The Wealth Creator

No one could blame RealInvestors® Chief Visionary Sherman Ragland if he had shied away from real estate after his first introduction to the industry. When Ragland was in junior high school, he begged his mother to take him to a real estate seminar that someone he saw in an infomercial was hosting. He bought a pair of expensive cassettes only to find out the host would eventually go to jail for fraud.

The event only strengthened Ragland’s resolve for real estate, however.

“It didn’t deter me from wanting to pursue real estate success,” he said. “I got my real estate license while in college when I was 22, competed for a national fellowship to attend the MBA program of my choice, and ultimately chose the Wharton School of Business where I got my MBA in real estate development.”

A Real Estate Career Is Launched

Ragland’s first job out of school was Chief Financial Officer (CFO) for a major land development project the Xerox Corporation was building in the Washington, D.C. area. He saw the opportunity as a chance to not only work on a large-scale project, but also return to his hometown of Washington, D.C. and pursue a commercial real estate development career. It was also a chance to work for some of the biggest real estate developers in the D.C. area—Xerox Realty as well as the Oliver T. Carr Co.

After working on major projects in the D.C. area, Ragland started his own company in the early 1990s. His firm mostly handled walkouts and took on busted loans from the savings and loan industry. The company also did a lot of work for the federal government for 12 years, achieving significant accolades for its work, including recognition from the White House.

It was in the late 1990s when Ragland decided to go back to what he really had a passion for—real estate investment and development.

“When my youngest son was born in 2001, I remember saying to my wife that I really wanted to focus on real estate,” he said. “She said it was a great idea, and I went to a four-day event in Atlanta. It was funny because they keynote speaker was this up-and-coming investor, (Rich Dad Poor Dad author and businessman) Robert Kiyosaki that no one had heard of who had this board game and book that was going to be coming out in six months or so.”

Ragland also met Steve Cook, another real estate investor at the event. When they returned to Washington, D.C., Ragland paid $500 for a one-on-one mentoring session with Cook on how to get his first real estate deal.

“It’s funny because here I was, somebody who had a career in commercial real estate, an MBA in finance and real estate development, and Steve by his own admission ‘barely made it out of high school,’” Ragland said. “[But], here’s a guy that basically taught me to fix and flip houses for my first year as a full-time real estate investor. I was fixing and flipping houses and the more I did it, the more people would come to me and say, ‘Hey, how do you do it?’ That’s how I got into the education business. People asked me, ‘Hey, can I look over your shoulder?’ Soon I became the ‘go-to guy’ in D.C. area real estate.”

Sharing Real Estate Knowledge through RealInvestors®Ⓡ

Ragland and his RealInvestors® Team have let a lot of people look over their shoulder and learn about real estate investing since 2001. The company began as a local networking group that helped one another out with real estate matters. It eventually turned into the largest real estate club on the east coast—the D.C. Real Estate Investor Association (DC-REIA). By 2003, it became clear that people really wanted to learn about real estate investing as it’s done closer to home. At the time however, there were a lot of speakers going around the U.S. pressuring attendees to sign up for training that was centered around going to out-of-town boot camps.

“The challenge with boot camps is they are a three-day event and by the time your credit card statement shows up, you don’t remember half the stuff you were taught in those three days,” Ragland said. “So, we started doing training in our own backyard for local investors in the D.C. market. We were doing a session one day when somebody asked what we called ourselves. I said, ‘I don’t know, RealInvestors®.’ We went online and found that nobody had grabbed the domain name.”

The club soon started its own training programs that consisted of a day of training at a hotel and then 30-45 days of “hands-on” training at local properties. The hotel company asked what they wanted to call the event, and Ragland replied “Real Investor Training.” That same weekend he registered the domain names and the training program was known as RealInvestors® from that point on.

Located in Prince George’s County Maryland, RealInvestors® had to go through a number of processes to comply with the county and state regulations so it could offer formal training in a permanent facility. The company purchased a 5,000 square foot building and then became a licensed trade school and the Maryland Higher Education Commission approved it. RealInvestors® is the only real estate investor school in the U.S. that a higher education commission has approved. The Maryland Higher Education Commission has also regulated popular colleges like Johns Hopkins and the University of Maryland.

“We’re in the same peer group as (those schools),” Ragland said. “So with that, we have to provide a curriculum and go for an annual review. We’ve done everything except get accredited, but we’ve thought about that from time to time. We are licensed and sanctioned by the state.”

RealInvestors® also offers certain classes under career school programs like the 60-hour real estate agent licensing program as well as continuing education (CE) classes, which a state agency regulates. The courses are part of the RealInvestors® Academy, which students pay a small membership fee to join. Classes are now offered in a 10,000 square foot campus located just east of Washington, D.C. where people learn to become real estate investors within a 90-mile radius of the White House. Programs offered vary from getting started in real estate, “quick-cash” real estate strategies, transitioning to commercial properties, raising capital, and using crowdfunding.

“There’s something for everyone from the newbie to the more advanced investor who’s looking to really take it big time,” Ragland said. “I have a project now that I’m working on that’s a $10 million deal. Steve Streetman who co-teaches a commercial course with me just raised a $26 million fund. I would say a big part of sustainability and resources is can you actually take somebody who knows nothing about real estate and help them build a $26 million portfolio.”

Streetman did his first commercial deal with RealInvestors® 10 years ago, not knowing anything about commercial real estate, according to Ragland. Six years ago, he became a RealInvestors® teacher and started to put together numerous deals using cryptocurrency and crowdfunding.

“That’s ultimate success to me—the fact that you can continue to not only educate people, but as time goes on, those people that you educated now become successful real estate investors and teachers,” Ragland said.

By having students become the teachers, RealInvestors® is consistently expanding its curriculum. Ragland admitted that when the academy was first starting he questioned the need to go through so many certification hoops just so he and his team could teach some real estate classes. In hindsight, he realizes the process was worth it so RealInvestors® can be a longstanding educational resource.

“This is the same certification process that a Johns Hopkins University has to go through,” he said. “It causes you to think about how do you create something that is sustainable, something that has longevity and is an institution. That’s what RealInvestors® has become—an institution.”

Closing the Generational Wealth Gap

One of RealInvestors’® goals is to help members solve their real estate investing challenges in part so they can create wealth that they can pass along to their children and grandchildren. Ragland noted the large wealth divide in the U.S.—which unfortunately falls along the lines of ethnicity. African-Americans have one-tenth of the wealth of non-African-Americans and Hispanic Americans have approximately one-eleventh of the wealth, according to Ragland.

“Fundamentally, if you look at the absolute numbers in terms of where wealth comes from, it comes down to just one thing: home ownership!” Ragland said that “The vast majority of African-Americans do not own homes, and it is similar for Hispanic Americans, while the vast majority of non-African-American and non-Hispanic whites do own their home. I’ve been a student of these facts before social justice and wealth building was popular.”

The motivation for Ragland’s interest in wealth building through real investing came from close to home. His daughter approached him one day and said she was thinking about buying a house and needed advice. They had a series of conversations and Ragland guided her though how to purchase her first home. That led to more people asking him how she did it.

After getting a large amount of inquiries, Ragland sat down with his daughter again about everything they had discussed. This time however, he recorded the conversation. The transcript turned into a series of TV appearances on the topic and an Amazon best-selling book, 7 Simple Steps to Getting Your Own Home!, which discusses the wealth gap and the importance of home ownership.

Today, home ownership is a family affair for Ragland. His three children all own real estate (even his youngest son who is a college freshman) and all three are on the path to financial security because of it—an achievement that Ragland calls his “most important accomplishment.”

“The reality is, the wealth gap can be closed in one generation if people just get serious about home ownership as that first step,” Ragland said. “After you get your first home, don’t stop. Get another rental property and then another rental. It’s almost like a game of Monopoly—four green houses, roll them up into a red hotel, except they aren’t hotels, they’re apartment buildings. And the formula for creating wealth isn’t hard. You just have to pay attention, find yourself a mentor, and be willing to get out there and actually do it.”

Ragland also noted the easiest way to close the financial gap is for people to pay attention to what they’re spending their money on—including how much they’re spending on rent versus what would that same rent payment would look like if were applied to a mortgage.

“I think most people realize they could probably get more housing if they took the same dollars that they are spending on rent and dedicated them to a mortgage,” he said. “Granted, it might cause them to move outside of an urban area and to a suburb. Case in point, my oldest son and girlfriend were paying $3,800 a month for a one-bedroom apartment in Washington, D.C. Finally, he said, ‘This is insanity.’ They’re now in the process of buying a four-bedroom house about 15 minutes outside of the city.”

Home ownership can be the first rung on the ladder to creating wealth, according to Ragland. In as little as three to five years, anyone can follow our system and own five to 10 rental properties if executed properly. Those rental properties could pay you between $5,000 and $10,000 a month in passive income in the Maryland/D.C. area. For many people, that is enough to be able to retire, or at least have your spouse leave their job and come home.

“That gives you real choices in terms of what you want to do with your life,” Ragland said. “If you go to work, you go because you love the job, not because you need the paycheck.”

Develop an Ownership Mindset

Whether someone owns one property or 10, it’s important they think of themselves as a real estate investor, Ragland says. His thinking is home ownership draws a distinct line between the consumer and the producer. If someone spends their whole life consuming, they may look at life as, ‘What can I consume next?’ The producer meanwhile has a very different mindset.

“It’s the mindset that says, ‘My wealth is dependent on what I do’ as opposed to a mindset of, ‘This happened to me at work, or I got laid off, or it’s my employer’s fault,’” Ragland said. “You just look at things through a different set of lenses.”

And it doesn’t matter if you have one property or a hundred.

“Once you put yourself on the side of ownership or investor-ship, you begin to look at life very differently. You realize that your capacity to create wealth for you and your family, and then teach those same concepts to other people is really just a function of how hard you want to work and not a function of catching a break,” he said.

Learn This Business by Doing It

When Ragland was in college, he had the opportunity to work an internship at the IBM Product center in the Inner Harbor in Baltimore. One day, Jim Rouse, a nationally famous real estate developer and founder of The Rouse Company, came into the store to purchase a typewriter for his wife. Ragland sold him the typewriter and two days later Rouse asked Ragland to come to his office and interviewed him for a job with his real estate development company. Rouse informed him he’d start in the internship program, become a developer and eventually a project manager. Ragland said the opportunity sounded fantastic, but informed Rouse that he had just applied for a fellowship and if he was accepted, he was going to the Wharton School of Business to get his MBA.

“I’ll never forget these words as long as I live,” Ragland said. “(Rouse) said, ‘Sherman, the Wharton School of Business is a very fine place, but you will never learn real estate in a classroom. You learn this by doing it.’ I would have to say that was the most powerful, impactful advice I ever got because you really do learn the real estate business by doing it. I got my MBA, and he was correct—learned a lot of stuff, but I did not truly learn real estate until after I started actually doing it. I learned most of the stuff about real estate after I got out of Wharton.

“It’s something I carry with me when talk about our training programs at RealInvestors® because all of our training programs are designed around real projects. If somebody’s doing a rehab or we’re teaching a rehab class, you are meeting with a contractor. You’re going out in the field with us as we’re buying a property.”

Ragland could have easily turned his back on the real estate industry when that seminar host was exposed as fraudulent when he was in junior high. Instead, he took the opposite approach and built a successful real estate development, investment and educational career. He didn’t quit—advice he gives to anyone interested in real estate today.

“Real estate can be confusing and it can be challenging,” Ragland said. “There are a lot of times where people feel like it’s not worth the effort, but they should hang in there just a bit longer. I’ll say to people if you need to take a break, take a break, just don’t quit. You simply need to connect with the right people who will let you look over their shoulder and don’t be afraid to follow in their footsteps. Most importantly, just don’t quit.”