Real estate, despite its central element being properties, is all about communication and building connections. Success can be achieved in this industry by understanding the power of systems and people, and you must learn how to use them to your advantage. Joining Sam Wilson to share how she did this is Shelby Osborne, Founder and CEO at Five Pillars Realty Group. She talks about acquiring more than 70 units across different investing strategies, working as a full-time agent, and spending time training investors. Shelby also discusses how she uses endorphins, dopamine, and adrenaline in her business ventures, as well as the best practices she follows to keep everything on track.
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Listen to the podcast here:
Finding Real Estate Success Through Systems And People With Shelby Osborne
Shelby Osborne graduated from the University of South Carolina in 2012. She served in the Army for six years and got out as a Captain at the beginning of 2018. Since purchasing her first rental property in 2017, she now owns 51 units, purchased using several different strategies. Fun facts about Shelby, she likes endorphins, dopamine, adrenaline, and seriously disliked wasting time, anything slower, lazy, close-mindedness, and 3-foot walls. Shelby, welcome to the show.
Thank you so much for having me. That was a bio that’s out of date because I now have 74 doors. My bad for sending you the wrong one.
It’s all good. You’re trending in the right direction. Anybody that’s going in your portfolio wants to see that number continuously grow. That’s fantastic. Shelby, the same three questions I ask everybody who comes on this show. Where did you start? Where are you now? How did you get there?
I started my interest in real estate investing back in 2017 when my frustrations with the military grew. I did not see a long future for myself in the military. I looked for the avenue in which I could stop trading my time for money. After some research, I discovered real estate. I got out of the military to pursue real estate, both full-time as an investor and as an agent. My first year was 2018. On the agent side of the house, I did well. I was the Keller Williams Rookie of the Year. On the investor side, I scaled up to sixteen doors, then fast forward to four years, my portfolio is 74. I am the owner of the Five Pillars Team at eXp Realty. That’s a team of investor-minded agents.
That’s a lot of growth in a very short period of time. Has all of that been single-family? What is your portfolio comprised of?
It consists of a little bit of everything. It started out with a handful of single-families. I have a large chunk of residential multis, so duplexes, triplexes, quads. I have a couple of commercials. I have 5, 6, and 8-unit. My focus is the BRRRRnB strategy. The BRRRR method into the short-term rental as opposed to the long.
There are a lot of moving pieces there. That’s one thing everybody struggles with when they start out. It’s finding which avenue to focus on. Somehow you found a way to acquire 74 units across a variety of investing strategies as well as be a full-time agent, and also be a training agent. What have been some of the secrets to figuring out all of this?
As long as you have the right people managing the right systems, there’s less that you have to do yourself.
Secrets are understanding the power of systems and people. Those are the two things that have expedited my path. With those systems, I’ve built everything. I started out doing everything myself, as many people start out. As I went through the process of learning how to do all the things, I would document them as I go and automate them. By documenting and automating, when it was time to pick my head up and leverage with the right people, I was able to transfer the how-to and the intent way I had to each of them, which allowed everything to grow more quickly.
It’s hard to do with the smaller properties. How have you been able to do that? Especially, maybe stuff’s been spread out and even with different investing strategies.
Everything is difficult. It’s easy to talk to someone at like the four-year mark and be like, “How did you do it?” I was like, “It’s blood, sweat and tears actually.” My portfolio is divided between my long-term rentals and then my short-term. With that, I have a property manager who handles my long-term rentals and I have a property manager who handles my short-term rentals.
I have an assistant who essentially works as an asset manager and oversees the two of them. Between those, problems still arise. As long as you have the right people managing the right systems, there’s less that you have to do yourself. There’s always more stuff. Shit always hits the fan. As long as you have the right people in the right systems, it’s manageable.
Why have you done some long-term rentals and some short-term rentals?
You learn as you go. I started out with the long-term rentals across the board. The goal was to buy and hold. It was cashflow, financial freedom, the whole thing that most people think about when starting out. I tested one of my properties with the short-term rental, and the cashflow is so much better that I quickly realized that I don’t need 74 rental properties. I need a chunk of high-performing short-term rentals, and that will be more than enough to hit my own personal goals financially.
How have you financed these opportunities? Coming out of the military, you’re getting out of the military as a Captain. You’re not making $1 million a year, I’m assuming.
It’s funny. My first one ever was an unintentional investment. It was a primary residence in Washington state. That’s the only one that I have outside of the Carolinas. I’m in North Carolina. That one, I used my VA loan. In the military, you get 0% down on a primary residence. When I first discovered investing, I did not know as much as I do now. I put 25% down on a duplex. That’s my first. It was a turnkey duplex. I quickly discovered that even at the $75,000 purchase price, I could not do that very many times because you quickly ran out of capital.
I started looking into other options. I used my VA loan again and got four units from that because you can buy a quadplex. After that, I started raising private capital in order to do the BRRRR strategy. Private funds to acquire, renovate, then refinance on the backend, pay off the private money lender, and ask them for the money back, and do it again.
I understood that. That makes a lot of sense because hard money is what you were using on the front end.
