Introduction

Welcome to The Gold Collar Investor Podcast with your host, Pancham Gupta. This podcast is dedicated to helping high-paid professionals to break out of Wall Street investments and create multiple income streams. Here is your host, Pancham Gupta.

Hi, this is Joe Fairless. If you wanna diversify out of Wall Street investments, then listen to The Gold Collar Investor Podcast.

Hey, this is Mauricio Rauld, founder and CEO of Premier Law Group and if you are serious about investing in real estate, listen to The Gold Collar Investor podcast with Pancham Gupta.

Robert: Well, hi there. I’m Robert Helms, host of the Real Estate Guys Radio program and if you want to have better results in your life, you gotta put better ideas in your mind. You’re on the right place here at the Gold Collar Investor Podcast.

Pancham: Welcome to the Gold Collar Investor Podcast. This is your host, Pancham. Really appreciate you for tuning in today. We have an amazing show installed for you. How many of you have heard about crowd funding platforms? If you Google the word “crowd funding,” you will get this from Google, I quote, “Crowd funding is a use of small amounts of capital from a large number of individuals to finance a new business venture. Crowd funding makes use of the easy accessibility of vast networks of people through social media and crowd funding websites who bring investors and entrepreneurs together with the potential to increase entrepreneurship by expanding the pool of investors beyond the traditional circle of owners, relatives, and venture capitalists.” There are many crowd funding platforms out there. We have kickstarter.com and indiegogo.com for people who want to bootstrap their ideas. We even have websites like gofundme.com to help crowd source your causes, you know, if you’re raising for charity, you can go to gofundme.com and I’ve seen multiple things where people have used gofundme.com to raise money, but when it comes to real estate, you will see there are many platforms available with RealtyMogul being one of the top crowd funding platforms. Today, I have the pleasure of having the CEO of RealtyMogul, Jilliene Helman. Before we get into the show, a little bit about Jilliene. Jilliene Helman is the CEO of RealtyMogul, a private equity firm focused on investing in commercial real estate that uses crowd funding to raise equity capital. In this capacity, Ms. Helman has approved investments with property values over $2 billion, including over 16,000 apartment units nationwide. Ms. Helman has been featured as a contributor on real estate and fintech in the Wall Street Journal, Bloomberg, CNBC, the New York Times, Yahoo Finance, and Entrepreneur magazine and has been included in the Forbes 30 under 30 list as well as named Fintech Woman of the Year. Prior to founding RealtyMogul, Ms. Helman was a vice president of Bank of Tokyo-Mitsubishi and its wholly owned subsidiary, Union Bank. Ms. Helman holds a bachelor’s degree in business administration from Georgetown University. Jilliene, welcome to the show.

Jilliene: Thanks for having me.

Pancham: It’s an absolute honor to have you on the show today. I’ve been looking forward to this show for a very long time. I know we connected in February of 2020 when we had the last, at least for me, last in-person conference before COVID hit everyone, so really excited for the show today. So, before we get on, I wanna ask you, are you ready to fire up my listeners break out of Wall Street investments?

Jilliene: Absolutely, let’s do it.

Pancham: Great. I’m looking forward to it. So, Jilliene, tell our listeners about your background and, more importantly, the person behind that background.

Jilliene: Sure. So, I’m the chief executive officer of RealtyMogul and we provide institutional quality investment opportunities to investors. Started the company back in 2013, so, since then, we’ve made investments in about 2-1/2 billion dollars’ worth of real estate. About 70 percent of that has been in multifamily apartment units, about 14,000 apartment units that we’ve made investments in, and we really strive to help people generate passive income and make passive investments so that they have more time to live the lives that they want and we feel very passionate about that mission. We have over 200,000 members on the RealtyMogul platform, close to 20,000 investments now that have been made with us, and we’re very dedicated to finding private investment opportunities that are not available in the public markets, you know, that are not available in the stock market or the stock exchange. You know, I started my career in banking. I worked for Bank of Tokyo-Mitsubishi, worked in Los Angeles, actually also worked in Tokyo, Japan, and I worked with a lot of high net worth clients and my main take away from that was that our wealthiest clients were investors in real estate. You know, their time was disconnected from their wealth. They weren’t out, you know, dealing with a job day to day necessarily. A lot of them made money in other businesses or entrepreneurial pursuits or entrepreneurial ventures but they made a lot of money in real estate and so when I left the bank and started RealtyMogul, I really wanted to provide access to these investment opportunities to a much wider scope of investors, right? Folks who maybe have never made an investment in real estate before, folks who are just getting started with $5,000 all the way up to folks who had $10 or $20 or $30 million in net worth and needed help accessing private investments and building a diversified portfolio in those private investments.

