There are so many roles you have to take in the real estate business. Although it is possible to manage everything on your own, it is best to build a team for the business to grow and scale. Liz Faircloth, the co-founder and Chief Advisor of DeRosa Group which controls close to 400 units of residential commercial assets throughout the east coast, shares how building a team helped their real estate business. The host of The Real Estate InvestHER Show, she breaks down the top three players you need in your syndication team. Moreover, find out the value in juggling corporate work and real estate and discover what could be the hardest part of the syndication business.
Our Gracious Sponsor:
Are you tired of answering emails from investors about when they’ll receive their K-1s?
Let The Real Estate CPA handle the accounting and taxes on your next syndication and they’ll file your tax returns by March 15th so you can get K-1s to your investors by the individual filing deadline on April 15th.
Not only will this reduce headaches, but it will help you retain investors over the long-term by improving investor experience.
The Real Estate CPA is now offering a Special Virtual Workshop to the listeners of The Real Estate Syndication Show on How to Answer Tax Related Questions from Your Investors!
Learn more today by visiting: http://bit.ly/Real_Estate_CPA
Watch the episode here:
Building Teams In Real Estate Syndication with Liz Faircloth
Our guest is Liz Faircloth. Thanks for being on the show, Liz.
Whitney, I’m glad to be here.
You may recognize that name, Faircloth. Matt, her husband, was on the show WS25. I would encourage you to go back and learn a little more about their story. I’m excited to have Liz. I believe she’s the brains behind the entire operations. She Cofounded the DeRosa Group in 2005 with her husband, Matt. The company controls close to 400 units of residential commercial assets throughout the East Coast. As Chief Advisor with DeRosa Group, she has helped build their portfolio to owning and managing apartment buildings, multifamily, mixed-use buildings and commercial buildings throughout the East Coast.
She’s also the host of The Real Estate InvestHER Show, a podcast providing straight talk along with inspiration for existing and aspiring women investors to live both balanced and financially-free lives. Liz, thank you again for your time and being on the show and providing to share expertise with the audience. Give them a little more about your background, maybe how you got into this business and I want us to dive into your expertise of the team building and the business that you are helping manage on the backside. I know a lot of people don’t see a lot of the things that you’re doing that are so crucial and so important and I want to dive in.
My husband and I met and we get introduced to Robert Kiyosaki. We’ve read Rich Dad Poor Dad like a lot of people. That’s the seed that begins it all for a lot of investors or it seems to be. We were young. We got started in our mid-twenties. We weren’t even married yet and we just started talking about our life and what we wanted out of life. Neither of us came from anyone that had invested in real estate. My husband’s parents dabbled in it and so did my dad dabbled in it a little bit. We had a little bit of an example, but nothing where they were building a business around it per se. It was one or two rental properties.
We always wanted more. We wanted to create a business. We started taking courses in real estate. This is interesting, you can make a difference in transforming houses and homes and buildings and doing well for yourself and building that passive stream. We knew nothing. We took a bunch of courses, joined a local REIA, read a bunch of books and made a goal to buy our first property within a year. That’s what we ended up doing. That year came and gone, we actually found it by calling the for rent ads. I sound like a 90-year-old. Back in the day, it was like 2004, we didn’t have our smartphones. We had cell phones, but it wasn’t anything like we have now.
We opened the newspaper and we heard from one of the workshops that call for rent ads because it’s a great strategy to find landlords that might be frustrated that their units are vacant. We did that and people would hang up on us and not even be interested in talking to us. After tons of calls and a few months, someone said, “Yes, I’ll meet with you.” We’re like, “This is awesome.” We’re super happy that finally, someone would meet with us. It was a duplex in a little town called Roxborough, right outside of Philadelphia. My husband was living in West Conshohocken, right outside of Philadelphia and I was in New Jersey at the time.
