F2496: 3 Tips for Successful Crowdfunding with Terrica Lynn Smith

Starting out with zero real estate investing experience, Terrica Lynn Smith built her brand from the ground level. With a current portfolio of 250 doors, Terrica is passionate about teaching others to do the same and get started in real estate investing. She talks about her journey to crowdfunding, how she approaches it differently than others, and her best tips to ensure it’s successful in your business. 

Terrica Lynn Smith Real Estate Background:

  • Full-time real estate investor
  • 15 years of experience
  • Portfolio consists of 250 doors including commercial, has helped develop 3 communities and is currently developing her own
  • Based in Lafayette, LA
  • Say hi to her at: www.terricalynnsmith.com  
  • Best Ever Book: Wealth Choice

 

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TRANSCRIPTION

Theo Hicks: Hello, Best Ever Listeners, and welcome to the Best Real Estate Investing Advice Ever Show. I am Theo Hicks and today, we’ll be speaking with Terrica Lynn Smith.

Terrica, how are you doing today?

Terrica Lynn Smith: Man, I’m fantastic. Thank you for having me.

Theo Hicks: Thank you so much for joining us and looking forward to speaking with you. And Terrica just told me she invented a board game. So we’re definitely going to be talking about that. But first, a little bit about her—she’s a full-time real estate investor with 15 years of experience. Her portfolio consists of 250 doors. She’s also helped develop three communities and is currently developing her own. She’s based in Lafayette, Louisiana, and her website is http://www.terricalynnsmith.com/.

So, Terrica, do you mind telling us some more about your background and what you’re focused on today?

Terrica Lynn Smith: Absolutely. So I’ve been in real estate for about 15 years, I started off as a realtor that didn’t know anyone, didn’t have many resources and literally just had to get it out of the mud. And getting started in real estate was not an easy task, because there was no one in my family who has ever owned any type of real estate. So understanding and learning what interest rates are, and a mortgage, and all of the different terminology was definitely a challenge. But Fast Forward to today, I took those stones, I would say, that were in my way, and I’ve used them to be able to build my career that I have today.

So I think a lot of people think whenever you get started in real estate, you have to know everything, and you really don’t. So for me, that was one of my biggest accomplishments was getting started in real estate 15 years ago. Starting as a realtor, working my way up to a broker, and now I’m a real estate developer. And again, like I said, I started with zero experience or any type of understanding of terminology. And yet I sit here and talk with you amazing people today. So I think it’s awesome.

Theo Hicks: Yes, that’s fantastic. It’s quite a journey. As you said in the bio, 250 doors, developed three communities, currently developing one on your own. So for those 250 doors, are those all multifamily?

Terrica Lynn Smith: No, it’s a mix.

Theo Hicks: What’s the breakdown?

Terrica Lynn Smith: It’s definitely a mixture. We have commercial buildings that we have rented out in there. We have multifamily units as well. We have new construction property that’s up in there. We have rental property, just single-family rental property that’s up in there as well. So it’s definitely a mixed portfolio, it’s very diversified. We even have rehabs in there as well, that consistently move every other day. So it’s definitely a huge mixture of different investments.

Theo Hicks: So you’re saying “we” a lot. So is this like a company, do you have a business partner doing this with?

Terrica Lynn Smith: It’s — yes, so I have several real estate companies. So I own my real estate brokerage. I have a consulting firm where we invest into properties. And then we have a real estate crowdfunding platform as well, where we create group economics. So collectively, when I’m saying “we”, I’m including all of our investment companies that we have.

Theo Hicks: Let’s talk about crowdfunding for a little bit. So of those 250 doors, how much of that has been crowdfunding? Is it all crowdfunded?

Terrica Lynn Smith: No. One thing about our crowdfunding is we put up more than 50-60 percent of our own money. And when I say “we”, that’s me and my partner. So whatever property we crowdfund for, we own majority of it, because we’re going to put our own liquid up. That’s very important for us to get that information out there because a lot of crowdfunding sources don’t use their own money. We do. We believe that — we believe in this project, and to not only show that we believe in the project, we put our money where our mouth is. But I would say probably about 20% of our portfolio consists of real estate crowdfunding.

Theo Hicks: What are some tips you have, some things you’ve learned that are some of the best practices when you’re trying to create that listing on a crowdfunding platform? And it might even be picking the right crowdfunding platform.

