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?
'all paid jobs absorb and degrade the mind' - aristotle
please adhere to my warning. the only true freedom is living under a bridge and eating other people's trash.
In my experience.... capital isn't as important.
The biggest reason is that, Investors cares soooo much more about the deal at hand. Think about it intuitively,
Let's say you stumble on a 200 unit multifamily apartment tower in Queens New York. You speak to the Owner (via public records you get their number) and the owner tells you they'll sell it for a 5.6% cap rate, now let's also say you spent 2yrs as a Analyst at a Real Estate Private Equity firm (a $2B fund unknown to people). This means that you have some basic understanding on why the Apartment makes sense as a deal that's good.
Ok so now what. Well you do what brokers do, find a buyer. You do this by calling RE Investors across the US and eventually you will find a buyer because the demand right now for real estate is really high!
Ok so now what? Well, you tell the buyer the terms of the deal and what you want out of it and work the terms into writing.
Now let me show you how you can go from $10,000 net worth to ___ in 2 yrs.
Step 1: You find a serious Seller.
He/she owns a $100M apartment tower in Queens of NY.
Step 2: You get as much financial information and try to work out the deal terms prior to reaching out to a buyer.
Step 3: You speak to a buyer who you can trust
Step 4: You come to terms with the owner where you're granted (1% - 3%) ownership of the property. This means, your equity stake is approx. $1M to $3M.
Why this works? Well its because on average CRE brokers get 1%-2% of a sold property. You can use this number to gain an ownership stake.
Also, you MAY be able to work out a compensation agreement with the buyer (maybe he gives you 0.5% of the 2% ownership stake in cash as a finder's fee).
Step 5: You do this a few times for the asset class you want your own fund to be one day.
Step 6: By the end of your 2 yrs to 5 yrs stint, you would have built an equity stake of $2M - $5M.
Step 7: If your partners decide to sell the properties (GREAT, you now got maybe $1.4M to $4M in cash!!!)
Step 8: You can now advertise your track record to your network and new investors.
Step 9: You raise capital and/or build a team.
Step 10: You're now a multi-million dollar PE Fund FOunder.
As you can see, this is ONLY 1 way of going from $0 to over $1M.
This is a strategy many brokers have done in the past.
Thus, you tell me, is Real estate a slow moving machine? Well if you're doing it the traditional way then yes, it is.
It's so funny to me how so so so many I-bankers and PE guys dig into the nuances and details of entrepreneurship.
"Oh, no RE is slow, I need to go into tech to be rich" or "Oh damn, no income for 1 yr? I need to hedge my risks" and many more.
Entrepreneurship is more so about hustle and creativity than the ingenious invention (This applies to mature industries or slower growth industries)