We went by and we had a mentor. He came with us and made an offer. That was our first investment property, a duplex. We don’t own it but we did well with it. We ended up having to evict both tenants, but it was good learning. We ended up selling it a couple of years later and doing a 1031 into more rentals in New Jersey and building our portfolio in Jersey. That was the impetus for us getting into the business. We financed it by taking a loan out from my father. We didn’t have any of our own money in the first deal even. We’ve put our own money into deals since then but learned a lot and grew from there.
You all have been in real estate ever since then, but you also have been in the corporate world as well.
We then got married in ‘05. We moved to New Jersey and my husband was tired. He was working as an engineer at a company and just said, “I’m done with my job. I want to focus on real estate.” At that point, we had a handful of rentals, nothing that was going to feed us necessarily but it was a start. We had a little bit of experience. I said, “I’ll keep working. I enjoy my job, I enjoy my work. I can support us and someone can make sure we get our mortgage paid and all that good stuff.” It was just the two of us for many years, we didn’t have kids until much later, so I decided to keep working and him to quit his job. We did it together. I was still involved and I would be the sounding board. I did consulting for about twelve years around team building and management consulting. Helping companies put the right people in the right seats pretty much, so that was my personality assessment. We would assess people’s strengths and weaknesses. That was my corporate work for many years.
[bctt tweet=”Focus on what’s working and let go of what’s not.” username=””]
You were assessing people’s strengths and weaknesses. I’d love to hear too about that transition while you were working, that decision of saying, “Matt, you’re going to leave your job and we’re going to pursue this business.” I like how you said you’re doing it together even though he’s over here doing this while you’re bringing home the bacon.
It was an interesting decision because at the time my husband was doing well financially. He was in sales. He was on the track of being a manager and he had this whole path ahead of him. The leader of that site would say, “Matt, if you want this corporate path, it’s yours.” He’s like, “No, I don’t.” He had the company car and all that stuff. He just didn’t want that life and neither me. We wanted something different and something more. At the time, we could have moved into a home where we both could have afforded together, but we decided to move somewhere that if he literally made nothing, I can handle the mortgage on my own with what I was bringing home. We were there for many years. It was probably one of the best decisions we made. We didn’t overspend at that time. We cut back and were very mindful of how we spent so that my husband could quit his job. We’re not big into material stuff. We actually just moved from our starter home. We’re more about where do we want to be versus having some lifestyle that we can’t afford now. That wasn’t as important to us when we’re young for whatever reason. We wanted to build something that was going to be bigger than us one day.
That’s very smart. I love that because like Dave Ramsey says, “Live like nobody so you can live like nobody else later.” It sounds like you all did that and it has paid off, instead of having all that stuff and stretching yourself. It sounds like that was an excellent decision because if the real estate thing didn’t work out, you can still support the family.
Some people accelerate well in this business. They’d been in it for a year and they own 500 units and they’re doing amazing. That wasn’t our path. Our path was we tried a lot of different things. We had those failures and we’d have some wins and we’d be like, “Let’s do more of this and let’s not do this.” We’ve been through various areas of this business through the years. We were figuring it out. We were young. We had no experience. My husband was an engineer because he’s a smart guy, but still this business you can get beat up a bit if you don’t know what you’re doing. That took us some time to get into a stride of, “This is what we want to focus on. More apartment buildings, multifamily.” That was our focus early on and then we’ve grown that well-over the years. Not every aspect of real estate was like that for us. We did have those struggles and those challenges and we did lose money at times and that can be tough. You get through it by constantly reevaluating and saying, “What’s working and what’s not? Let’s focus on what’s working and let’s let go of what’s not.” It’s a constant evolution.
Your background in the corporate world, you were consulting, you were an expert in team building. You mentioned assessing people’s strengths and weaknesses. It seems like such a good skill for somebody to have in building your own team in this industry. I’d like for you to elaborate on how that has helped your business and help us to assess some of our team members. When we’re hiring team members, maybe the first people that we need to hire in the syndication business, the first people we need to have on our team and maybe a couple of the top important hires and how we need to hire them.
