Real estate may be the way to financial independence, but it won’t come easy. It will take mindset, determination, and the drive to succeed. In this episode, Sam Wilson talks about real estate investing and multifamily with Sterling White, investor and Principal of the Sonder Investment Group. Sterling shares his story of adversity that gave him the drive to succeed and shares lessons he learned on his real estate journey. Listen and be inspired by Sterling’s tale of success.
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Scaling Your Multifamily Real Estate Business With Sterling White
Sterling White is the Principal of Sonder Investment Group and all related entities. His mission, when it comes to real estate, is to help as many people as possible and give them the push they need to create their path to success. He oversees acquisitions, development financing for multifamily opportunities and other commercial projects.
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Sterling, welcome to the show.
Thank you, Sam, for having me on. Everyone, I want you to get a bag because we are going to drop tons of golden nuggets, and you will want to go ahead and scoop those up as we were going and get your popcorn ready as well. We are going to take you along for a ride.
The same questions I ask everybody who comes to the show. Can you quickly tell us where did you start, where you are now, and how did you get there?
I will go a little bit back to my upbringing. I was born and raised in Indianapolis in not-so-good parts of the city. Every other day, I remember in one of the apartments that we lived in, and people called them the projects, it sounded like fireworks outside, but it was gunshots. With that is a fraternal twin brother I grew up with as well as a single mother. We were on welfare food stamps, Section 8 Housing, and luckily ended up getting out of the environment. One of the things is I had to figure out a way to earn money and that is where the entrepreneurship bug came for me.
Fast-forwarding through all that, I got started in real estate in 2009, where I was on the construction site as a laborer in my friend’s construction company. Shortly after that, I saw that the wealthy did not get that way by being actual laborers, so I started investing in 150 single-families. My first deal was no money out-of-pocket, and then I started buying multifamily. First, it was 46 units, and then the latest was 156 units and then scaled to 500 units.
That is an interesting epiphany when you are looking around, and you are going, “If I continue to do the same things everybody around me is doing, I’m going to wind up like them.” Look to somebody in your industry that is twenty years older than you and say, “Is that the person I want to become?” Yes or no. If it is not, then maybe change your tactics. You bought 150 single-family houses. That is no small feat. Why did you end up getting out of single-family and then going into multifamily?
Finding a mentor takes time. You may have to speak to multiple individuals.
As you mentioned, it is no small feat and it is a lot of management and looking at deals. It is one of those very labor-intensive and I was self-managing. It had about 120 in Indianapolis and about 30 in Dayton, Ohio. It was a lot of moving parts with that. I took a step back and said, “What model is even more scalable and what it made the most sense to start to transition to multifamily?”
I don’t want to spend too much time here, but I’m curious because you divested yourself of all of that single-family. Did you sell them as a package or one-by-one?
Most were one-offs and some of those were packages. It was quite a bit.
I’m looking forward to the next segment here. Talking about no small feat, but it sounds like you have had quite a few of these going from labor in 2009 and buying 150 units. That is not a whole mindset shift.
In 2013, I was 23 years old, I bought my very first single-family. In that period of 2013 to 2014, that is when the single-families were accumulated, and then that is when I started to buy the multifamily.
What was the mindset? I’m like you. I didn’t grow up in the projects, but I certainly heard my fair share of gunfire. I grew up very poor. We heated our house with firewood. I know what it’s like to go, “Okay,” and go without. I didn’t know that there was such a thing as closed at feat as a kid. I thought everybody’s clothes were too tight or gloves were too small in the winter. Talk to us about that. What was that like to overcome that mindset and go, “I’m capable.” We were a product of our environment, but there is also nature versus nurture. Somewhere along the way, there was somebody that helped nurture you the ability that said, “I can do more than what I have already done.”
I love that you bring up the topic of a product of our environment because my twin brother beat me out of the womb by two minutes. He calls me little brother. I’m like, “Are you serious?” He ended up taking a different path in life, being a product of that environment. I took a completely different shift. The people you surround yourself with are true. Our mother moved us out from the inner city to the suburbs. We were in lower-income housing, but we were no longer in public schools. We were in township schools. Township schools are a lot better, and I surrounded myself with completely different people.
