PILF 62 | Real Estate Syndication

62. How to Retire Yourself from Your Day Job with Derek Clifford

PILF 62 | Real Estate Syndication


There are many ways to build and grow your real estate business, whether you are an active or passive investor. Managing or investing in syndications is a great way to scale your investments and efficiently build wealth. In this episode, Jim Pfeifer talks with Derek Clifford, Founder and CEO of Elevate Equity about “retiring yourself” from your day job through investing in cash flowing assets. Derek shares his journey from accidental landlord to Airbnb Nomad successfully scaling his real estate investments and achieving all Three Degrees of Freedom. Tune in to learn more great insights on how to grow your passive wealth.

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How to Retire Yourself from Your Day Job with Derek Clifford

I am pleased to have Derek Clifford with us. He is an investor in single and multifamily real estate who successfully retired himself from his full-time W-2 job by growing and scaling his real estate portfolio. He is the host of the Elevate Your Equity podcast and is the author of Part-time Real Estate Investing for Full-Time Professionals, although that does not apply to him anymore because he retired himself. Derek, welcome to the show.

Jim, it is an honor to be here. Thank you for having me on.

The first thing we do on this show is we would like to hear about your journey. How do you get to where you are? What is your financial journey? Also, you are on a perpetual journey, it sounds like. We would like to know about that as well.

I started out investing in real estate like most people do, completely on accident. That is how we ended up getting our portfolio started because my wife was living in Washington State back in 2007. She decided to purchase a condo about a month before the real estate market crash in 2008 with the mortgage meltdown. She had bought a condo for $250,000 in Washington State, come to find out 3 or 4 months later, it was worth $90,000. By the time she had graduated school about four years later, she was ready to move on to a residency but the condo was underwater by about $70,000 or something more like that.

We did not have any options because, at the time, we were starving students. We graduated from school, and we are trying to get our whole financial and personal lives started. We could not afford to write the $70,000 difference to cover that difference between what someone would be willing to pay and what our mortgage was currently outstanding. The only option that we could go with was to rent out the condo. When we rented out the condo, we started collecting cashflow. We are making our drive from Washington State down to California, which is where we both ended up working for a little while after Washington.

We noticed that we were getting this mailbox money coming in every month. We were paying our mortgage, the HOA, all the water bills, everything, and we still had this excess cashflow. At the time, I was big in Dave Ramsey in paying down debt and trying to get to the point where you can live off of 4% of your nest egg savings and stocks. I realized that it was going to take me 25 or 30 years to get to the goal that I needed to get to in order to have the same lifestyle that I was having then at the time, including raises and everything else in my W-2.

When we started getting this mailbox money, the gears started turning in my head. It is like, “If we did this on accident, imagine what we could do if we did it on purpose out of design.” That is what we ended up doing. We started going deep into BiggerPockets and spent years in analysis paralysis trying to figure out what the easiest way to hit a home run right out of the gate was. I learned some lessons there and got some single-families eventually. I made some mistakes and started to shift my mindset from hitting it out of the park from the first one to learning and knowing this is lifelong learning and a journey that would be going on.

Once we made that shift, we started buying up stuff like crazy. We bought 14 or 16 units in our first 8 months when we started hitting the road and hitting it hard. From there, eventually, we went into multifamily, started getting mentors, did this full-time while working a job for five years, and then eventually was able to leave my full-time project management job at a utility company, building a gas pipeline and electric infrastructure on construction projects. That is a little bit about my background.

An accidental landlord that is funny. That is the way I started as well. It was also about the same time in 2008, we could not sell our house. We built a new one, became a landlord, hated it but then the check started rolling in and I thought, “This is not so bad.” Can you talk about some of the mistakes you made? You mentioned along the way, you made mistakes, and I made plenty of them as well. That is how I ended up becoming a passive investor because I realized I was not an asset manager or a property manager. I needed to get out of that business and get into something that I could figure out and was good at. What were some of the mistakes that you made early on?

[bctt tweet=”With the amount of people that are interested in real estate investing, only a select few of those actually end up working in it or actually end up doing something in it, whether it’s passive or active.” via=”no”]

Similar to your experience there, Jim, we have a lot in common. I thought that I could do it all myself. This is a classic mistake. When you buy a property in your local market, you figure that you can place the tenants, do the repairs, collect rent, and do all of that. While it was true, you can do all of it. For me, what was truer was that I did it very poorly.

We ended up getting our first couple of tenants in there, and we charged way too much for rent. We placed tenants that could not afford it. As you might imagine, they only paid for 3 or 4 months, and then we had to do a Cash for Keys arrangement, giving them back all the money that they had paid us to get them out.

This is in California, where the Tenant-Landlord Laws are very much slanted towards the tenant. The other thing that we did was we’ve got the next tenant in there. This one was purposefully trying to hurt us. They took us to court, and we went through the whole eviction process. It took us six months to get them out. That whole time, we are paying the mortgage without any income coming in with people that are not happy with us inside the property, most likely damaging it. Just like you, I had the a-ha moment that it is like, “I need to start outsourcing some of these things.” The number one mistake was not relying on a team. Even if you think you can’t afford to do a property manager on it, do not buy it.