It’s interesting because I did a lot of personality assessments. What is someone’s core strength? There are a lot of things that make people successful. There are their skills, their knowledge, their experience but there is always this part of people that helps them be successful, but you can’t see it on paper all the time. That’s what I specialized in terms of where we apply to our business. Obviously, I had my husband take this assessment when I first met him because it was my work. I had to have practice analyzing this very analytical tool.
Is this before you were married?
Before we were married, so I got to know what I’m getting into. My husband’s pretty authentic and open with his strengths and things that he’s not good at. Me sharing this is not a big deal. He’s a very charismatic guy. He’s very extroverted. He likes people. He likes to be with them. He’s a collaborator in a lot of ways. He’s not as detail-oriented. He’s a smart guy, he knows stuff but he’s not someone who wants to get bogged down with a lot of detail. What ends up happening is that someone like that is a visionary. They get excited about new things. I’ve helped him over the years assess what his strengths are and also the areas in our personality that we have to watch out for and we have to manage too.
We either have to build a team around, assist them around, process around or something in all of our personalities that if we don’t watch out for or keep an eye on, it’s going to bite us later. That can be any personality. You can have the most dominant, self-confident person. That too much you, so to speak, can also get come back to bite them. What I mean is to know your strengths. Take some of these assessment tools. The one that I worked with was called The Predictive Index. There are some great ones out there: Kolbe, StrengthsFinder. Don’t take some quiz online for free. Do something that costs some money. It’s $50 or $100, it’s never that expensive.
Do something where you figure out what you’re a genius at, what you’re good at. What we found, especially in the syndication business is there are a lot of roles. There are three roles that we built our team around. One is the hunter. You always need someone or a team finding new opportunities if you’re looking to grow. That’s a role that you need to fill. There are behaviors that somebody needs to have in order to be a hunter. Logically, you don’t want someone who’s passive to be in that role. Hunting would mean you have to be a little more aggressive, a little more of a self-starter. It’s not always the most likable person either.
[bctt tweet=”Do something you’re a genius at.” username=””]
The second role is somebody who’s the brains. What we mean by the brains is someone who is analyzing the deal, underwriting the deals, keeping the business functioning. It’s the helm of that syndication business, that apartment building business. People always see the people on YouTube and someone like my husband who’s definitely managing things, but he’s definitely more of the third role, which is the money. Not that he has all the money, but he is the one that’s raising money. That’s where a lot of people get into syndications. Unless you’re endowed with a lot of money, which is amazing. A lot of syndicators will raise money to put funds together and to go buy apartment buildings. It’s not rocket science, but somebody needs to be the leader of that. That’s a different behavioral capacity.
You don’t want somebody who’s the brains to be as the raising money person. That would not be a good thing. It’s all connected but it’s all separate too. There are a lot more roles to that than just those three. We’ve thought about it around like, “Who needs to be which, and then how do we build teams around those three segments?” One’s the business brain, the business functionality. One’s the deal finder. There’s almost like they’re connected to the underwriting because they had to make sure the deals are going to be part of our criteria. Then there’s that raising money part of it is doing due diligence, take care of investors’ money and what have you.
Those three people are very different. Their personalities are different. The other tip I’d share is that you have to have different styles working well together, but you have to have diversity. If you have three analytical people or you have three dominant people, that’s disastrous. If you have all very similar styles, that’s when teams don’t work. The biggest challenge I’ve found is that people are attracted to people like themselves. We go to networking events, we go to conferences and if you’re somebody who is extroverted, you tend to connect with extroverted people. You don’t connect with very scientific, engineering type people because they’re not as chatty as you, yet they’re the people that you actually need. You need the analytical, critical mind with the more extroverted person, especially in syndication. If you don’t have that, I don’t know how you’re able to run the business. There’s always someone who’s analytical on a syndication team in what I’ve seen at least.
It’s a requirement.