Pancham: Great, that’s an amazing background there and I wanna go back to the time when you were working in Bank of Tokyo-Mitsubishi and you came up with this idea of RealtyMogul back in 2013, I believe. You know, my question to you, two questions there, so how did you come up with this idea of RealtyMogul? Is it because of your experience in Bank of Tokyo-Mitsubishi and also the JOBS Act of 2012, all of that played into that, so that’s my question number 1, and number 2, like tell us about the transition. You had this great, high paying job at Bank of Tokyo-Mitsubishi and now you’re thinking of starting your own company. What was it like to start the company? What were the fears? What kind of fears did you have to overcome to get into and start your own company and leaving this high paying job?

Jilliene: Yeah, so I guess for starters, at the time that I left, I was working in risk management and so I read the JOBS Act to figure out was it gonna have any impact on the bank, right? Was there something that we needed to be aware of and in my analysis came out with, there’s not gonna be any immediate impact on the bank. Maybe there will be, you know, 10, 20 years down the line but, you know, today, I really don’t think there’s gonna be any impact but I’m gonna go start a company. And the reason that I thought it was the right time to start the company was because of the regulatory change. You know, it was really the first time in decades and decades and decades that the regulations had changed and this was the Securities Act of 1933 so, you know, documentation that was written literally in 1933 was being modified and updated to the modern era, right? Being able to use the internet, being able to market investments on the internet, being able to raise capital on the internet, right? I mean, it’s shocking you think that that was only 2012 when that legislation came out but that was 2012, right, and so I saw a big opportunity there. I’d always wanted to be an entrepreneur so I grew up in a very entrepreneurial family. You know, I was the kid who was hawking lemonade at the lemonade stand at 6 or 7 years old. I was selling stuff at swap meets when I was 11, 12, 13 years old, so I always knew that I wanted to be an entrepreneur and I think that I saw that opportunity and it also felt like the right time, you know? I was young, I didn’t have children, I didn’t have a lot of obligations, I sort of only had myself to take care of at the time and it really felt like the right time so I always knew that I wanted to be an entrepreneur. You know, I’d wake up every morning and think about what business I was gonna start or what I was gonna create or what I was gonna do and, you know, I tell people if you don’t have to be an entrepreneur, don’t be one, right? Because it’s the best journey of your life and the worst journey of your life all bucketed in, you know, one big bucket, but I had to be, right? I would wake up every day and think about my company and think about what I was gonna do and think about what I was gonna build and I have never been quite as inspired as I was when the JOBS Act came out where I looked at it and I said if I don’t leave Union Bank right now, if I don’t turn in my resignation and get started, someone else is gonna do it because this is the first time that the legislation has changed dramatically since 1933 and there’s a lot of smart people out there and execution really matters, so I knew at that point in time if I was gonna do it, I had to go, I had to be all in. You know, I started the company nights and weekends just to kinda give myself some momentum and make sure that the idea was gonna stick. I started spending a little bit of money on Google Ads to make sure that people would click on my website, you know, the basics, kinda give myself that courage and give myself that comfort and then I just took the leap.

