JF2391: Building a Business to a Greater Purpose with Ellis Hammond #SituationSaturday

• Full time multifamily investor 
• Previous guest on JF1866
• Leads a mastermind community, Kingdom REI, for other faith-driven investors
• Based in San Diego, CA
• Say hi to him at: www.EllisHammond.com

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless. This is the world’s longest-running daily real estate investing podcast, where we only talk about the best advice ever. We don’t get into any fluffy stuff. First off, I hope you’re having the Best Ever weekend. Because it is the weekend and because it is Saturday, we’re going to talk about a specific situation that should you come across the situation, well, you’ll have some tools to help you solve for it.

Here’s the situation – the situation is you are looking to get more traction in your real estate investing business, you’re looking for your brand, your company to be recognized by more people, and you’re looking to grow your business. Well, that kind of probably covers a lot of us, so that’s why I wanted to have this Situation Saturday episode, where today’s guest is going to talk to us about how to use our personal story to build our brand. With us today to guide us through that conversation, Ellis Hammond. How are you doing, Ellis?

Ellis Hammond: What’s up, Joe? I’m really thankful to be here man. Excited to serve your audience in this way. I didn’t know we were doing a Situation Saturday, so I’m pumped, man. Let’s get into it.

Joe Fairless: That’s awesome. Well, sometimes I change it up right before the last second… So I figured we could probably make sense for this segment. So a little refresher… Ellis has been on the podcast before, Episode 1866. He is a full-time real estate investor. He leads a mastermind community called Kingdom REI for other faith-driven investors. He’s based in San Diego, California. Really quick, will you give us just a refresher of your background? And then let’s go right into how we can use our personal story to build our brand, because you’ve done it effectively.

Ellis Hammond: Yeah. So I’ll just set the premise real quick and then I’ll let you kind of lead through it, too… But the reason I think I’m an expert to be able to talk on this subject, Joe, is when I go to and speak at these conferences, or in front of other investors, especially when I’m in a room with other experienced operators like yourself, I don’t have the biggest track record, we don’t have the largest portfolio. As a matter of fact, it was a year ago I was a full-time college pastor. I served as a Christian pastor for six years; we started buying real estate and our first syndication deal as a full-time pastor. So when I come in front of a room, or when I get in front of a group of investors, I can’t say, “Hey, look, I’ve got 10 years of investing experience,” or “Hey, I have this massive real estate portfolio.” I don’t have any of that. But somehow I’m able to leave that room and almost always leave that conference or whatever, with people who are emailing me, or DM me on LinkedIn, or whatever, saying, “Hey, I want to learn more about you and your business and ways to invest with you.” Why? It’s because I have a powerful story that separates me from everyone else and that really resonates with my core audience. So that’s really what I’m excited to kind of hopefully get into today a little bit. So where would you like to go, Joe? How to best start that, man?

Joe Fairless: Thank you for framing it that way, because now we’re all with you on, okay, one of the toughest questions that you can get is, “How are you differentiated from your competition? Why should I invest with you?” This solves for that, I assume. So what would you say if I was a potential investor, you’re in front of the room, and before you get into your story, I ask, “Real quick, why would I invest with you over other people?”

Ellis Hammond: I think it’s knowing who I am. I always start with “Listen, my journey, my story…” something that’s going to catch their attention for me is I was a former pastor, I was a former Christian missionary. All of a sudden, they are like, “Whoa, what? That’s not what I was expecting to hear. Now, you’re a full-time investor?” Now they’re intrigued and I’ve caught their attention. So the backstory that maybe resonates with them.

Then I’ll tell them the turning point, “Listen, we wanted to figure out ways to go and create vehicles that could produce wealth, that would better serve the things that we were passionate about being a part of. I was a full-time missionary, and honestly, we were running out of money. So we went on a journey to figure out how do we go build and create wealth? And the vehicle that we figured out how to do that was through real estate. Now we have this vehicle that we can allow other investors to be a part of this journey with us.”

I’m saying, “Hey, we want to go create vehicles of wealth.” a.k.a. real estate, real estate syndication, multi-family, that can produce wealth for our investors, yes, but also impact change in the lives of our residents, but then even more so create enough cash flow, margin for us and for our investors to go and support the things that we’re passionate about serving.

So I think it’s helping them see where I come from and then showing my journey. I call it the journey that resonates with people that they want to be a part of. Because you and I both really do the same thing, but the journey you bring them on and the journey I’m bringing people on are very different.

I think this is so important, Joe, that people have to get – not everyone is going to want to go on that journey with me. Because some people  all of a sudden are going to outrule me because I don’t have the track record or the experience. So many people, man, are trying to serve everyone, where I just want a few. I want the few people who resonate with my story so much that they’ll say, “I’d rather go and work with that guy, because I’m passionate about the things that he’s passionate about. I’m so convicted to his message and thought process that I’ll go work with him above everyone else, even though he doesn’t have that track record.” I think a good story, a good brand must attract the right people and it must repel the wrong people.

