How would you get to $15M?
I don't have a mentor that can give useful insight for my current situation so I am relying on internet strangers advice on how to hit my unrealistic number. I want to accumulate $15M as fast as possible (I know, I know). Based on my below information what would you suggest as next steps assuming my only interest is total compensation. Currently in my mid 20s -- total comp @ $170K. Partner of 8 years who is in residency and will be making ~$400K-$600K in 4 years (we are getting married next year).
Top 5 undergraduate business program > in-house construction management for large national developer (Related, Hines, etc.) Bay Area -> Senior Cost Manager for small GC NYC -> Cost Consultant for large national firm (CBRE, JLL, etc.) NYC -> Cost Manager back at same national developer NYC
I also inherited about $600K and 120 acres of non-producing (relatives sucked it dry) oil land in west Texas worth ~$200k. Total NW just over $1.1M. I stand to inherit an addition $1m over the next decade (morbid, but important for planning).
As I see it I have (3) options to hit my number before in the next 30 years.
- Dump all of my liquid assets into VOO ~$900k and max my 401k with my 170K-200K comp for 30 years. assuming the market still gives 10% annualized I should hit my number just before 56. This seems like such a long time but is my current trajectory...
- Go get an MBA or MSRE from Columbia or NYU, pivot into REPE or Investment Sales to supercharge my savings and get to my number faster. Seems like a lot of grinding to get into school, do well in class, network, study for interviews and apply during a rough economic cycle. A career change like this would help me accelerate my timeline through increased savings and would help cushion future costs of family/kids. Say 20-25 years instead of 30 if the U.S. economy doesn't crumble...
- (My favorite option), Get an MBA and start a self funded search fund (SBA will give 90% LTV to acquire a small business) and start buying small businesses. Seems extremely risky but highly rewarding and interesting...
I know my goal is mostly-unrealistic but any advice on the options I listed or any additional ones that I overlooked would be greatly appreciated. Apologies for the essay, I am just a little lost right now and maybe a little delusional. I also want to acknowledge how fortunate I am to be in this situation at a relatively young age.
Option 4. Blow up my life and move to Mexico for hookers, drugs, pet monkeys, and sailing
Hypothetically if I were in your shoes, but had my knowledge and experience and were living in my market, I would probably just do what I am doing now, which is pursuing my own development/renovation/condo conversion projects. Given your background in construction, you should be able to get your GC license and should have the knowledge or most of the knowledge to run your own 2-3+ unit renovation. From a financing standpoint, between your SO's future income and your cash/equity on hand, you should be able to borrow $1.5mm-$2mm. If I were you, i'd start out by acquiring a 2-3 unit multifamily where 1 of the units is livable (not newly renovated, but good enough to live in). I'd renovate the other unit(s), move into the renovated unit(s), then renovate the unit you just moved out of and then either sell them all as condos or rent out the units and sell the whole property. You can even leave 1 unit empty in case a homeowner wants to move in, but also collect rental checks. I'd do this until you are financially comfortable to own your own primary residence and also pursue your own projects. The first couple times, you might need to fund the renovation out of pocket build a track record and strengthen your tax return before applying for construction loans, but eventually you should be able to finance the construction through construction loans. So maybe for your first project, you buy a 2-3 unit for $1mm-$1.5mm and put down the minimum down payment required (for 2-3 units I think its 10-15%), so that you have funds for construction.
A few caveats however. First, I would probably wait until your SO is employed because her high income will allow you to borrow more and also it's just safer to have recurring income. Second, it's a pain in the ass, but moving into the properties that you renovate is a really good way of hedging your downside, especially at the start. In the worst case scenario, you can live in the unit and collect rent. Third, I know that this strategy would work in my market because i've done it many times. I don't know if it would work in your market. Fourth, if you choose to pursue this strategy, you better know your markets like the back of your hand and know your cost. You must have a lot of conviction in your numbers. Never force a deal to work.
As for your upside, it is infinite. The world is your oyster. The more projects you do the more you make. If you get big enough you can hire people such as project managers to help you grow. You could hold onto some properties as rentals. You can pursue entitlements and larger developments. And a nice bonus is that you will obtain Real Estate Professional status on your taxes, which can significantly lower not only your taxes, but your wife's W2 income as well. You can google it yourself, but you can expense meals, travel, home office etc... and if you end up holding onto some properties as rentals, you can accelerate their depreciation and deduct the depreciation against your wife's high W2 income. It's a very lucrative business if you know what you're doing and there is a very real chance you hit your $15mm number well before 56, but there is also more risk and work involved.
I'd first ask, why $15M. Why is that a magic number? Do you think that number will immediately mean happiness? Why not $2M, why not $5M, why not $250M.
Most of us in this forum are driven hyper competitive individuals.... vision, goals, work, accomplishment, and then back to the beginning of the process again. After the rush of the accomplishment there is another hill to climb. You are an extremely lucky individual (at least financially). You have a good nest egg at your age, a good well paying job, and a spouse that will contribute significantly to your household income. Maybe take a step back from a "number" and evaluate what you want to do with your life. That vision/path is more important than a BS number.
I'm not sure I really have an answer for you except that I think you are focusing on the wrong goal. BTW..... Getting an MBA so you can buy businesses is a TERRIBLE idea. MBAs are for consultants, managers, and executives. Its a piece of paper that shows your in the club, not something that actually teaches you anything about buying and running a company.
You have a golden opportunity in front of you in terms of your life. Don't waste it chasing a "number."
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