Whitney Elkins-Hutten serves as the Director of Investor Education at PassiveInvesting.com, and national passive real estate investment firm that holds $1.4 Billion in assets under management. After making 52k after her first sale of real estate, nearly losing it all on her 2nd deal, she focused on how to grow her portfolio the right way. Today Whitney holds $800M in real estate including over 6,000 residential units, 1,400+ self-storage units, and is focusing on growing even more through investing in express car washes. She's focused on helping others grow Money For Tomorrow, which is the title of her book that will be coming out in 2024.
In this episode, Whitney shares how you will be able to:
The key moments in this episode are:
00:00:00 - Getting Started in Real Estate Investing
00:06:19 - Finding the Balance Between Cash Flow and Equity
00:07:56 - Factors Influencing Investing Strategy
00:08:07 - Personal Experience with Real Estate Investing
00:14:38 - Building a Cash Flowing Business
00:15:41 - Getting Started with Car Wash Investments
00:17:02 - Types of Car Wash Investments
00:20:13 - Collaborating for Better Returns
FOLLOW WHITNEY 👇
SUBSCRIBE IF YOU'RE LOOKING TO BUILD WEALTH THROUGH OPPORTUNITIES IN THE REAL ESTATE INDUSTRY
GET STARTED INVESTING TODAY AND ACCESS OUR DEAL LIST!
PARTNER WITH US ON BIG DEALS!
BUILD YOUR REAL ESTATE AGENT CAREER WORKING WITH INVESTORS
LEARN ABOUT REL FREEDOM & HEAR MORE REAL LIFE STORIES
FREEBIES: DOWNLOAD YOUR FREE FREEDOM FOUNDATION BLUEPRINT
LOOKING FOR A REAL ESTATE AGENT ANYWHERE IN THE US? FIND A TOP AGENT IN YOUR COMMUNITY
JOIN OUR FACEBOOK COMMUNITY
SUBSCRIBE TO THE REL FREEDOM PODCAST
🎧 Apple Podcasts: https://podcasts.apple.com/us/podcast...
🎧 Google Podcasts: https://podcasts.google.com/feed/aHR0...
🎧 Spotify: https://open.spotify.com/show/5nXA5hL...
👉 Facebook: https://www.facebook.com/mswenson13
👉 Instagram: https://www.instagram.com/getrelfreedom/
👉 TikTok: https://www.tiktok.com/@relfreedom
🏠 Minnesota Real Estate: https://www.eliteadvantageteam.com
When that light bulb went off, we were off to the races. Scaled to 36 single family units, still doing about ten flips a year. And then we had our next ceiling achievement. We needed to scale further, faster and with less of our time. So do we do that? Do we go into multifamily, buy bigger properties or do we invest in other people's projects? And I decided to do both, test it out for a couple of years and see which avenue actually would get us closer to financial freedom.
Welcome to the Real Freedom show where we inspire you to pursue your passion to gain time and financial freedom through opportunities in real estate. I'm your host Mike Swenson. Let's get some real freedom together. Hello everybody. Welcome to this episode of Real Freedom, talking about building time and financial freedom through opportunities in real estate. I am your host Whitney Elkans-Hutten. And today we are going to talk about passive investing and what better way to do that than to talk to one of the experts from Passiveinvesting.com. One of the best URls out there, I will have to say. We've got Whitney Elkins Hutton. She's the director of Investore [email protected]. And you guys have a whole bunch of different opportunities from multifamily self storage, car washes, debt funds, all sorts of stuff which we'll get into. And so you guys have over 700 million of real estate, 6000 residential units, 1400 self storage units. And so I'll let you share more of the updated numbers. But welcome to the show, Whitney. We are so excited to have you here.
Thank you. Thank you so much. I'm happy to be here. The numbers that you willed off are actually probably two years old and that's just my husband and I holdings, passiveinvesting.com. We actually have 1.4 billion assets under management, over 3500 residential units, over 6000 self storage units and then 30 soon to be 31 Express car washes. We actually have a few more in the pipeline that are under Loi right now, so I can't really tell you where those are at, but that number is expected to significantly grow here in the next couple of months.
Awesome. Well, congratulations. That's a lot of stuff in a lot of different areas. Why don't you just share your background, how you got into real estate and we'll take it from.