That is my number one advice for people starting in single-family. The second thing that I learned was analysis paralysis. I touched on this before. Once I was able to shift my mindset from crushing it and making $1 million off of the first deal to accepting that I do not know what I do not know and that it is going to be a journey. Also, it is going to be a long-term type of investment where we are going to be reinvesting gains back into the business, that is when I was able to take action. I took the pressure off of myself to get something right away to maximize the hard-earned money that we earn as active income professionals to convert it into something that is more of a passive or even an active investment elsewhere in real estate. Those two things helped me get started.

Now you are doing multifamily syndications. Talk about the transition from doing your own single-family homes, then presumably you did some small multis, and then you realize, “Maybe I can upscale and get this larger.” Talk about that and how you’ve got to being a syndicator doing multifamily properties.

I like to think about it in terms of a funnel. With the amount of people that are interested in real estate investing, only a select few of those actually end up doing something in it, whether it is passive or active. I had all these single-family homes. Once I’ve got to the point where I am like, “I am out of loans,” because once you get to ten loans on single-family homes, Fannie Mae does not allow you to take on any more. That means that you would have to start going into expensive business debt anyway, which is more like commercial products where you can refinance all of your homes into a commercial product, and you can start buying houses again.

I figured, “For all the effort that I am putting in to rehab a property, have a property manager there, have one tenant in there, do the lawn maintenance, and all that stuff to manage that tenant, why don’t I do multifamily?” You buy one property and the closing process to do due diligence, all that stuff is the same for each time. I saw scale there. I am sure you get this a lot from some of the people who walk the same journey. I saw and realized that, “From the funnel, I am interested in real estate. I executed on real estate on the single-family side. The next thing is multifamily.”

In multifamily, I started with doing JVs. I wanted to make the mistakes myself. In the end, I always knew I was going to run out of money but when I saw the light about what syndication can do and how you can partner with other people with their capital to bring it to the table, I knew right away that as I am walking down this funnel, I’ve got more interested in real estate. I’ve got myself more convinced to become more of an active real estate investor as a syndicator. I was faced with the choice. When I was working at W-2 job once I hit those ten loans, I am like, “Do I keep doing single-families? Do I go active into multifamily? Do I go passive into multifamily?”

I wanted to continue moving into the real estate realm and get more assets. I was faced at that fork in the road. I was like, “I love this more than working my W-2 job. I want the scale.” I ended up going with seeing, with the syndications on the active side. That is the path that I walked when I had that decision point. Leaving the job was also another decision point but there were definitely some financial, lifestyle, and relationship considerations that we had to make before making that jump.

PILF 62 | Real Estate Syndication
Real Estate Syndication: In a joint venture, all of the investors that owns the ownership of the building, they all have a joint responsibility or they have active involvement that needs to be there.


I would love to talk about that because we have a lot of our community who are looking to get out of the W-2. Before we do that, you mentioned JV, so Joint Venture. Can you explain why you did joint ventures? What is the difference between that and a syndication? Why are you doing syndications now and not joint ventures anymore?

With joint ventures, these are structures in which you buy property like you would buy a house. Let’s say that it is you and your wife that ended up buying a home together. You are 50/50 on it, depending on how you take the title, either way, you can consider that a joint venture or maybe you and your brother and a friend or coworker, the three of you can come up with a down payment on a house in your neighborhood in Ohio. You can go ahead and buy that property as 1/3, 1/3, 1/3. In a joint venture, all of the investors that own the ownership of the building all have a joint responsibility or they have active involvement that needs to be there.

When you do a joint venture, all three of you have to be actively participating in the business or the operations of the business. That is the way a joint venture works. Even if someone brings all the capital and someone brings sweat equity, the assumption is that all of the people that are in venture or in the ownership team of that have some sort of membership in it, whether it is an LLC that takes the title and then people are owners in the LLC. All of those investors have to be actively involved. In a syndication, it is different because you have two classes of investors. You have passive investors and active investors.

The passive investors get equity but they have no voting rights. That is all legally outlined as long as the syndicator is following the rules of how to build these syndications, which they should when giving you PPMs, and you sign all that documentation. That is what all that is about. You have two classes of investors in syndications. One that makes all the decisions and still holds equity, and maybe even earn free equity for that to do those things, and then you have the limited partners which give the cash, and they earn equity but they have no voting rights. You have this exchange.

When I was doing JVs at the beginning, I wanted everyone to be active because it was also all of my capital coming in. It was a lot of my own capital. All the people that I was working with understood that we were all learning together. We were willing to take that risk. I wanted to do that first before I started taking on other people’s money because there are so many people out there that will accept people’s money and then use that to learn the business. That does not sit well with me.

That does not sound like a secure way to handle other investors’ money. I much rather would not gamble but play with my own money first, learn how the business works, and get my systems honed and sharpened. Once we have that down and we are ready to accept other people’s money to start scaling up with that experience, that is how that led to that.

For passive investors, that is a great thing to hear. We talk a lot about when someone changes asset classes, a syndicator is now doing self-storage rather than multifamily. I do not want to be their Guinea pig or their test case. I would much prefer someone to go and do the joint venture thing for a while, come back to me and say, “We have made all the mistakes on our own dime. Now we are going to go make you some money.” I appreciate that.

I would like to get back to leaving the W-2. In our community, we call it ditch the W-2. You call it retiring yourself, which I thought was fantastic. You mentioned there were a lot of things you had to consider. What most people mainly consider is, “I need to make sure I have more income than I do expenses. What do I do about health insurance?” It seems like there might be some other things you considered. I would like you to talk about that.

