JF2006: Finding Opportunities to Automate With Ellie Perlman
Ellie Perlman started out as a real estate lawyer and experienced the crash in 2008 which made her a very conservative investor because she saw how not being conservative can kill your business. Her focus is on buying MultiFamily properties across the US. She shares how she started her business with the mindset of “How do I create a process that can scalable” instead of “How do I get this deal done so I can move onto the next one?” She shares a great tip on what helped her scale her business by presenting to multiple investors without having to tell the same story over and over.
Ellie Perlman Real Estate Background:
- Founder of Blue Lake Capital
- Portfolio of $93 million in multifamily properties
- Host of the podcast That REllie Happened?
- Based in Santa Monica, CA
- Say hi to her at https://www.ellieperlman.com/
Best Ever Tweet:
“Don’t think about it as one deal, I need to get the one deal done and then figure out the second or the third one. Those deals they don’t work in silos, so think about its a business.” – Ellie Perlman
Theo Hicks: Hello, Best Ever listeners, and welcome to the best real estate investing advice ever show. I’m Theo Hicks and today we’ll be speaking with Ellie Perlman. Ellie, how are you doing today?
Ellie Perlman: Hey, Theo, I’m doing great. How are you?
Theo Hicks: I’m doing fantastic, thanks for asking. I’m looking forward to our conversation. We’ve spoken a lot via email, so it’s good to hear your voice and talk to you virtually. Before we get started, a little bit about Ellie – she is the founder of Blue Lake Capital, currently has a portfolio of $65 million in multifamily properties; host of the podcast, That Really Happened. She’s launching a mentorship program called REady2Scale which teaches people how to not only become a multifamily syndicator, but how to start and scale a business. So we’re gonna be focusing on a lot during this interview today.
She’s based in Santa Monica, California, you can say hi to her at ellieperlman.com. A link to that will be in the show notes. And if you recognize her name and/or her voice, that’s because she was a co-host on a Follow Along Friday with Joe while I was on a baby vacation, and that was called Keeping an Open Mind With Investments and Leaving Your Job For Real Estate Investing, and we’ll put a link to that YouTube video in the show notes as well. So Ellie, before we get started, can you tell us a little bit more about your background and what you’re focused on now?
Ellie Perlman: Yeah, absolutely. For that, just one little thing. Actually, the portfolio that I have today is $93 million not $65 million. So I’ve grown since last time I sent you my bio [unintelligible [00:02:30].01] quickly. So a little bit about my background – I actually started my career back in 2007 in Israel by accident, and I started as a real estate lawyer, and I’ve experienced the crash with my clients, and that made me a very conservative investor, because I’ve seen what being not conservative and a bit aggressive can do to you.
Then after the crash, which I thought was an interesting couple of years, I moved to property management, and then after four years, I decided to move to the United States, started investing, had some time to go to MIT and got my MBA degree… And where beyond my legal education and my experience in real estate, I was also exposed to the entrepreneurial world and how to start businesses, how to scale, how to raise capital for VCs.
At some point I said, “Hey, I want to go back to real estate,” and I went back to real estate, and this time, as an investor. So I’ve made a full circle, from legal, to property management, and then finally, in investment. I chose to focus on multifamily, and I think the fundamentals are very strong, as probably you know and a lot of your investors know. Today, my company buys properties across the US, and that’s what I do.
Theo Hicks: Perfect. Thanks for sharing. So you’re ready to scale. We talked a little about that beforehand, but you kind of match becoming a multifamily syndicator with starting and then scaling a business. You can take this any direction you want to, so I’ll just ask you, how do you start and scale a multifamily business?
Ellie Perlman: Sure. So I think the one thing that I see many new syndicators do that I did a bit differently was focusing on getting that first deal, which is important, but focus on getting the first deal done and then say, “Okay, let’s get it done, learn how to do it, then we go to the second one and the third one.” Because I had that entrepreneurial background, I looked at things a bit differently, and I said, “How can I start this business from day one, so I can scale it and build it as a syndication business?”
I chose not to focus only on the first deal, but build systems and processes so I can actually scale it. I know that’s a huge pain point for a lot of syndicators. There’s so much to do. There’s so many moving parts, and that could be very overwhelming. So that’s why it’s so important to have everything in place to set you up for success.
But with my first deal, to your question, I started by partnering with someone that was more experienced than me when I started. So when I did that, I had more time to focus on building those processes. So by partnering, I took part of the deal, part of the responsibilities – that for me was mainly on the capital raise side, and the other part was done by the other partners. In that way, I had the time and the focus to really build a company, so next time, everything moved a lot faster, a lot better and a lot more efficient.
Theo Hicks: So you said the focus for you starting out was building the systems and processes. So what are some of these initial systems and processes that you put together during that first deal? Then maybe talk a little bit about how those have evolved, now that you’ve gone through the experience of doing these deals and growing a portfolio of $93 million in multifamily.