I like private money so much better than hard money.
Define the difference for us.
Hard money is institutionalized. I don’t know if that’s the correct word. There are rules and there are going to be standards and appraisals. Generally, sometimes hard money lenders don’t require appraisals, but it is a business. Whereas private money doesn’t have to be. Private money can be your mom’s friends, people who already know you, like you, and trust you within your sphere of influence.
The difference is when using private money, you have the opportunity to create whatever agreement that you want in a way that works best for both of you. They might not necessarily need points or need a twelve-month balloon. Maybe they’re cool with having your money paid back in five years, or maybe they’re cool with 8% interest only as opposed to whatever the hard money lender can give you. There’s a lot more room for making both parties happy and saving money on the investor side.
Sometimes those terms are used interchangeably. Maybe there are some nuanced differences there. Let’s talk a little bit about your real estate agent side of things. I know you have focused on training agents to be investors and investor representatives. What does that mean and how does that work?
If you turn your head at every shiny object that comes your way, you’re losing focus on what’s best for you.
I quickly found that as a real estate agent in my very first year that when you look across real estate agents, most of them have no idea anything about investing. They don’t know how to speak the language. They don’t understand the mindset. If you tell them you want an investment property, they’re going to get scared and run. I found that there is a gap in our industry for that and by finding other agents who are on a similar path than I was, where they would like to generate active income through commission closings to pour into their passive income portfolio.
There was an opportunity to fill that gap in the market. I trained agents on how to work with investors but also how to use their active income to get them out of the never-ending hamster wheel of real estate life. If you imagine as an agent, you close the deal and you’re happy for about ten seconds, then you’re like, “When is the next one closing?” I have no guaranteed income. There’s no retirement. There’s no actual light at the end of the tunnel. All of those pain points are what I aim to solve with my team at Five Pillars.
Many years ago, when I was buying single-family, especially on the commercial side, you understand what brokers do. It’s still the same hamster wheel, which is still interesting that even on the commercial side we see that. Especially on the single-family side of things. How did you come up with the idea and then figure out a way to monetize that with other agents and bring them on board? What was that process like?
The idea came from the interest of the agents around me. I had people come up to me and be like, “I like what you’re doing. I want to be a part of it too.” Based on that interest is where the idea developed from. By systematizing, providing leverage, and a system in which agents can plug into, begin to operate, and expedite their success, that provided the opportunity for turning it into an actual business. What I found is for most people, systems are challenging. Figuring out what to do, timelines, having email templates, drafts or packets, and all of these things do not come naturally to most people. Most people are happy to fall into a system that already exists.
That does not come naturally to most people. Is that what you feel like is your gifting then, figuring out those systems and putting in those templates and things?
Yes. Systems organization automation is my strength.
Fun facts about you that are interesting. You said you like endorphins, dopamine and adrenaline. What does that mean? How does that affect your business and work?
Understanding the biology behind humans, it’s very interesting to me. Endorphins like freaking getting that sweat on. The chemical changes in which it provides your body are what I thrive on. Same with dopamine and adrenaline in general. I like skydiving or bungee jumping, or anything that’s fast and exciting. I know myself and that’s what I like.
Pull yourself out of the daily grind of attacking whatever’s in front of you. Look at your life strategically from a bird’s eye view.
How do you keep that real in business? It’s more than just working out and getting that adrenaline high. There’s got to be a way that that applies to businesses as well.
Getting stuff done will give me that little kick, and it’s exciting. I want to attack a project, break it down into actual steps, and then complete it. I understand that with business, and I’ve found a way to integrate it with business. For me, it’s fun. Business is a puzzle. It’s a part that I get to play with and build and create whatever I can imagine, and then attack and bring it into a reality. That’s super exciting for me. The adrenaline part is a little riskier. You want to make sure that you don’t tap into that as much as you may be naturally inclined because that’s how you get yourself in trouble.
What have been some hard experiences that you have gone through in business where you let that get the best of you?
I have experienced some downfalls in regards to FOMO, the Fear Of Missing Out. I love my community. My biggest source of pride is the community that we’ve built and the people that I get to spend all my time with. With that, they’re incredible go-getters and they’re always trying something new, learning something new, acquiring this, doing this. I’m like, “I need to be doing more.”
I love that in a lot of ways. Also, it can get you in trouble because if you turn your head at every shiny object that comes your way, you’re losing focus on what’s best for you. Having that awareness that you have to take that time to reflect and think about truly what is best for you, not what everyone else is doing is super important, or else it will derail your progress.
How do you define what is best for you and how do you make sure you stay on track?
I’m big on mornings. Miracle Morning Millionaires is one of my favorite books, the Hal Elrod and David Osborn series about how you do your morning sets the rest of your day. It’s that time in the morning when you haven’t opened your phone yet, haven’t checked your email, no distractions and it’s quiet. You can think about where you want to go. Are you on track? You pull yourself out of the daily grind of attacking whatever is in front of you. You look at your life strategically from a bird’s eye view.
