5 Key Lessons from Entrepreneur Terra Padgett on Real Estate Investing

Dylan Silver (00:00.866)
Hey folks, welcome back to the show. I’m your host, Dylan Silver. And today on the show we have Terra Padgett in Houston. Terra is a real estate investor, licensed insurance broker, Hall of Fame collegiate basketball player, and founder of Real Estate Investment Club Power Pool Fund. Terra, welcome to the show.

Terra Padgett (00:22.028)
Thank you, thank you, thank you Dylan. Even though I wrote that bio, that was a great intro for me.

Dylan Silver (00:28.386)
Before we hopped on here, I sang, we’re gonna have a great show, let’s save it for the show, and I said Houston is one of my favorite cities, maybe in the whole country, but certainly in visiting Texas, I say everyone has to go to Houston.

Terra Padgett (00:40.79)
Yeah, I’m born and raised in Suisonian, so go go strove. So I love it. Like I said, it’s an America I feel like best kept secret. You hear all about the other major cities, but not a lot of talk, not a of reality TV shows, know, not a lot of filming really goes on here in Houston, but there’s a lot.

Dylan Silver (00:56.332)
was welcomed so well. I went there to visit to go see an Astros game with my buddy. We didn’t really have plans outside of that. We were like, let’s just go to Houston. We just ended up making a bunch of friends. I’m like, where else does this happen? Like, how, how, how common is that? And I’ve talked to people since then. You were like, you guys had a very unique experience. I was like, we went on like a Wednesday. Like it wasn’t anything crazy.

Terra Padgett (01:07.64)
Yeah.

Terra Padgett (01:16.44)
Yeah, come again. I’m sure you’ll probably encounter something else, something similar. And if you just came on a random day, imagine if there’s an event going on, like the rodeo or, of course when Beyonce comes back home and all that kind of stuff.

Dylan Silver (01:18.798)
you

Dylan Silver (01:29.09)
I know, that’s like our royalty. Like we don’t have a royal family, but Terra, we have Beyonce.

Terra Padgett (01:33.994)
Yes, I mean who doesn’t love a Beyonce?

Dylan Silver (01:37.55)
There’s a lot. There’s a lot. I had two gentlemen on the podcast last week who were involved in Houston short term rentals and one of them was also involved in oil and gas. And I feel like Houston is one of the oil and gas capitals of the United States and definitely of Texas as well. It’s huge out there.

Terra Padgett (01:56.148)
Yeah, for sure. So oil and gas is huge. also medical, the Texas Medical Center is located here in Houston. It’s one of the largest medical centers in the world with Indy Anderson Cancer Center and all that. So it’s a huge population for health care professionals with the Texas Medical Center, right alongside, of course, Texas oil and gas, Dallas as well. But, you know, anything in Texas, you know, oil and gas related is still a thing. It’s very much so still a thing.

Dylan Silver (02:21.55)
Very much so. I mean that’s about as Texas as it gets. The Astros, oil and gas, the rodeo, and Beyonce. Come on, this is not a better, this is the best promotion for Houston.

Terra Padgett (02:27.522)
Then Beyonce. Best mix. Don’t forget, what was it? Trillburgers. That’s been the thing taking over the nation. Trillburgers, right here from Houston.

Dylan Silver (02:36.162)
That’s right, I’ve never been there. I need to go.

Dylan Silver (02:42.604)
But, Terra, your-your-your bio is truly remarkable. I’m definitely going to look up some hoops highlights after we get off of here. and-

Terra Padgett (02:52.344)
Please do. Texas A Corpus Christi. Go Islanders!

Dylan Silver (02:56.686)
Go Islanders. I always ask my guests this at the top of the show. How did you get into the real estate investing space?

Terra Padgett (03:05.684)
Yeah, interesting enough, we started right before COVID hit. And so it was more of, we had invested, me and my husband had invested in the stock market and whatnot. And you always hear about stocks and real estate, stocks and real estate, and kind of like they’re, which one’s greater or better. And so we had done a lot of stock investing, but just wanted to get into real estate and kind of diversify into real estate.

