So, you want to be an entrepreneur—a successful real estate investor. My advice to you: get a job.
There are certain people for whom (and even certain seasons for which) it makes the most sense to start down the path toward real estate world domination by—yes—getting a job. Yep, I’m talking about earning a good old W-2 paycheck.
This is a path that most of the baby boomer and prior generations saw as the only option. However, it’s a path that seems like an increasingly scorned option for many today.
Successful Real Estate Investors Who Once Held Regular 9 to 5 Jobs
Before you mock and sneer at my opinion, consider that many of the great real estate investors of our day started off on the traditional path.
I recently met Rick Graf, who owns a lot of large apartment complexes and is CEO of Pinnacle, one of America’s largest property management firms. Rick is one of the leading voices in commercial real estate.
Rick started out as a porter at a local apartment complex. He worked his way up from there.
Gary Keller, the world’s most famous real estate broker, went to college for real estate and took a role as a Realtor before starting Keller Williams.
Or consider my friend Andrew. Andrew worked as an asset manager for years at Equity Residential, Sam Zell’s company. He managed about half a billion in commercial real estate assets for Sam.
In time, he got the attention of an awesome entrepreneurial commercial real estate syndicator in Virginia. They brought him on board in a similar role with one important difference: Andrew has an equity stake in everything he manages.
Ideal Jobs on the Path to Full-Time Real Estate Investor
I’ve struggled a bit with those who ask what the best jobs are to have on the path toward becoming a full-time investor. I haven’t seen a lot of people work this out successfully. But I’ve narrowed it down to five ideal positions, and I’ll be glad to elaborate on each if you reach out to me.
The five potential jobs include:
- Property Manager
- Asset Manager
- Financial Analyst
- Commercial Real Estate Broker
- Commercial Real Estate Lender
Though there may be other occupations that will get you on the path, I think these five cover most of the bases.
This post will focus heavily on path No. 1. I’m going to share a real-life story about Joe, a friend of mine who took a pay cut to learn the self-storage business from the ground up.
How Working a 9 to 5 in Real Estate Could Help Your Investing Business
Many multifamily and self-storage syndication firms manage their own facilities. Others use third-party management firms. These firms employ a variety of staff, including frontline managers, regional managers, accountants, and more.
By taking a job as a property manager, you will learn the detailed ins and outs of this business. You will learn all about:
- Customer service
- Maintenance and repair
- Capital projects
- Inventory (point of sale items, etc.)
- Legal (evictions, auctions, etc.)
There are other benefits to this path, as well:
- You will get to know and prove yourself to middle and senior management.
- You will get to know competitors and others in the business.
- You may get to attend industry tradeshows and business events in your community.
- You may get significant training and education.
- You may have a chance to work your way up to regional or senior management over time.
Real estate investing has become very popular, and there are many entrepreneurs in this space. There are surprisingly few in commercial real estate who did the hard work to learn their business from the ground up.
But this path to becoming a successful investor could give you an advantage over many.
Living Example of a Property Manager Turned Commercial RE Investor
Last year while I was attending one of Scott Meyers’s self-storage academies, I met a young guy who really impressed me. And he made me laugh hysterically.
His name is Joe Mascow, and he lives north of Dallas. Joe is part of Scott’s mastermind, and he has taken bold and costly steps to succeed in the self-storage arena.
Before Joe discovered self-storage, he was a successful residential mortgage broker. He was making over $100,000 annually, but he was trading hours for dollars. He realized that being a self-storage owner would create true wealth for him that would supersede his current occupation. The question was how to get there.
Joe took a leap of faith by taking a significant pay cut (over 60 percent) to become a self-storage property manager. His goal was to learn the business from the inside out.
Joe told me, “I got this idea from the book Secrets of the Millionaire Mind by T. Harv Eker. In it, Eker told a story about wanting to buy a property and start his own restaurant business. So, he got a job as a dishwasher at a local restaurant in order to be able to get an understanding of how everything worked on a day-to-day basis.”
Joe saw a parallel in taking the property manager job. He said there are three major factors to keep in mind if you decide to follow his approach:
- Understand that this is not a glamorous job. You may not feel as valuable or affirmed as you could in other roles, but that is not your goal. Your goal is to learn how to run a commercial real estate property from the ground up.
- Have your financial ducks in a row. You need to be sure you can live off this relatively low-paying job. Realize that this is your education, and you are setting yourself up for a future of success as an owner yourself. As a property manager, you are doing the vast majority of functions you will need to someday do as an owner.
- Start with a smaller property. Joe started out with a property of 1,000 units with a wide variety of customer and unit types. Though he learned a lot and was very successful, he was pushed to the limit daily just to keep up. He had little time to reflect and learn all he could. He feels it would have been smarter for him to manage a facility with about 500 units. Then he would’ve had time to implement new marketing strategies and test new ideas, rather than just run hard all day, every day, just to keep up.
Joe said it is important to keep a journal and reflect on your thoughts, strategies, successes, and failures. He said that it is easy to disagree with the owner on strategy and tactics. Therefore, it’s good to sit down and reflect on why the owner might be doing things a certain way and why your opinion differs from his.
This journal could be very valuable in your next role, potentially as an owner.
Joe said it is also important to keep track of tangible ways that you have increased the income and the value of the property. For example, he said you should be able to tell the owners something like this.
“In the first four months of my employment as the property manager, I took the physical occupancy of this property from 68% to 79% by personally introducing myself to as many of the current tenants as I could and notifying those tenants that I would lower their monthly rent rate by 10% for each new tenant referral that they could give me!”
Joe said it was important for tenants to see him carefully taking notes about their suggestions to improve the property. Equally as important was letting them know if and when he did what they suggested.
The Bottom Line
By taking a job as a property manager, you could be well positioned to be an owner of a facility yourself someday. You’ll build your credibility in the industry, make a variety of contacts, and be in a better position to convince lenders and brokers to take you seriously.
Plus, you’ll know answers to questions like these firsthand:
- How do you find and/or know if you have a good property manager?
- Do you want to run your property yourself or pay someone else to do it?
- How large of a property do you want?
- How do you keep the property manager happy and motivated?
- How do you keep your customers happy?
- What type of unit mix, marketing strategies, operations policies, and so on will be best for your facility?
As I consider what Joe did, I must say I’m a bit jealous. I’ve never had this experience, and I don’t see how I can get it without walking in his shoes. It’s another benefit of taking risks while you’re young, single (Hey, ladies!), and flexible.
Are you in a position to take a job as a property manager? Or an asset manager? Or a financial analyst? Or a loan broker? Or a real estate broker?
If so, you may be positioning yourself for decades of future success. I’ll let Joe close this post in his own words.
“Remember, the first thing I said was that being a property manager isn’t the most glorious job you will ever have. Oftentimes, I started my days by picking up other people’s trash or trying to kill rats with a broomstick or a spray bottle of Pine-Sol.
“I stuck with it because I was determined to have a well-rounded understanding of the investment that I was going to be putting my capital into. Ultimately, even though I took a pay cut, the firsthand knowledge I obtained helped me gain the credibility and familiarity I needed to be considered an expert in the self-storage investing niche in the market.”
What sacrifices are you willing to make to get where you want to go?
Share in the comment section below.
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.