My brother went back to that environment and took the path and is facing a hard time due to the decisions he made. One thing I want to mention is that I didn’t have the best mindset growing up because I didn’t have the right people around me. I had this very pivotal moment when I was at a college party doing what college kids are doing, having a good time, and all that. I drift away from the crowd.
I’m out in this canoe or boat in the middle of a lake or a pond, and this question comes down to me that says, “Sterling, is this what you want to do with your life?” I said, “No.” That is when my path changed. I started coming across Earl Nightingale’s, the Jim Rohn’s and Zig Ziglar’s. I had a lot of limiting beliefs out of my mind that I had to remove first and then put the good into it. What helped with me was having that pivotal moment, listening to whatever that voice was. I don’t know who it was, a higher being, God or whatever you want to call it. The universe started to open up once I started listening to those individuals.
Were there any mentors outside of the people that we can see public figures like Jim Rohns, Zig Ziglars and things like that? Was there anybody that came in that was a more personal mentor to you?
Yes. That was a person at the CrossFit gym that I was working out that I was bartering as a way to pay for the membership because I did not have any money. I established this relationship with this person and never thought they would be my mentor. One day, I approached them because I overheard that he was a member at the CrossFit gym. At that time, I was training for a world record. He was talking about doing construction and the build-out.
For some reason, I asked him out to Subway and said, “How can I be of value to you and your business? I want to work for you. You don’t even have to pay me anything.” He took me up on that. The next day, I was in his property management office helping out. Another moment came that he said, “I’m looking to buy some single-families.” He owned some apartments, but he was looking to diversify. I said, “This is perfect. Now, it is up to me to find the deal.”
What advice would you give to somebody who is looking for a mentor?
To put it out there, the universe is cheesy as it sounds. It worked for me. I also know that it takes time. Many people hear that story of me getting my mentor and thinking that, “It happened overnight.” We were in the social media days where everyone saw highlights. It takes time. You may have to speak to multiple individuals because I happened to have a lockout that this person was older. They saw something in me and decided to take me up under their wing. Some people don’t have the time or the bandwidth. I get approached with it like, “I don’t have the time to be able to do that.”
That is a great point there, which was the time it takes, especially in the social media age. That is business. This is not a get-rich-quick business. You can get some good licks along the way, but all good things take time.
Get rich slow is what I would like to call it.
Talking about the get rich slow program or plan that we were on, what are some things that have been instrumental for you in building your momentum?
Focus as quickly as you can on the highest value activities versus the lower value activities.
It starts with mindset. That is the key thing, and input as much as you can because I had so many limiting beliefs. One is the belief in myself because, on a daily basis, I have people who I woke up to that said I would not amount to anything. It started with that. Secondly, I had limiting beliefs that you had to have a good credit score. You had to have a large amount of cash. I’m 23 years old. How can I do buy into real estate? It is an old man’s game. It is all of these different things. I would say it starts with mindset. That is where I see most people get stuck.
The second is patience. Those first couple of years, I didn’t make anything. Luckily, I was able to live in my friend’s den, and I had an Amazon business as a way to cover my overhead. There is that patience, knowing it is going to take time and not instant gratification. Thirdly, systems and operations. Where I’m at now and looking back, I wish I would have documented a lot more of what I did. In that way, I can move faster moving forward. In addition to that is to focus as quickly as I can on the highest value activities versus the lower value activities.
When you say documented your activities a little bit better, what comes to mind, or how would you propose someone to document their activities such that they could replicate it?
From a tactical standpoint, it is opening up a Google Sheet. It is free to have a Google Doc. Let’s say you are using your laptop and it has Microsoft Word or whatever particular process or tests that you are doing. I remember each time I would go and raise money for deals with my partner, the next time we would raise money for deals, we would have to think back like, “What did we do last time to do that?” That is a prime example of documenting as you are going through the process.
Another thing that comes with patience is that I’m one of those people that is like, “Go.” Now, I have taken the time to document. You are essentially taking 1 step back to take 2 to 3 steps in the future. As I’m going through something, whether it is new or whatever the case is, I will document it. It doesn’t have to be 100% of the way because there are different ways to document things like opening up the browser. Keep it on a high level and then that will allow you were moving forward to move faster, or if you bring someone onto your team, everything is already there versus it being in your head.