Terrica Lynn Smith: First of all, we built our own proprietary portal, so we don’t use nobody else’s; we own it. I would say that right there was number one for us, because to license it from someone else, you’re going to spend thousands of dollars in fees, which you pass those fees on to your crowdfund investor who’s investing with you. So get you someone on your team who can code from scratch and build you a portal that would be SEC approved. That’s number one, I would say.

Number two, which is up there with number one, you can swap them however you would like, is get you a really great legal team that understands the law, because the regulations are constantly changing. We crowdfund under Reg D 506(b), which allows us to have unlimited amount of unaccredited investors and unlimited accredited investors. And just making sure that you understand the importance of the PPMs, not only the importance of it, how expensive it can be if you don’t have a legal team that would be on a retainer that will continuously pop up those PPMs per property that you get. So I would say that would be number two.

And then number three would be do right by the people. If you do right and you be very transparent and you communicate, then you’ll get a whole lot further than you would by hiding things. So when I really say crowdfund is they know that we’re putting up majority of the money, they know that they’re going to get a percentage paid out to them after the project closes. They have an anticipated timeline and they receive monthly communication updates in regards to their investments. They also choose their own investments; we don’t choose what to put their money at. So we don’t just crowdfund, crowdfund, crowdfund and then go place it everywhere. When you crowdfund with us, you are picking a property from my portal that you want to invest in today, that you feel comfortable in regards to, and youinvest into it.

And the other cool thing about our real estate crowdfunding platform is that the investors that invest into properties can actually go and view those properties as well.

Break: [06:45] to [08:46]

Theo Hicks: How are you directing traffic to your custom platform? So obviously, you’ve talked about some of the pros… Is it harder to attract people than it would be to put your deal on someone else’s platform, or do you kind of have that marketing strategy locked in pretty tight?

Terrica Lynn Smith: If you want to check us out, you can go to https://saltcapitalequitygroup.com/, that’s our website. I have a really great audience that believes in me and trusts me, and are members of SALT Capital Equity Group. So not only are they a part of the real estate, crowdfunding, they receive monthly education and bi-monthly education as well. So I’m constantly coaching and mentoring me and my team, the investors that are a part of Salt Capital. So for us again, like I said, we are very different, because we don’t just do crowdfunding; we have a membership-based platform where you have to be a member before you can invest with us.

The reason why is because we want you to become an accredited investor using your own money to be able to go and invest into your own property. What better way to go to the bank and say, “Hey, I have experience, I’ve invested with Salt Capital Equity Group. This is the process, this is how it takes place, and now I have a down payment, because we didn’t pay it out return on investments to our investors.”

Theo Hicks: Yes, that’s really interesting. So you said you send out two educational pieces a month to the members, as well as—

Terrica Lynn Smith: Oh, no. We have two live coaching calls a month, we have a monthly meetup where we do it live and we do a class there. We also have one-on-one Thursday calls with my team if they have personal questions in regards to deals that they have going on. We have our networking events once COVID is over. And then we have a real estate conference that our members attend as well.

Theo Hicks: So when you’re saying one-on-one – these are your actual members, you’re talking to them?

Terrica Lynn Smith: Yes, a lot of the one-on-one membership calls are handled by other seasoned investors that are on my team—

Theo Hicks: Okay.

Terrica Lynn Smith: —who are more than qualified to offer mentorship in regards to whatever their questions may be.

Theo Hicks: Perfect. So how are you attracting people to become members?

Terrica Lynn Smith: We don’t invest with people that’s not members.

Theo Hicks: How do I become a member?

Terrica Lynn Smith: Oh, okay. You go to https://saltcapitalequitygroup.com/, you become a member, it’s $100 a year. And once you pay $100, you become a member. And then from there, you go through the approve investor process, if you are approved investor, which is paperwork that the SEC recommends that we do, just  to protect ourselves. And if that application is approved, then you become an investor with the SALT Capital Equity Group.

Theo Hicks: Okay, so I guess my question is, are you doing things that attract people to apply for this membership or is it just naturally referrals or other people that know them? Does that makes sense?

Terrica Lynn Smith: Yes. So you’re asking me, do I go out and look for people to invest?

Theo Hicks: Yes, in a sense. It’s not like physically like, going to the store and doing it, but in social media, YouTube channels or anything.