I should start by explaining about what our lifestyle is like because that feeds into this discussion. My wife and I are Airbnb nomads. We travel the country. We have been doing this for a while now. There is no end in sight for us, at least until we get back from Europe. We are traveling around the world. We are living for much less than what we had when we were working in the California Bay Area. This feeds into the discussion. When we realized that it was time for us to exit the W-2 and retire yourself, the first prerequisite is you have got to have something that you want to step into when you exit.

[bctt tweet=”Learn how the business works, get your systems honed and sharpened, and then once you have that down, then you’re ready to accept other people’s money to start scaling up.” via=”no”]

If you want to exit and you have passive income, what are you going to do with your time? You have got to find something to do. If you are at a point where you have all these passive investments and your passive income is starting to exceed your active income, then you have the luxury of being able to go ahead and escape the job, and then say, “I will figure it out.” Most of us are not there.

When you start thinking about it, you crave it more. If you are approaching that level, as long as you have some sort of marketable interests that you have built up as a side hustle while you are working your job, that you can hit the ground running. Also, take full advantage of the time that you were spending in your full-time job on this side hustle, to be able to leverage that and create income is the number one factor. If you have a cash buffer of a year, then do it. If you have a skill that is marketable and if you put more time, energy or focus into it, and you know you will be able to scale it up on yourself, I always would bet on yourself rather than having an employer take care of you.

The main mind shift for me is there is income involved. You have to make sure you are covering your expenses but if you have a cash reservoir for about a year of your expenses, you owe it to yourself no matter where you are to try it. That year-long calculation is dependent on what your expenses are. When I quit the W-2, and we went full on mobile, our expenses in the Bay Area was $10,000 a month to live there because it is the California Bay Area. That is the way it is out there. When we are traveling, our total nut is somewhere around $5,000 a month. We are living nicely across the US.

You can understand and respect that because if I were to get a nice Airbnb in Columbus or out in Cincinnati, that would be $3,000 a month, and then you have $2,000 a month for your expenses and healthcare. You’ve got to think about what lifestyle you are going to step into. If it is going to be currently where you are, that is easier to predict. As long as you have a one-year cash runway to do this and a marketable skill that you believe in yourself and are passionate enough to jump into, you owe it to yourself to go ahead and jump into it.

What is the worst thing that could happen after that year when you run out of cash? Go back to work. What is the big deal? That is how we are thinking about this. You owe it to yourself to give yourself a chance, to light a fire under your butt, to live off of your own mettle and see if you can make something work, see if you can build something.

If you can build something in that year, you will never have to work again or you are on your way to never having to work again. That is my advice to those who are thinking about leaving the W-2. Have faith in yourself, invest in your mindset, and work through limiting beliefs. All of that stuff is there but consider thinking about it from a different perspective.

A lot of our community is a little bit older. Maybe they are in their late 40s, early 50s, and they have worked for 25 years and do not have a marketable skill. They are just ready to do something different. Maybe it is a part-time job but they have the cashflow. Would it be different for somebody like that? I do not have a marketable skill necessarily. I am a podcast host and an investor. That is what I am doing with my time. What else is there if you are not thinking, “I am going to go create something or do something,” and you want to lessen the hours you put in working for somebody else?

What you are doing is a very feasible thing. Having a part-time job that at least covers the medical bills or doing something like that is great. From my perspective, everyone has a marketable skill. Everyone can do it. Everyone has something. It is a matter of whether you are that type of a person if you want to step into something that you are passionate about.

Everyone has got a hobby. You could step into that hobby somehow. There are so many resources out there. Even for some of the older readers, I would encourage people to ask the question, if money was all taken care of and you had the time to do whatever it is that you wanted to do, what is that one thing that you would do?

PILF 62 | Real Estate Syndication
Real Estate Syndication: Always bet on yourself rather than having an employer take care of you.


That would be an indication of something to do that you could supplement your income with. It could be consulting. You could do a consulting with people. You can tap into your network and say, “I am an expert in this space. I would love to consult there.” You could give back. You could start volunteering with your time, and you will meet people there. You could build a nonprofit. There are a ton of things that you can do with your time. It is a matter of finding out what it is that you are in alignment with.

There is this interplay here, where for some people who want to work and be passive, then eventually you can get to a point where your income starts to approach your monthly expenses. If you have a cash reservoir, in addition to that, you know that a few properties are starting to become a full cycle, that is, you can start to think about planning your exit. Those full-cycle moments, depending on how much income you have coming in, you can play accountant with yourself and become a real estate professional. You can start to claim some of the taxes on cost segregation when you start doing new properties.

It is a call with your accountant, your wife or your spouse to make sure that whatever lifestyle you are about to step into, you can sustain yourself with. I always think that people have marketable skills. Even when they do retire and if they look to retire early, “What are you going to do?” That is the one thing that I ask the readers, whatever it is that you decide to do, make it something that you could make some income in doing on the side.

The goal is I maybe I do not want to be committed to this job, I want to reduce the hours or I do not want to work for somebody else anymore at all but you are not thinking, “What am I going to do next?” Now you have the money and enough passive income to cover your bills but what are you going to do? That is something that people need to think about. I have heard you talk about the three degrees of freedom. Can you tell us what those three degrees are and what it all means?

This is another thing I meant to bring into this conversation about freedom for your passive investors. One way to start looking at the freedom that you are going to be enabling through passive investing is you break it up into three degrees. I like the term degree of freedom because every time you unlock a degree of freedom, it allows you to move in that space however you want to. The next degree of freedom that you unlock exponentially opens up more possibilities. The third one means that you can do anything you want. The three degrees are time, location, and financial.