Talk to us about raising money. You have already told us you didn’t come from a wealthy background. What was it like getting investors involved in deals, especially early on without a track record?
I started with that initial mentorship, but then I ended up partnering with someone who already had a relationship with friends and family of which they had already started doing deals and having success. I essentially tapped into that relationship. I was using friends of friends’ cash to buy deals. This started on the single-family side.
I was doing the marketing, so I was putting a lot of content like being on podcasts such as this and being a contributor to the BiggerPockets as a way to generate interest from outside investors. We would take our original investors and then cash them out with the new ones. They would earn a return on their money and the new ones that came in, and then we would snowball that. That is how we were able to scale so quickly.
When you think back along this journey, what have been some surprises or pitfalls that you have experienced along the way?
One is I took multiple pivots when I started the company. Luckily, I’m glad that we didn’t do the things that came up. We had someone approach us, and this was right towards the beginning as we were starting the company. We had some deals with a venture capitalist that said they were going to fund this but they wanted this control, and then they also wanted to bring on these partners and all of this. I’m glad we passed that up.
Also, there were other regulations when we were considering crowdfunding. We were thinking, “Let’s go ahead and partner with this other operator. Also, let’s go through this regulation,” so we had to take multiple pivots. As you are starting your company, that is going to take patience. Your original vision depends on how the marketplace provides the feedback, so listen to the feedback and be willing to make those pivots.
Success is the progressive realization of a worthy goal.
You can never lose money on the deal you didn’t do. When red flags go up for you guys with the VC partner going, “Maybe this is not for us.”
It didn’t make sense. The original person we spoke to said, “I will provide this amount of cash and I will be the one that will be able to provide insights to you and help. However, I’m going to bring all these people along with me.” It was very fishy.
One of the things you are known for is creative marketing and bringing in sellers on a more strategic level. Can you break down for us what you do, why you do it, and why do you think it works?
Take the direct owner approach when buying deals. In 2017, things started to creep up in the market as far as price is going up. When we bid on properties, people were bidding 10%, 15% or 20% more than what we would pay. At that time, I said, “Why not go directly to the owner in this case?” If the deal is listed with a broker, you don’t go directly to the owner.
In that case, we build our own lists, and then that is when we go the direct owner approach. What I learned is sales is everything. An owner may not be interested now in selling their property, but then things do change. They have different and creative ways to follow up that allow you to stand away from the crowd. Most people follow up and say, “Now you are interested in selling your property.” There are different ways on how you could follow up like sending birthday cards. I will send out the list, and people will ask, “Do you know their birthdays?” No. They will call me and I will say, “I may be a little bit early or late. I just want to make sure I got you covered.”
That is a way to follow up. I have set Rubik’s cubes to owners and follow-up with that. I remember I was speaking with one owner. He says, “My wife cannot figure out this damn Rubik’s cube.” That is so hilarious, but you think she is while she is back there trying to solve that Rubik’s cube. He is thinking of the guy who sent it to him. That is a creative way of following up without following up.
What do you even tell them when you send the Rubik’s cube? Is it like, “Happy Rubik’s cube day?”
It is more so the owners I have spoken with and I have submitted an offer to them, they said, “I will go ahead and think it over,” or they may be at this price. That is why I will send them the Rubik’s cube. It is like, “Let’s figure this out together.”
That is super creative, but it is also a lot to track. A lot of us want a model that is scalable, repeatable, and does not require a lot of hand-holding, but what you are telling us is there is success in getting a niched-down list. You can’t send Rubik’s cube to 1,000 people.
It is different from the targeting because there is only a finite of apartments built between 40 units to 150 units that are C properties built around 1970 versus targeting a single-family home list that may be 1,000, 5,000, or 10,000. That is a lot more difficult to do.
That makes a heck of a lot of sense and gives some insight into the next step. You are going to win deals over the guy that is mailing out the same letter every month going, “I hope they have a reply.” Let’s talk about some definitions. Let’s define success and then tell me what does it mean for you to be successful.