Pancham: Amazing story there and all entrepreneurs I speak to, they have all this in common. You mentioned the right advice. If you don’t want to be an entrepreneur, don’t be one, because it takes a lot of hard work, persistence, and perseverance to get going and, you know, Google Ads definitely worked because I remember in 2014, 2015, 2016, that time, if you were to search for crowd sourcing platforms on Google, RealtyMogul would be one of them that would show up and that was great so all of that worked and obviously you are where you are today because of all the hard work that you’ve put in, so, kudos to you for that. So, you know, I wanna go back to RealtyMogul now, like you started this company, you have 70 percent in multifamily and then 30 percent in different asset classes. I would wanna know like what are those asset classes? And now your mission of the company is to really help people, right, with the cash flow, with passive investments, and so tell us like, you know, how over the years, since 2013, your portfolio has changed which has led to now 70 percent multifamily and 30 percent other asset classes and what do you see going forward? Like are you still focused on multifamily or you’re more focused on different asset classes now where we are in the cycle?

Jilliene: Yeah, so, about 70 percent of our investment is in multifamily, the other 30 percent is in other commercial assets so office, industrial, retail, mobile home parks, we’ve got a little bit of self-storage. I think that that will probably be our mix moving forward, right? At the end of the day, we’re looking for investments with good risk-adjusted returns. I like multifamily a lot, right? We’ve done a lot of value-add multifamily. We found that that business works very well. There’s still risk in that business. There’s risk in every business, right? In every real estate execution, there’s risk, but I think we found a winning formula there and so we don’t wanna diverge from that too much. That being said, a lot of times, we find really interesting investment in office or industrial, even retail, right? So many people are afraid of retail but we’re not afraid of well-located retail on Main and Main. That’s not going anywhere, right? Even though we’re having this conversation while COVID is still going on and retail is getting hit really hard, you know, we’re not afraid to invest in retail today. We don’t invest in hospitality. We haven’t invested in hospitality since 2015 and I don’t expect to invest in hospitality. It’s not related to COVID. We made that decision, you know, well in advance of pre-COVID and it’s really because I don’t think hospitality is a real estate business. I think hospitality is an operating company and we don’t wanna invest in operating companies. We wanna invest in tried and true real estate transactions and so we got out of that business in 2015 but I expect that we’ll still do a lot more multifamily. We’re not afraid of retail as I mentioned. We like industrial, we like office. We’ve had a lot of really high cash-on-cash office transactions that we’ve done that have been fantastic but, you know, a lot of investors, if they can only invest in five transactions or ten transactions, I wouldn’t encourage them to go make five or ten commercial investments, right? I think multifamily really should be the backbone of most investors’ real estate portfolio with some additional diversification of other asset classes melded within.

Pancham: Great. So I totally agree with you. We are pretty big on multifamily ourselves, but within multifamily now, like talking about COVID and all the things we had, stimulus packages that came out which expired and now the impact of that we will see shortly, we will see whether the class C apartment buildings or class B apartment buildings, how they weather the storm, so, now, do you have any specific kind of asset class within multifamily that you’re looking at or specific markets within that asset class that you’re looking at that you want to focus on given where we are in the cycle?

Jilliene: Yeah. I mean, look, we’ve made investments in all kinds of multifamily. We’ve invested in class C multifamily. We’ve invested in section 8 deals. We’ve invested in LIHTC deals. We’ve invested in class B. We’ve also invested in, you know, class A and new development, right? We’re working on a new development project right now in Columbus, Ohio. We’ve made an investment on a development project in San Diego, California. I would say that I’m a believer in multifamily. If I was gonna hone down on, you know, the exact multifamily, type A vintage market that I think that we’ve performed the best in, it would be class B assets, 80s vintage in Texas. That’s really where, you know, the majority of our investments have been over the last, you know, 7, 8 years. It performed very well but there’s still risks, right? I mean, you look at Dallas which has been a big market of ours and there’s a lot of construction going on in Dallas right now, right? Is there gonna be overbuild? Is there gonna be oversupply? I don’t think the class A is gonna compete with class B rents or class B minus rents. You know, you’re talking about rents with a couple hundred dollars’ differential. It’s a totally different renter profile but we’re still big believers in Texas. We like Virginia a lot and we made an investment in Virginia in October of last year. We made another investment in Richmond in February of this year, so, you know, we like Texas, we like Virginia, we like Florida, we like Ohio. Again, I just mentioned that we’re working on a deal in Columbus. We like Utah. We’re working on another deal in Utah right now. I don’t love California. We just turned down a deal in San Jose, California, because of what’s going on politically there. I don’t like New York because of what’s going on politically there. You know, what’s going on with rent control and both California and New York we’re shying away from, but we’re still looking at opportunities, right? There’s always an exception to sort of every underwriting rule, right? If there is a way to do a transaction that we think makes sense, that we think has an acceptable risk-adjusted return, it’s not an automatic no for us, right? We really dig in to the details. One of our cultural values is details matter and what that means is that we’re willing to dive in, we’re willing to understand the risk of the investment but in general, you know, I like Texas a lot. I like the sunbelt markets. We’ve made a lot of investments in and around Atlanta, Georgia, as well. We’ve made investments in North Carolina. You know, we’re pretty diversified as far as our portfolio but our largest concentration is in Texas.