Joe Fairless: I love how you broke down the components of it. Perhaps it wasn’t an official breakdown, so let me recap what I heard and then you tell us what else we need to factor into it. I heard one – you didn’t say this, but I think you implied it – that you surprise them with your background of being a pastor or former pastor. Then two, you talk about in that story, a challenge that you had, which was to create wealth. Three, there’s a turning point where you discovered real estate. And then four, now we offer this to create wealth for ourselves, as well as help others to create wealth and support the things that they want to support. Are those the main components, first off?

Ellis Hammond: Yeah. I can say [unintelligible [00:09:31].20] plan. Okay, what’s our plan to go do that now? Really, the plan is also your call to action. So what’s the plan that involves the person that you’re talking to? I’ve done a longer talk on this, but I think for the sake of this podcast, Joe, of those four components, the backstory really is what gives people a vested interest in your journey. And then what was the problem that you faced, the turning point that you had, and now what’s the plan that you’ve created, and that you’re bringing or you’re inviting other people into to be a part of? I think that’s huge.

Joe Fairless: With each of those –and I’d love if you could go through each one of them individually– what are some tips for if we’re thinking about, “Okay, I can do this. I’ve got a backstory, I’ve come across a problem, there’s a turning point, and now my plan is to do apartment syndication, or fix and flip homes, or whatever it is.” Can you give us some tips for each of those that as we’re developing, if we didn’t hear from you we might not implement?

Ellis Hammond: Yeah. So the backstory – I always ask three questions when I’m thinking about a story or a brand. The first question is always “Who am I?” You’ve got to be authentic. Don’t try and make something up. But I think all of us do have a story. And typically, the more vulnerable we are, the more authentic those come out. We don’t think people will resonate with our story; you think “Well, I don’t really have an exciting story.” Well, what is exciting? If you come from the corporate world, you don’t think that’s very exciting. Well, there’s a lot of people that come from the corporate world that wanna invest in real estate.

Let’s say you’re in the medical field – well, listen… You don’t think that’s exciting or you don’t think that’s relevant, but that resonates with people. If you were a doctor, a lawyer, or a nurse, and now you’re in real estate… Again, it’s not about trying to be the biggest or the most famous, it’s trying to find your core audience who resonate with you and your journey. So I just think, be authentic to who you are.

I think the second part is struggle. This is something that I think should resonate with people. For us and for me, to be a little bit more specific, in the world of faith and religion, especially Christianity, there is this dual mindset of, “Well, if I’m going to be a pastor or in the world of nonprofit, I must be poor. The only way I can really go make money is if I have a business.” That is the overall mindset of our faith for a lot of people, but a lot of people know that mindset is wrong. So I’m really challenging that and I’m inviting those who think the same way into that. I wanted to go figure out how do we merge that together.

So go figure out again, with the people that you serve, what is that common problem that they also face, that has some tension to it? Because it’s the tension and it’s the edgy dilemma that really is going to invite people in to say, “Yes, I also struggle with that. Yes, I want to know what you’re doing.” Now they’re eager to hear how you’re fixing that problem. Does that make sense, Joe?

Joe Fairless: It does. Help me have a broader mindset than what my mind goes to initially. I think, well, if we’re talking real estate investing, then isn’t a common problem going to be that they want to make passive income?

Ellis Hammond: No, actually. I don’t think so. That’s such a good example, Joe, because we have you, for example, who’s a big name. We have Grant Cardone, who’s a big name in this space. It’s all about cash flow, it’s all about passive income, and that’s the thing where we say, “Oh, people also want that. That’s what I should be promoting.” That’s actually not always the case. Most of my investors don’t really care right now about the cash flow. That’s not their biggest need or concern. I think that’s just what we’ve heard from other people and what their investors want.

So to me, what I see what folks want is they want to be part of a vehicle that has a mission, that is purposeful and intentional about the way it serves people, but also protects their money and helps them grow that money over time. That’s what’s most important to my people. The passive income, the cash flow is honestly just a bonus. Most of these people are still working, so the passive income is really probably third or fourth on your list.

So I would just say figure out who you serve, because their needs and their wants and their desires for what they want out of this vehicle could be different. It may not be passive income.

Joe Fairless: Okay, thank you for that. I’m glad we’re talking about that, because I heard what you said, and you did include passive income and capital preservation in what you said, but you lead with “being involved with something that has a purpose and is serving.”