And so we started out just buying single family rentals, ideally going for passive income. And what you always hear about owning rentals is passive income, passive income, mailbox money, know, cashflow every month. And so we started acquiring rental properties and quickly, quickly found out that it is not all that passive, especially when you’re self-managing. You can make it semi-passive, but it is not the true essence of what I would say passive income, owning single family rentals. And so while I liked…

having single-family rentals, it was definitely creating another job and more work with, know, showing properties, tenants, repairs, just renovating, you know, any properties that we bought that needed to have, you know, upgrades and stuff to them. So it just started to become a lot of work. But the short answer to how we got started was just, we just needed to diversify. And real estate was something that we hadn’t done before. And so we needed to get into real estate. And so that we just went out and started buying some single-family rental properties to diversify into real estate.

Dylan Silver (04:23.022)
At that time, Terra, I’m imagining you have your job and then you have this that you’re looking at. And is it a matter of you going and getting a lot of education, self-education, networking with people to figure it out? Or will you somehow, through your job, be able to make connections or through outside and have some type of mentorship in a formal or informal way?

Terra Padgett (04:45.866)
Yep, so we did an education course called Fortune Builders. And so we joined Fortune Builders Mastery. And so that was definitely the catalyst that started my real estate investing journey was doing the Fortune Builders course. And I thought it was a great education, not just on real estate, but really just all things financial and financial literacy and just really understanding the movement of the dollar. And then as kind of like any type of program or school, you can only learn so much in

college or eighth grade or with these programs, but it’s actually getting out there and doing it. It’s really where you start to learn and kind of connect the dots on all the concepts and theories and ways of doing stuff and really rubber meets the road when you’re out there doing and you’re negotiating or you’re making offers and you’re actually hiring contractors and all this kind of stuff. And so that was a great foundation and framework for it. But it was really, even when I didn’t feel as confident in it, just.

Getting out there talking to lenders, getting out there speaking to sellers, getting out there making offers on properties, just starting to put the wheels in motion as far as the different ways to access capital. That was the biggest thing. The questions that I had, and I’m sure most people have, is like, first, where do you find deals that are good deals, where the math makes sense? And where do you find the money? That’s why people’s biggest thing is like, how do you just out there buying properties cash? How can you just?

buy, buy, buy, buy, buy, where do you find the money? And that was probably one of the most important and biggest things. And I probably watched the financing curriculum two or three times, you know, to really dive in. And that’s been the biggest kind of like eye opener that it’s so true. You really don’t need a lot of money to start. You do need money, but you don’t necessarily need your own money to start. So you definitely need some type of money to get into real estate and to acquire properties, but you don’t necessarily need your own money. And so…

Taking that education is really where I just dove in, you know, head first and really absorbed a lot of it just got out there and started putting into action. Tried not to get, you know, analysis paralysis where you’re just evaluating and watching and thinking all the time, but you really, the best bet is like staying in school your whole life. You got to get out there and get a job and, you know, get real life experience and action. And so that’s what I did. And it is really just accelerated my real estate investing journey.

Dylan Silver (06:56.334)
had a similar experience. was selling cars and I knew that these 12 hour days and just letting the money sit somewhere was not forever for me. I just felt it, right? And I was trying to get involved in real estate. Wasn’t really sure what and how. I knew nobody. I didn’t know anything about anything. In Texas, have, you know, Trek promulgated forms. I didn’t know how to read these contracts. It seemed like a bunch of legalese and jargon I couldn’t understand. So I ended up

going into the real estate field, working for a wholesale company, which was a great crash course in real estate, went to a REIA conference, paid a bunch of money to get into that room, and then it just clicked for me. And so it sounds like you maybe had a different experience, but similar in some ways, because having that room you mentioned, the Fortune Builders, it just set off an interest and passion in real estate investing.

Terra Padgett (07:53.9)
Yeah, I mean, it really just connected a lot of dots that we kind of knew that what we either should be doing or could be doing or, you know, in looking at returns and, you know, how, you know, we can, you know, earn the passive income. And so just doing that, it really connected a lot of dots of, you know, not only, yes, we should be doing real estate, but the why and how, you know, to do real estate, to really make it a revenue stream, you know, for your personal financial statement. And so, yeah, I just think it really takes a lot of…

of time to educate yourself. And when I talk to people, I always say, you don’t need to spend all day every day, but even small amounts, but just every single day. I do something towards educating myself in all spaces every single day, Monday to Sunday. So whether it’s 10 minutes, whether it’s doing a podcast somewhere or listening to a podcast or…

reading a chapter in a book or watching some shorts on YouTube or having conversations with other investors, something Monday to Sunday, whether it’s 10 minutes or whether it’s 10 hours or whatever, I just have the time listening to something as I’m washing dishes, something that is constantly, you know, educating myself on different strategies and just different aspects of the space that I’m in of this industry.

