JF1866: From Non-Profit Work To Real Estate Investing with Ellis Hammond

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Ellis has taken a slightly different path to real estate investing than we usually hear of. His background is in the non profit space as a missionary. He started investing in multifamily real estate as a better way to build wealth for his family and the causes he cares about. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

Best Ever Tweet:

“If you’re looking to get into real estate, don’t hesitate and figure out what you are good at” – Ellis Hammond

 

Ellis Hammond Real Estate Background:

  • Founder of EllisHammond.com
  • Manages a private network of investors that focus on acquiring multifamily commercial real estate assets
  • Based in San Diego, CA
  • Say hi to him at EllisHammond.com
  • Best Ever Book: Mindset: The Psychology of Success

 


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TRANSCRIPTION

Theo Hicks: Hi, Best Ever listeners. Welcome to the best real estate investing advice ever show. I’m your host today, Theo Hicks, and today we will be speaking with Ellis Hammond. Ellis, how are you doing today?

Ellis Hammond: I’m doing wonderful, really excited to be here. I’ve been a Best Ever listener myself, part of the community for really since the beginning of my real estate investing career, so I really feel honored to be here.

Theo Hicks: That’s great to hear, and I’m glad  you’ve been a long-time listener. I’m glad you finally got your opportunity to speak to the Best Ever community as well, and hopefully provide advice to like-minded individuals, or maybe people who were once like you.

Before we get started, a little bit about Ellis – he is the founder of EllisHammond.com. He manages a private network of investors that focus on acquiring multifamily commercial real estate assets. I’m looking forward to diving into that. He is based in San Diego, California, and you can say hi to him at EllisHammond.com.

Before we get into more details, do you mind telling us a little bit more about your background and what you’re focused on now?

Ellis Hammond: Yeah, Theo, I’d love to… Because I think it’s a great story, and I hope it’s encouraging for your listeners, wherever they are in their journey. My background is really in the non-profit space. [unintelligible [00:02:38].18] to multifamily missionary, working here in San Diego, California for a Christian nonprofit… And I got into real estate really to try and find a better way to create cashflow, to find a better way to build wealth for my family, for the things that my wife and I were passionate about serving… So we learned about real estate, and really went all in. I’m not kidding when I say – I learned how to buy my first piece of property listening to podcasts like Joe’s, and several different podcasts; I would just put it in my ear and I would listen.

So I got started that way. We started buying duplexes here in San Diego, started with a house-hack, of course, and I think we learned pretty quickly that even though we did really well, it was going to be really hard to get where we wanted to be in terms of the wealth that we wanted to create… So we needed something that was more scalable, and that’s where we learned about syndication. I think that’s probably why I started listening to The Best Ever Show – the focus on syndications.

Now we’ve been a part of two syndications as passive investors, but also really leveraging our networks to really move those deals forward, partnering with other sponsors to raise capital.

Theo Hicks: That was a very inspiring story. Before we talk about what you’re focused on now, how many duplexes did you buy? Was it like you house-hacked on, lived in it for a year, then house-hacked another one? Or did you just house-hack the first one, and then bought the other ones?

Ellis Hammond: We actually own a couple single-family homes in South Carolina, which is where I grew up, and then we came to San Diego and we purchased one duplex, the one we did a house-hack in. Essentially, we moved into the back-unit, which is what we kind of rehabbed, we had a long-term lease on the front unit, and we did really well. We created through that rehab phase about 100k in equity in 11 months… And a lot of that has to do with the market appreciation in San Diego, which is crazy, but also we found the ugliest house on the best block in town, and really created a ton of value in a short amount of time.

And then we refinanced out of that deal; we had a family investor invest with us, and we were able to pull out most of their capital and give it back to them. Now we actually airbnb one side, and we long-term lease the other.

Theo Hicks: Okay, so after that one house-hack is when you realized that it’d be hard to scale that, and that’s when you transitioned in syndications?

Ellis Hammond: Yeah, it was when I was doing some landscaping in the backyard, and shoveling dirt, and I realized “There’s gotta be a better use of my time than down here shoveling dirt.” Even that principle of how much is your time worth… And listening to podcasts – I listened to people who have gone before me, hearing that question asked, and I’m thinking “I know my time is more valuable than shoveling dirt. I can do something more with this.”

That’s when I realized I don’t wanna be 10 PM scraping floors on my project. That’s what we had to do for that deal, just because there was no margin in the deal to hire anybody else. So that’s where we started learning about syndications, and really putting together a team to [unintelligible [00:05:36].17]

Theo Hicks: Okay, so you say you’ve done two syndication deals so far… Were those ones where you were the sponsor, or are those two deals that you were passively investing in?

Ellis Hammond: Yeah, I’m on the general partner side of both of those deals. I act on the general partnership with those sponsors, but really the value that I bring to sponsors is my network, my experience, really from the nonprofit world and fundraising.

Theo Hicks: Okay, so you’re on the GP side, mostly focused on the equity-raising aspect.

Ellis Hammond: Yeah, investor relations, capital raise. Exactly.

Theo Hicks: Okay. Do you mind walking us through how you were able to join either an existing GP, or how you found the person that you partnered with? The reason why is because I know a lot of people wanna become syndicators, and one of the big things is the lack of real estate experience, but you’re kind of a testament to the fact that yes, you did a few deals before, but you went from doing a few single-family homes, to doing a house-hack duplex, to raising capital for (I’m assuming) a multi-million-dollar deal… So do you mind walking us through how you were able to get involved with the GP that you’re currently on?

Ellis Hammond: Sure. Well, I’ll save my best advice, because I think it’s going to apply really well to this, but I think the first step was that I got educated. I really understand how syndications work. I knew the lingo, I knew how to evaluate deals before I ever approached a sponsor; I was well-versed in the apartment syndication world, and then I just went out and started building relationships with people. And honestly, the first guy I ever met, I heard him on a podcast show. And at that time in my life, I was just reaching out to every single person who was where I wanted to be. And it was through that process where I just developed some really deep relationships, found some really good mentors…

And it was one mentor in specific who I approached; actually, he was looking at a different type of investment in Texas, and we flew down to go look at that project. We weren’t interested in that, but we learned really quickly “Hey, we like this guy, we like this network. He could really serve us and mentor for us”, and we approached him and said “Hey, if you find another apartment deal”, which he wasn’t buying a ton of apartment deals at that time”, we said “Hey, if you buy another one, we’d like to be a part of this project. We really think we have a network that would be interested in something like this.

Lo and behold, that project came up in the next couple months, and we were able to really partner and bring value through our network.

Theo Hicks: [unintelligible [00:07:51].10] but for someone who wants to start reaching out to sponsors, what’s some important information to include in that first point of contact?

Ellis Hammond: That’s really great. I think you wanna make sure you know the ins and outs of apartment syndication, you wanna know exactly what you’re doing. I think it’s hard to say, Theo, because a part of this has really come through relationships and relationship building, showing up at conferences and getting face to face; I think that’s a huge thing. If you’re going to conferences and you’re meeting these people, you wanna make sure that there’s good synergy there…

But if you were to reach out to someone — let’s say it’s Joe, for example; you’ve been to his conference, or you’ve been listening to his podcasts, say “Hey, this is who I am. I’ve been part of your network for a while. I’ve really got a ton of value from what you’re doing. I’ve been talking with my network…”, which means that you have to have already kind of gone to your network and said “Hey, if I could bring a deal like this, would you be interested?”, so  you know, you have enough momentum in your personal network, who said “Yes, if you bring me this, we’d be down to ride”, essentially…

I would just be very direct, and say “Hey, I have a network who’s interested in investing in real estate, and exactly what you’re doing, and I’d love to talk more about if we could add value to one another”, because that’s exactly what you’re doing as a money-raiser – you’re bringing value to a sponsor. Because most of the sponsors that I find who are really good at operations or really good at management, they spend a lot of their time finding deals and operating the projects, that they’re not really good at building a brand, and they’re not really good — I wouldn’t say good, but they just don’t focus enough time on raising the money. That might be an exception for Joe, as he’s done a great job of building a brand, but most of them have not, so that’s the real value that we can bring as money-raisers – we have a network, we have a brand that we can leverage in order to really bring value to our investors and bring value to the sponsor.

Theo Hicks: Alright, Ellis, I know you said that you might have touched on this already, but we’re gonna ask it anyways – if you wanna just repeat it, or have something new to say – what is your best real estate investing advice ever?

Ellis Hammond: I saved it, but it does kind of go back to what I was saying… And I think it’s really simple. First of all, everyone should get started investing in real estate; that goes without saying. But there are so many ways to enter into real estate investing that the best advice ever that I could give is that you need to know what your super-power is. You need to know what you do best.

For me, for example, that wasn’t looking at and crunching numbers. For me, it was the skill that I learned in the non-profit world, which was building relationships and fundraising. And I’ve found a way to really use that super-power to add value to other experts in the real estate world. I can’t say that any more clear – if you’re looking to get into real estate, you shouldn’t hesitate, but first, you should figure out what you are best at, and how you can leverage that skill in order to really partner with others.

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

Ellis Hammond: Yeah, let’s get it! Woo-hoo!

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

Break: [00:10:49].03] to [00:11:29].26]

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

Ellis Hammond: I love mindset books; this is what’s really helped me cross some self-limiting beliefs… So one is “Mindset: The Psychology of Success.” Incredible book. Talks about growth and fixed mindsets. And then the other one is “Switch on Your Brain”. Two really amazing books that have really helped me in the past year.

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

Ellis Hammond: I’m building a brand primarily, that’s what I’m really focused on. So I’d go back to the drawing board and I’d figure out how to best serve my audience, the following that I’m creating. So  if it’s not in investments, I’m still building a strong brand, that really is learning to know, like and trust me. So I’d go back to the drawing board and see what they need.

Theo Hicks: What is the worst deal you’ve ever done?

Ellis Hammond: I haven’t done enough deals for any of them to go really south yet, but I would say that my due diligence process that I go through on every single deal, which I’m actually happy to send that to the Best Ever listeners if they reach out to me – the due diligence process  I go through and vetting the sponsors has probably kept me from doing some shady deals, or some deals that may not have worked out with, or maybe they’d have worked out with, but I just wouldn’t have enjoyed doing those deals… That probably has helped me a ton.

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

Ellis Hammond: EllisHammond.com is a great place to reach me. If you sign up, I will reach out to you there. You can find me on LinkedIn, I do a ton of content. Most of my content comes on LinkedIn. Or call me. My phone number is 619-797-6213. And Theo, if they go to my website, EllisHammond.com, and sign up for either my newsletter or fill out an investor form, I’d be happy to send them my due diligence checklist that I use for every deal, which – like I said, it has really saved me a ton of headaches in really not doing bad deals. So I’d be happy to send that as well.

Theo Hicks: Alright, because that’s what I was gonna ask you next, which is where they could find that checklist. So if you go to EllisHammond.com – will they be able to find it pretty easily?

Ellis Hammond: Yeah. Like I said, either sign up for my newsletter or fill out a form. I’ll get it right away and I’ll be happy to reach out to them that way.

Theo Hicks: Alrighty. Well, Ellis, I appreciate you coming on the show today. Lots of solid advice. Just to quickly summarize – you discussed how your background was in a nonprofit; you were a missionary in San Diego, and decided to transition into real estate, because you wanted to find a better way to create cashflow and build long-term wealth for you and your family… You said that you literally bought your first property by learning from listening to podcasts like ours; that’s always great to hear. You mentioned how you did a few investments in South Carolina that were single-family homes, and ended up house-hacking in San Diego. It took a lot of manual labor, and while you were doing some landscaping in the backyard you realized that this is not the way to go…

Ellis Hammond: I hate gardening. [laughs]

Theo Hicks: Yeah, gardening in the backyard… You were probably sweating in the San Diego sun, and just happened to have an epiphany that this is not the way to go, and that’s when you transitioned into syndications. You mentioned how you are part of the GP on two syndication deals and your focus is on the equity raising investor relations.

We talked about how you were able to become a GP with very minimal experience, and first of all, you mentioned how you got educated before actually speaking with sponsors, because you’ve gotta know what you’re talking about… And then you went out and started building relationships with people. You reached out to everyone you heard on podcasts, you went to conferences and talked face-to-face with people, and eventually you were able to find a mentor that you ended up partnering up with on these two deals.

We talked about what someone in a similar situation needs to do in order to reach out to these sponsors. Obviously, you know the ins and outs of apartment syndications, go to conferences and speak to people face-to-face, but the most important thing – and this kind of goes into your best ever advice as well – is you need to know what value you can bring to these sponsors. You can’t just go out to them and say “Hey, I wanna work for you.” Even if you say “I wanna work for you for free”, that’s still not enough value to add. You need to figure out what your superpower is, and then how you can use that superpower to add value to a sponsor’s business.

You mentioned from your experience that a lot of syndicators are really good at crunching the numbers, finding deals, managing deals, but they don’t focus as much on the brand-building component… So that is where you, based on your background of networking and fundraising, were able to add value to their business.

Best Ever listeners, if you are interested in becoming a syndicator, Ellis kind of gave you an entry point, which is become an expert in building a brand, have some proof that you’re able to build a brand, and then maybe even proactively start a brand for a syndicator and present that to them, so they know that you’re the real deal.

Ellis Hammond: Yes, every 16-year-old should become a syndicator, right? Because they’re good on social media. [laughter]

Theo Hicks: Yeah, seriously… Snapchat experts, and stuff. Alright, Ellis, again, I really appreciate you coming on the show. Best Ever listeners, thanks for tuning in, and I will talk to you soon.

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