Terrica Lynn Smith: No. As with our board game, we have a course; a lot of our members are from some type of social media platform that I’ve been on and are my own platform. So normally, when I do a podcast like this, people inquire and then they go through the registration process and the approval process, and it goes from there. But what I don’t do, Theo, just to be very clear – I don’t solicit people just to solicit people. Real estate crowdfunding is something we offer to create group economics to help others become real estate investors. So I don’t need the income nor do my partners need the income, but we know the need in the community and that’s what’s more important to us.

So a lot of people will be like, “Why do you charge $100 a year?” Well, simple, because we just want to keep up with the maintenance on our system and keep our team on board. That’s it. We’re not here to take people money because we need it. We are here to help people understand that they too can become real estate investors, just like we have, and without overkilling them with costs. And people relate to that. I started Salt Capital almost a year and a half ago, two years; we have $21 million in assets, we have 300 members, 200 investors, approved investors, and it’s constantly growing.

Theo Hicks: Let’s talk about your board game a little bit.

Terrica Lynn Smith: Yeah.

Theo Hicks: So you invented a board game. Where did that idea come from?

Terrica Lynn Smith: Again, wanting to help. Because so many people hit me up, Theo, and will be like, “T, I just want to get started. It’s hard. It’s just I don’t understand.” And I’m like, “What if I can show them a way to do it, but it’d be fun and it’d be engaging?” I am big on teaching my children how to create generational wealth, because it was never taught to me and I kind of got it late in life. So I believe if I can give them a head start, right, then there’ll be a lot further than where I’m at right now. So I went to sleep, I had a dream that I was standing at the top of a mountain and I was teaching people how to do real estate, but it was in the form of a board game. I didn’t have the name or anything like that, but I just seen everybody standing around and we were moving pieces.

And I woke up the next morning, I went to my notebook, I wrote it down, I made the vision very clear to say, what do I want people to receive from this? And then I called my partner and I said, “Hey, I want to create a board game.” He said, “Did you just pull that out of the sky?”  I said, “Probably, but I believe that it’s important that we do it and it can help a lot of people.” So he was like, “Yes.” Then we called my other two partners and together as a group, we said, “Alright, let’s create it. This looks like it can be fun. This is real-life experiences that we went through personally, and that it can help other people.”

So how the board gamer works —and it’s called Developers— it works in regards to you start off with seed money. The goal is to get the keys to the city. But in order to get the keys to the city, you’ve got to go through some adversity, such as, you have a sequence of events through life cards and you have liabilities where you’re going to land on liabilities, and you’re going to face foreclosure and bankruptcy and you’ve got all these expenses because you don’t know that they’re liabilities. People really just don’t know. And throughout the life cards and the liabilities, you have asset cards, and you have paydays. So you’ve got to hope that you can make it around the board collecting each property in each industry without going bankrupt. You have to have a strategy to win the board game Developers, which is why I love Developers, because it’s a game that continuously teaches, and without a strategy, you’ll never win Developers.

Theo Hicks: That’s super fascinating, especially that came from a dream and you made that to literally a dream.

Terrica Lynn Smith:  Yes.

Theo Hicks: And you made it a reality. One of the things I want to ask before the best of advice, this is a question I was going to ask, but I forgot, and now I remembered it. So you mentioned that your education is focused a lot on getting your passive investors to become active investors?

Terrica Lynn Smith: No, not passive to become active; to have my investors that are unaccredited become accredited.

Theo Hicks: Okay, so unaccredited investors to become accredited. I thought from the onset the goal is to get them to do their own deals, too.

Terrica Lynn Smith: Yes, absolutely, to be able to go to the bank and do their own deals. Right now, a majority of the unaccredited investors don’t even know how to go to the bank, they don’t know the first step. They don’t know any of that. So to give them the knowledge to be able to go to the bank and get the loans that they would need and understand the type of loans that they need is very important. So yes, you’re correct.

Theo Hicks: Perfect. And so the goal for them to do both, like, still invest in your deals, while also doing their own deals? Or it’s strictly going from doing nothing to investing in their own deals?

Terrica Lynn Smith: Oh, no, no. Keep multiple streams of income. If you’ve got money over here in a project and you know you’re receiving 12-18 percent return depending on what the closeout is, and you have your own deal going on, whatever that return on your investment is going to be, I think it’s awesome. You just created two streams. So I definitely encourage them to have multiple streams of income and don’t just focus on one, but also don’t be all over the place. You try to catch two rabbits, you’re going to catch none. So it’s important to have your main bread and butter and then diversify over into the other one.