Dylan Silver (09:07.73)
You talked about getting in in the single-family rental space. Was this 12-month leases for your first deals that you were getting under contract?

Terra Padgett (09:17.656)
Yeah, so we were acquiring basically around fair market value. So they weren’t like, you we buy them for $100, put a thousand, $100,000 into them and then flip them in the whole, you know, we weren’t flipping and doing wholesaling. We wanted to just, you know, buy pretty much ready turnkey. Maybe they need a new paint job, maybe some new countertops or floor, something simple, and then get them rented out. And so, yes, so we were buying with conventional financing, you know, getting loans and acquiring the properties.

and having them leased out for long-term rentals. So we weren’t doing the Airbnb or short-term rentals. We wanted just, know, steady, eddy, long-term cash flow. We wanted to hold them for a while, you know, that whole, okay, yeah, we can give this one to our son or this one, that and the third. So we wanted long-term rentals. So we didn’t get into all the other stuff.

Dylan Silver (10:02.894)
At some point you see that this is actually a lot of active work. That this is me responding to tenants who have issues. That maybe someone gets behind or maybe someone has to go to another state and now I have to do this and that. And so you’re in there thinking, well, I was looking for passive and this actually feels like active. And were you working at, you were working at this time as well as a broker, right? Right.

Terra Padgett (10:26.423)
Yes, as an insurance broker. So yes, so my husband is an accountant and CPA and I worked as an insurance broker. And so yes, we still had full time jobs. So we would just kind of do it on our our spare time. I always said, you know, we worked our nine to five, but then we had our five to nine. So it’s five p.m. to nine a.m. was when we did all of our real estate stuff and then on the weekends. And so, yeah, and initially we were also self managing and I’m, you know, and everyone always said, you know, put it on property management. Don’t try to do everything yourself. And, know, in the beginning, it’s kind of like if you

start your own business or own a restaurant. You’re the cook, you’re the cleaner, you’re serving the food, you’re hostess at the front, you’re the cashier, you’re taking out the trash, you do everything. And it’s great to do everything to kind of learn. And I’m glad I did it because I have definitely a different appreciation for property management. So I’m like, this is not like 1980s where you got to go knock on the door to collect rent. It’s all online. just pay it online and set it in a third. You got to maintenance. You call somebody to go out and do it. Oh, this won’t be that hard. This won’t be that.

you know, we can do this. And so yeah, quickly learned and I’m glad I did it because now I know it’s not that, you know, that simple of a process. And so, and the biggest thing that I found is really evaluating tenants because we’ve had some hoard ones. I’m not gonna lie. So really it’s just evaluating tenants and making sure you’re putting the right people in your property, in your asset. I mean, this this house, a home that everyone needs somewhere to live. And, you know, I’m just amazed. I have a different perspective on.

tenants and residents and people that rent, I’m amazed at kind of some of the mindset and the attitudes and the behaviors of people that are renting someone else’s home and the level of entitlement that they feel with certain things. mean, it’s very eye-opening in that like, really? Okay, so we’ll just, we’ll leave that there. But so we got up to about 10 properties to where we’re like, this is way too much. And so we did, we started putting them all on property management, which definitely took a lot off of our plate for sure, but it still wasn’t.

Dylan Silver (11:59.968)
Yeah.

Terra Padgett (12:19.448)
completely passive and we still were then managing the manager and making sure they were keeping expenses low, that our incentives were aligned, that they were finding the types of tenants that if we don’t want smokers, if we don’t want people with dogs or whatnot in house, that’s our choice, our preference as owners of the property and that we controlled it. So making sure that they were keeping what we were designing in line and doing that in an efficient manner where we were keeping long-term tenants and keeping expenses down to make it a good, profitable investment vehicle for us.