When I started on my journey, the very first thing that I did was I worked on location freedom first. I did that even while I was working a full-time job, thanks to COVID. A lot of people are able to work remotely now, but once I had that itch of that locational freedom where I was working everywhere and traveling around, I started to sense or feel that I needed the time freedom. That is when I made the W-2 exit. At the same time, we started crunching our expenses down where we were living and that created financial freedom.

In stages, we were able to create these three degrees. The first one, location freedom. We were able to travel throughout California and go wherever we want to, and then we created time freedom in the fact that I was leaving my job but still working in the house in California. My wife and I realized, “Why don’t we start traveling and living for cheaper than we can in the Bay Area?” That created financial freedom because now we can live sustainably, anywhere we want to live off of the income from our joint ventures and our syndications.

Let’s get back into the syndications. You are looking at smaller apartment complexes than the typical syndication. I have always thought that I, an investor on my own, can buy up to a 25 or 30-unit and handle that on your own, although I did not handle mine very well but people can. If you are a syndicator, you want 100, 200 units. There might be an opportunity in that 40 to 100-unit space where there is not as much competition. Is that why you are targeting that? Are there other reasons? Are the cap rates better for the smaller deals? Is there less competition? Talk about your strategy.

Everything that you are mentioning, I am totally jiving with. When you work in the 24 to 48 or 64-unit space, you are not dealing with people that have hedge funds behind them or huge 1031 money, or large down payments. You are working with less sophisticated owners and operators that are operating the property. The opportunity for you to increase NOI is there because you are dealing with less professional owners. They are usually mom-and-pop operations. What we like to do, especially in Indianapolis, which is one of our primary markets, is to buy properties right next to each other, 24 units, 36 units, another 18, 20 or 22 units. You might know why we are doing this.

[bctt tweet=”Everyone has a marketable skill. Everyone can do it. Everyone has something. It’s just a matter of whether you’re that type of person.” via=”no”]

When we have our property management team come in, we treat all the units the same. We rehab them the same way. We put in the same flooring and fixtures, at least over time. As we get these properties and the tenants leave, we go in and upgrade everything to be the same standard. That would allow us to rebrand the entire portfolio right next to each other as a single property. That is when you can go from having the mom-and-pop operators or owners to now consolidating operations. Now you are getting the attention of some of the bigger boys when you are trying to exit.

That opens us up to a whole new pool of buyers, so we are able to attract more people. If we wanted to, we can split them back up again, keep them separate and sell them one off if we need to. We liked that approach because it is easier to buy properties there at a lower rate, and they have more upside potential that way.

What happens if there is 1 property between you and you have 4 of the main properties? I love the idea of packaging that. It is the same as what a syndicator does that has a 200-unit complex and make it all nice, beautiful, package it, and sell it to an institutional investor who is going to cashflow it like a bond. You are doing the same thing.

You are taking all these smaller ones, packaging them up and saying, “Here is a larger one.” You are going to give it to a larger syndicator who does larger properties. They can carry out their plan. How do you negotiate that to find those properties next to each other? You are taking a leap if you are buying 3 properties and there is a 4th one that the old guy or gal will not sell. What happens then?

The does happen. The good news is that we are in Indiana for the long haul. It’s because of this market, a lot of people are looking to sell. The simple method for us is to use Google Maps and start looking around the area where the apartments are and look up who the owners are. We reach out to them, and we try to make sure that they understand that someone is interested in buying the property.

The other thing that we do is have plenty of brokers that we work with, and we tell them what our strategy is. When we start setting up a cluster of apartment buildings to buy in a certain submarket of a Metropolitan area, they know that we are going to be a pretty competitive offer in the space because our underwriting is going to assume that we are going to combine operations and do that.

We will do this at staggered points in time. Usually, with all of our operations, we hold them for at least 3 to 5 years. If we acquired on year zero, the first property, we are always looking from year 0 to year 2. In year three, we are looking to exit. If that last acquisition comes in, that gives us time to start to reposition it or maybe we will even sell it six months after we buy it so we can leave meat on the bone for the next investor as well. That is always an important thing, is to make sure that when you sell something, there is an upside that you can have as a proven rental increase of the proven type of value add that needs to be expanded with the new operational team. That is what we like to do.

I have seen apartment complexes, and there are five apartment complexes right next to each other. Four of them were built by the same builder around the same time, and they all look similar but there is that one in the middle that looks totally different. All the other ones are 2 bedrooms, and this is 1-bedroom with balconies. The other ones do not have balconies. Does that matter? Can you still consolidate them all into one portfolio?

I do not see why you could not. What I consider as a consolidation of a portfolio is having the same management team and rehab standards. Sometimes it does get tricky where every once in a while like in Ohio and also in Indiana, you will have fantastic properties on one side of the street, then the other side of the street or the next street over, it is not quite the same. There are exceptions to that. As long as you are using the same management team and the same type of rehab standards, paint, vanities, upgrades, and keep it all the same and the upside potential is there, you could call it the same property if you wanted to.

PILF 62 | Real Estate Syndication
Real Estate Syndication: If money was all taken care of, and you had the time to do whatever it is that you wanted to do, what is that one thing that you would do?


