Updated: Oct 15, 2020
Guest on Real Estate Investor Goddess Podcast
On this show, we interview amazing, badass and real estate investing goddesses, women that are crushing it in the real estate investing sphere. My guest is certainly no exception. I’m super excited to have with us, Stephanie Wankel, who’s the Founder of New Heights Investment Group. She connects investors with the best real estate syndication opportunities in the industry. She spent several decades in software product development as well as actively growing and managing her real estate portfolio. She’s on a mission to share the amazing benefits of real estate investing. Stephanie loves to encourage other women that if she, as a single mom with a full-time career, can grow her real estate portfolio, so can they.
To help spread the word, she started New Heights Investment Group and the Frenzied To Financial Freedom podcast, where she and her co-host, Kristen, talks to women who are reaching financial freedom by creating businesses, juggling five hustles and investing in real estate. I was excited and honored to have been on that amazing show, so check it out. I’m excited to have her. Welcome, Stephanie.
Thank you. It’s great to be here.
It’s great to have you. Share how you got started in real estate investing.
Back when I was a kid, I spent a lot of time with my grandmother and she had duplex rentals in a college town. I tagged along with her. She was turning over clients, collecting rents and doing all the things you do when you’re a landlord and your rental properties. We never talked directly about what she was doing or why, but I got the feel of it. I knew that it helps support her family. Her husband had died many years earlier and she had six children she supported. It was a large part of her income and I knew that. Somehow, that experience set a seed inside of me that was like, “This is something I want to do. I want to have rental houses.”
As the years went on, I thought about it and then things happened. I went to college and I got married. I had kids, then 2008 happened. I got divorced in 2006 and my kids were young. They were 5 and 8. When 2008 rolled around, I’d spent a good decade telling everyone that I was going to buy rental houses, but I never was doing it like a lot of us. A wholesaler that I knew from someone else like many people, were unloading properties. He’s like, “This is your time. You keep saying you’re going to jump in.” I’m like, “This is not my time. I am divorced and my income went in half. All my assets went in half. There’s no way that I can do this.” I had dreamt about it and talked about it. I did the math on it where income minus expenses and the cashflow were good. I jumped in and that’s where I got started. Little did I know, I was adding a full-time job to my lifestyle, that of a landlord.
There are many amazing things about that story. First is that you had an original goddess grandmother and real estate investing goddess model, which is awesome. This beautiful example of what real estate investing does for a woman or can do for women and why it’s so important to have that, especially in her case, she became a widow. For you, when you became divorced. Also, you had great timing because you started when houses are on sale right after the crash and that was a good time to be able to get in. It can be a full-time job when you are doing property management yourself. That is something that’s important for people to know. There are other ways to invest in real estate. Tell us more about your investment focus.
I still do have a portfolio of single and small multifamily homes. I don’t manage any of them. They’re all out of state and I’ve property management for all of them. I also invest in large multifamily apartments in what’s called apartment syndications. I also connect other busy professionals that want to invest in real estate but don’t want a landlord, don’t want to buy single-family homes and figure it all out. They just want real passive investment, meaning they don’t have to worry about any of it. It’s one of the great benefits of syndication. Investors can jump on, collect checks and never have to deal with the day-to-day operations.
I’m all about syndications too. You started talking about some of the benefits. Why do you like that as an investment focus?
One of the reasons is the ability to scale and grow your real estate portfolio as a single person. Fannie and Freddie Mae allow me to have ten mortgages. You can do things around that but there’s a barrier at that point where you’re like, “Should I look at a strategy?” What happened to me is I wanted to scale bigger and do more, and it made sense to have more doors under one roof. When I started researching it and looking into it, the benefits are vast, like economies of scale, all the things that when you multiply doors under one roof makes a lot of sense. That’s what got me excited about taking on that new asset class.
Where do you see the biggest opportunities in real estate investing?
Personally, I still love apartment syndications and will continue doing that, but I also am interested in capitalizing on short-term rentals. For 2020, some of the things that I’m looking at are smaller apartments, buildings in locations that cater to corporate housing. Maybe take advantage of some of the short-term rental opportunities. That train may come and go, but the cashflow opportunities on that would enable me to buy more long-term properties. It’s almost like adding a job and it’s a business if you’re going to be taking on short-term rentals. I’m going to have someone do it, but I see it short-term as a way to generate more capital to go out and do other things.
Real Estate Investing Mistakes: Having a small portfolio is harder than having a large portfolio. When your tenants turn over, it hurts worse.
I want to ask you a question that I ask all my guests because I find that we get the most gold out of the situations that don’t turn out as we hope versus when things are smooth sailing. What do you say was your biggest mistake in your real estate investing career and what did you learn from it?
Two things come to mind. One is I had conquered fear and got in the game, but I also stalled out in the game and I see this a lot. When I bought that first property in 2008, I quickly refinanced it and bought two others. I had three properties that I was landlording and taking care of for many years. I just kept doing that. I didn’t pause and think, “What’s my next step?” Having a small portfolio is harder than having a large portfolio. When your tenants turnover, it hurts worse if you only have one or two properties. Another thing I love about multifamily is you don’t even feel the pain when people turn over. If there’s a large capital expense like a furnace or something like that, your cashflow for that year is gone.
