I caught the finance bug late in life and have recently starting interning at a small RE company doing book work for them and odd jobs. The three investors in the company all have other jobs and are about to close on a 102 unit apartment deal, about 5x their biggest to date. They are not yet at the point where one of them can forgo a six figure salary to run it, therefore they are needing someone whom they can trust and are trying to get me to run it. I will be attending a MSF school this fall and would rather not. However, if they offered me something like an opportunity to buy in to the company with 20-25% ownership, it would be hard to pass up. I’m currently 26 and it would be very doable for me to attain a net worth of a million dollars by 30 if I were to take up this offer. What would you do?
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What market are you in?
The rural south east
Very hard for me to believe that you can make a million in 4 years in that market doing 100 unit deals at this point in the cycle. I think msf is a safer bet but i can understand the trepidation to take classes and forgo salary, if you like the guys and think you can train yourself then go for it but it's definitely riskier
Do it man. If all else fails, use the cashflow from the deal to help pay for your MSF in a few years.
I think you'll learn way more from buying a multifamily deal with sponsors than you would from a Masters program....
Sounds like a good opportunity. I think I would pursue this deal and put the MSF on hold. This will only strengthen your experience/school application in the future.
Definitely do it. I can't imagine you'll make $1M in 4 years, but maybe 8 years. In either case I think the freedom and income potential of being part of your own shop is what most excel jockeys aspire to someday. Let us know how it goes!
Interesting situation. I'm all for taking risks but why not do both at the same time?
Can you provide more info on this equity deal? Sounds like this hasn't been set in stone and it's something you're thinking about trying to get in lieu of a 6-figure salary? Also, what would you have put up to get this "20-25% ownership"? Deferred salary? Might be reading that wrong.
Even if the equity is not something you can negotiate, I agree with @LReed" you will probably learn more with hands on experience but you said you have a full ride....What school is it? Not busting balls for prestige or anything, just curious why you don't want attend a MSF for free, especially since you caught the finance bug? Sounds like this can only help.
If it's a great program and good recognition in the rural south east, it might pay dividends. What's the opportunity cost of a free ride, especially if you can get real experience on the resume at the same time, even if they can't pay you?
Either way, I'd make sure the deal with them is pretty clear: When would you get the equity? What type of hands on work would you be doing for them? What skills would you gain? Etc. etc. I'd hate to hear that you worked for them for two years, the deal fell through, or somehow the equity wasn't what you thought.
Keep us in the loop!
Ok, so here is a little background about me and the company I'm currently working for. Currently, I am the only full time employee. The three partners in the company all have other jobs. The youngest partner, who is also the founder, started the company when he was 24 with just a few properties. They now have dozens of properties, but they have a $4+ million complex under contract. They are now at a point where someone is probably going to have to quit their job to run the business. Because the youngest partner is also paid the least (probably around 80k), it is likely that it will be him. However, they are not at a point where they can afford to pay someone 80k a year plus benefits etc. without stretching the company's margins. Also, the other partners can't do it because they "have families" while the youngest is currently married and may want kids in the future. This makes it a problem for the other two to quit their comfy jobs.
Now the apartment complex currently has a property manager on site who is in her 70's. They are speaking to her this week to find out if she's willing to stay on. If she is not, someone will need to run the property, which is where I may come into play. The youngest is a strong proponent for me running it and thinks I will be crucial to the success of this deal. I am more single than a nun, have zero debt (other than 3 properties that I own myself), little obligations, am a fast learner, and have experience managing people. The other two partners are somewhat neutral to the idea of hiring and trusting an outsider. 2/3 partners would like me to come on board at some point in the future in some way, perhaps with equity. It would probably be about a $100k buy in for 20-25% but this is just a random number that I've came up with off the top of my head considering both partners bought in with the youngest for 65k for 33% (they have no acquired several more properties since then). If the point came to this, obviously I'd get a lawyer to look over the contract written up and not just sign willy nilly on the dotted line.
In terms of the school I'm attending, it is a part time program with classes every other week. It's possible i could do some remote financial work for them on the side. In the mean time, I'd hate for them to acquire another partner and me be left out of the company. Perhaps I could join the company when I graduate from school and help run the operations and by that time the property manager would have left. babybaboon I will inbox you the school for reasons of anonymity.
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