It’s a requirement but yet people don’t always get the heaviness of the analytical side of the business. I don’t think they see, “You can get into big apartment buildings. That’s great. Let me just jump in.” It’s not as simple as that.
I appreciate you laying out those three roles: the hunter, the brains and the money. In my business or the audience if they’re getting started in this business, the money a lot of times is where a lot of people start. What’s going to be the next person we should be partnering with? Are you going to share some of those roles maybe initially or would you use say, “I want to find this person that’s going to assume those roles so I can just be focused over here?”
I’ll share our own experience. For many years, we were buying small multis. We’d buy a ten-unit. We didn’t go from zero to 500. That wasn’t our path per se and that’s other people’s paths sometimes, but it just wasn’t ours. We grew very slowly and steadily in terms of our rental portfolio. We went from literally a ten-unit and then eighteen units. We did jump to a 49-unit. My husband was at the helm of underwriting deals and analyzing everything. He actually had someone helping him find the deals, but he wore the brains and the raising money hat.
At that point, we knew we wanted to get into bigger buildings. You have to look at yourself because in a lot of ways you’re like, “I can underwrite.” Because if you’re building a portfolio, you’ve been in this business, you can underwrite deals. That’s a skill you need to know but then you’re getting into a 200-unit building. That’s a different underwriting skill set. It’s almost going from the Minor Leagues to the Pro. You can underwrite but it’s a whole different level. When talking with my husband, he’s like, “I can do it and I’m good at it but I don’t know if I’m as good as someone who that’s what they literally live and breathe and that’s what they do.”
He knew he needed someone to help him from more of that truly underwriting perspective. That’s when he connected with someone. One of our partners in our syndication business, his name is Ben. He’s a great guy, super analytical and he came in to underwrite and was in that role. As we’ve grown, he’s more like in a COO perspective, helping with the operational side of things. My husband’s able to grow the investor base and the brand and those sorts of things. As we’ve evolved, we’re like, “We need help. My husband can’t raise money for every deal for himself anymore.” He’s getting pulled in a lot of directions. This syndication we have, we’re actually raising money. We have a team helping us. They’re not necessarily fundraisers. We call them investor relationship people. They’re a part of our team and they’re going to win along with us. My personal opinion is that it’s hard to grow from zero to twenty members of a team. You should grow organically and start to say, “What am I good at? I’m doing all this but where can I maybe partner or work with someone on this? Because this is needed and I’m just not A-plus at it.”
That’s the key is to say as you grow and you start to get into it, it’s like, “Where might I need help? Where am I not a genius at?” I don’t think everyone, especially in this business, can be a genius at many things. Honestly, take someone who’s amazing in this business who’s doing well, they’re amazing at one thing and they’re good at nine things. If you’re good in this business, you know about a lot of things. My point is that you’re usually like a genius. You wake up in the middle of the night and do these usually one or two things.
[bctt tweet=”People are attracted to people like themselves.” username=””]
I bet one of those things that they’re good at is managing a team, hiring team members just like yourself.
You have to grow into that because it’s like, how do we win alongside ourselves? You know how in the syndication world, in this apartment building complex, it’s not like you have all this money to not do anything with because you’re putting the money into the building. You’re putting the money into the assets. You need to start putting money aside to figure out how do we put money aside to manage our investors? To make sure we have enough money to pay for some help. We’re figuring that out as we speak. I think it’s an evolving thing for many people. It’s not like, “Here’s the business and this is how you do it.” You might have a real estate experience, but building a business is different than real estate. It’s in and of itself. That’s where people who have that business experience could just run into this business and run with it because they built businesses before. We grew up in building a business in the space, so we’ve figured it out. I’m sure people take a lot shorter time than us.
I can relate to a lot of that. There are things like as far as your team. You don’t know your need yet or you’re not ready. Six months from now, you’re going to have a different view or vision for your team than you do now. Until you get there, you don’t know what you don’t know.