Yeah, yeah. As you noted, I'm the director of investor education [email protected]. I wish I could take credit for the URL. And that was all Dan Hanford, one of our managing partners. He did pay a little bit of cash, but not as much as one would think for that. But it's totally amazing. We get those comments all the time. I started off real estate investing back in 2002 completely by accident. I mean, honestly, the house that I bought with a significant other, I thought it was going to sink me. After we bought the house, about a month later, the relationship fell apart. And I had a house, I had the mortgage, I had the expenses. I was like, this thing's going to sink me. I'm going to be broke. So I stuffed it full of roommates. What any young 20 year old would do, stuffed it full of roommates. It needed a massive rehab. We're talking green shag carpet, psychedelic daisies from the 60s painted on the walls. You're just like, what were they doing? Eleven months later, sold the house, thinking that that was the best financial move that I could do at the time. I actually regret selling that house today by hindsight's 2020, and walked away with $52,000 in my pocket. A lot of skills built, but the one thing that I realized after I sold it is I hadn't been paying for any of my housing expenses. My roommates had been paying for everything. And not only that, I'd been cash flowing. I was like, what is this? This is amazing. So started really diving, and I got to keep it tax free because I had to move for a job. So I got to take advantage of the 121 exclusion, which is kind of like the 1031 exchange that real estate investors are so familiar with. But for people who have primary residences, long story short, did several more projects on my own and then with my husband, and we got really good at building up buckets of equity, but really bad at creating cash flow. And it dawned on us one day that we should actually keep some of these flips that we're doing and just when we move out, put a renter in there and start creating streams of cash flow. And when that light bulb went off, we were off to the races. Scaled to 36 single family units, still doing about ten flips a year. And then we had our next ceiling achievement. We needed to scale further, faster and with less of our time. So do we do that? Do we go into multifamily, buy bigger properties, or do we invest in other people's projects? And I decided to do both, test it out for a couple of years and see which avenue actually would get us closer to financial freedom. And quite honestly, I will say the passive investing over the long haul not only Helped us build the cash flow, but Build the equity, but also get Our time back, which is one of your most precious nonrenewable resources. Anyways. I can go down rabbit holes all day long with passive investing, but my Husband and I are at today. We have over 800 million personally in real estate and partnership. And you read a lot of the vanity metrics, but the main result that we get from that is 100% choice on how we spend Our time and we choose to work. We're still young and in the accumulation phase of our portfolio, but it gives us freedom and flexibility. We were talking before the show about kids and schooling, and I'm like, why not take a few weeks off or a few months off and pull the kids out of school and travel? It gives you that sort of freedom.
Talk a little bit quickly just because you had brought this up, this cash flow equity consideration. I know people that are newer into investing and Just getting started are trying to figure out, like I kind of explained it as you've got all equity on one side of a scale and all cash flow on the other side, and your preference and kind of your strategy fall somewhere in the Middle. Is it a lot of cash flow and a little equity? Is it a lot of equity, a little cash flow, or kind of right in the middle? How do you help people think through that as they're deciding their strategy to kind of figure out what properties or what opportunities to identify on that equity cash flow scale?
Yeah, I'll go over how I advise or suggest people approach it, and then where I'm at personally for people, how do you figure this out? Well, first you need to understand what your goals are. And this is where I think sometimes the trap that people get into is that they're always trying to copy somebody else's investing plan. You really need to sit down and create your own investing thesis, right? You can take hints from other people's plans, but you really need to make it your own. Do you need cash flow? Do you need equity? Do you need tax benefits? Do you need diversification? What kind of time involvement are you willing to put in your portfolio? For people that are high net worth? Doctors, lawyers, tech workers, entrepreneurs, you probably have a higher and better use in your profession. So how quickly can you take that cash flow you get from your position or the equity through bonuses and profit sharing and put that onto the other side, into cash flow in order to free those golden handcuffs, right? Other people might need to supplement with equity. Maybe they have a small rental portfolio. They have a lot of cash flow coming in, but maybe they're in C and D class properties. We now need to start building up but more buckets of equity so you can get higher quality type of cash flow. Anyways, there's a myriad of questions here, but really, it boils down to the goals, the risk, and timeline. And those goals, risk and timeline, should shift from your 20s into closer to retirement. Right. That pendulum is going to continue to shift. Now, for me, we were talking just a second ago that my husband and I were still in the accumulation phase of our portfolio, but we decided to take a balanced blend, one, because we wanted to have that cash flow now to unlock us from our job, even though we had no intentions of using it right now at the time when we were working full time. W two, we had no intentions on using that cash flow so we could gather it all up and continue to reinvest back in the business. The number one mistake I see people, investors make is they say, my job jobw two, I make great income at it. I don't need any cash flow. Let me bet the house on a complete equity deal, development deal. And then now that money is locked up for three, five, seven years, earning zero cash flow, and they have a life event happen. Some reason why they have to step away from their job or reduce their hours, or maybe they just burn out and they want to switch jobs. They don't have the cash flow there to support them. So when you take a balanced approach, you can actually flip that switch. That's what I really help my investors that I coach at Ashwealth understand. Now, even if you're not consuming the cash flow, if you decide in three or four or five years that you want to take a lower paying job so you have more flexibility, you can start utilizing that cash flow earlier, but if it's never there, you can't do that.