Dylan Silver (12:49.422)
So you now have the property manager in place and you have 10 properties. And at this point in time, you must be thinking, we got something really, really great going on here. But are you also thinking, how do we get this to a point where this can take over so we can effectively make this our full-time deal? Are you thinking that at this point in time?

Terra Padgett (12:49.452)
And so we did it.

Terra Padgett (13:11.0)
So we were thinking, okay, now we see the returns on single family rentals and we would get excited, oh, double digit returns was always the goal. So, okay, if we could get 10, 12%, great. But then I started looking at, the more that you’re in this space, and I just think as you talk out loud, you start seeing different stuff on your news feeds on different platforms, about syndications and investing and doing all other kinds of stuff. And I started to look into private equity and commercial syndications. And I’m like, okay, we’re getting excited seeing projections of 10, 12%.

Dylan Silver (13:29.08)
Right.

Terra Padgett (13:39.938)
you know, these operators and multiple ones, you know, they’re projecting say on, let’s just say multifamily, it’s easy one, 15%. And then, you know, once we started looking at track records, they’re selling or closing out at 25 % or 20%. You know, some, you’re getting, you know, 1.7 equity multiples or 2.0 equity multiples. And so I’m like, you know, if we’re getting excited over, you know, 8%, 10 % returns, maybe, you know, 300 cashflow, but seeing the returns on the commercial side, it was like, okay, what are we missing here? You know, and so.

Dylan Silver (14:07.928)
How do we get into commercial?

Terra Padgett (14:08.376)
And it was truly passive where we weren’t picking out paint colors, we weren’t sourcing the deal, we weren’t signing the line for the debt, they were doing all that. And so we ended up selling about half of our portfolio and started shifting those funds into these private equity and commercial syndication investments, mainly because the sing track record and understanding what they were doing, how they were doing and having done it on the single family side.

We were like, can diversify across both different geographies, because I’m in the Houston market, so all of our properties were just near Houston, but we can diversify throughout the Midwest and East Coast to West Coast. We can diversify amongst sponsors, diversify geography, diversify asset classes, multifamily is one, yes, but land or industrial real estate or mixed use type of buildings. And so we were able to be able to diversify on a lot greater scale. And the biggest kind of eye-opening aha.

It’s like, okay, when we’re buying these single-family rentals, because we’re not house hacking and living in them, there’s no BHA, FHA, 3 % down, nothing in these. It’s 20, 25 % down and buying right around fair market value or whatever we can negotiate lower, you’re putting down 50, 80K based on the price point of the home. So I’m like, okay, if we’re gonna do a cash outlay of 50, 80K, one home and we’re still heavily involved work-wise.

A lot of these syndications have a minimums of anywhere from 50, 75, 100K. We can deploy that into that and be diversified again across land or real estate funds or a fund of a bunch of short-term rentals, same cash outlay, but still the projected returns are well into the teens and double digits, a lot greater. And then when they’re, they still are cash-borne, we still get the same appreciation that as it grows over time.

We still get the same tax write-offs, both from the depreciation and tax write-offs and things like that. So there’s still, you get all the same benefits, you know, by owning something direct as a single family owner, the same way in the commercial space. And so that was the impetus to just take that same cash outlet that we put on a down payment on house, put it into a syndication, truly be hands off, because it’s really set in, forget it, we’re limited partners. We are LPs in these deals. We don’t have control or say over. And so that…

Terra Padgett (16:23.724)
You have to get comfortable if you do want control over your properties, you have to get comfortable around that, that you are not going to be saying, you know, who we hire, who we fire, who, you know, what tenants we bring in or whatnot. But you’re partnering with your GP, your general partner, that sponsor, whatever, know, however you want to term it, to use, you’re partnering with them and you’re entrusting them to execute the business plan. So you’re providing the financial capital and you’re entrusting them to execute the business plan, just like when you’re…

borrowing on the private money lender side. Like the lender isn’t telling you what to do. You’re borrowing their money and they’re entrusting you to execute and pay them back on time, every time, and exactly how you present your business plan to them. So it’s the exact same thing when we had lenders entrust us when we were acquiring properties. It’s the same thing that we’re entrusting those sponsors to execute and deliver on the business plan.

Dylan Silver (17:12.664)
that point, Tara, did you sell your entire single family portfolio? Did you keep a couple?