Ellie Perlman: Sure. So one of the main things that I’ve changed and I’ve learned from the first deal that I’ve done was to really automate the process. So instead of calling investors one by one, which is one of the mistakes that I’ve done early on, while I was still building the company and understanding how and where I can automate the process, I had a list of investors, and I called each and every one of them and told them about the great deal that we’re buying. And that was a very long and tiring process, and I found myself listening to myself over and over again, going over the same stuff with every investor.
So the next time around, the one big thing that I’ve done, besides sending an email to all the investors that I had on my list, by using MailChimp – that was very helpful, because I could really see who opened the email, who clicked on the link, and I could focus on those who are more likely to invest. But I found out that if I hold an investor conference call and record it, and go over the investment once — so I dedicated 45 minutes to it, go over the investment, answer questions at the end, I open it to questions from investors… It just worked like magic. And actually while the call was in progress, I started receiving text messages and emails from investors saying, “Sign me up, I’m in. I’m investing 100k, 50k, 300k” whatever it was.
That way, I found the way to tell the story and go over the investment page with 60 or 70 investors in 45 minutes, instead of telling the same story over and over again. So some of them gave me the green light right away, and some investors who still had some questions that haven’t been answered, we’d basically focus the conversations that I had with them on very specific questions, one or two or five questions that were very specific, and that made the entire capital raise a lot easier. So that little trick really helped me automate the process.
Theo Hicks: Perfect. Best Ever listeners, we’ve got a lot of blog posts, as well as syndication school episodes, on that conference call she’s talking about. So just go to joefairless.com and search “new investment offering”, you’ll find all of that content. Alright, so the one system you put into place was instead of calling people one at a time into the conference call, what other systems, processes do you have in place to automate and help you scale faster?
Ellie Perlman: Sure. So I want to shift the focus from capital raise to sourcing deals. So I found out that there has to be a system to go over every deal, so I can track and see what my acquisitions team is doing and where they are in the process.
So you start with a whiteboard and you say, “What’s the first step that happens when you look for a deal and what is the last step?” So the first step was source deals, and when I say source deals, I mean, go online and search for deals, contact brokers, ask them questions… I literally wrote every step of the process, which websites I want my team to search, what question, which brokers to reach out to – some of them I already knew – which questions to ask. Then every step of the way, when do you reach out to your property manager? When do you reach out to the property tax expert to get a quote? So all of these different steps I’ve built using a great tool called Airtable, and I believe it’s free to use.
It’s a project management tool where I can see every morning when I check to see where my team is. I can see how many deals are being underwritten, how many deals were waiting for information from a property management company, how many are in a pipeline. So my team would move deals from one step to another, and I plugged in where in the process I want to get involved. So before we submit an LOI, I want to see the deal, I want to go over the numbers, and then once I give it the greenlight, my team can move forward and we can submit the offer. And then if we’re in the best and final, then this is the time where I fly out… Because I live in California and I invest in, as I mentioned, out of state; Florida, for instance. So I know when I see it. I have a snapshot of everything that is happening in every single moment in the business, where each deal is, and that’s very helpful.
Theo Hicks: You mentioned that you’ve got a team of people helping with these deals. So how does your team fit into this, having systems and processes and helping you scale and then what tips do you have for people who are wanting to scale their business about finding the right team members, interviewing team members, ongoing training, things like that?
Ellie Perlman: So when it comes to where they fit in the process– when I started, I built the process with them, because you’ve got to understand that this is how you want to build a process, when you have a team that should feel comfortable and not frustrated. So we’re always changing and tweaking the process, so everyone can be happy, but it also has to make sense, of course.
My goal was, at first, to be more involved, and as my team learned how I think and understood what I needed exactly, I was able to pull myself a little bit out of the process, so I don’t need to walk them through every step of the way. But before we submit an offer, this is where I get involved, this is where I want to review everything, and that freed up my time to work on other parts of the business. So that’s the answer to your first question. The second question was about– can you remind me what was the second question about?
Theo Hicks: Yeah. How do you find them? What is the process for hiring people on your team?
Ellie Perlman: Yeah, absolutely. I have a mentoring program, and part of what I’m teaching is how to build a team on a budget… Because most people don’t start with a million-dollar in their bank to invest in starting a company. So it really depends what part of the business you’re trying to hire. So for marketing, for instance, and investor relations, you can use anything from Craigslist to LinkedIn, which LinkedIn is more expensive, but will give you, generally speaking, higher-quality candidates.
Then when it comes to the acquisitions team, you have three main sources that I’ve been using. One of them is Upwork, which has many underwriters and acquisition managers there, and you pay them by the hour. The downside is that most people there have full-time jobs, so they can only work in the evenings and on weekends, so you’ve got to make sure that you feel comfortable with that.