Ellis Hammond: Yeah, it aligns with our core values, it has a bigger purpose in life. Again, the bottom line is important, they want to know their capital — because if you can give them both… “Man – preservation of capital, equity multiplication, but I’m involved in a vehicle that I can feel good about and that I know my money is actually helping others at the same time…” That’s the kicker.

Joe Fairless: So tactically speaking, are you doing anything that other groups might not do that makes your investments — you do apartments, right?

Ellis Hammond: Yeah, we do.

Joe Fairless: …your apartment investments more purposeful and more warm and fuzzy?

Ellis Hammond: Actually, we do. So we’ve kind of built up a brand around this and we currently — and I think by the time the show goes out, this fund will be closed… We just launched a faith-driven multifamily fund; it’s essentially the way that we’ve since kind of branded and putting this out to the world. Again, is everyone going to want to be a part of a faith-driven fund, Joe? The answer is no, right? That’s the whole point, and I hope people are catching that. I’m not trying to raise a fund that everyone and their mother wants to be a part of. I want something that my people want to be part of. So yes, we have a faith-driven fund; it’s actually a feeder fund into a larger group. Really what makes this faith-driven is we’re working with an organization called Apartment Life, which is a Christian nonprofit that works and comes alongside apartment owners, and really places families and resident leaders in our apartment complexes with the intention of really caring for our residents alongside our property management team. So they’ll do anything from events, to Bible studies, they check in on all of our residents 60 days before their lease is up to see how they’re doing… So really, their goal is to connect people in that apartment community, and really love all of them and show them the love of Christ. So that is very intentional, it’s very even measured. There are metrics to what we’re doing there.

So yeah, we’re very intentional, very purposeful about what we mean by faith-driven. I would say — I know a lot of people were using [unintelligible [00:16:24].16] and you’d actually be surprised how many people use this organization Apartment Life. But I don’t want to say no one’s been bold enough, but we just said, “Hey, we’re going to use this organization, so let’s be honest about…”

Joe Fairless: You’re going all-in.

Ellis Hammond: Yeah, let’s go all in. Like “Why are we not talking about?” So we are a faith-driven fund. So that’s what we kind of said.

Joe Fairless: One, you have a backstory; two, problem; three, turning point; and four, a plan to do it. We talked about the backstory. It’s okay, you should have a core audience… And as you mentioned, that I really like, you’ve got to find the common problem that they all face, where there’s tension, and inviting them in.

Can we just pretend your background is a software engineer for a moment? What would be your best guess that if I was a software engineer, and I wanted to create a multifamily company, and I wanted to say, “Yeah, Ellis had a great point. I want to create a backstory. What’s that common problem? Let me think about this… I know Joe asked him, he said it doesn’t have to be cash flow, it could be something else.” What are some other examples besides the faith-driven component that you have, and that you can think of?

Ellis Hammond: That’s a great question. I have a buddy — and I’m going to change the example just because I can speak to this one…

Joe Fairless: Okay. Sure.

Ellis Hammond: It’s guy sure is a guy who works in San Francisco tech, typically startup company. So we have a friend — actually, Joe, you might know this guy; we don’t have to use his name, but his whole brand and mission, and we chat regularly about this, is helping people go from IPO to cash flows; that’s his tagline. So his investors are typically in the San Francisco Bay Area, and they have spent most of their life waiting for IPOs. That’s how they make their money. They are part of a startup and they kind of stake their life or their income based on the next IPO. He is helping them shift their mindset to say, “Hey, that’s good. You don’t think you should leave that job. But let me teach you about a vehicle that once you IPO, you can invest in, and it can give you passive income.” Passive income is very important now for him… “So that you aren’t always relying on the next IPO.” So he has very clear targets, that he’s helping them open their world and say, “Oh, wow.”

This was his story, by the way, he worked in San Francisco area tech. This was what he did, and he learned about syndication, and now he started investing in real estate, and having the passive income to support him in between these IPOs. So I think that’s a great example of just kind of knowing who you serve, knowing that there’s a problem there that he saw because he experienced it, of “Man, this is so unstable. What if this startup doesn’t go well? So I’m always kind of waiting for the next thing.” And that was a way that he figured out how to use his story, figure out a problem that his people had, and bring them into a journey that he’s on now, really helping people invest in multifamily syndications.