And also, you guys focus on a few areas that a lot of people have probably described as more of a cash cow, like a self storage or car washes. So I'm curious to hear, as you're helping identify different asset classes for people, talk about those opportunities a little bit.
Once you have your goals, risk, and timeline identified, now you have to match it with what type of asset that will actually yield that. That's another mistake. I see investors, maybe they understand their goals, risk, and timeline, but they're so attached to one particular asset, and they're going to have to take enormous risk with that type of asset class in order to achieve it. So that's where you're going to. I don't let the asset determine your goals. You determine your goals, and then you match it to the asset. So self storage is pretty stable. Cash flow, modest equity growth, unless you're doing, like, expansions or development. We'd like properties that have an expansion component to it, so we can immediately boost the NOI by just adding more units if there's like a couple of acres or something like that. One of our last RV storage deals, we were able to add several units to the property. And it's RV storage. It didn't take much like, we didn't even have to wreck walls for that. Just put it in a parking lot, essentially. Even within that particular asset class, you can still get some nuances there on how it might match your goals. Multifamily, historically, has been kind of like that nice middle road, balanced cash flow and equity growth. But again, still, there's a sliding scale in there as well. Right now, I would say cash flow is pretty compressed in multifamily. But I see in the next two to three years that really kind of turning around. One, with the interest rates, two with the cap rates starting to expand a little bit. But investors are searching for yield. And how can we provide our investors with cash flow, equity and tax benefits and not have to swing for the fences with risk on that? And we started looking at cash flowing businesses, actually well before COVID actually happened. And we identified hotels and express car washes. Now, hotels have recovered very quickly post COVID Express car washes. This is a new space. It's a high intense cash flowing business. It is low operational expense. And the current car washes that are owned right now, just think about this. The industry is $33 billion in growing. It's very small. It harkens back to self storage in 2006. But now these are primarily owned by mom and pop owners, and they maybe built one or two or three locations, but they're owner operators of these businesses because you need five to ten locations before you can even hire one regional manager. And so we're starting to consolidate these locations within a portfolio and use our immense buying power for that. Now, we also are taking the technology we developed with our self storage and starting to layer that onto the express car washes. So you already had a low operational expense business, high cash flow business, high Margins. Now we're driving that down. One, with our buying Power, getting these, purchasing these properties at a lower multiple, we're able to negotiate down the Chemicals that are used on the property, get better equipment. So we're lowering our cost that way. But then we're also taking the Technology that we have here, and we're moving people from single pay for their car washes to monthly recurring revenue model. And so there's just a lot of Different Ways that we can optimize this business and really unhook the income from the actual time that one spends at the car wash. I'm very passionate about this. I can go down, I can keep talking about car washes forever. But I think that's a unique opportunity for people in this environment, investors in this environment, to still hit nice cash flowing numbers, have owned the real estate underneath, still take advantage of that appreciation, and then also get nice tax benefits because it's a business, you can actually write the building off. The car wash building off is a piece of equipment. So we can hit some 60% to 80% Year One depreciation numbers right now.
Yeah. And I think for some people that are looking for that cash flow to be able to earn a little bit of time, freedom, or somebody that's working a job right now, that cash flow that you're building up through something like car washes, you can always invest that in more appreciation, play businesses down the road. And so it's kind of like you're going upstream and starting off well with Building this cash flowing Business that can then fuel everything down the road behind it.
Absolutely. I think one Thing that I would impart to investors right now, make sure that you invest with an operator that, you know, Love and Trust that are in great growth markets and high quality assets, even if the cash flow Seems a little low for Year one, because these Days, the cash flow will grow over time between 2015 or really 16 and 2019, everybody was talking about the 2% oral, the 1% rule, right? Like, high cash flow. We're back down to where cash flow, we're level setting expectations. We're back down to normal cash flow on these assets. You get in, let it grow, right? This isn't get rich overnight. This is like, get in and wait and you'll get rich.
So for somebody that just because you had mentioned being passionate about car washes, where do they start looking for these opportunities? Or how do they get started with something like that if they've never even thought about car washes? And they're like, oh, my gosh, Whitney's talking about it. It sounds pretty amazing. What do I start doing to educate myself?
Yeah, you can reach out to [email protected]. There. I've got some free resources in our master class on Express car washes that you can learn, because really, first, it's educating on the different types of car washes, right? I'm specifically talking about the express car wash, not the ones where you drive in a concrete garage and you wash your own car, not the ones that are attached to the gas stations and not your full service car washes, because each one of those, while they might be money makers, have their own, they're not business optimized. And so we're especially trying to pick up that express car wash type of asset or develop it from the ground up. We will do both. We're looking to scale our portfolio to 150 to 200 locations and take an IPO backup, I shouldn't even say backup plan, a very quality second plan is to roll it up to a REIT. And so there's a huge taste for this right now from Blackstone. And you just think of a REIT. They want low operational expense, high cash flowing businesses. Now, how do you get started like this? Anybody listening here? Well, one, you could do it yourself, right, in Express car wash. Probably the simplest way to get started would be to invest in a franchise. But now you might not own the land. You definitely don't own the brand. So you got some business issues here. And you need to have probably like $1.5 million plus the cost of the land and a little bit set aside for reserves, a couple of million dollars set aside for reserves just to get it off the ground. For most people, that's not palatable. Two, you could invest in an RA operating business that is a franchise. But again, you don't own the land, you don't own the brand. And there might be some issues there, right? Like you're not going to be able to probably exit like you want to. For us, we are a direct owner, so we actually own the land that the car washes sit on. We own our own brand. We don't franchise it. So we're direct ownership and we own the third party management company because that's the last piece of the puzzle, that third party management company, if you want to have a very strong exit, you need to have property management already built into your business to be able to either one IPO it or two exit. Because Blackstone, if you're exiting to a REIT like that, they're not in business to manage car washes. They just want to clip a coupon. Right? So think of the end in mind, like, what is your exit going to be? What's your ideal exit? And then build it back from there.
And how many years have you guys been tackling the Express car wash sector?
We launched our own brand two years ago, so we've been in the space longer than that. But we launched our own brand two years ago, and we're already one of the top car washes in the United States car wash brands. And so when you build your own property management company, we already have 200 employees that are within the company. You learn a lot, and you learn a lot really fast. And so we've scaled primarily in the east and southeast part of the United States, and we're looking to expand further along the Gulf coast and into the interior part of the United States. But we're remaining really thoughtful to. We're not necessarily looking to build in the major metropolitan heart where you're seeing all these massive express car washes go up. We're looking to be in areas where we have no competitors for three or 5 miles around know, we're looking know really stand out. And that might mean being in a secondary market or somewhere between a secondary and a tertiary market. We have one property in Gaston, South Carolina, that makes almost as much money as our largest property in Fort Myers, Florida. And they're two different sizes of car washes. One looks like a little mini Starbucks in comparison to the other one. So being bigger doesn't always mean being better.
Well, I think for people listening, you can try to figure it out yourself, or you can align with people that share your resources and share your learnings and share your experiences together. Because I was talking with somebody that was looking to do their first investment, and so it was them and a buddy trying to do their first flip. And I get it. You can certainly do your first flip on your own. But what if you pooled your money together with some other people? If you can find people that align with you and go hit a better economies of scale? It's kind of this idea of, hey, if I do a single family home, yeah, I'm in control of it. But if that person is not paying rent or that unit is vacant, I've lost 100% of my income. If I even just go to a duplex right now, it's 50% of my income if one person's out and sliding all the way up to these larger economies of scale. And so I think sometimes people maybe have a lot of ego in it where they feel like I have to do everything myself, where it's like, hey, I could latch on to all the experience and education and learning that you've already figured out in the car wash space, or I could try to figure it out on my own. Like you said, it's so hard to try to pull that off on your own. Why don't you just latch arms with somebody who's moving a lot faster and a lot bigger already, and you kind of have to give up that ego, but you can earn better returns and who cares at the end of the day, right?
Well, one, like what you're alluding to, you don't earn a gold star for doing everything yourself, right? Two, if you're going to create true diversification within your portfolio, specialize on one niche, right? Maybe that niche is your business, right? Or something else that you're building. Maybe single families is your jam. Maybe building multifamily is your jam. And then if you want to diversify your portfolio, find the experts that already have the knowledge and expertise, the team. They have the credit and lending. They can pull the investor capital and they can operate the asset. Invest with other people. A lot of operators invest with us. They understand that. They practice that. They do multifamily, and they're like, we want exposure to express car washes, but we're not going to go figure it out ourselves. Two, I yield for people. I mean, I started off in single family investing, and you're just like, I think you're new to real estate and you're like, this is amazing. I have cash flow coming in. You can see your portfolio growing, and then you got the tenant that doesn't pay, right? You don't lose 100% of your income. You actually go negative, right? Because now you have all the bills yourself, right? And then you get maybe an insurance claim and you start realizing, okay, this isn't exactly passive. Maybe the IRS calls it passive, like passive income, but this is certainly not passive with my time. So there is a whole kind of scaling that I feel like a journey that people have to mentally go through, whether they go through it physically or not, they have to go through that, at least mentally, to get them from investing in stocks, bonds and mutual funds, which we are so trained to do, right? That's what our educational system almost teaches us to do to getting into alternative assets, either diversifying our portfolio or going all the way over there entirely into owning different types of real estate. But then it might be single family homes, multifamily syndications, and then maybe like hedge funds and then venture capital, right? There's a whole journey here that somebody has to go through. So I don't fault anybody for that, but how quickly can we get you moved along that journey and not stuck in one mentality.
Now, you had mentioned offline that you've got a book coming up here, money for tomorrow. I would love to just hear a little bit for folks listening a little bit kind of about that journey, about that message that you're going to have with your upcoming book.
Absolutely. Yeah. So money for tomorrow is really written. I actually wrote all this material that went into the book for my daughter. I had the unfortunate experience of settling five estates within my family, seeing another two, being part of another two, and just all the myriad of ways that some people think that if there's an estate, that there's a lot of money attached to it, but not necessarily so. Right. That's just the legal term for where the assets go when somebody passes. And going through this experience and just realizing firsthand all the different ways that your wealth can be eroded and things that are 100% avoidable. But there's a taboo. We don't discuss that. Whatever reason, we don't take care of that early enough. And I wanted to write a guidebook for my daughter to help her understand how to create wealth, how to grow it, how to keep it, and then how to pass it on. It's really the keep stage and the growth or the passing on stage. I see people do hundreds and thousands of dollars. That $100,000 may sting, but compound that out at 7% over 30 years. We're talking millions of dollars lost in eroded amongst families. I want to help families avoid that. So the way the premise I use in the book is if you think of generational wealth as a game, you have to understand the objective of the game, the strategy in order to play the game. How do you keep it? How do you create it? First of all, how do you keep it? How do you grow it? How do you pass it on? And then we got to talk about all the various tactics. The problem is most people start with the tactics and they don't actually understand what the true objective is, nor do they have a nice strategy in place. And really this book is focused on the objective and the strategy that anybody can use. It doesn't matter if you are in real estate or not, anybody can use to get you 80 85% there on creating multigenerational wealth for your family.
Well, we're excited to see it come out in the future and excited to go pick it up for people that want to reach out to you. Learn more about Passiveinvesting.com and what you guys are working on. How can they do so?
If you want to learn about what we're doing as far as passive investments and get more education around passive investments, you can reach out to [email protected]. A little form there, but you can also schedule directly on my calendar if you're looking for more one on one support. If you're interested about finding out about the book and the details there, it's coming out with bigger pockets here in the middle of February 2024. You can reach out to [email protected]. Ashwealth.com thank you so much, Whitney, for.
Coming on and sharing your experience and just excited how you are helping others think a little bit more in depth about what they're doing, their strategy and what they want to accomplish. And so thanks for what you're doing and excited to see you guys continue to grow and see the milestones you guys continue to hit.