When you have a small portfolio, you’re working hard for sometimes what can be not as lucrative as an opportunity when you have a bigger portfolio. Everyone wishes they’ve started earlier, done more and got bigger. I wish I honestly knew about apartment syndication. I didn’t know anything about it, which is why I feel it’s important for people like us to share it because still, people don’t know it’s a thing. If I knew I could take capital and put it somewhere and it would grow more returns that I would do nothing, then I would do that. It’s weird to say you wish you knew something, but I wish I had paid attention more and focused on growing so that I could have found these other opportunities quicker.
Do you say the mistake was not trying to learn or not taking the time to plan?
Not treating it like a business. We get busy with our day-to-day stuff and I was working, single-mommy and being this property manager in business. I know a lot of people enjoy it, but I didn’t. I wasn’t good at it. That’s another lesson. When you buy a property, bake in property management into your numbers. Even if you decide, “I’m going to love this property management stuff,” if you decide you don’t, then your numbers still work. That also fits into this mistake. I took on this work that it wasn’t my skillsets, not my sweet spot and not what I’m good at, so I didn’t do well, which means I had turnovers and it was painful. Because of that, I didn’t keep the growth trajectory. I was just putting out fires.
It does highlight this misconception that you have to start small or that smaller is easier. It’s not. It’s something I’ve learned too when I got into syndication and larger properties. My start with single families was small duplexes. I was like, “It’s not harder to do 200 or 600 units than it is to do a duplex or fourplex.”
Another misconception that ties into that is that people feel that large multifamily is riskier. In my mind, it’s less risky for all the reasons that we’ve talked about.
Generally, when you’re syndicating, you’re purchasing a property that’s stabilized. It’s already 90% plus occupancy and it’s working as a business already. You buy it with a plan to add more value and improve a business that’s already working.
You have team members that are specific to the area that they are good at. People don’t generally go into large multifamily and think they’re going to property manage it, where you do when on single-family like, “I could do this. It’s no big deal.”
What are you most proud of with real estate investing?
I am proud that I had the gumption or the grit to jump into it and then also keep it going. I like the fact that my kids have seen a single mom who’s working hard and taking care of them. Also, doing something that she’s passionate about, that leaves a legacy that they are part of. Like it or not, as young kids, I drag them around to tenants, sit in the car and duck under. I felt guilty about that a lot of those times and now, they’re adults. My son’s passionate about real estate investing. He works with me on deals. I see in hindsight that dragging them along and all of those things that did not seem attractive at the time left little lessons for them, and I’m proud of that.
That’s also why I love helping women, especially those of us who are mamas. It ripples down to do that. What do you attribute to your success?
Real Estate Investing Mistakes: When you buy a property, bake in property management into your numbers.
Perseverance might be one of the attributes that have helped me be successful. As in life, real estate investing doesn’t always go our way. I’ve done too many evictions to remember. I lost money and wish I’d made different decisions along the way. I like that those are learning opportunities. Instead of quitting, crying and giving up, you take the learning. It’s a blessing and you keep persevering. That can help people in any situation that they’re in.
What advice do you have for women just starting out in this field?
One of the reasons why I love talking to women, especially in the multifamily space, is it’s more male-dominated. There are less women, but there are a lot of women. I suggest that people reach out to people like you and me and get out there. There are meetup groups and you hold events. There are all kinds of ways that people can talk to other people who are doing this. It’s a great way to get started by just talking to people, finding out who’s doing what you want to do, then start learning from them.
What do you wish you’d known at the beginning that you now know?
In the beginning, a lot of people struggle with this. There’s a lot of fear, a lot of, “What if I lose everything? What if the tenant ruins the house?” On the other end, after doing this for many years, that stuff happens. Tenants do ruin houses sometimes and you can fix it. There are a few things that are not fixable and are disasters. All of the things that you’re worried about in your head that is freaking you out and making you not make a move, A) Your thinking about it is worse than what’s ever going to happen and B) There’s usually a solution to almost every problem.
The last question before we do our trinity is what’s the best way for people to reach out to you and know more about what you do?
If you’re going to search for that on social media, it’s @Frenzy2Freedom and #Frenzied2Freedom on Twitter too. Time for our trinity, which is a brag, gratitude and a desire. What is one thing you’re celebrating? What’s your brag?
My brag is Kristen and I dropped our 52nd episode of our Frenzied To Financial Freedom. It has been such a blessing. I’m sure like you, I can’t believe how many amazing women are in this world doing amazing things. I love hearing their stories and I love connecting. It has been so much fun for us. I’m excited about that.
What’s one thing you’re grateful for?
There are many things to be grateful for. One thing that I’m excited about and grateful for is my 21-year-old graduating from college and he’s moving to the Dallas area. He’s going to take on managing some of our duplexes. He’s jumping in and learning. I’ve been complaining about it and it feels like this whole time, but it’s a fantastic way for someone who doesn’t have a lot of skills, capital or is ready to learn to jump into the business. I’m grateful that he’s passionate about it. It’s a fun thing to share with family members.
Last but not least, what is one thing you desire?
In 2020, I am desiring to travel more, connect more with people and maybe do more adventures. There’s some room for fun and adventure. That’s my desire. I’m putting it out there.