You have mentioned this a couple of times, property managers. In my limited experience as an active investor, that was the hardest thing to find. I went through too many property managers. That is why I’ve got out of the active business. How do you find property managers? How do you vet property managers? How do you evaluate them while they are in place? How do you communicate that to your investors? Is that something they ask about? Is that an important thing to investors to know that you have that part handled?

Property managers are our lifeblood. If you have a great property manager and a terrible property, I would rather have that than the vice versa having a great property and terrible property manager. Let me get that lined out straight away. The best way to find property management is to talk with other investors in the area because you are leveraging their experience and expertise. Sometimes they keep it close to the chest but those are people that maybe you do not want to build strategic relationships with anyway. I find that some of the best people in the business, whether they are investors, contractors or property managers, tend to stay in the same realm.

A good property manager will not bring on a crappy contractor to do their work. These referrals are powerful. If you have a good connection that is doing some amazing stuff, ask them for a referral. That is how we keep our Rolodex up to date on property managers. You have to think about a property manager as an incentive. That is the main thing.

I am going to tell you something that is pretty interesting that I am not sure many syndicators do but it is one way to keep property managers in the loop. Let’s say I have two properties. I have property A and property B. They do not necessarily have to be next to each other but they are in different parts of the same market. On property A, I will hire property manager Y as the property manager, and then I will bring on another property manager, property manager Z, in the ownership team. That is on property A.

On property B, it is vice versa. I have property manager Y in the ownership team and property manager Z running the property management. That way, they know that I am connected with everything here, and they are checking each other. Having a property manager in the market and ownership team to oversee what a property manager is doing, and they know that it is vice versa, is a great way to keep them looped in.

There are problems. Sometimes fallouts happen, you have issues or conflicts but that is why you have got to channel your communication well so that you are having all the internal team communication taking place in one area, and then that communication gets relayed to the property managers. You are not having the two property managers always in a fight state. You have a management team that can create a message that distills out to the PM.

The good news is it goes back and forth. The ownership team acts together with the property managers, knowing that each other are involved. You are trying to remove the emotions and manage all of those personal things that happen but they are incentivized to work together. That is a ninja technique that I have been using pretty well in Indianapolis. It has been great.

I am a passive investor. How do I evaluate the property manager? When I am looking at a deal or looking to invest with a new sponsor, and I want to invest with you, how do I know that you are picking great property managers? What questions can a passive investor ask the syndicator to get at the quality of the property manager?

What it comes down to is the KPIs, the asset manager or the sponsor is looking to track. That will be fed down to the property manager. You ask questions related to those KPIs. In our industry, it is generally turnover time. That’s one. NOI, that is two. Number three is costs or construction costs. Those are the three major KPIs. There are others that we track as well.

[bctt tweet=”Make sure that when you sell something, there’s an upside that you have, such as a proven rental increase, or proven a type of value add that just needs to be expanded with the new operational team.” via=”no”]

You want to ask questions that are about vacancies. You would say, “What is your average vacancy time for units that you currently have?” That would be something that us, as a sponsor would ask a potential PM. We would also ask, “How much do your typical turns cost? How much have you been able to get turns done for? Considering there is carpet in there. It is a 1,000-square foot place. We want a typical turn. Tell us what that is about and what that comprises.”

For the net operating income, you want to ask them, “What have you seen works from a marketing perspective to get the maximum amount of rent that you can for these units, and what have you done to help save owners money on expenses?” You get some interesting responses. You get responses like, “We helped implement a ratioed RUBS system that is based on per head count. We have installed dog parks before that, and then also installing hardwood flooring, and dog proofing all the units so that you can have access to a better clientele because there are no other places that accept dogs in this area.”

Great insights like that gives you the confidence that you, as a passive investor, are asking the property manager that the syndicators selected that you are both asking the same questions or that they know what they are doing. I would hang around those KPIs because when the rubber hits the road, that is what matters. Also, a character is important, too. Knowing that the person that you are working with is going to follow through with what they are saying is important as well. Hopefully, that is something that you vet straight out of the gate. Once you see a red flag, it is like, “No, thank you.”

KPI and RUBS, what are those?

KPI is called a Key Performance Indicator. If you had to map out the performance of the real estate asset when you are doing asset management, you want to check the health. How have your vacancies been trending? Are you getting more vacancies a month or you are you getting less? How are you trending on your net operating income? It is those performance indicators put into a single number, so you can track it over time and bench line it.

The other one was RUBS. That is called a Ratio Utility Billing System. What that means is, let’s say, that you have 100 units in a property, and your water bill is $10,000 or $5,000 a month. You can bill back that $5,000 a month to the tenants because they are the ones that are using it. There is usually often 1 meter in the Midwest. It is very expensive to sub-meter all the water and sewer in all the units.

You have this huge $5,000 bill that you are not responsible for because the tenants have been using it. How do you break up that bill? Who owes what? Sometimes there are flat fees per unit but our property manager has done a great job at doing it per head, per unit size or whatever the legal mandates recommend.

This next question is going to seem like it is way out from the left field but that is appropriate for this show. I watched a webinar that you did. I was shocked I watched it because the topic was not very exciting. We had my accountant come on and talk about K-1s. I thought that was the most boring thing ever but it was also the most informative thing ever.

It was something that I had to do. I watched your email organization webinar and was fascinated. I have not implemented everything but my Google inbox looks completely different. Can you talk about how did you even figure out that was a thing? Why are you presenting on it? Why does it sound so boring but it is good once you do it?

PILF 62 | Real Estate Syndication
Real Estate Syndication: Obviously, there are problems sometimes, fallouts happen, or you have issues or conflicts, but that’s why you’ve got to channel your communication well, so that you’re having all the internal team communication taking place in one, in one area.


Most people out there, when they hear email inbox, there are feelings of dread. There is a black hole where you look on your phone, and there are 1,000 emails on that bubble. There is a little envelope, and then there are 1,000 in that red bubble. I decided to start using my inbox as a task list and as a priority manager for me. For you readers, there are tools out there where you can have emails come in and pre-sorted to fall into categories that you want them to go into. You can use your email inbox as a task list.

If there is an email that comes in that is important to you and you can’t do it right away, you can star it. Depending on how you configure your email inbox, you can have it go up to the top of the screen, so you are looking at it every single time you open up your inbox. Meanwhile, all the other emails that are coming in that you will not read or need to read, it’s just clutter. You can have a rule for them. When they come in, they are marked as read and go to the bottom. The reason we do that rather than unsubscribing and deleting is that you want to use your inbox as a tool. What if there was something that you wanted a reference on?

Let’s say that there was a deal in Louisville or something that you want to look up. You can go to your email inbox and search for Louisville on some of those read emails, and then it will pop up. If you have a question about a resource or a person, you still have all of those old resources that are red that are such a low priority for you that they are not worth reading but they are worth storing. You may need that information later.

I can’t tell you how freeing it is to have the inbox at zero every day for the last several years that I have been doing this. It is such a great philosophy shift of you going to look at your inbox. Your inbox is your task list. You know what you need to do, and then everything else that comes in is a new email here and there but everything else is you have already made the decision ahead of time to not look at it. That saves you everything. Why can’t you do that? Why can’t you outsource your decision-making now and pre-decide that you do not need to see every email from Groupon, Zillow or the Pampered Chef.

If you need them, they are there for you. You can go in and search for it but having that philosophy has saved me so much time. I learned this through project management doing it for many years. We had to do this to keep everything all straight. I did this in my professional life for many years and then decided to bring it into my personal life.

It was a total game-changer. My efficiency went way up. My attitude towards email and responding to people has created opportunities within itself because I have been able to respond to people quicker, keep myself more organized, and save time from doing administrative stuff to focusing on the real things that matter.

I’ve got to email inbox zero one day and poured myself extra bourbon to celebrate it because I was so proud of myself. Hopefully, we can get a link to that presentation from Dennis Shapiro. I know you did it with him. The last question I always ask is, what is a great podcast that you listened to?

There are a few I do not know how many of the investors or the readers out there are into cryptocurrency. I loved Bankless. I enjoyed that podcast’s philosophy, the news, and the raw information that they provide around the blockchain world. If I had to go with one, it would be The Tim Ferriss Show. The reason for that is he brings on such incredible guests that touch on topics that you never knew you needed to know about. That is what is so cool about it. It is that discovery. It is like, “What is coming up next?” He always brings on very powerful and impactful speakers. I recommend those two.

If readers want to get in touch with you, what is the best way to do that?

The easiest way is to go to our website. There are a lot of options there. You can get our eBook on the seven ways that commercial real estate protects and grows your wealth over time or our syndication brochure. It walks you through how syndication works from tip to tail with live examples inside of it. We are on social media. We are on Instagram, LinkedIn, and Facebook. If you want to talk with me directly, I highly prefer email because we will be traveling a lot. You can do that by emailing me at Derek@ElevateEquity.org.

PILF 62 | Real Estate Syndication
Real Estate Syndication: It’s very expensive to sub-meter all the water and sewer systems in all the units.


Is that your website as well? ElevateEquity.org?

Yes, sir. It is.

Thank you so much. This has been fantastic. I appreciate you being on the show.

Thank you, Jim. This has been a blast. Thanks for having me on.

That was a very interesting conversation with Derek. A couple of things that I liked was he talked about learning first, instead of always going for the home runs, the big deals, and the big wins. Once he decided he wanted to start learning and was going for smaller deals or singles and doubles, he was a lot more effective. That allowed him to get some home runs because he was not swinging for the fences anymore. He was just trying to learn. That is a big help. I also liked that he is doing the joint venture before syndications. What we talked about is you do not want to be somebody’s Guinea pig.

He is doing his test himself. He is his own Guinea pig. Once he was ready, he had done a few joint ventures and figured out all the processes, then he goes and collects money from others. That is a really great way to do that. I also enjoyed how he talked about once your money is all taken care of, what is the one thing you would want to do? We need to think about that when we are trying to get away from the W-2 or reduce work hours is, “What would you do if you had all your money taken care of? What do you want to do? What would you do?” Those are valuable things to think about.

A lot of times we just think about, “Let’s get done with the W-2, get out of it, and everything will be great.” You have to have something. Thinking about that ahead of time makes sense. His strategy of consolidating small apartment complexes, and then selling them to a larger syndicator as a package is brilliant because I always have felt some of those smaller apartments is an in-between. The single-person owner can’t really handle them that large, and the large syndicator does not want them that small but if you can buy a few, manage them as one, and then package them up and sell them. That is a brilliant strategy. I am sure that is going to be working for him.

The way I first met Derek was through this email webinar. It has really helped me a lot to organize my email inbox. I recommend that you watch this webinar and just get a couple of tips. I did not do everything. He is way too organized for me. I did not include my calendar because I am not that organized but I took the first step. I am starting to sort my email inbox.

It took a little bit to figure it out but once I did, it was super easy. I am adding new functionality every day. I feel like I am a little bit more on top of emails. That is super helpful. He is an interesting guy traveling around the world on Airbnb. That sounds fantastic. I enjoyed this conversation. I am going to keep track of Derek, follow him, and see what he is up to next. That is what we have for this episode.


Important Links


About Derek Clifford

PILF 62 | Real Estate SyndicationDerek Clifford is a successful single and multifamily real estate investor, adding 13 out-of-state units to his portfolio in his first year of acquisitions while working a full-time job. He has since retired himself from his job! Today he is a multifamily investor controlling 100+ apartment units with over $10M AUM. He is also an author, and podcast host of the “Elevate Your Equity” show.

Derek is also the founder and CEO of Elevate Equity, a firm that partners with individuals and companies to purchase, improve, and operate cash flowing multifamily apartment real estate. Derek published his first book “Part-Time Real Estate Investing for Full-Time Professionals,” in 2019, which has helped several people get started on the path of growing their passive income on the side while working a full-time corporate job.

He also loves to give back his knowledge and has a passion for breaking down complex ideas into easy to explain topics. He’s helped many people start, maintain, and grow their portfolios to achieve their own financial independence. In his spare time, Derek enjoys relaxing with his wife, biking, hiking, reading, and undertaking small household construction projects.


Our sponsor, Tribevest provides the easiest way to form, fund, and manage your Investor Tribe with people you know, like, and trust. Tribevest is the Investor Tribe management platform of choice for Jim Pfeifer and the Left Field Investors’ Community.

Tribevest is a strategic partner and sponsor of Passive Investing from Left Field.

Chris Franckhauser

Vice President of Strategy & Growth, Advisory Partner

Chris Franckhauser, Vice President of Strategy & Growth, Advisory Partner for Left Field Investors, has been involved in real estate since 2008. He started with one single-family fix and flip, and he was hooked. He then scaled, completing five more over a brief period. While he enjoyed the journey and the financial tailwinds that came with each completed project, being an active investor with a W2 at the time, became too much to manage with a young and growing family. Seeing this was not easily scalable or sustainable long term, he searched for alternative ideas on where to invest. He explored other passive income streams but kept coming back to his two passions; real estate and time with his family. He discovered syndications after reconnecting with a former colleague and LFI Founder. He joined Left Field Investors in 2023 and has quickly immersed himself into the community and as a key member of our team.  

Chris earned a B.S. from The Ohio State University. After years in healthcare technology and medical devices, from startups to Fortune 15 companies, Chris shifted his efforts to consulting and owning a small apparel business when he is not working with LFI (Left Field Investors) or on his personal passive investments. A few years ago, Chris and his family left the cold life in Ohio for lake life in the Carolinas. Chris lives in Tega Cay, South Carolina with his wife and two kids. In his free time, he enjoys exploring all the things the Carolinas offer, from the beaches to the mountains and everywhere in between, volunteering at the school, coaching his kids’ sports teams and cheering on the Buckeyes from afar.  

Chris knows investing is a team sport. Being a strategic thinker and analytical by nature, the ability to collaborate with like-minded individuals in the Left Field Community and other communities is invaluable.  

Jim Pfeifer

President, Chief Executive Officer, Founder

Jim Pfeifer is one of the founders of Left Field Investors and the host of the Passive Investing from Left Field podcast. Left Field Investors is a group dedicated to educating and assisting like-minded investors negotiate the nuances of the passive investing landscape and world of syndications. Jim is a former financial advisor who became frustrated with the one-path-fits-all approach of the standard financial services industry. Jim now concentrates on investing in real assets that produce cash flow and is committed to sharing his knowledge with others who are interested in learning a different way to grow wealth.

Jim not only advises and helps people get started in passive real estate syndications, he also invests alongside them in small groups to allow for diversification among multiple investments and syndication sponsors. Jim believes the most important factor in a successful syndication is finding a sponsor that he knows, likes and trusts.

He has invested in over 100 passive syndications including apartments, mobile homes, self-storage, private lending and notes, ATM’s, commercial and industrial triple net leases, assisted living facilities and international coffee farms and cacao producers. Jim is constantly looking for new investment ideas that match his philosophy of real assets producing cash flow as well as looking for new sponsors with whom he can build quality, long-term relationships. Jim earned a degree in Finance & Marketing from the University of Oregon and a Master’s in Business Education from The Ohio State University. He has worked as a reinsurance underwriter, high school finance teacher, financial advisor and now works exclusively as a full-time passive investor. Jim lives in Dublin, Ohio with his wife, three kids and two dogs. In his free time, he loves to ski, play Ultimate frisbee and cheer on the Buckeyes.

Jim earned a degree in Finance & Marketing from the University of Oregon and a Master’s in Business Education from The Ohio State University. He has worked as a reinsurance underwriter, high school finance teacher, financial advisor and now works exclusively as a full-time passive investor. Jim lives in Dublin, Ohio with his wife, three kids and two dogs. In his free time, he loves to ski, play Ultimate frisbee and cheer on the Buckeyes.

Chad Ackerman

Chief Operating Officer, Founder

Chad is the Founder & Chief Operating Officer of Left Field Investors and the host of the LFI Spotlight podcast. Chad was in banking most of his career with a focus on data analytics, but in March of 2023 he left his W2 to become LFI’s second full time employee.

