The following conversation was conducted over email and edited for flow and clarity.
Derrick Deese is based in Seattle and works for Amazon. He has built a hefty real estate portfolio under his business, Grey Pine Ventures, in his spare time. Even with all of this to keep him busy, he also used to work behind the scenes for Wealth Noir.
Acquania Escarne of Wealth Noir (WN): Hi, Derrick, thank you for your willingness to share your story with Wealth Noir readers. It’s great to see someone who used to work behind the scenes of Wealth Noir was also able to work a full-time job, manage to invest in real estate and cryptocurrency, and have a family! How did you do it all?
Derrick Deese of Grey Pine Ventures: Great question! Balance is a constant challenge across everything such as work, family and investing. I think the main thing I focus on is protecting my energy. People and things can pull you in a lot of different directions, but I do my best to compartmentalize my efforts and ruthlessly cut out things that waste time or are not value-added.
It is a constant challenge and requires discipline like sticking to a schedule and not deviating, waking up early or staying up late, and practicing patience. I have a family with a two-year-old and another on the way!
The main catalyst for me was the birth of my son, Abram, in 2018. When I realized how little time I get to spend with him because of working a W2 job, I really wanted to focus on ways to generate income to spend time with him. While W2 jobs have a purpose and can provide great benefits, stability and earned income, I know the earnings upside is capped. I am working on someone else’s clock and don’t OWN MY OWN TIME. While that is still a key priority, I have also evolved my life to include spending time helping people with financial literacy, being more involved civically in my community and making more time to spend with family.
WN: I understand that besides real estate, you also invest in cryptocurrency. When did you first start investing in cryptocurrency, and do you still heavily invest in it now?
Derrick Deese of Grey Pine Ventures: I started investing in crypto in about 2018. A friend of mine was talking, more like raving, about it. I didn’t really understand it so I did some research on my own. I realized there is some value in certain coins, but many are scams. In general, I focused on coins that had B2B (business to business) applications as opposed to consumer-facing coins. I had a small portfolio as a percent of my overall portfolio, say about 3% in crypto, and about 80% of that was in Ethereum (ETH). I haven’t bought any coins since 2019 and have really stopped following them in an effort to cut things out as I said above.
WN: I understand you made a pivot in your investment strategy to start investing more in real estate versus stocks? Why did you make this shift?
Derrick Deese of Grey Pine Ventures: I would say it is a personal preference and also now I have a clearer understanding of my long-term goals and objectives. For me, there are three main reasons why I am moving out of stocks.
First, I simply wanted to diversify my portfolio more. About 95% of my portfolio was in stocks, and the bulk was in Amazon (AMZN) stock. While my portfolio has returned 58% year to date, that is not sustainable long term and I wanted to start building more passive income.
Second, I wanted to experience both the intangible and tangible benefits of asset ownership. Stocks are a piece of a business, but you have very little say in that business. In real estate, you can see the impact of your investment on not only your life but also your tenants.
Last, I wanted leverage. You can create meaningful wealth through leverage in real estate. If I wanted to have $100K in passive income annually, and assuming a 10% cash return on real estate, I would need to invest $1 million in real estate to achieve that. To get that same return with stocks through dividends, I would need to have at least $2 million invested in stocks, assuming a 5% dividend yield, which is generous. However, I wouldn’t get the same tax benefits as real estate.
WN: Wow, that’s a great perspective. What was your first real estate investment?
Derrick Deese of Grey Pine Ventures: My first investment was a property in Cleveland, Ohio, through a platform called Roofstock. I didn’t know where to start and was nervous as hell about investing in a property I couldn’t see in a state where I didn’t live. But as the great Rick Ross said, “Scared money don’t make money.”
I knew I wanted to invest in Ohio but just didn’t have a sense of where, and Roofstock was a great way to get my feet wet with a more streamlined experience. Roofstock helps you find a lender, the properties are often with tenants, and they help you find a property manager. The first purchase was for $111,459, and it was a single-family home with a tenant and a property manager.
When I look back, I think it was just like making a big major appliance or TV purchase online, except you can actually make money from it. The fear subsides when you realize that thousands of people around the country and world are doing the same thing! I highly recommend using Roofstock for the first property. It breaks down barriers and helps open up a world of possibilities.
WN: That’s awesome. Thanks for the recommendation. What is your current real estate investment portfolio?
Derrick Deese of Grey Pine Ventures: My portfolio is a mix of first-party–that’s assets I own myself–and third party assets I own with partners. I have also started getting into property flips, as well. In total, I have 30 units, worth $2.8 million, and it took me under two years to get there. My first purchase was in November 2018, four months after my son was born. It is a mix of apartment buildings, duplexes and a few single-family properties. That sounds crazy when I say it, but as long as you have a clear vision, some capital and determination, it is within the realm of possibility.
WN: Do you ever see yourself becoming a full-time entrepreneur?
Derrick Deese of Grey Pine Ventures: Yes, I do. Owning my own time is extremely important, and I believe that is the crux of an entrepreneur’s life. That may mean you work harder, but it’s on your own time, which is important to me. In order to do that though, I am building a financial base for my family and me so that I feel more confident in myself when making the leap to a non-W2 job.
I also know that it is a personal preference and have come to realize that over time. Not everyone wants to be on their own and that is totally cool. Many people enjoy the stability of a job, the camaraderie in the office, among other things. I appreciate that; however, I know personally that I value charting my own course and destiny and owning my time, and hence the desire to make the jump full time at some point.
WN: When folks find out you are a real estate investor, what is the most common thing they ask you?
Derrick Deese of Grey Pine Ventures: I think the most common question is “how do you do it” or “what markets do you pick?” The “how do you do it” is more a function, as I mentioned above, of determination, patience and sacrifice. Anyone CAN do it, but to me, it is a function of who WANTS to do it.
The next question is where to invest. That is a loaded question because there isn’t one answer for everyone. Some people prefer to invest close to where they live, so that answers it for them. Some prefer price appreciation, which means different markets. Some prefer cash flow, which means different markets. I always tell people that it’s a function of your own risk tolerance and your objectives. I wrote an article for Wealth Noir with tips on finding a place to invest that you can read here.
WN: What was the greatest lesson you’ve learned while investing in real estate?
Derrick Deese of Grey Pine Ventures: There are three. Always trust your instincts and judgment, trust but verify, and follow up. This is more an umbrella lesson that applies to many things. For example, if your risk tolerance is low and you don’t like losing money or spending money, then real estate may not be for you. There is ALWAYS going to be something with homeownership like maintenance, a new HVAC, plumbing, etc., and it can be costly.
On the flip side, investing in your business can yield long term benefits that outweigh the upfront costs. So trusting your judgment can help you decide whether real estate investing is for you.
‘Trust but verify’ is one lesson that I learned over time, especially being an out of state investor. People will try and sell you things that don’t make sense, inflate the value of properties, or sometimes just lie about things with properties. So, I never take someone’s word for something, but always do my own due diligence to verify whether something is as they say it is. It will save time and headaches in the long run.
Last, follow up. This is more part of the sales cycle, but being a little pesky with potential sellers and even tenants can be a good thing. Pesky is a way of asking if someone will sell, asking tenants if there are issues we should be aware of to proactively address them, etc. Following up can yield more deals for you, and also show your tenants that you care about their environment, which will reduce turnover for your portfolio.
WN: It’s interesting how as a landlord you are also trying to empower your tenants with financial literacy. Can you explain more of what you’ve done and how well it’s worked with your tenants?
Derrick Deese of Grey Pine Ventures: One of the areas that I want to focus on with my time is financial literacy. It has literally changed my life. It started with programs like Sponsors for Educational Opportunity, which helped me land an internship at Goldman Sachs and subsequently a job on Wall Street after college; and learning and understanding the power of finance and how acumen can be a great asset for not only work but life.
Rent or mortgage, as a portion of income, is generally the largest expense a person has. Additionally, many people in America struggle financially and do not know where to turn to learn about money. As a result, I am building financial literacy programs for tenants. This is still a work in progress, but my goal is to assist with building financial literacy. I want to create a loop of “incentive-based rents” where tenants have milestones about financial literacy that will allow them to have reduced rent over time. For example, opening an investment account and automatically investing gets 3% off rent. I tried to do this early on in the portfolio and didn’t get much response at all, so I am continuing to tweak the overall curriculum and continue pushing for financial literacy as a key pillar of the overall business.
WN: That’s awesome. Even if you didn’t get a big response before, keep doing what you are doing. What’s next for you? What would be your next big personal or investing goal?
Derrick Deese of Grey Pine Ventures: The biggest thing coming is baby number two due soon! So right now I’m getting mentally prepared for that challenge, and how I will continue to manage both work and investing. However, once things settle, my goal is to hit 300 units by the time I am 40 years old. It is lofty, but I don’t believe it is unattainable, especially if my partners and I can raise money to invest in larger deals and complexes. At that time, I would likely shift to managing the portfolio and investing full time as that will provide a stable source of income for my family and me.
WN: Congrats and good luck! Is there any particular childhood memory or a person you remember that helped influence the person you are today?
Derrick Deese of Grey Pine Ventures: This is less a memory but more a function of my upbringing, but my parents didn’t know much about money growing up. While we were a solid middle-class family, I talk to them now about things they wish they had known or done differently. One specific instance I do remember is that after the 9/11 attacks, both my parents lost their jobs. I remember we as a family got a cleaning contract at some commercial buildings in our town to clean buildings and my parents had part-time jobs for a time, as well. While everything turned out fine, I realized that I couldn’t rely on someone else–person or company–to control my destiny. I didn’t know how at the time, but that particular time in our lives I remember vividly and always keep it as a reminder for myself.
WN: That’s a great reminder. Thank you so much for sharing your story with Wealth Noir readers.
Acquania Escarne is the creator of The Purpose of Money, a community of women building generational wealth for their families one dollar at a time. As an entrepreneur, real estate investor, and licensed insurance agent, Acquania has always been passionate about financial literacy. On her website, Acquania blogs about ways to help you improve your money habits, create wealth, and invest in real estate. Follow Acquania on social media for daily tips.