The second source is Select Leaders, which is website mainly for investment banking and real estate jobs. So you do get quality talent there. I think it’s about $500 or $600 for two months. My favorite is actually LinkedIn, where I found the highest quality talent. These days, you can set up a daily budget of $20 a day, $30 a day, and based on that budget, LinkedIn’s algorithm is going to push your job in the internet.
So that’s mainly how I got my talent. I have very specific questions that I’m asking them, and when I hire, I find four or five different characters that are important for me when it comes to hiring this person, and I rank the importance of each of them, and when I interview, I give a certain score. So by the end of the day, I have a weighted average of the score of that candidate. On my mentoring program, I also provide all the tools that I’m using, all the spreadsheets and all the processes that I’m using in my business. But generally speaking, this is how I hire, using this process, and that helps me hire a lot faster than it usually should.
Theo Hicks: Alright, Ellie, what is your best real estate investing advice ever?
Ellie Perlman: My best real estate advice ever is to think about a syndication as a business. Don’t think about it as you need to get that one deal done and then figure out the second or the third one. Those deals – they don’t work in silos, and so think about it as a bits of business. It’s not only syndication; I like to call it a syndication business. And once you think about it from the get-go, that would shape the way that you build your syndication empire. So that would be my best ever advice.
Theo Hicks: Alright, Ellie. Are you ready for the best ever lightning round?
Ellie Perlman: Yeah, absolutely.
Theo Hicks: Alright, what is the best ever book you’ve recently read?
Ellie Perlman: The best book that I’ve read recently was The One Thing by Gary Keller; it actually teaches you how to use your time and how to focus so you can get more done in a short period of time.
Theo Hicks: What deal did you lose the most money on?
Ellie Perlman: I haven’t lost any money on deals, but I would say there are many deals — what I do lose is deals, period. So I lose deals to other sponsors that are overpaying for them; I’m really not ready to overpay for any deal.
Theo Hicks: Besides your first deal and your last deal, what is your best ever deal?
Ellie Perlman: My best ever deal was a deal in Florida, that we found out that the owner renovated all the units and only started raising rents two or three months before we bought it. So we got a fully renovated complex with $250 rent premiums that were just implementing. I don’t know why he did it; he told the broker later that he made a mistake, and he should have done it a while ago, but that’s why it was 100% occupied when we bought it. So that was one of the best deals that I’ve done.
Theo Hicks: What is the best ever way you like to give back?
Ellie Perlman: I love speaking with people who are starting out and seek advice, and so just share my knowledge and prevent them from making the mistakes that I’ve done, that’s one way. The second way is that my husband and I, when we got married a year ago, all the gifts that we received, we started a charity fund for kids to educate them about entrepreneurship and just give them a chance as kids, in communities that wouldn’t have gotten the chance to learn about entrepreneurship and finance. That’s a project I’m passionate about, so that’ll be the second way.
Theo Hicks: And then lastly, what’s the best ever place to reach you?
Ellie Perlman: The best ever place to reach me would be my website. That would be ellieperlman.com. So you can get in touch with me there or email me firstname.lastname@example.org.
Theo Hicks: Perfect, and we’ll have that contact information in the show notes. Well Ellie, I had a great time talking to you today. Just to quickly summarize what we went over – again, the focus was how to start and scale a business, and the main theme is that when you are starting a multifamily business, a syndication business, really any business, rather than focusing on how you’re going to get that first deal done, get that first contract done; you want to focus on creating systems and processes that will allow you to scale your business long-term, and doing that from the get-go.
A few examples that you gave were – one, instead of calling investors one by one, which is going to take a long time… An example is 60, 70 investors, an hour each, that’s 60 hours of your time. Instead, you started to do conference calls, 45 minutes long, and you were able to present the entire deal to those 60 to 70 people, and you even had some people texting you and emailing you commitments to invest in that deal while on the conference call.
The other example you gave was your Airtable system. You gave the example of when you are looking for deals, and you have the entire process in extreme detail written from start to finish, all the information that your team needs in order to complete each step, and then you also have a time in that whole process where you step in and get involved.
We also talked about your process for hiring team members for your acquisitions team, find them on Upwork, Select Leaders and LinkedIn. For marketing, investor relations, Craigslist or LinkedIn. You talked about how you have a specific list of questions that you ask during your interviews, but you also have four to five different characteristics, different qualities you want of a team member. All those are ranked from most important to not as important, but still important, and then you’re able to use those to score each of your candidates, and that helps you make sure you’re hiring the right candidates who are a right fit for your business.
Then lastly, your best ever advice, which is coming full circle to the beginning, which is to think about the syndication as a business, as a syndication business. Don’t just focus all your efforts on getting one deal done, and then all your efforts are getting the second deal done; put systems and processes in place so that once you’ve done that first deal, the next deals fall like dominoes.
So again, thanks for talking to me today, Ellie. Lots of great information. Again, make sure you check her out at ellieperlman.com. Best Ever listeners, thank you for listening. Have the best ever day and we will talk to you tomorrow.Follow Me: