Top 1% producer Eric Workman of Green Street Homes has built a successful business working with investors. In our conversation Eric shares how he finds opportunities for his team, why every broker should be investing, and how building a property management business has led to even more brokerage transactions. If you’ve ever considered becoming a real estate investor or learning what it takes to work with them, this is the episode for you!
Eric Workman can be reached at 630-408-5582 and eric@greenstreethomes.com.
Transcript
D.J. Paris 0:14
Hello and welcome to another episode of Keeping it real. The only real estate podcast may buy real estate agents for real estate agents. My name is DJ Parris. I am your host through the show and today we have a great interview with Eric workman coming up in just a few. Also really quickly wanted to say thank you. I feel like I say that most every episode, but we’re really really overwhelmed by how generous every Alba listeners have been. What you’ve been doing is telling a friend telling other brokers in your office about the show, we are coming up be by the end of this month, we will be over 5000 subscribers, which just a few months ago, we had 50 subscribers. And so with basically no marketing at all, you guys have been spreading the word. So continue to do that. Please also feel free to leave a review on iTunes or Google Play about what you like about the show. Also let us know what we can do to make the show better where this show is for you. Right. That’s it for brokers who want to improve their skill set. So let us know. We do a monthly interview with Carrie McCormick, who is a top producer 18 years in the business and she is here to answer your questions. So anything you want to know well, you know, send those questions to us through our website which is keeping it real pod.com Also you can find us on Facebook keeping it real pot. Okay on to the interview with Eric Worre.
A today on the show we have Eric workman Eric is the owner and broker of Green Street homes. Eric is a graduate of the University of Illinois, where he majored in finance and real estate. Eric has been a prominent fixture in the residential investment space since 2010. In his prior positions, Eric structured some of the largest transactions in the history of the Single Family Investment Industry and has been featured in multiple news publications, such as The Wall Street Journal, Bloomberg MarketWatch and Fox News. In his current role, Eric oversees the inventory selection, construction management, sales, marketing and investor relations for Green Street. Eric, thank you so much, and welcome to the show.
Eric Workman 2:29
Oh, well, thank you very much for having me. It’s a it’s an honor.
D.J. Paris 2:33
Well, tell us a little bit about how you got started in real estate, and in particular, how you eventually or maybe even from from the start, but you know, headed down the investment path?
Eric Workman 2:45
Sure. Well, I graduated school in 2004. And like you said, I graduated with a finance degree, but also a concentration in real estate. And not unlike a lot of people who got into real estate in 2004, I went the new construction route. So I came out of school, I went to work for a big national home builder, and was in sales, which at the time wasn’t, wasn’t too difficult of a job. You know, you were pretty young, right out of school, making a lot of money and real estate was pretty easy. Sure, but then four years later, you know, it’s 2008 I had my first child on the way the the market takes a dive, nobody wants a new construction home anymore. And I had to reinvent myself, I had to kind of figure out how I was going to continue to make a living at the level that I was at gotten used to over the prior couple of years. You know, now starting now with a family started, it was it was imperative that I kind of figured that out. And I went back to kind of my roots educationally of why I decided to get you know, a concentration in real estate from from the University of Illinois, and it really had to do with real estate being a wealth building tool. And, you know, I grew up in a small town in central Illinois. I come from a family of firemen and electricians. And I was always very comfortable with construction projects and houses and small apartment buildings. And I never really got the stock market or the equities market or bonds or what have you, but I understood how you could either build a piece of real estate or you could you know, renovate a piece of real estate and how you could create income and and equity from that. And so I I very quickly in 2008 decided to kind of transition myself from focusing on new construction and on the regular brokerage market and focus on working with investors. I had I was given some pretty sage advice at the time as a young man that no matter what What’s happening in the real estate market, there’s always money to be made, you know, even though even though you know, new construction sales aren’t going well anymore, and even though, you know, you can’t just stick a sign in the yard and do a regular resale transaction, there were still 1000s of transactions happening all the time. And so I network myself, just with people that I knew, and kind of let everyone know what my focus was, and was going to be and was, was fortunate to be connected with a couple of investors who, you know, in, in 2008, and 2009, I think, you know, I did 30 transactions in a row with the with the same clients. And from that point, at from that point, the, the focus of mine from a from a career perspective, and also from a personal investing standpoint, was on distressed real estate and on working with investment properties.
D.J. Paris 5:56
Sure, it has the focus of the types of properties, I know you’re you’re a single family home, that tends to be your, your, your specialty, if I’m understanding has it always been that way? Or did you? Have you shifted from different types of investment opportunities?
Eric Workman 6:11
No, I would say single family homes has been 95% of everything that I’ve done. It’s, you know, traditionally, people look at a house as a home, right, and 80% of all single family transactions that occur in the market, are people buying those properties as a place to live for themselves. But what’s what’s staggering is that, you know, close to 20%, nearly one in five of all single family transactions in the United States are for investors, and investors who are buying those properties as investments, you know, as rental properties. And the neat thing, for me in that was, when working with an investor, there’s significantly less emotion, there’s sure quite a bit less time as it relates to, you know, being out on the weekends and driving around to look at different properties and, and, you know, caring whether or not the cabinets are brown, or whether they’re white, or whether they’re gray. It’s a very emotionless, you know, financially based transaction, you know, either the numbers work, or they don’t, the rents are strong scenario, or they’re not the tenant, you know, the type of tenant stability that you have in a particular area is high or it’s not. And whenever you’re able to, to find the right buyer audience or the right investor mix, the projects, when presented properly, can really speak for themselves. And so you can you can dial in the way that you’re managing your time, the type of inventory that go after, etc. And so for me, the single family home as an investment vehicle, and as an asset in and of itself, has been something that, you know, I’ve been focusing on, really since since the downturn.
D.J. Paris 8:07
And do you focus in in a particular geographic area, or does that shift based on market conditions?
Eric Workman 8:13
Well, I would say it does shift based on market conditions. I mean, I’m, I’m only focused here in Chicagoland. You know, I don’t I don’t transact in any other markets. You know, there are there are some brokers, I would say, of similar ilk to myself who will do deals in Dallas or Atlanta, Memphis, you know, some other markets where you have a large number of investors who’ve who’ve come into the market, but for me, it’s always been Chicagoland. And really what you have, what you have, whenever you’re compiling a portfolio of single family homes, is you’re an investor really got to be focused on one of two things either has to have to be focused on cashflow, which is going to be the kind of the net money that you have leftover. You collect the rent, you pay your mortgage, you pay your property manager, you pay your taxes. And what you have leftover is your cash flow. The they’re either focused on having high cash flow, or high appreciation potential. And traditionally, you don’t find both in the same area. So right so you have, you know, you have areas of Chicagoland where prices are depressed, you know, southern suburbs, southern parts of the city, western parts of the city, even northern far northern suburbs, where the price to rent ratios are, are relatively high. And in those areas, you’ll find really strong cash flows. What you don’t tend to find is that for five, six years after buying a property, that the actual value of that property has changed much. And so as an investor, you know, you’re in those areas, you get really great cash flow. But you know, the house that you buy for 150 hasn’t jumped to 210 Sure, or 250. In other parts of Chicagoland, it’s the exact opposite, you’ll have a little bit lower cash flow, but you’ll see quite a bit better home price appreciation,
D.J. Paris 10:16
and the investors you work with are they traditionally are mostly looking for cash flow.
Eric Workman 10:23
You know, I would say that they’re looking for both, a lot of investors who I work with, start off looking for cash flow. And then it’s, it’s not unlike balancing out an equity portfolio, where you, you start off as a young person willing to take a lot of risk. And you know, buying less expensive stocks, and then as your portfolio matures, all of a sudden, you start buying a lot of a lot of blue chips, right, you you own a lot more coal in Walmart than you ever thought that you would. And when you, when you start off with a real estate portfolio, it’s really no different. You know, when you have a high concentration of a particular style of properties, whether that be, you know, cashflow heavy, or appreciation heavy, it’s not a bad idea to balance those out. And when you when you look at a lot of the investors who I work with, and you look at their portfolios, over the course of the last five or six years, and the ones who, you know, 345 years ago started to balance out their hive, their high cash flow properties, with some high appreciation properties, have seen some really significant jumps, appreciation wise. Sure. And, you know, while still maintaining really healthy cash flow in their other areas,
D.J. Paris 11:42
it’s, ya know, it’s, it’s interesting, and it’s funny, you are the owner of our company, he’s an investor and his family’s been buying real estate, mostly buy and hold for almost exclusively buy and hold multi units for many, many years. And our owner himself tries to buy a property every several months. And he has, I think he’s up to 25 or so properties, multi units, he has a specialty. And he he likes Bridgeport, he there’s a few areas that he just seems to find deals and but he’s always said that and I would be interested to get your take on it. He’s like finding the investors is the easy part. Because, you know, whenever you can present a good opportunity to people that are cash heavy, you know, where they can get a some sort of return on investment, assuming they’re looking for cash flow, and maybe also appreciation, but specifically cash flow, where they can get a guaranteed return, or at least a semi guaranteed return, the investors are pretty easy to find. I don’t know, if if you’ve had that similar experience? Is the deal harder to find than the than the cash itself for the event from the investors?
Eric Workman 12:45
Well, it is today. You know, things aren’t really on sale anymore. At least that’s the way that I look at the market, I don’t think there’s a well, you know, a lot of the distress is pretty much gone. And it’s difficult to find good deals yet, because the because the markets done well over the last five or six years, really all markets have done well. Investors and money is not that difficult to find. You know, 678 years ago, whenever everyone was scared, and all markets were taking a pounding, and a lot of people were either, you know, losing their jobs or getting, you know, a reduction in pay or not getting their bonus, it was more difficult to find people who were bullish at that time, you know, than it is today. However, you know, when you find the good investor, when you find that good client, you’re able to typically, you know, provided you can continue to put good deals in front of them, you’re able to, to enact a lot of volume out of one client. You know, I told the story a little bit earlier that, you know, one of my first investor clients, I did, you know, 30 transactions in a row with with your client, and I don’t know how many years it might have taken me to do 30 You know, to do another 30 transactions with, you know, random other people who were either referred to me or who I marketed to and happened to attract. So that’s another that’s just kind of another foundation for why I why I stuck with the investment investment path.
D.J. Paris 14:22
Yeah, sure. And I think, you know, just it’s really becomes you become the deal finder, the deal maker, and, you know, you have people who obviously trust your judgment and are able to, you know, push, push the button on without a lot of emotion attached to that decision. So it seems like the best of both worlds in a lot of ways. Let in I’m not asking you to give up your secret sauce, but I’m just curious. What percentage of the properties that you invest in? Are MLS listed, is it do you have a general idea of how often you find them out? Let’s say the MLS versus
Eric Workman 15:01
in, that I invest in or that I that I transact,
D.J. Paris 15:05
that you transact.
Eric Workman 15:09
On the transaction side, it’s probably 5050.
D.J. Paris 15:13
And how do you, you know, and again, I’m not asking you to give, give all of your technique away, but how do you find non MLS properties? Do you guys proactively reach out to owner saying, Hey, if you ever interested in selling? Are there marketing campaigns you put together? Or are there? I’m just curious on how you find property?
Eric Workman 15:33
Sure, well, we we do that. I mean, we have done that. But one of the, one of the key components to, to our call it brokerage business, has been, has been bringing on property management business. And so sure, yeah, so, you know, part of being a property manager in the state of Illinois is that you have to be a licensed broker, right. So my partner has a tremendous amount of operational and property management, operating experience. And a few years ago, we decided to, we decided to start bringing on property management for others, you know, we, you know, when you’re, when you’re in this business, it’s very difficult, as a, as a broker, to investment deals, to see these deals happening all the time and not getting them yourself. Right. You know, so we’ve, we’ve built our own portfolio of a number of single family homes and some small apartment buildings. And we, we needed a way to manage them. Right. And so we, we got our own property management software, we got a good accounting team in place, we brought on a couple of really great property managers. And, you know, we had they, I should say, they, they had excess capacity, and a number of the investors who we worked with, were looking, you know, they were all looking for a more trusted management experience. Sure, and, and, you know, would, would occasionally reach out to us, and finally, we decided to bring a number of them on. And in bringing those guys on it almost, you know, it just opened up another avenue for people to interact with, with us and with our company. And it brought about significantly more brokerage opportunities. You know, whether it was existing clients wanting to trade out of different positions, or, you know, or other investors or other, you know, brokers throughout the market, who were, who are looking who were looking for, you know, avenues to sell properties into, you know, they found they would find us occasionally through our property management business. So, that’s been a great way for us to Advent, the brokerage side.
D.J. Paris 17:54
Yeah, that makes absolute perfect sense, that would not have occurred to me that that would also not only increase, I mean, obviously, you’re building your property management business, but it would also lead to more brokerage opportunities. Of course, that’s, that’s quite a quite smart. So. So good percentage of the transactions you find are possibly even just people who you’ve interacted with who have opportunities, or can introduce you to opportunities out there in the in the field that you might not be aware of.