Pancham: Got it. So, in the COVID, last 3,4 months, how’s your class B, class C multifamily portfolio has done overall? Is it performing still the way it was performing before or has it changed?

Jilliene: Yeah, so our — for Q2 which is the most recent data that I have on a compiled basis, our weighted average net effective rents in Q2 2019, so last year, was 98 percent. So, 98 percent on a weighted average rent basis. For Q2 2020, we’re 96 percent. We’re running about, you know, 4 percent collection loss across the portfolio right now on the multifamily side, but different markets are different, right? I would say the hardest hit in our portfolio was Brooklyn. You know, we had months, I think April we were in the 80 percent collection range in Brooklyn which is terrible, right? I mean, your apartment portfolio should not be in the 80 percent collections, but that was a political issue, right? That was the government effectively telling people not to pay rent which I don’t agree with, right? I mean, one of my biggest concerns right now, not to turn this into a political conversation but, you know, I am very much against homelessness. It is near and dear to my heart that people have a home and that people have a roof over their heads, right? It’s something that I really deeply care about because my sense of home is so important. If I didn’t have a home to go home to every night, I couldn’t be the entrepreneur that I am and the human that I am. I wouldn’t be able to function. That being said, I am very concerned about what’s going on with the government. I’m very concerned about this CDC eviction ban through the end of the year because the government has effectively just null and voided contracts and so does contract law mean anything in America anymore? And that’s really, really concerning to me. Not only from the financial perspective for our investments but for the broader societal impact on America that our government could come in and say that these contracts that you’ve signed are null and void and, you know, I do a podcast and I had one of the guests on my podcast and he said, you know, you wouldn’t walk into a grocery store, fill your cart with groceries, and then tell the checker that you can’t afford to pay and just walk out with those groceries. That would —

Pancham: Exactly.

Jilliene: — be theft, right? And you’d go to jail for that and yet here we have the government saying you don’t legally have to pay for your housing but that’s theft, right? I mean, we’re being stolen from. We’re still paying property taxes, we’re still paying the property managers, we’re still paying insurance, and all of these things and, again, I realize that the intention is to avoid homelessness and to avoid people being out in the streets which I wholeheartedly agree with but there’s a better and a different way I think that we could be dealing with it. It could be, you know, housing vouchers where the government continues to pay rent. It could be, you know, other opportunities to make sure that people have a roof over their heads and so that’s really concerning to me and I’m not surprised that Brooklyn is our worst performing in the market because I think that between Brooklyn and LA, frankly, they’ve been encouraging people not to pay their rents, albeit LA has put in, you know, this $100 million rent stimulus so at least they’re helping, right? But outside of that, our collections have been strong, right? We’re running a 4 percent collection loss across the portfolio and some of that has certainly propped up by unemployment, right? The unemployment benefits, the federal stimulus, so it’ll be interesting to see where Q3 plays out but I think that this cycle is very different from the 2008, 2009 GFC. In 2008 and 2009, you had tremendous oversupply, right? You had oversupply of housing, you had oversupply of single family, you had oversupply of multifamily, different markets obviously different, I’m speaking a little bit generally, but you don’t have that today, right? We’re underhoused today. We don’t have a dearth of affordable housing available so I think that, you know, if we do run into additional collections issues this year, I think that they’re gonna pop back quickly and we’re long-term investors. You know, any time that someone invests with us, I encourage them to think for the long term. You know, we don’t want anyone investing with RealtyMogul with dinner table money. We don’t want anyone investing who doesn’t have, you know, a 5- or 10-year horizon depending on which investment opportunity they’re choosing to invest in. So, you know, that’s a big difference from the public markets, right? In the public markets, you have liquidity. You can get in and out, you can trade, you can move. You know, real estate is patient. Be patient, right? Set it and forget it, sort of the old Ron Popeil, you know? It’s very — it’s a patient game.

Pancham: That’s right, and you mentioned so many things that I wanna dissect into but we don’t have time but the CDC moratorium thing that was like it’s basically getting into the private property law, the ownership, like, you know, you cannot — they don’t even know anything about landlord-tenant law and they’re coming in and they’re basically dictating that you don’t have to honor it, so that was that, but, again, I’m totally with you on that and we get questions on policy making quite a bit and this is one thing that we cannot control and something totally out of the left field, so we’ll see how that plays out. Thank you for sharing your thoughts on that. So, I wanna go back to your RealtyMogul platform now and so, if you have investors, how can they invest in that platform? Is it mainly like other crowd funding platforms where you have, for a specific deal, they can come in or do you have fund that they invest in or do you have a REIT that’s listed on the market? Like how does it work?

Jilliene: We have a couple of different ways that investors can invest with us. We have two real estate investment trusts, two REITs. Those are structured as public vehicles but they’re not traded on the stock exchange so they’re legally public and why that’s important is that, because they’re legally public, any investor can invest in them. Accredited investors, non-accredited investors, there’s no limitations on — well, there’s limitations on how much people can invest but there’s no limitations on, you know, being an accredited investor to invest in one of those diversified pools. Those two REITs have two different strategies. MogulREIT I is the name of the first real estate investment trust and that’s an income-focused strategy. So, we’ve been paying out 6 to 8 percent dividend on an annualized basis since we started that REIT a couple of years ago. We pay that out on a monthly basis. Our second, MogulREIT II, is more focused on growth. We’ve been paying out 4.5 percent distribution on that vehicle since inception on an annualized basis. We pay distributions there quarterly but that’s really intended for longer term growth. So, in the second REIT, we’re focused only on multifamily investments and in the first REIT we have a diversified mix of property types. It’s multifamily, office, retail, etc. So we have those two vehicles for people who want to buy into a diversified pool. Maybe they don’t have enough money to properly diversify, maybe they really wanna set it and forget it, they don’t wanna make investment decisions, they don’t wanna deal with the individual underwriting of each individual transaction, maybe they don’t have the expertise to dive into each individual transaction. You know, we make all the investment decisions on behalf of the REITs so we are, you know, debating at our investment committees, we’re stepping foot on those properties. We’re really the eyes and ears on the ground, if you will, on those properties for those two diversified pools. We also allow investors to pick and choose investing in an individual property if they’re an accredited investor. So it’s limited to accredited investors because of, you know, government regulations but those accredited investors can pick and choose a specific apartment building, a specific shopping center, a specific office building, etc. Typically, the minimums on those individual investments are anywhere from $25,000 to $50,000. The minimum on the REITs is $5,000. So, depending on what that investor wants, depending if they wanna sort of set it and forget it in a diversified pool or they wanna pick and choose their own deals and build a diversified portfolio on their own, we can offer that.

Pancham: Great. Thank you for explaining that. So, you know, one question that I have on your portfolio of different things. Do you use third party management or is it all in-house management and vertically integrated when it comes to that?

Jilliene: So, it depends. You know, we have operating partners all over the country. We’ve backed over 70 operating partners since we started the business. Some of them are vertically integrated and they are their own property manager. Some of them use third-party property managers so our portfolio is a mix.

Pancham: Got it, got it. Great, so, I will have one last question for you before we move on to the next section of the show. So, this is the question that I’ve been asking everyone lately and this is partly for my benefit and I’ve really started following this morning routine and kind of trying to build connections between like is it the morning routine that, you know, you have that you follow that attributes to your success or not? Like do you have anything, any morning routine or daily routine, I should say?

Jilliene: Yeah, it’s interesting. COVID has given me a lot more time in my life. You know, normally, I’m jumping on airplanes and flying around and I’m still traveling during COVID. I was just in Michigan. I was just in Ohio to visit that property that I mentioned and visited another property, but it’s really given me an opportunity to get a lot more time. So, I now have a very sort of disciplined morning routine. You know, one of the big pieces of that is my gratitude practice. So, every day, you know, it’s really important for me, whether it’s, you know, lying in bed or it’s journaling or sharing with someone three things that I’m grateful for that day and it’s varying. I mean, some days, it’s my eyesight. Some days, it’s my hand so that I can type. Some days, it’s, you know, my inertia and my energy. Some days, it’s my executive teams. Some days, it’s, you know, someone else on my team who did something great. So I have a very strong gratitude practice both in the mornings and in the evenings. I journal a lot. So I started journaling back in 2014. One of my routines is every year, usually around kind of the first of the year, I’ll go and read my entire journal from that year and I’ll try and be very deliberate about the year to come so that’s sort of an annual routine, less of a daily routine. I also make a smoothie every morning so I make a green smoothie every morning, drink celery juice every morning. You know, now, in light of COVID, I’ve been working out almost every morning which has been a lot of fun so, you know, I’ve been trying to get more disciplined during COVID, but I’d say the one thing, whether it’s COVID or not COVID, I’m traveling, not traveling, my gratitude practice is really steady.

Pancham: Awesome. That is awesome and so refreshing to hear. So, your journaling, I have one question and, you know, you can answer, but if you don’t want to answer that’s certainly fine. So, do you journal, like how long do you journal and do you have a specific journal type that you use for journaling or it’s just paper and pen and you just write?

Jilliene: So I started, when I first started the practice, I bought something called the 5-Minute Journal which is great. You start with your gratitude, you start with some “I am’s” or positive affirmations or you include a couple of things that would make the day great. So it’s really meant to be, you know, positive affirmations, sort of building the life that you want, right, and you’ll find that you’ll write three things that would make today great. Getting to swim in a pool, you know, playing tennis and having a great conservation with someone at work and they’ll happen, right? Like it’s really around manifestation so that’s how I started. I now journal electronically so I’ve got a file on my computer, I pop it open, it’s 5 or 10 minutes. I mean, I can’t imagine I spend more than 5 or 10 minutes journaling, usually a couple of times a week now but it’s really stream of consciousness for me. How am I feeling? What’s going on? How did I show up the day before? How do I wanna show up today? I’ll also, you know, journal my goals and I’ll do a goal reflection typically on a quarterly basis so the beginning of the year I’ll set all my goals and, you know, set sort of milestones and then every quarter I’ll check in and either change the goal if it doesn’t apply anymore or, you know, modify it and realize, you know, linking that to my calendar, like are the things that I’m spending my time on, day in and day out, actually mapping to what I set as my goals? Both on a personal level and on a professional level. And like, perfect example, it’s September, I am very behind on my own number 1 personal goal and so I took a step back and I said is this still my number 1 personal goal? I affirmed that it was and now I’m playing catch up, right? And now I’ve got, you know, 8 months of work to put into the last, you know, 4 months of the year to make it happen but it’s helpful. It’s helpful to reprioritize and really be intentional about how you’re spending your time.

Pancham: Awesome. This is really, really awesome stuff. Thank you for sharing that. So, we’ll be back after this message.

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Pancham: So, Jilliene, this is the next section of the show which I call Taking the Leap Round. These are the four questions I ask every guest on my show. My first question for you is when was the first time you invested outside of Wall Street?

Jilliene: So, the first deal I did outside of Wall Street, this is a good story, it was a fix-and-flip loan on a duplex in Compton and I don’t know if folks know where Compton is but it’s a neighborhood in Los Angeles that is not a very safe neighborhood or historically has not been a very safe neighborhood. I’ll never forget when I went to tour the property it was with a buddy of mine and he had a crowbar in the backseat so we were, you know, touring the property with a crowbar which I don’t do very often anymore. I tend not to invest in very high-crime neighborhoods, but that was the first time. It was a fix-and-flip loan for a property in Compton and that was really, you know, the start of the business, you know? It was the first loan that we ever made at the company and it was, you know, the start of — a funny start to where we are today, right? I mean, that was a $140,000 loan, you know, very rinky dink, and now we’re buying or investing in, you know, $30, $40, $50 million big apartment complexes, you know, 7 years later so it’s funny to think back that that’s where it all started but that was the first investment, you know, that I coordinated, that I underwrote, was a fix-and-flip loan on a duplex.