If you’re able to look at the whole picture, you’re able to make sure that you’re headed in the right direction and make that focus for your daily tasks, weekly tasks or monthly tasks. As long as you’re able to pull yourself out, look at your life strategically, and then stay focused on that, in my experience, that is the most successful way for me to do it.
I know there are many people who come on this show say the same thing, using the Miracle Morning as a template and work from that frame of reference. Let’s talk a little about your dislikes. You said you hate wasting time. You hate anything slower, lazy, closed-mindedness, and 3-foot walls. I’m going to argue this, inside of the residential real estate side, it’s fraught with excess paperwork and goofy hoops that people have to jump through to get things done. How does that not drive you crazy?
It does drive me crazy but also, there are people who don’t mind. It goes back to systems and people. There are the people who love paperwork, who love doing things exactly as they’re supposed to be done, and checking every block, and crossing every T and all the things. If those are the people in charge of your contract to close part of the business, they’re happy to do it, and then you don’t have to. That’s one way.
The other way is choosing not to do anything that you don’t have to do. A lot of people will tell you, “You have to do something,” or they’ll tell you, “No, you can’t do it that way.” You say, “Okay, thank you very much.” You can either talk to someone else who might give you a different answer, or you can choose to do it your own way. This all takes a lot of ability to determine what is truly important, what’s not, which lines you can cross and which ones you can’t.
It takes a lot of tact. If you are able to do that and release the things that don’t matter, I say this all the time to my agents, “Be a rain jacket. Don’t be a sponge. Let it roll right off you. Don’t absorb it and keep rolling.” People will get weighed down by the noes, the negativity, things that aren’t happening, and all that stuff that you can’t. Let it slide right off you and keep rolling.
When you say you dislike a 3-foot wall, what does that mean?
When people will say like, “No, we can’t do it that way. No, it’s not possible.” They’re saying no because they’re seeing a wall. They’re not realizing that it’s 3 feet, and you can hop right over it. It came from an Army saying. Don’t stop at the first thing that looks like a setback. That’s what I mean by that.
Shelby, before we jump here into the final four questions, is there anything else that you would love to share with our audience?
Not really.
Here are the final four questions. The first question is this, if I gave you the $20,000 to invest in real estate, what would you do with it and why?
If I did not know anything about real estate investing or experience, I would have bought a primary residence, ideally multifamily or at least something that you can house hack, using a primary residence loan, with the intent of house hacking. You’re getting the best rate, terms, down payment, everything possible out there on the market. I would use that $20,000 to furnish out the remainder of the units as short-term rentals. Hopefully, you get a quad. I would live in one unit, and I would have three Airbnbs that would bring in a ton of money, and I would be happy.
If you could help our audience avoid one mistake in real estate, what would it be and how would you avoid it?
I would ask the questions. A lot of times, newer investors do not want to sound dumb. Ask the questions, call whoever you need to, get the answer, dig in deep. If you don’t, you’re biting yourself at the end. You will regret not finding the answer upfront because it will bite you later.
When it comes to investing in the world, what’s one thing you’re doing right now to make the world a better place?
Huge on community. My goal is not only the community built within Five Pillars but also, we do a real estate investors meetup called Pints & Properties. It’s gone nationwide. The intent of that is to educate the community. It’s a free meetup. Come learn about real estate investing in ways that you can change not only your financial situation but also your mindset and the people you surround yourself with.
Shelby, if our audience wants to get in touch with you, what is the best way to do that?
@RealEstateWithShelbyOsborne on Instagram is a great way, but also FivePillarsRealty.com and just contact.
Shelby, thank you so much for your time. I do appreciate it.
Thank you so much.
Important Links:
- FivePillarsRealty.com
- eXp Realty
- Miracle Morning Millionaires
- Five Pillars Realty
- Shelby Osborne – Facebook
- Shelby Osborne – Instagram
- Shelby Osborne – LinkedIn
About Shelby Osborne
Shelby graduated from the University of South Carolina in 2012, served in the Army for 6 years, and got out as a Captain in the beginning of 2018 to dive into Real Estate full time as both a broker & investor.
Following her first year as a broker, Shelby was recognized as the Keller Williams Rookie of the Year for the “Carolinas Region” (all of North & South Carolina) and began to expand, creating her own team of real estate professionals. Five Pillars Realty Group became official in 2019 and specializes in helping military and investors nationwide meet their goals. “Pints & Properties,” their Real Estate Investors meetup, is booming & continuing to grow rapidly.
While building the team, Shelby was constantly working to grow her rental property portfolio. Since purchasing her first intentional rental property in November 2017, she now owns 51 units, purchased using several different strategies and comprised of a little bit of everything: single-families, residential multi-family, commercial multi-family, and short-term rentals… plus a bit of Airbnb arbitrage.
What’s next? Continuing to invest (duh), expansion of the Five Pillars Realty Group to Charlotte, NC and rolling out our Consulting business, to train Real Estate Agents on how to work with investors.
Fun facts Likes: Endorphins, dopamine, adrenaline, competition (ahem winning), smart people, creativity, doers, problem-solving Dislikes: Wasting time, anything slow or lazy, closed-mindedness, “3-foot walls”