You want to start small and try to figure out, “How do we build together? Do we both have an entrepreneurial mindset?” That’s the big thing too. If somebody wants to get paid, that’s not how this business works, especially apartment building syndication. You get paid if that asset stabilizes and all that good stuff. Mindset and interests also play into it, similar interests, similar values. Entrepreneurial energy is important too.
What’s been the hardest part of the syndication business or process for you so far?
I would say the biggest thing for us is we grew our portfolio and had a rule early on that we would invest only 30 minutes from our home. For the first many years of our investing, probably eight, nine years, we invested locally only. We wrote a lot of blogs on it. We were very committed to not ever investing where we couldn’t be there quickly. We built a team but then you start to look around and go, “The local market is shifting.” I love the taxes in New Jersey. Everyone that says you have a property in New Jersey, it’s like, “How do you do that with property taxes?” We started to scratch our heads and said, “The return here isn’t where we needed to be anymore.” We want to diversify where we were investing. We started to go elsewhere like many people. They start to say, “The northeast is not making sense anymore.” That’s at least where we were.
I just want to share this path because it’s going to answer my question. We took the path of investing for about an hour and a half from our home. We were an hour and a half drive. The key to that process is that we had a local partner that was five minutes from that property. That’s the 49-unit. If we couldn’t be there, he was there, which was huge. We started to get into buying buildings in North Carolina and Kentucky, two states that we have some multifamilies, our larger buildings. We’ve had to build the local boots on the ground, but we didn’t have that at first. I think that was probably one of the biggest challenges because we were so hands on for so many years.
It’s because of the market. We’re not the only ones investing in the southeast. There are a lot of great returns and just great market there versus New Jersey especially. We had to think through right back to the team. We had a property management team, but we don’t have people that have your interests. I always suggest to people, if you’re going to buy out of state, have a wonderful and phenomenal property manager because you’re not going to be able to get there obviously. You also want somebody who has your interest, who’s getting paid by you, the owner, and not the property management team. They’re going to look at things the way they need to look at them. If somebody has your interest, it’s going to be boots on the ground and can go drive past the property once a week. Walk around, see if there’s trash on the playground. Whatever is coming up on that complex, you need eyes on that property besides your property management team. That was not something we knew when we started, and that’s something we’ve come to do. We have people that report to us in addition to a property management team.
The hard part was just shifting that mindset from being so strict that we’re only staying local to building a team or building ways of investing?
Yes, and letting go of the control a little bit. We managed all of our own units. We had a team but we’re in charge of all that. Now, we have to let go of some of the control. When you let go of some of the control, they’re not going to necessarily get back to your tenants as quickly as you may have. It’s very hard. We didn’t just go into syndication and never managed the property ourselves. We managed everything ourselves. That shift was tough but we also knew to grow and to scale. You can’t keep doing everything yourself either.
[bctt tweet=”You can’t keep doing everything yourself.” username=””]
What’s the number one thing that’s contributed to your success?
Never giving up. I spent a lot of countless times and some amazing times. You have such great wins, but there have been some times that you want to get your head banging against the wall. We’re in this for the long-term. We love real estate. We always probably will. It doesn’t mean it’s the only asset class we’ll be in, especially around tax season. I love real estate. I think never giving up because you’re going to get knocked down. Anyone reading this, no one has complete wins all the time, and roses and sunshine all the time. If they do, they’re not growing. You’re going to get knocked down and you just can’t give up.
I like how you mentioned they’re not growing if they’re never getting knocked down. What’s a way that you’d like to give back?
We’re actually in a shift with our giving back. We did a lot of work with the church that we were previously members of. We’ve moved and we’ve joined a new church. We’re asking the question, how do we give back as a family? I had this conversation with my husband. I’m like, “We need to pick an organization and start taking the kids.” I have young kids, a two-year-old and a five-year-old. They’re not going to completely get it, but they’ll start getting it. We’re in the throes of figuring that out. One thing I love to do and giving back is my good friend and partner, Andresa, we have a podcast and a community of helping women invest in real estate. I think we’re growing this community, but there’s a little bit of me that’s passionate and I give back too.
