Tiffany Elder, From This Weekend’s Upcoming Class, Interviewed

We sit down with Tiffany Elder, long time TREIA member, former member of the Board of Directors, and presenter at this weekend’s Historic Preservation and Tax Credit class.

How did you get started in real estate investing?
I originally moved to North Carolina for grad school and was in the Keenan Flagler Business School at UNC. I was either going to take a marketing job or a consulting job, neither of which seemed exciting. I remember thinking that my parents are in real estate back home back in Chicago, and I always thought I would do with the way they did it, which was have a job and invest on the side. When I came out and wasn’t excited about job prospects, I knew that I had to feed myself and keep clothes on my back. I thought, “I can take a chance”, and I just decided to do real estate full time. The first thing I did was shadow of local real estate agent. I spoke to a couple of my professors who thought I was crazy because everyone in the business school takes a job. One of them, his cousin was a realtor in Durham. He told me if I was thinking about doing real estate that I needed to talk to him. I was lucky to have a semester free because I finished a semester early, so I use that time to investigate whether to take a job or to go into real estate. So I shadowed his cousin, and by the end of that semester I decided this was it.

Tell us about your first deal.
My very first deal I found was a short sale deal in Durham where the owners were about to leave and go out of the country to do missionary work in Romania. I had done a letter campaign and they contacted me and said, “Tiffany, we worked with another investor, and he didn’t do anything he said he was going to do.”

They were leery, but I sat down with them, they were comfortable with me and they said they would give me a shot.
I ended up getting a short sale on their home. I remember the numbers; it appraised at $165,000, I got it for $130,000, and they were leaving before we could close. They signed a deed, they signed a power of attorney, and said, “We are going to be gone for 2 years, we are hoping that when we come back to the states, you resolve this and we can buy another house, but we are leaving regardless, so we don’t have anything to lose at this point.” That was a lot of pressure for my first deal and it added to it, that this very first deal was a triple closing. For most people, a double closing is a big deal, and mine was a triple closing.
It was a great learning experience for multiple reasons because my first deal was 1) a subject to flip, 2) my sellers had to leave the country and sign everything over to me, so I felt a little bit of pressure and 3) the triple closing. With that as my first deal, everything following was a little easier.
I remember signing my contract with the owners and feeling the gravity of the it. But when we closed, I got a check for around $7,000, I said “I did this”. I tell that story to people, especially new investors, to try to encourage them because your first deal  is going to scare the crap out of you. Because you don’t know what to expect. You are going to have bumps in the road, but just use safe, but realistic numbers. Some investors use those online formulas, 70% of ARV, etc, and if you stick to those, you might never buy anything. Because in this market you may never find anything that meets that criteria. But if you use safe numbers and contingencies, run with it.

Do you focus on any types of properties now?
Historic restoration. I haven’t bought anything in the last three years that was not a historic home. Meaning in a national historic district where there is a potential for tax credits. One reason is that it doesn’t make sense to do a project two blocks over outside of the district if I can find one in the district and get 30-40% in tax credits back.
One thing TREIA members need to know is that there are two overlays for historic districts when you look at the GIS maps. There is a local and national historic district. They need to check to see if it’s in a local district, because any exterior work needs to be approved, and if any work is done without a permit and do work that is not fitting with the nature of the home, they have to pay to reverse it. We are going to cover this in the class this Saturday.

Tell us about one of your toughest deals.
My toughest project was probably one of my first rehabs, only because I was working with a partner. And when you work with a partner, you want to make sure you are on the same page. Talk about your communication styles. That was a project where we spent over $200,000 in renovations. You have to make sure you are on the same page. Even though we had divvied up responsibilities, I think both of us were thinking, “I need to peek over here to make sure they are doing what they need to be”. It turned out great in the end. My problem is, I know if I want it done right I will do it myself, and if you know you are that type, just make sure you and your partner are ok with that.

Any more words of wisdom for TREIA members?
For people just getting started, don’t get caught up in analysis paralysis. Read something, and then put it into action. I see more than not, investors who read up on a certain topic like Wholesaling, then they convince themselves not to do a wholesale deal, and say, “Now I need to learn about Subject To”, and then they say “Let me read up on rehabbing”. They bounce around and become coffee table experts and never do a deal. So read up, network, stay focused and do that and then spread out from there. Get good at one thing and do it.
For seasoned investors, just look for new opportunities. If you’ve been a landlord for a length of time, maybe look at being a landlord in a historic property because that will get you familiar with those and gain the benefit of the tax credits. Tiptoe into an new area.

What has being TREIA member meant to you?
I’ve always said TREIA is what you make of it. Just by virtue of being there doesn’t mean anything if when you leave you don’t do anything with what you learn. Some people feel like just by osmosis and sitting there, they are going to replace their primary income with investing, but no, you have to network, you have to get involved. Definitely volunteer. That’s how I got started with TREIA.

Anything else?
Feel fortunate to be in this market. I talk to colleagues back home in Chicago and friends in Michigan and Vegas, and while they had a drop, even a few years ago, we had a steady downward to flat trend, but that’s still a market that you can invest. People in this market should feel fortunate and take advantage of that because it may or may not always be that way. Stop waiting for tomorrow to come, if you are serious about investing you need to do it,  just do it smart.

Register Here to Attend Tiffany’s Class About Historic Tax Credits This Weekend!