Terra Padgett (17:18.52)
Yeah, we still have a handful of them. So we didn’t sell all of them. So we do still have a handful of them. I do still believe in the single-family rental space. And since we had already acquired them, were at during the 2020, 2021 time, the 2%, 3 % or whatever interest rates. So we have low leverage on them, low interest rates on them. so, yes, so we do still have a handful of them. And just to be determined kind of what we’ll do in the future with them.

I am still looking to hold those for a little bit longer until it just makes sense to divest those. And so right now it doesn’t make sense and so we are holding on to them.

Dylan Silver (17:54.03)
So you then have the single family, you have the commercial syndications, this commercial syndication is mailbox money, you have the single family which is more active, but then you’re also, I’m imagining, getting people who are now approaching you, which brings us to Power Pool Fund saying, hey, how do I do what you’re doing? I see from afar what you’re doing, how do I partake in this? Is that how that came about or was it you saw the need for it? my gosh, okay.

Terra Padgett (18:16.92)
A little bit reverse. Yeah, it was a little bit on the reverse. It was me going to people. And so when we did our first indication deal, we were like, OK, that’s 50K gone. And now, now what? I it really wasn’t very exciting. know, it wasn’t a lot to it. I mean, we did the due diligence on the front end. But, you know, some of the fun part in real estate is about the deal and watching that house transform from this, you know, piece of crap to this beautiful thing that everyone wants to live in. And so it’s like, OK, well, there goes 50K. Now what? And so we started to

I had the idea, know, if, okay, 50K, that’s, you know, one for a lot of people, that’s a lot of money. And that’s just really probably one deal a year or however long it takes you to gather up another 50K to be able to do another deal. And so I thought, well, if we broke this down and you say, just do maybe five or 10K a piece, I could do five deals, you know, doing the minimum investment, do five deals a year, just the pooling alongside other friends and family. So I started reaching out to folks.

that may have wanted to just to pique their interest, see if they wanted to invest in real estate and just start talking to folks. And so we got a handful of our just close friends and family, really those that like stood in our wedding and said, hey, we can pull 510K together and get on these bigger real estate deals hands off without doing 100 % of the work and still get some of these same cashflow projected returns and all the things that come along with real estate, but without.

putting out 50K every single time. So 50K is a lot for a lot of people, but a lot of people can also do five or 10K. And so that was the goal, is just breaking it down and making it more accessible by bringing in smaller amounts of capital, but by pooling it with others, which is exactly what syndications are doing. They’re taking all of the investors and small to them is 50 or 100K, but small to the individual investor, maybe five or 10K.

And so they’re just pooling all of our investor capital to be able to do these deals. That’s all we’re doing to be able to do their deals is just pooling smaller amounts of capital. I’ve got five or 10, you’ve got five or 10, maybe you wanna put in 20, you wanna put in 15. We pool it all together and as long as we meet the minimums, that’s where we’re able to do the deal. So it me reaching out to folks saying, hey, you wanna get in on some real estate and do what we’re doing.

Dylan Silver (20:23.394)
that point, Taro, was this your first big exposure or experience to raising large amounts of capital? Or had you done this previously, maybe as some iteration of the syndication? Or was this your first experience with this?

Terra Padgett (20:38.912)
Yeah, it was my first experience with it. I don’t even think of myself as a capital raiser. Every deal that we do, I wanted to do the deal. But I just didn’t want or didn’t have at the time another 100K to put into something.

I don’t even still don’t even think of myself as a capital raiser. I lead an investment club and an age old, just like a stock investment club that Warren Buffett started back in the day where you talk about stocks and maybe you put money together, invest in them or you go in individually. It’s the same thing with a real estate club. We have deals that are presented to the club. We talk about them amongst ourselves. Those that wanna do it, do it. Those that don’t, don’t. But yeah, it’s just a matter of if you…

I talk about and do platforms and webinars and we bring on different educators to talk about different ways to access capital. So where a lot of people, like myself, like I don’t know where I’m gonna get 50K to do this, but then once I started learning the different strategies to do it, you’d be surprised. You probably do have the funds or know how to get access to the funds, but you just need to learn those different strategies. And so those are some of the strategies that I started talking about and sharing with the friends that were members of the club.

ways that they can utilize this capital to be able to invest in real estate or ways they can find capital or other people’s capital or maybe even your own capital through say solo 401ks and self-directed IRAs to be able to utilize that to put towards real estate. So again, I don’t really think of myself as a capital raiser. Yes, we’re pooling capital, but we’re all doing it. but yeah, I guess if I don’t know if that’s considered a capital raiser.

Dylan Silver (22:07.384)
So at this point, at this point, let’s back up a bit. in your view of the landscape, you’re seeing, OK, there’s these opportunities. How do I get more people involved in this? You bring it to friends and family. I’m imagining as many of us have had the idea to, but

All of us don’t, right? And so talk about that before the club is even formed. I’m imagining you just started pitching it to friends and family in informal way maybe. And so how did that go about and do you have any advice, Terra, for folks who are pitching these types of projects to friends and family about ways to go about it?

Terra Padgett (22:48.864)
Yeah, I always took it as a business and not as just like, know, hey, you want to do this. But I put together a PowerPoint presentation before I even had the first call with anyone. And so put together and thought about what would someone like me want to know if someone was coming to me with an idea on investing in real estate and doing it in this kind of club group investing model. So I put together a PowerPoint presentation and pull graphics and things like that just to explain what it is, what it does, what the benefits are.

and just spoke to and asked myself questions that I would want to know and answered those questions in the presentation. So when I reached out to folks, and a lot of people, a lot of people want to invest in real estate, but like most, you just don’t have a clue of where to get started. So it’s not easy. It’s not an ER hard task. It’s pretty easy to peak someone’s interest about investing in real estate. That’s not the challenge is just peaking someone’s interest. I think a lot of people.

want to do real estate, but just don’t have the money or don’t think they have the money and just don’t know really where to start. Don’t have the knowledge or education on how to start within, you lot of people are scared. They don’t want to lose money. And anything that we do is a risk. You know, Jim Rohn has a thing that like everything is risky. know, getting married is risky. Having children is risky. The funny line is, you know, like you want to know how risky life is, you’re not going to get out alive. You know, you’re not going to make it out alive. So everything’s a risk. But a lot of folks may be a little fearful of losing money, which is

Dylan Silver (24:03.96)
Right.

Terra Padgett (24:09.334)
very much a thing that can happen when you’re doing investments. Look at your stock portfolio. Are you not doing that anymore? You see what that’s been going on over the past couple of weeks. Have you stopped that 401k investing with your job? No, but it’s just you try to take calculated risk. so getting people’s interest in real estate itself wasn’t the challenge at all. It was really the knowledge base, really getting an understanding of you probably do have funds that you don’t realize that you can have access to, or just kind of getting an understanding of

what you’re doing and how you’re doing it to make you, because my goal was always to make people more informed investor. I’m not an investment advisor. You know, I’m doing these deals for my own family and my own portfolio. And as you should, as you’re investing, do it for your own family and your own portfolio. But there’s definitely a level of education that I have that, you know, a lot of people, if you’re not in this space, don’t. And so I’ve always encouraged, you know, do your due diligence, do your research, ask the questions or whatnot. And so I provide a lot of that.

in the club with different calls that will bring different people on. Like we had someone, a lender talk about borrowing and putting yourself in the best position to borrow from the lender perspective. Or we had an infinite banking strategist come on and talk about how to use those cash value life insurance policies to be able to use it as your personal bank like the Rockefellers have done over generations. Different things like that. We had an IRS tax auditor come on and be like, okay, if you’re doing real estate from an auditor’s perspective that works with the IRS, these are some.

tips and tools and how you should organize and do things and what is acceptable, what is not acceptable to write off, that kind of stuff. So providing all kinds of education to help make investors more informed in what they’re doing. But also, again, you gotta get off the bench and you gotta get out there, you gotta take that leap of faith, take that risk, so to speak. But what we’re doing at the club is trying to make a calculated risk and we’re trying to just do what all we can do to evaluate. And the point of doing it with the club is that it’s not just.

your perspective. It’s your perspective, he, she, and its perspective. You know, it’s my thoughts too. And so something that I may think of that you never thought of or something that this person brings to the attention of the group that didn’t even cross my mind as far as something to consider and to evaluate. So it really makes everyone stronger when you’re bringing in other people’s thoughts and opinions and what they get. I’m an insurance professional, so.

Terra Padgett (26:25.848)
I’m always like, know that insurance is gonna go up here and depending on what type of cycle we’re in in the insurance market space. So that’s the eye that I’m looking at. My husband is a CPA, so he’s looking at it from the numbers and the accounting perspective. Someone else that has their own mindset on what they may call out as like either risky or good or whatever. So it just, really helps bringing just value to everyone when you’re looking at it together. And then also you’re pooling it together. So I’d say, $5,000, $10,000, it’s not gonna.

bankrupt, know, someone. And if it does, really shouldn’t be investing or using that money to invest. that will, you know, bankrupt you can’t take, you know, that family vacation this summer because of it. So it really is your discretionary income, not your live on, you know, the income that you buy your groceries or you need to pay your light bill with. So that discretionary income, nobody wants to lose any dollar, know, that’s Buffett’s rule number one, never lose money. So no one wants to lose it, but.

it’s a lot easier, lot easier pill to swallow losing five to 10K than it is losing 50 or 100K. And so that’s why we do these small amounts, pooling it with others.

Dylan Silver (27:23.886)
50.

Dylan Silver (27:28.024)
Terra, when you were going from friends and family to then bringing in people who are not directly in contact with every day, was that a step where you realized, whoa, this is getting to a point where I hadn’t even seen this growth, and now this is turning into something that is totally different? Or when you started it, you were like, no, I’m gonna get there eventually. That’s the end goal.

Terra Padgett (27:52.064)
Yeah, and I realized that I thought, you know, I didn’t think really long term on it. I was just like, I want to do a couple more deals this year, so let’s get some friends and family to do it. But then as the year went on, you know, kind of the well kind of got dry. It’s like, OK, well, we probably do need more people because maybe people won’t even have five or 10K every, let’s say quarter even to invest in something. And so then, yeah, I needed to get into growth mode and I needed to.

you know, reach out and make this a little bit more public to where those to let people know that there’s something like this out there for them. If they wanted to join our friends and family club and, know, become a part of our friends, listen for part of our family to be able to just have more people to, know, with just, you know, you’re scaling, you have a larger number of people. So maybe people one through five don’t have any capital or you just don’t want to invest in that year, but maybe five through 10, you know, do and so forth. So just with a larger group, you’re able to do, you know, more deals.

And then also, the larger the pool, you can, and if you’re able to raise, certain points within the investment, like 250K or 500K, you can start to negotiate better returns with the sponsor, as opposed to maybe a 75-25 split, you’re getting an 80-20 split, or as opposed to a preferred equity of 7%, you’re getting a preferred equity of 9%, or a preferred return, I should say, of 9%. And so, the bigger check size you’re writing.

You yeah, you’re able to make some accommodations, you know, and negotiate better terms with the deals that you’re doing. And so, yeah, we’re in growth mode right now, you know, just expanding beyond friends and family, because again, the more people you have, the greater number you can do, and not everyone’s going to always have, you know, funds to divest it every, because we review a deal about every month or so, know, month or, you know, every month or every other month. yeah, just, the more people, the more you can consistently do deals and the bigger checks you can start to write.

Dylan Silver (29:43.714)
That’s right. It’s getting me thinking. We have to have you back on because I could probably talk to you about this for a whole other two podcasts, the process of putting this money together and bring people on board. And how do you show people your vision and earn their trust in that regard? think it’s very tricky, but I also think that so many people are doing it.

that I don’t think it’s beyond the realm of possibility for anyone. But we are coming up on time here, Terra. I have two questions. First, where can people go to get ahold of you? But before that, I wanted to get your thoughts on the Texas basketball landscape because we’ve had some very difficult events happen here in the Texas basketball landscape the last three months. Number one, we lost Luca. What? Number two, Houston should have won the championship. Houston should have won the championship.

Terra Padgett (30:34.168)
Oh my gosh, I don’t even talk about that. I don’t even…

Dylan Silver (30:37.238)
And what is going on? What is going on, Terra?

Terra Padgett (30:40.024)
You know, Luca, you know, I saw some funny memes online where he was like trading in like a G-Wagon for, you know, a Corolla. It’s like, you know, you’re giving up, I mean, an MVP player, you know, franchise player, a name, a force, you know, and I don’t even know why. I mean, I have some speculation. I’m not gonna put it out there publicly in the speculation, but you know.

Dylan Silver (30:50.476)
Yeah, what is going on?

Dylan Silver (31:01.292)
No one knows.

Terra Padgett (31:06.392)
But hey, they had to make a decision, that was their decision, and you roll with it. I don’t even know who the owner of, I know it’s not Cuban anymore, I don’t even know who the owner of the Mavs are, but.

Dylan Silver (31:16.214)
I know people are mad at him and I’m like, has nothing to do with this at this point.

Terra Padgett (31:19.04)
Yeah, I’m like, he sold his entrance before all that. So I don’t even know. you know, best of luck to the Dallas Mavericks and, you know, the future that they, they see a future without Luca and the Lakers saw a future with him. So, you know, I don’t know. But yeah, that was, that was pretty, a big question mark. I’m sure the side of a lot of people’s heads like, why would you give up Luca? Like he’s a franchise player, but they’ve got a strategy that we don’t know about yet. So.

Dylan Silver (31:27.202)
ass.

Dylan Silver (31:43.842)
What a great jersey. I guess so. What was the vibe like in Houston after they lost the championship? I think they lost by like two points.

Terra Padgett (31:52.464)
Oh, yeah, but the Houston, the University of Houston, yeah, the Cardiac Cougs, like, you know, great season. They were, somebody was gonna, only one, only one victor was gonna be, you know, there at the end. And it’s unfortunate that it wasn’t them. They had a phenomenal season. Again, their games, the ones that I watched were like, oh my goodness, why do you do this to the people? You know, just like I said, the Cardiac Cougs were a reason. I mean, it was tough to watch.

Dylan Silver (31:56.301)
Yeah.

Dylan Silver (32:15.33)
Wow.

Terra Padgett (32:19.82)
But I mean, they had a phenomenal season. Only those guys can even know what it’s like to play in a championship game like that. And so it was a tough loss. mean, you hate to see how it happened. mean, and I’m sure the guys that were on the court and even the coach Samson, I mean, it’s a tough pill to swallow. But life goes on. We just have to take the L as a lesson. Yes, it was a loss, but it’s a lesson. And what can we do different?

Dylan Silver (32:31.296)
It was a tough loss. Ugh.

Dylan Silver (32:41.09)
Yeah.

Terra Padgett (32:49.216)
and God willing they will be back next year. They’ve been killing it for several years and to get so close. But Akeema Lajwan and then back in like the 80s, they got so close and that was the whole famous, know, GD thing when they won and ran out and he took for somebody to hug. So it’s tough and it hurts, but know, this too shall pass. And you know, we go through the process of grief and mourning and we will get to the other side and we will just try, try again next year.

Dylan Silver (33:00.14)
now.

Dylan Silver (33:07.223)
It does hurt.

Dylan Silver (33:15.928)
Keep rooting for the Astros. I the Astros are gonna keep winning. I mean, they’re just a dynamo. I love the Astros. Gosh, I could talk about the Astros all day, but I digress. Terra, where can folks go to get ahold of you?

Terra Padgett (33:28.16)
Yeah, they can visit our powerpoolfund.com. That’s powerpoolfund.com. And that’s our website, a lot of great info. And they can even schedule a call through the links on the website. can schedule a call or if they’re ready to join the club, they can join the club. And always, I do wanna make this plug in there that when we’re doing the deals, these aren’t my deals. I’m not an operator of these deals. I am a limited partner and a passive investor right alongside them. So.

Even when we’re pooling money and raising capital, my money is tied to the deal and I sit in the exact same position in all the deals that every member of the club sits in those deals. So I’m not an operator of the deal at all. So I just wanted to make that clear in kind of how we operate with the club. But powerpoolfund.com and then also they can just shoot an email, info, info at powerpoolfund.com and ask questions or reach out and schedule a call to talk about if the group investing model.

is something for you, is kind how you want to earn passive income and invest passively in real estate by pooling with others at smaller 5, 10K amounts, opposed to the 50, 100K amount.

Dylan Silver (34:36.334)
Terra, thank you so much for coming on, for giving us insight about what it’s like to scale in this business, for chopping it up with us about some basketball, and just for giving us great value. Terra, thank you for coming on.

Terra Padgett (34:45.848)
my pleasure. Thanks, Dylan.