Pancham: Wow. So is that with RealtyMogul, that was the first investment?

Jilliene: Correct, in March of 2013.

Pancham: Wow. Great. That was a great time though, you know, when you look back, hindsight is 20/20.

Jilliene: Yeah. Yeah, we look — we charged 10 percent on it, we got all our money back, everyone was happy so it was a good start to the business but funny to think back that that’s where it all began.

Pancham: Yeah, awesome. So, second question for you. What fears did you have to overcome when you actually did that first fix-and-flip loan?

Jilliene: One that first comes to mind is just safety, right? I mean, I was pretty freaked out, you know, driving around with a crowbar but outside of safety — I mean, I think it’s all mental, right? It’s all about confidence and knowing that you can do it, right? I mean, I remember, this isn’t the first investment, but, you know, when we bought our first apartment building at RealtyMogul, right? And we came out the gate and we bought close to 500 units in our first transaction and most real estate companies don’t come out the gate buying 500 units, right? They buy 4 units or 8 units, 12 units, you know, we came out the gate buying over 500 units and it was all mental, right? Can I do this? Do I have the confidence to do this? Am I capable of doing this? And you have to say yes to yourself and so I think that, you know, the main fear is always the fear of self-doubt. It’s sort of coaching yourself out of that, of like you’re ready, you can do this, you know what you’re doing. I mean, you know, by the time that we did that as a GP meaning we were, you know, the sole investor. We didn’t have a partner on that deal. I mean, we’d invested in probably 13,000 apartment units, you know? We knew what the playbook was, but it’s still scary to pull the trigger the first time and I think that’s always self-doubt.

Pancham: Yeah. Totally relate to that. Thank you. My third question for you, can you share with us one investment that did not go as expected, if you have any?

Jilliene: Sure, yeah. I mean, I think that our investments in Brooklyn are not going as expected and I think that that’s a direct result of political issues, right? And us not underwriting for those political issues, right —

Pancham: So those are multifamily?

Jilliene: They’re multifamily. Even pre-COVID, what happened on these transactions were they were rent controlled. The business plan — and this was with a partner of ours. We weren’t the real estate company but we have a partner on these transactions and the business plan was to buy out folks in rent-controlled apartments and New York effectively came out and said that’s no longer permissible, right? And so we got caught in the crosshairs of a regulatory issue or a policy issue or a political issue that we didn’t underwrite, and, you know, it’s hard. Looking back, do I wish we’d never made those investments? Sure, right? I mean, are they performing as expected? No, but it’s so hard, right? And I think that it informs a lot of our decision making today though where, you know, we don’t wanna invest in New York. We don’t really wanna invest in California unless there’s, you know, some real legitimate reason there. We’re trying to stay out of those markets where a policy can impact you like that but, look, now it’s federal. I mean, the key thing that I mentioned is like it’s insane that we just null and voided contract law in America, right? It’s so challenging to operate this way and, look, you just do the best that you can, right? And you make sure that your investors understand that there’s risk, right? And it’s not only the risks that we see, right? There’s risks that we see around construction timelines and the cost of materials and if we’re properly underwriting, you know, where we can push rents if we renovate a unit but there’s all of these risks that you don’t see and that, you know, Brooklyn is an example of a risk that we didn’t see, right? I mean, you view it as a political risk, right? That’s sort of a generic disclaimer that we have in all of our documents, but that’s why we try and educate investors that there’s always risks in every investment, right? You can’t project 12 percent return or a 15 percent return and expect there to be no risks. It doesn’t work that way, you know? If you don’t want any risk, people would say, you know, invest in T-bills but there’s also risk in T-bills —

Pancham: Exactly —

Jilliene: I mean, look at our federal deficit, it’s crazy what T-bills are paying when you think about, you know, how much debt this country is in, so — but that is one investment that didn’t go as expected and it was largely because of, you know, political reasons that we didn’t expect.

Pancham: Right, and, you know, these are the lessons that you learn and learn from and you kind of strategize your future investments based on that, so, again, hard learned lessons. So, you mentioned one thing that it was a partner of yours, like do you do JV investments also, like you bring in partners where you go and buy some of these buildings? Or —

Jilliene: We do. We do.

Pancham: Okay.

Jilliene: So we have JV partnerships with, you know, operating partners around the country and then we also have assets that we acquire directly on our own.

Pancham: Got it. Got it. Okay, so, my last question for you is what is one piece of advice you would give to people who are thinking of investing in Main Street that is outside of Wall Street?

Jilliene: Educate yourself. It’s all about education, right? If you wanna start investing in real estate, you know, start listening to podcasts, start, you know, reading blogs, start reading books. We have what I think is a great knowledge center on the RealtyMogul website. It’s free. You can go in and, you know, read and consume as much as you want, but it’s really educate yourself. I mean, I find that you can overcome self-doubt with education. You know, as I mentioned earlier, like we went out and bought 500 units as our first acquisition or direct and we did over 10,000, really probably 12,000 or 13,000 apartment investments through JV partnerships and with partners before we did that and, you know, I finally felt educated enough, right? When I went and did that fix-and-flip loan that I first mentioned in Compton, you know, I had read six or seven books about lending against commercial real estate, right? And lending against single-family real estate. So, there’s so much knowledge available between books, between the internet, between podcasts. My main advice would be get educated ’cause that’s gonna give you the confidence to make your first investment and then once you make your first investment, you know, hopefully, you’ll be hooked and you’ll want the exposure and want the diversification outside of Wall Street.

Pancham: Great. So, thank you, Jilliene, for your time here. It’s been awesome to have you on and how can listeners connect with you if they wanna reach out or wanna invest with RealtyMogul, how can they find you?

Jilliene: Yeah. Visit us at RealtyMogul.com. As I mentioned, we’ve got a great knowledge center so you can read up about commercial real estate and you can sign up for a user account. Signing up for a user account is free so there’s no payments, no nothing. If you choose to make an investment, great. If you wanna, you know, watch investments for a couple of years and get educated, great. You know, a huge part of our mission is educating people about investing in real estate whether you choose to invest with us or not, you know, that’s your prerogative but I really think that real estate has a place in everyone’s investment portfolio. That’s a fundamental belief of mine from an investment perspective and so we try and make that available to help investors learn. So visit us at RealtyMogul.com and, you know, we’d love to have you as a member.

Pancham: Great. Listeners, definitely check out RealtyMogul if you have any interest in passive investments and, you know, from anywhere to — you said $25,000 to $50,000, right?

Jilliene: $5,000 is our minimum.

Pancham: Oh, $5,000, yeah.

Jilliene: Anywhere from, you know, $5,000 to — we have investors who’ve invested, you know, millions upon millions with us so, you know, it just depends on the investor and what they’re looking for.

Pancham: Yep, thank you. Thank you for that and thank you, Jilliene, for your time here.

Jilliene: Wonderful.

Pancham: Hope you guys really enjoyed my interview with Jilliene Helman, the CEO of RealtyMogul. I learned a ton from this show and she was an amazing guest and, you know, what kind of markets that they’re focused in, she was talking about that, the investments, her Brooklyn investment and, you know, what they’re focused on now and how multifamily is really a great investment still and, you know, I really enjoyed the conversation. I hope you guys learned something from this show and thanks for listening and see you guys next time. If you have questions, e-mail me at p@thegoldcollarinvestor.com. This is Pancham signing off. Until next time. Take care.

Thank you for listening to The Gold Collar Investor Podcast. If you love what you’ve heard and you want more of Pancham Gupta, visit us at www.thegoldcollarinvestor.com and follow us on Facebook at The Gold Collar Investor. The information on this podcast are opinions. As always, please consult your own financial team before investing.