Joe Fairless: Thank you. I appreciate that additional example. The thing that comes to mind, just to play the other side of the fence with this… The thing that comes to mind is its cash flow. No matter how you’re packaging it, the problem is ultimately, in this example at least, it’s IPO meaning “I don’t have the cash flow.” And now, “Hey, apartment investing. You get cash flow”, which is totally fine. But that to me is the challenge in this, is that when you say a common problem that they all have – that makes sense, but ultimately, it sounds like it’s always going to lead to cash flow. Allow me to put words in your mouth and then you can correct me… Now that it’s ultimately really about cash flow, except for your example, which I would argue is an outlier, but we can talk about it… If the problem is cash flow, like from IPO to cash flow, then really, it’s about — okay, let’s think about our background. I was in advertising before this. We would make a salary, and then we would need to jump from one employer to another, most likely, if we were going to get a significant salary bump. Because that’s just how the advertising world works, generally speaking. So if I were to apply this, then I could say, “Hey, advertising people, I know the stress that’s involved with needing to go from one job to another and completely start over with a new company just to get this extra bump of income.” So that’s the problem I came across. And now here’s real estate, where that solves for that. So it’s just repackaging, which is fine, but I think it sounds like you’re ultimately always solving for the cash flow and capital preservation. But I would like to hear your thoughts.

Ellis Hammond: That’s a great point. I don’t actually disagree. I think, though, to make the caveat, you and I, the vehicle we’re talking about is multifamily. [unintelligible [00:21:23].16]

Joe Fairless: Correct.

Ellis Hammond: …to this that aren’t in multifamily and cash flow is not part of their business model. So I totally agree with you, the vehicle that you and I are in, a huge component of why we’re in this is because we like the cash flow. That is also part of our story in the story that we’re working with. I’m sure there are people listening to your show that aren’t in multifamily, and they may have something else in real estate that cash flow isn’t that. So I just wanted to make the point that it doesn’t have to be cash flow; figure out what that is. But I think when it comes to multifamily, you’re right, it’s probably in the top three of whatever problem that you’re trying to solve,

Joe Fairless: Ultimately, money. Replace cash flow for “make more money” and “preserve the money that you have,” and not in that order. So I don’t think it changes much. I think yours is a bit of an outlier, but even in your example, you said cash flow and capital preservation, even when you said, “Here’s what we offer.”

Ellis Hammond: You could change [unintelligible [00:22:21].13] all you want, but again, we’re still not having an investment vehicle, right?

Joe Fairless: Right. That’s my whole point. So with backstory, it’s identifying the core audience who we are a part of, and the common problem that they face – that has to do with money, quite frankly. And then thinking about what are the unique situations that they’re in.

Ellis Hammond: We’ve got to point out here, I think – I think this is important before we finish here… Yes, we started with the preface of, let’s say, you’re listening to this show today, and you get asked to speak at the Best Ever Real Estate Conference, and you’re going to be in front of all of these people… And you get on the stage and talk about why they should invest with you is because you preserve their capital and you give them cash flow…

Joe Fairless: Not going to work, right.

Ellis Hammond: Right, because you are not Joe; he owns the state, and if they want preservation of capital and cash flow, they’re going to go invest with Joe. You have to give them a different outcome. And it may be still preservation capital and cash flow, Joe, is my point… But for example, when that guy said, “Well, I was in San Francisco tech, and this is who I served” and he’s able to speak to them in such a way that he knows their problems; he knows their struggles, he knows their journey. He’s not just selling cash flow and capital preservation.

Joe Fairless: I get that.

Ellis Hammond: He’s selling them away out of this lifestyle from just living on IPO. That’s what people have to realize. You have to sell the benefit. You’re selling the outcome of what capital preservation and cash flow provide that person. I think that really would separate anyone knowing what do your core people really want whenever they get capital preservation and cash flow, to use those as an example? What is the outcome of them getting cash flow? I’m telling you, that’s probably different from everyone who’s listening to this show, because we all serve different audiences.

Joe Fairless: That’s helpful. I’m glad that we dug in deep there, and I heard your perspective; that’s very helpful, and everyone heard the thought process. So backstory, identify core audience… And it is our backstory; it’s who we are, and what audience can we serve based off of who we are, thinking about the problems they have, as it relates to what we can help them solve for. They might be colorblind – well, we can’t do a whole lot about that. But as it relates to the business that we’re in, what can we help them solve for related to those problems. Then our personal story about the turning point, and then our plan for how to do it, and then opening it up. It personalizes the brand, resonates with that audience, it might not rise with other audiences, but who cares? I have a loyal group of a thousand people every day, over 100,000 generally passively interested people. You want a thousand raving fans.

Ellis Hammond: I’m fine with 100 committed people who would invest 50k with you every single year. You can build something pretty massive over the next decade.

Joe Fairless: How can the Best Ever listeners learn more about what you’re doing, Ellis?

Ellis Hammond: Absolutely, man. If you want a really great example of this, I wrote actually a book about my story and kind of walk through this in more detail. Missionofmultifamily.com is actually where you can grab a free copy, Joe. It’s our book link. And then just email me; I would love to connect with you. Invest@ellishammond.com.

Joe Fairless: Ellis, thanks for being on the show. I really appreciate it. Hope you have a Best Ever weekend and talk to you again soon.

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