Success is the progressive realization of a worthy goal. That is from Earl Nightingale. That is not my definition. As long as someone is constantly working towards a goal, then that is a success. What I mean by that is everyone has different measures of what success is to them. That is one thing I have learned too. As an operator, I have to understand that someone may be okay with being a janitor and going home. Let’s say they work from [9:00] to [5:00], do not have to worry about work and make $60,000 a year. As long as they were working towards some goals, that is what I’m a firm believer of what success is.
Let’s talk about impact. Define impact, and then tell me what impact do you believe you have on other people?
The impact is making a dent in the universe. That is what I would consider impact or making an impact into the universe, even though I am still using the word impact in the definition. What I would say is providing inspiration. How I wish to inspire people is by showing someone who is in that environment that, “There is a way out. I was where you were.” Sometimes, I start to feel this when I talk about this because I remember growing up there, and I did not know there was a way out. I didn’t know what was outside of that.
It’s good to learn from your own mistakes. But a wise person learns from others’ mistakes.
I didn’t know about being able to travel to Dubai, Santo Domingo, Puerto Rico, and all these different places, and that I was going to live a modest life and not even live past the age of eighteen. If I can provide someone the inspiration of, “You don’t have to be a product of the environment. You don’t have to deal drugs. You don’t have to do this as a way to make it out,” and be that inspiration that, “I took this path and this is how I did it.” That is how I wish to make an impact.
Let’s jump into the final four questions. Certainly, I appreciate everything you have shared with us, your story talking about a creative mark or seller outreach, taking deals down financing, how to partner, red flags, and things to avoid. You have given us a lot of golden nuggets here. The first question for you, and the final four is, what is a resource you find you can’t live without?
I would say Google Docs and the platform, Asana. I shifted from using Google Docs to the platform Asana where we enter all of our SOPs. That is one resource I would not want to live without because I live and die by the SOPs. If I don’t have an SOP or something documented, I will have someone on the team. That is one of the things we first think of, “We got it down. Now, you go document it.”
If you can help the readers avoid one mistake in real estate, what would it be, and how would you avoid it?
Raise enough money to take care of renovations on a deal. If the deal does not make sense for you to do that, then pass on it. If you start to have the thought process that, “I can take this out of cashflow.” It is a red flag because I have learned, and they say, “Yes, it is good to learn from your own mistakes, but a wise person learns from others’ mistakes.” I heard this mistake but still made a mistake. I was like, “This sucks.” Sometimes, that still has to happen.
If you are moving forward or underwriting a deal, and it doesn’t make sense to raise the money to take care of improvements because it affects your cashflow to your investors and the returns. If you are saying, “I can still figure this out,” and there is a devil that is going around your head. If it is saying, “Do not do this deal, it doesn’t make sense.” That is me floating around your head like a little angel.
That is a hard-earned lesson. Thank you for sharing that with us. When it comes to investing in the world, what is one thing you are doing right now to make the world a better place?
I would say telling my story and being as vulnerable as I can when it comes to that. Some people can see their trajectory of me telling my story since 2013 when I started to be more open with it. That is what I would say. I have heard people at conferences that I have gone to. I received emails and DMs and all that that says, “Sterling, you have inspired me so much.” I was like, “I’m just living this life and telling a story to the people.”
If our readers want to get in touch or learn more about you, what is the best place to do that?
You can visit @SterlingWhiteOfficial, and you can shoot me an email anytime at Sterling@SonderInvestmentGroup.com.
Sterling, thanks so much for your time. I do appreciate it.
I appreciate you, Sam.
Important Links:
- Sonder Investment Group
- @SterlingWhiteLLC – LinkedIn
- @SterlingWhiteFan – Facebook
- @SterlingWhiteOfficial – Instagram
- @SterlingWhiteRealEstate – YouTube
- The Real Estate Experience Podcast
- Sterling@SonderInvestmentGroup.com
- Google Docs
- Asana
About Sterling White
Sterling is a multifamily investor specializing in value-add apartments in Indianapolis and other Midwestern markets. With just over a decade of experience in the real estate industry, Sterling was involved with the management of over $10MM in capital, which is deployed across a $16MM real estate portfolio made up of multifamily apartments.
Through the company he founded Sonder Investment Group, he owns just under 400 units. Sterling was featured on the BiggerPockets Podcast and has been a top contributor since 2014, with over 200 posts on topics ranging from single-family investing and apartment investing to wholesaling and scaling a business online.