Chad always had a passion for real estate, so his analytics skills translated well into the deal analyzer side of the business. Through his training, education and networking Chad was able to align his passive investing to compliment his involvement with LFI while allowing him to grow his wealth and take steps towards financial freedom. He has appreciated the help he’s received from others along his journey which is why he is excited to host the LFI Spotlight podcast and share the experience of other investors and industry experts to assist those that are looking for education for their own journey.

Chad has a Bachelor’s Degree in Business with a Minor in Real Estate from the University of Cincinnati. He is working to educate his two teenagers in the passive investing world. In his spare time he likes to golf, kayak, and check out the local brewery scene.

Ryan Steig

Chief Financial Officer, Founder

Ryan Stieg started down the path of passive investing like many of us did, after he picked up a little purple book called Rich Dad, Poor Dad. The problem was that he did that in college and didn’t take action to start investing passively until many years later when that itch to invest passively crept back up.

Ryan became an accidental landlord after moving from Phoenix back to Montana in 2007, a rental he kept until 2016 when he started investing more intentionally. Since 2016, Ryan has focused (or should we say lack thereof) on all different kinds of investing, always returning to real estate and business as his mainstay. Ryan has a small portfolio of one-to-three-unit rentals across four different markets in the US. He has also invested in over fifty real estate syndication investments individually or with an investment group or tribe. Working to diversify in multiple asset classes, Ryan invests in multi-family, note funds, NNN industrial, retail, office, self-storage, online businesses, start-ups, and several other asset classes that further cement his self-diagnosis of “shiny object syndrome”.

However, with all of those reaches over the years, Ryan still believes in the long-term success and tenets of passive, cash-flow-focused investing with proven syndicators and shared knowledge in investing.

When he’s not working with LFI or on his personal passive investments, he recently opened a new Club Pilates franchise studio after an insurance career. Outside of that, he can be found with his wife watching whatever sport one of their two boys is involved in during that particular season.

Steve Suh

Chief Content Officer, Founder

Steve Suh, one of the founders of Left Field Investors and its Chief Content Officer, has been involved with real estate and alternative assets since 2005. Like many, he saw his net worth plummet during the two major stock market crashes in the early 2000s. Since then, he vowed to find other ways to invest his money. Reading Rich Dad, Poor Dad gave Steve the impetus to learn about real estate investing. He first became a landlord after purchasing his office condo. He then invested passively as a limited partner in oil and gas drilling syndications but quickly learned the importance of scrutinizing sponsors when he stopped getting returns after only a few months. Steve came back to real estate by buying a few small residential rentals. Seeing that this was not easily scalable, he searched for alternative ideas. After listening to hundreds of podcasts and attending numerous real estate investing meetings, he determined that passively investing in real estate syndications was the best avenue to get great, risk-adjusted returns. He has invested in dozens of syndications involving apartment buildings, self-storage facilities, resort properties, ATMs, Bitcoin mining funds, car washes, a coffee farm, and even a Broadway show.

When Steve is not vetting commercial real estate syndications in the evenings, he is stomping out eye diseases and improving vision during the day as an ophthalmologist. He enjoys playing in his tennis and pickleball leagues and rooting for his Buckeyes and Steelers football teams. In the past several years, he took up running and has completed three full marathons, including the New York City Marathon. He is always on a quest to find great pizza, BBQ brisket, and bourbon. He enjoys traveling with his wife and their three adult kids. They usually go on a medical mission trip once a year to southern Mexico to provide eye surgeries and glasses to the residents. Steve has enjoyed being a part of Left Field Investors to help others learn about the merits of passive, real asset investments.

Sean Donnelly

Chief Culture Officer, Founder

Sean holds a W2 job in the finance sector and began his real estate investing journey shortly after earning his MBA. Unfortunately, it could not have begun at a worse time … anyone remember 2007 … but even the recession provided worthy lessons. Sean stayed in the game continuing to find his place, progressing from flipping to owning single and multi-family rentals to now funding opportunities through syndications. While Sean is still heavily invested in the equities market and holds a small portfolio of rentals, he strongly believes passive investing is the best way to offset the cyclical nature of traditional investment vehicles as well as avoid the headaches of direct property ownership. Through consistent cash flow, long term yield and available tax benefits, the diversification offered with passive investing brings a welcomed balance to an otherwise turbulent investing scheme. What Sean likes most about the syndication space is that the investment opportunities are not “one size fits all” and the community of investors genuinely want to help.

He earned a B.S. in Finance from Iowa State University in 1995 and a MBA from Otterbein University in 2007. Sean has lived in eight states but has called Ohio home for the last 20+.  When not attending his children’s various school/sporting events, Sean can be found running, golfing, shooting or fly-fishing.

Patrick Wills

Chief Information Officer, Advisory Partner

An active real estate investor since 2017, Patrick Wills’ investing journey began like many others – after reading the “purple book” by Robert Kiyosaki. Patrick started with single family rentals, and while they performed well, he quickly realized their inability to scale efficiently while remaining passive. He discovered syndications via podcasts and local meetups and never looked back. He joined Left Field Investors in 2022 as a member and has quickly become an integral part of the team as Vice President of Technology.

An I.T. Systems Engineer by trade, he experienced the limitations of traditional Wall Street investing firsthand in his career and knew there had to be a better way to truly have financial freedom.

Unfortunately, that better way is inaccessible to those who need it most. His mission is to make alternative investments accessible to everyone who seeks to take control of their financial future and to pursue their passions in life.

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