Theo Hicks: Exactly.

Terrica Lynn Smith: Let that main bread and butter diversify into the other categories.

Theo Hicks: Okay, Terrica, what is your best real estate investing advice ever, besides playing that board game?

Terrica Lynn Smith: Yes, that would be up there. But I’m super patient; it’s the complete opposite of what everybody say, rush, rush, rush. Be completely patient, because there’s going to always be a deal. And if you rush into the wrong deal, that’ll hurt you a whole lot more, a whole lot more than being patient and waiting on the right deal. That right there is one of the most important lessons I’ve learned.

Theo Hicks: Okay, are you ready for the Best Ever Lightning Round?

Terrica Lynn Smith: Yes, let’s go.

Theo Hicks: Okay. First, a quick word from our sponsor.

Break: [18:15] to [18:47]

Theo Hicks: Okay, Terrica, what is the best ever book you’ve recently read?

Terrica Lynn Smith: The best ever book that I recently read is going to be—oh, I read so many books. This is good. This is good. Is this lightning round and I’m going like really, really slow with it?

Theo Hicks: No problem.

Terrica Lynn Smith: I would say the best one is the Wealth Choice. The Wealth Choice.

Theo Hicks: The wealth Chart or Wealth Choice?

Terrica Lynn Smith: Choice, the  Wealth Choice.

Theo Hicks: I’ll tell you what, you said your best advice that is patience, so…

Terrica Lynn Smith: Yes.

Theo Hicks: …you’re patiently finding the best ever book. Okay.

Terrica Lynn Smith: Yes.

Theo Hicks: If your business going were to collapse today, what would you do next?

Terrica Lynn Smith: I will start over.

Theo Hicks: In the same industry or different industry?

Terrica Lynn Smith: I will start over in real estate because, I have the knowledge, and I can accomplish a whole lot more than what I would have been able to do 15 years ago, a lot faster.

Theo Hicks: Out of all the deals you’ve done, what’s been the best deal?

Terrica Lynn Smith: Madeline Cove.

Theo Hicks: Can you elaborate on that a little bit?

Terrica Lynn Smith: Yes, absolutely. We invested into a property that we picked up at $500,000 and it’s worth $2.5 million. We didn’t even have to touch it, so… I like that deal.

Theo Hicks: What’s the best ever way you’d like to give back?

Terrica Lynn Smith: I’m passionate about foster care, because I used to be in foster care. So being able to build transitional housing for foster care youth is extremely important to me. Other than that, the other ways that I give back is through my time, by educating the community on what’s important.

Theo Hicks: And then lastly, what’s the best ever place to reach you?

Terrica Lynn Smith: The best ever place to reach me is at https://saltcapitalequitygroup.com/.

Theo Hicks: Okay, Terrica, thank you so much for joining us today and providing us with your best ever advice. We focused a lot on crowdfunding; you kind of gave us a breakdown of what are some of the best practices, the most important things to keep in mind when buying real estate with a crowdfunding platform, in your case, buying real estate with your own crowdfunding platform. You went into a lot of detail on that, so I really appreciate that.

You talked about putting your money in the deal, building your own portal, having great legal team, doing right by your people with transparency and honest communication, and consistent communication.

You talked about all the education that you do with the members there, and you also talked about how you become a member of the crowdfunding platform. You talked about your board game, and then we also talked about your best advice, which was to be patient, and that you can hurt yourself a lot more by rushing into a bad deal than the potential positives that could come out of rushing into a deal. It’s much better to be patient and wait for the right deal, because as you said, there’s always going to be a good deal somewhere.

So thank you so much for joining us. I really appreciate the conversation. Is there anything else that you want to mention before we sign off?

Terrica Lynn Smith: No, I just would leave with this quote from Warren Buffett, “The transfer of wealth is from the impatient to the patient.”

Theo Hicks: Definitely, a good quote there to end the episode with, and definitely aligned with your best ever advice on patience. Again, thank you so much for joining us. Really appreciate it. Best Ever Listeners, as always, thank you for listening, have a best ever day and we’ll talk to you tomorrow.

Terrica Lynn Smith: Thank you.

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