So you just got your first bonus and by the grace of god you’ve managed to avoid the temptation of blowing it on bottle service and a watch that will remind you that you’ve sold your soul for a fancy clock every time you look at it.
You’re a financially literate person, you know how to build wealth, you want your hard earned money to work for you! As I’ve been thinking about the best use of that capital I’ve come to a cross roads. Do you take your ~8% in the S&P and wash your hands of any need to pay attention to it, or do you invest in multi family rental properties.
I think it’s clear that you can definitely make more in real estate if done correctly, but being in IB and almost certainly not having the time to do the hands on work involved with being a rental owner, will the costs associated with a property manager / land lord be worth the trouble, and more importantly long term outweigh the benefits of parking your cash in index funds.
Anyone gone down this route before and care to share their thoughts / advice on how to get started?
I rather buy levered ETFs than deal with that nonsense.
Will not be worth the time, especially when ur not that knowledgeable about the topic. Go for etfs and if you want exposure to Real Estate go for reits
Happy to answer any questions. Started banking in MCOL (Charlotte/houston) and bought some lower cost rentals sub $250k and set them up myself as a self managed property. Figured out everything myself (roofing contractor, hvac contractor, plumber, handyman) and just coordinated as my own GC. Cash flows well if you screen and select tenants yourself. I literally used Zillow rental manager and marketed for $10 a week and screened tenants on TransUnion Smartmove. Just choose a lower crime area with no foundation issues.
Easy as fuck.
Better you think than investing in markets long term?
I do both so I’m 50% real estate and 50% stock. Most of the family friends I know with money have real estate. It’s much easier to diamond hands real estate in a downturn (although I have yet to see a 2008 equivalent).
Hey can you PM me? Joining IB FT soon and planning on doing this with my bonuses. Have some questions but would rather ask in pm.
Being in IB the big advantage you have (in theory) is being able to analyze businesses to some extent.
Why not do growth-y investing in early stage companies? Probably not venture, but companies growing at ~20% - 50% YoY and largely bootstrapped? If they're doing ~$10m - $25m a year, someone like you can probably add a lot of value around the finance side. Even just implementing a 13w model + getting a good cap stack running does a lot for them.
Your IRR would be much much higher than RE or stonkz + you'd learn a lot quickly + it compounds very quickly.
I met a guy in PE working for an MM firm doing it on the side and he's crushed it in ~2 - 3 years. I think it could work even with IB schedule.
Have thought about this as well, just not at all familiar with the logistics of how you get the opportunity to be making these investments and going about findings the companies. Any insight you have on that would be great!
Tried doing this with smaller LMM firms and wasn’t too successful seeing ROI on headache. Would definitely appreciate pointers on building out a pipeline for this - like, which 20m Rev business growing at 20%+ is looking for me to invest a meager $10-50k for the privilege of being their outsourced corp fin person (assuming no retainer)?
Focus on deploying to maximize learning opportunities.
Then build a solid reputation and get in at excellent valuations.
Yes you’ll end up doing a lot of “free” work. Need to look at that as cost of deal flow/rep.
OK so I’ve done something similar to what you’re saying (i.e buy real estate with free cash flow) but took a different view on underwriting. Only twice so please do take it with a grain of salt. The reality is that cap rate is shit almost wherever you look in North America. It doesn’t make sense for me to buy a $1 mil property and rent it out for $5k/month and maybe net 1-2% cap rate. Instead the thesis is on regions where you expect to see fast capital gains. Smell the flow of money into a neighborhood/city/whatever. One play that worked out well is buying residential detached house/townhouse in the suburbs in the last 18-24 months, which would have seen above average growth due to desire for space from WFH. Unlevered return of ~5-10%, engineered with leverage to boost that to ~20-40% on a physical asset? Growthy af. We’re not even talking about fixer uppers. Artificially low rate environment made financing easier, and competition for those assets more intense. Demand outstripped existing supply and the pace of new local level housing starts. You get the idea. If you observe, you’ll find a thesis. The tougher part is actually winning a bid. You may run into many situations where you’re bidding against 15-20+ offers. Many are cash offers. Some walk in with a massive bank draft. Others even write letters. You don’t need to buy it when it’s hot. Just form a view about a region. Maybe there’s new transportation access. Maybe a new hub is being built next to an existing one. Maybe a few companies are moving HQ nearby. Information / research process is different from what you do in IB but the logic is the same: see where money would go, plant your trap, and then collect your killings. This is the 500 A.D. spice merchant game. Left out some stuff but hope that helps.
you can literally stake a stable coin and earn 19% (say it drops to 10%, I do nothing so who cares) ... real estate sounds like a lot of work for 10-15%
lol all the monkey shit just proves how early I still am, thanks for the added conviction fellas
Cumque quis provident enim earum autem rerum alias molestiae. Nam ex ex ut. Fuga nam quia eveniet omnis reiciendis.
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