As far as the kids, you’re building habits. Two and five-year-olds, I can relate to that. I have a four and six-year-old. Tell the audience how they can learn more about you and listen to your podcast as well.
My husband and I’s company is the DeRosa Group, DeRosaGroup.com. You can learn more about what we’re up to there. In terms of the work that I’m up to with Andresa and our podcast, it’s all about supporting women in this business and getting them more educated and women supporting women as investors. That is called The Real Estate InvestHER Show and it’s TheRealEstateInvestHER.com is our website. We have meetups across the country. There are about eleven meetups that are InvestHER meetups for women from Arizona to Florida to Pennsylvania. We have a huge Facebook community of women posting questions and helping one another. We have about a thousand members on there as well. We feel like we’re part of creating a movement with other women, which is cool.
I appreciate your time, Liz. You’ve been a great guest and just bringing in your expertise from the corporate world into your real estate business and then sharing us with us. I like how you shared about how Matt was able to leave his job and the crucial decision that you all made to not live like everyone else. You may have hung around news. He didn’t have to come back to a corporate job and then maybe the real estate thing not work out as it had. I can relate to that as well, and the three roles that you laid out: the hunter, the brains, the money, I like that. I appreciate the audience being with us and knowing to the value that Liz gave us. I hope you all learned and hope you will go to the Facebook group, The Real Estate Syndication Show, as we can all learn from experts like Liz. Also go to Life Bridge Capital and connect with me. We will speak with all of you next time.
- Liz Faircloth
- WS25 – Matt Faircloth previous episode
- DeRosa Group
- The Real Estate InvestHER Show
- Rich Dad Poor Dad
- The Predictive Index
- Facebook – The Real Estate InvestHER Show
- The Real Estate Syndication Show on Facebook
About Liz Faircloth
Liz Faircloth grew up in a small town right outside of Flemington, New Jersey. She graduated from Rowan University with a degree in Psychology and went on to get her Masters’ Degree in Social Work from the University of Pennsylvania. While attending the University of Pennsylvania, she took some classes at the Wharton School of Business and her interest in entrepreneurship and investing was born.
Liz began her investing career (along with her then fiancé) with the purchase of a duplex with a $30,000 loan outside of Philadelphia. After selling this duplex and moving to New Jersey, she co-founded the DeRosa Group in 2005 with her husband, Matt. The DeRosa Group, based in Trenton, NJ, is an owner of commercial and residential property with a mission to “transform lives through real estate.” DeRosa has vast experience in bringing properties to their highest and best use, which includes repositioning single family homes, multi-family, apartment buildings, mixed-use, retail, and office space. The company controls close to 400 units of residential and commercial assets throughout the east coast.
While helping grow DeRosa’s portfolio, Liz had a career for many years where she worked with Fortune 500 companies to develop team and talent development programs. Liz has facilitated hundreds of workshops for universities, business conferences, and executive level trainings.
As chief advisor with DeRosa, she has helped build their portfolio to owning and managing apartment buildings, multifamily, mixed-use buildings, and commercial buildings throughout the East Coast. Currently, Liz assists with both the strategic vision of the company and runs DeRosa’s marketing and communications. Liz is the proud founder of the DeRosa Gives initiative.
Liz is also the host of “The Real Estate InvestHER Show,” a podcast providing straight talk along with inspiration for existing and aspiring women investors to live both balanced and financially free lives.
Liz has been interviewed for many articles and top-rated podcasts, including being a two time guest on the top-rated BiggerPockets Podcast. On the personal side, Liz is an avid runner, has completed several triathlons and marathons, has two adorable children and is a New York Mets fan.
Love the show? Subscribe, rate, review, and share!
Join the Real Estate Syndication Show Community: