Real Estate Entrepreneurship

Some of us just aren't made to be employees at firms. Our goals don't line up to working for someone else. For me, it's autonomy. I don't want to have to ask for permission to take off. I rather take a haircut now on salary than be stuck with golden handcuffs later.


Anyone else here building their own firms?

 

The ancient Greek philosophers disagreed about many things, but they shared a common view of work. Platonists, Epicureans, Hedonists, Stoics, Aristoteleans-they all agreed-work is what your slaves do. A man without slaves is in no position to perfect the role of statesman or philosopher, the only truly worthy professions. Aristotle says, "All paid jobs absorb and degrade the mind".

 

What's your plan of attack? For a new entrepreneur or someone with a low net-worth I don't see real estate as being a great pathway as it's hard to make a lot of money quickly unless you're amazing at raising capital and placing it very quickly to juice your own IRR - but IMO that's irresponsible.

It's a cool glorified savings account that hedges against inflation etc nicely but going from $0M -> $10M is hard with RE. Takes forever...

 

Which part of RE is slow and capital intensive? What industry jobs are you referring to?

 

The one industry where you can start small and scale is really real estate. Don't even need to be a big shot. You can start with a 4plex out of a fha loan. Or raise money to buy a small 4plex. 

So many guys have started with no money quietly building firms. 

 

Champagne Sipping

The one industry where you can start small and scale is really real estate. Don't even need to be a big shot. You can start with a 4plex out of a fha loan. Or raise money to buy a small 4plex. 

So many guys have started with no money quietly building firms. 

I think the point was that this isn't a "fast" way of making money.  Yes, you start with a couple duplexes.  And after a couple years you refinance or sell and invest in a couple more.  Then do it again a few times.  Maybe after 5 or 6 years you own several dozen apartments/properties.  That is awesome, and make no mistake, but the strategy you advocate for here means lots of debt and little equity in each deal, and little cash flow as you service that debt.  I agree that over time you build equity and can make millions of dollars, but it's not a quick process and as @m_1 mentions, it can be highly cyclical if you try and speed it up by taking on lots of leverage.

I guarantee you there are thousands of real estate "entrepreneurs" out there who bought several homes to rent to AirBnB travelers (probably committing mortgage fraud in the process, if what I've seen holds true) and who now find themselves servicing debt on half a dozen homes while only one or two are renting.  Is COVID-19 a bit of an outlying event?  Sure... but a major recession would have done the same thing.

 

That's only 1 way I've seen it done multiple way. Like you said before on another post if the way was easy or obvious everyone would be doing it. But there are way to drastically lower your risk and not use high levels of leverage. 

Also highly dependent on market. 

 

You don't understand real estate. And that's fine.

Or rather the way you see real estate isn't for entrepreneurship. You only see it as an investment. But someone has to sell you the property. Someone has to build it. Someone has to lease it up. Someone has to find the debt on it. Someone has to manage it. Etc.

 

RE ppl don't really care about that kind of stuff tho. We have ULI, NAIOP and other organizations that are real estate specific. The fact that real estate is slow is part of the appeal behind it for those in it.

 

Why are you guys even bothering to respond to someone who comes into a thread titled “Real Estate Entrepreneurship” just to comment “Bro, why would you become a RE entrepreneur? RE is a glorified savings account, you need a ton of capital, you will never be as rich as me if you do RE entrepreneurship”

This guy is one of the biggest clowns on the forum. He’s had a ton of success at a young age, yet he still comes on this website and regularly to put people down or prop himself up. He is the embodiment of “weird flex, but ok”.

He also clearly knows nothing about RE.

 

Real estate is capital intensive, yeah, the sky is blue.

Plenty of people do deals without their own capital. When you include those who save up $500k - $1mil to start doing their own deals, there’s even more people.
 

So many entrepreneurs will do $50mil deals and only put $50k of their own money in. Their goal is to do a large number of deals and collect as much in asset management fees, acquisition fees, construction management fees, and development fees. Turning that $50k into $200k is great, but they’re all about the fees, scale, and building a track record.

Idk why non-re people insist on commenting in the RE forum and pretending like they know everything

 

My OP said this too. Requires raising a ton of money and juicing your own IRR. I was just trying to point out to OP that if you're a new entrepreneur, there are easier paths. I'm not in tech personally but lots of guys are raising at delicious valuations (for the entrepreneur) in tech focused on RE. I think it's a nice way of getting into entrepreneurship as you have way less risk being funded. You can pull a salary from day 1, etc. Not really going to happen in vanilla RE.

Option 1:
Traditional RE approach. Requires personal leverage. Slow. No real income. Risky.

Option 2:
Use hot private markets to your advantage and raise capital at a crazy valuation, pay yourself from day 1, sell secondaries along the way, doesn't matter if the co succeeds or not and OP still makes money.

 
Most Helpful

Lol at you MS’ing my comments. At the end of the day you’re still a clown for coming into the RE forum, on a post titled “RE Entrepreneurship” to scoff “why would you want to do RE Entrepreneurship, you make no money bro!”

Every time I see your name pop up on here, it’s a flex about you / your business, it’s you subtly talking down to someone (this entire thread), or you responding in a slightly off topic way that allows you to talk about yourself / your business. Why can’t you just stick to using this forum to learn or help others? I’m sure you have plenty of experience in your field to be useful to younger folks on here 

Entrepreneurs have other passions and expertise outside of tech. Someone who will be a successful RE Development entrepreneur could be completely useless as a prop tech entrepreneur. Some people would rather use their 5-10 years of experience in RE to... I dunno, start a real estate company? 

And again, your lack of real estate knowledge is showing. Plenty of RE entrepreneurs will be able to pay themselves day one. Or they will keep their day job until the portfolio has enough scale to pay them. This stuff isn’t hard - you just don’t know because you have zero experience.

Idk what your point is - you can make more money as a tech entrepreneur? Wow, who woulda thunk it? Gonna tell every doctor that he could make more as a banker. Or every consultant that he could make more as a tech software developer. I don’t get the point of bringing that into this thread? Let people work in different fields

 

m_1

That's literally what I had suggested in my post originally. Starting something like a tech co in RE. 

That's not what he's talking about when he wrote "someone has to sell you the property. Someone has to build it. Someone has to lease it up. Someone has to find the debt on it. Someone has to manage it."  Those are not startup/VC-backed companies.  Those proptech companies fuckin suck, and you know it.  But I know a guy who started a boring mgmt co from nothing and crushed it at a young age.  And I know brokers who crushed it at a young age.  Etc.  Look up Michael Stern, who's a hot topic on this forum.

Also look at the people you really admire.  Warren Buffett.  Josh Harris.  Do they encourage people to raise unnecessary equity for low-cash flow/likely doomed "hot potato" companies where the end goal is to flip out in the secondaries market?

 
m_1

It's slow, cyclical, and very capital intensive. Maybe something ancillary like tech related to RE?

I think it's going to be amusing to see how these pro-tech opinions change in the next few years.  I feel like the last few months are teaching us that the last decade of the tech boom is thanks almost solely to a lack of regulation and cheap monetary policy.  

 

Fair point but people who are in the industry would a few ways to do well. 
For example (Real cases) 
#1: I know a Business broker who sole business is selling real estate related companies (anything from builders to prop management firms). He sells on average of 100M per year for 5% commission. It's only him and 3 other partners right now. Do the math... he's making a good amount. 
Btw. He been doing this gig for about 7 yrs now straight out of college. 

#2: I sold a RE M&A shop for a good amount. I started the firm in my senior year in College after doing 2 CBRE internships. I got lucky AF... because I got a great relationship with 3 veterans who had wealthy networks. Thus, we partnered up to build the firm. 6 yrs after building the firm. I sold it for about 9 figs  
 

 

Plenty of guys have bought a property and property managed or GCed or brokered on the side on the side to bring in revenue.

Are you gonna be making a lot of money up front? No. That's why I think there is value in starting early while your expenses are lower.

 

A-lot of the comments here are from non entrepreneurs and it shows... which is not a bad thing but if you want to learn how to pick apples you ask someone who knows how to pick em... Not your local cashier. 

I for one started in the CRE sales business, made a lot, now running a portfolio of assets with partners. I didn't work in banking, but hired ex-bankers. 

 

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