a position to where you can actually communicate with the banks effectively and have them understand what your plan is… They are concerned; they have an asset that hasn’t been paid on for a number of months, and when they learn of the death, they’re scared, in a way… They’re gonna put pressure on the estate in order to reposition the home or get things paid off.
The other thing that we learned in this process is just being on the other end of the BRRRRR investor… Just how refreshing it was when we did end up working with investors that really took time to care about our situation and help find the best-fit need for us, as opposed to seeing an opportunity to get a cheap house really fast.
Joe Fairless: Based on your experience, what is your best real estate investing advice ever?
Whitney Elkins-Hutten: I’d say for the Best Ever listeners my best advice would be that if you [unintelligible [00:16:11].27] a proforma on a single-family deal or even a syndication, if the numbers don’t make sense, find out where the numbers do make sense, make your package or make your offer on that, and if you just can’t close the gap quickly enough, walk away because there’s always gonna be another deal behind it.
Joe Fairless: I was asking about things that haven’t gone right… What’s a proud moment that you’ve had as an investor?
Whitney Elkins-Hutten: Oh, wow… We actually just came off another rehab this spring, where we had a family — and I think we were going through it at the same time as we were dealing with this inherited property. We had a family in a house that we were looking to pick up, and they were just in dire straits, and just really going back to them and being able to empathize with them where they’re at, and work with them to strike the deal, get to the right number that works for both parties, also the right timeline that worked for both parties, and not to be too anxious.
That was a really proud moment for me, just to have that conscious awareness as an investor.
Joe Fairless: Are you ready for the Best Ever Lightning Round?
Whitney Elkins-Hutten: Sure, let’s do it.
Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.
Break: [00:17:27].09] to [00:18:05].00]
Joe Fairless: Best ever book you’ve recently read?
Whitney Elkins-Hutten: Long Distance Real Estate Investing by David Green.
Joe Fairless: How come?
Whitney Elkins-Hutten: You know, it really encouraged me to go back and put the systems in place that I hadn’t already.
Joe Fairless: Like what?
Whitney Elkins-Hutten: I think the biggest takeaway that I had from that book is we had been putting together our own deals, really looking at hundreds and hundreds of properties every month… The thing that struck me was leverage the people around you, find the deal finder that will bring you deals. And since we did that, our portfolio acquisition has really accelerated.
Joe Fairless: And will you elaborate on how you found the deal finder, how you compensate him/her, that sort of thing?
Whitney Elkins-Hutten: In a variety of different was – pure networking, reaching out and just making connections, attending different REIA groups, talking to people in your area or in your network and asking them who they are doing deals with, or who they would recommend, and then just really getting to know that person and building a relationship with them.
As far as compensation, we look to partner with people that can find us the deal, but also potentially manage the deal if we’re doing a rehab deal. So they’re getting compensated on the purchase of the property, they’re getting compensated on the rehab, and then if we reposition the property in any way, hopefully perhaps with property management, or if we’re flipping it, they would get compensated there as well. So we kind of create a win/win/win.
Joe Fairless: Best ever deal you’ve done that we haven’t talked about?
Whitney Elkins-Hutten: My first property – I purchased it for 171k with none of my own money. I took out a second on the property; this was back in 2004, whenever you could get 103% financing… We put about 8k in rehab into it and then flipped it about 11 months later for 219k.
In that time I had renters living in the house, so I was living for free. So I made about $50,000 off the deal, between not having to pay housing expenses, and then also the sale of the house
Joe Fairless: Beautiful. What’s a mistake you’ve made on a transaction that we haven’t talked about?
Whitney Elkins-Hutten: Let’s see… The biggest mistake – I would say just not buying with the location in mind. I picked up a vacation rental… I was really starry-eyed; I picked up a vacation rental here locally in [unintelligible [00:20:26].21] I found it extremely hard to rent, hard to resell, and then eventually, when I was going through the sales process, I had to rebuild the retaining wall out behind the house, which opened up a whole can of works with the city… And then when we closed on the property, literally 48 hours after we closed on the property, my neighbor had parked her motorhome right behind the house, on top of the newly/freshly-built retaining wall, and it tumbled into the roof of the house… And I thought I was gonna get sued.
Joe Fairless: You didn’t?
Whitney Elkins-Hutten: I did not, no. My realtor at the time had both parties sign a waiver, because we mutually agreed on who the construction crew and engineer was gonna be on rebuilding the retaining wall behind the house… I have to admit I was kicking and screaming whenever I did that, but at the same time that was probably the best asset protection that I did during that deal.
Joe Fairless: Yeah, that’s good to know; I appreciate you sharing that story. What’s the best ever way you like to give back?
Whitney Elkins-Hutten: My husband and I, we actually participate in the Boulder County [unintelligible [00:21:29].18] program here, and I volunteer at my child’s school, and then we’re also both avid supporters of “Charity: water.”
Joe Fairless: The best way the Best Ever listeners can learn more about what you’re doing and get in touch with you?
Whitney Elkins-Hutten: They can reach out to me directly at whitney.elkins@gmail.com, or they can find me on Bigger Pockets.
Joe Fairless: Well, Whitney, thank you so much for being on the show, talking about a wide range of topics. A lot of what we talked about was specific deals, and wins and losses and lessons learned along the way, from your 20-unit residential portfolio to some things that you look for when investing as a limited partner… So thank you so much for being on the show, sharing your advice, and we’ll talk to you again soon.
Whitney Elkins-Hutten: Thanks, Joe.