Eric Workman 18:23
Yeah, and, you know, when you think about the type of assets that are trading, it’s difficult to list a rented single family home on the MLS Sure, it difficult as actually being kind, it’s nearly impossible. And it’s in it’s very difficult to show because you’re not just coordinating with the salary, also grinding with the tenant. You know, if a tenant has lived there for a while, and doesn’t particularly want to move, they can, you know, it can be difficult in you know, in allowing showings, and, and so a lot of those transactions happen off market. And there are other there are other brokers like myself who are focused in this asset class, who, you know, it becomes it becomes a relatively you know, it’s a it’s a huge market and a small industry. The, you know, the guys who do the most volume tend to know each other pretty well, and they know what types of assets and what types of areas you can sell into, with what brokers and so when, you know, when 100 home portfolio becomes available, you know, it’s not going to go on the MLS Sure, it’s gonna go out to a handful of different brokers and, you know, client of mine swoops in and picks up 70 of them, per se, you know, and there’s, there’s a, there’s a $10 million transaction that that never hits the MLS, right. So,
D.J. Paris 19:50
yeah, I know like our owner who specializes in multi units in Walsall. We also have a property management division tear which was born out of similar system as yours, but a lot of the times, you know, he will, he will do marketing campaigns in his early earlier investing days where he would send out, Hey, if you ever want to sell your property, Mom and Pop who own the multi unit, and now he like yourself finds they doesn’t have to do that as often because those opportunities also come along through the other channels of the property management side. But yeah, it’s very interesting. If there’s obviously we have several 1000 brokers who listen to this, and who are will be listening to this? And do you have suggestions for them? If they’re interested in sort of learning about, you know, they’re, they’re not used to working with investors? Do you have any suggestions of how they could get started to acquiring this knowledge?
Eric Workman 20:49
Well, sure, they’re the the industry has become, I would say more in vogue since 2011. I remember, I remember in, I guess, what, almost be six years ago to the date kind of late October 2011, going to a single family rental or single family, you know, investment property event in Scottsdale, Arizona, and we there were like, 20 of us in the room. And there are there, you know, huge conferences, you know, multiple times a year with, you know, hundreds of attendees. So the there are, there are plenty of courses out there that somebody can take. I think that the bigger pockets website does a great job of putting good data and information out there. But, you know, really an investor is going to want to sorry, a broker is going to want to understand the lingo. You know, investors talking in different terminology, like I was saying, you know, cash flow cap rate, you know, noi, you know, those types of, you’re gonna need to learn that type of lingo. And yeah, there are, there are plenty of different education formats out there, you know, where you can buy this knowledge. There’s a lot of different books on investing in real estate and investing from a cash flow standpoint. And I think I think a place like bigger pockets is a great place to get information.
D.J. Paris 22:22
Yeah, I know that the owner of our firm always says, in particular, to new investors, like pick a specialty, pick some hyper focus in one area of investment, because you’ll go crazy trying to figure it all out, and certainly try to, you know, master one, one avenue. Sounds like you guys, you know, hyper focus as well. And so yeah, there’s there’s so many resources, there’s meetup groups, there’s obviously bigger pockets, there’s lots of programs, and people can learn if they’re really truly committed. And,
Eric Workman 22:54
you know, what, actually the Chicago Ria, the Chicago Real Estate Investors Association, yes. Is a is a good spot. The gentleman who runs ads guy named Andrew Holmes, I think Andrew, Nick, Andrew, does a great job of disseminating the kind of what real estate investing is all about. And if you’re an agent, I would recommend learning it from the investor’s perspective. So that you can then so that then you can mold the investors perspective with your market knowledge in whatever opportunities that you’re presenting. Those are, that would be my that would be my, I guess, kind of the foundation of, of how to get started.
D.J. Paris 23:35
And if there are any investors who are interested in working with with your firm, you and your firm directly, how would you recommend they get in touch with you?
Eric Workman 23:45
Well, our website is Green Street. homes.com. And my my email is Eric errc at Green Street, homes.com. That’s the easiest way to get in touch with me. You can also reach me on my cell phone 63040855820 And,
D.J. Paris 23:59
Eric, I wanted to ask you before you left, because I am also from Central Illinois. Where are you from in central Illinois.
Eric Workman 24:05
Do you know where Decatur is? I do a little town called Mount Zion.
D.J. Paris 24:09
Okay, I I know I know the name I you know, I didn’t know where exactly that is. I have been a Decatur I’m from Peoria, Illinois. So not too far away. But for sure.
Eric Workman 24:21
A lot of time playing baseball up around Peoria playing against Pekin and Morton and sure I love the all the little towns around there.
D.J. Paris 24:29
Yeah. That’s That’s us. Well, thank you so much for your time this has is going to be extremely well received by our brokers so I by the people who listen rather, I’m really grateful that you spent a few minutes with us to do this. And thank you so much and best of luck. We wish you continued success. You certainly don’t need that. My well wishes for there but thank you again.
Eric Workman 24:54
Now. Well, thank you for having me. It was a lot of fun.
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