Advice for New Investor who already has large capital

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Advice for New Investor who already has large capital

Curtis Robbins
Investor · Indianapolis, IN · Member since 2013 · 11 posts · 19 votes

So I've ready more books than I can count, heard all the podcasts, read the articles, stalked the forums, etc. Classic I should have started investing a long time ago stuff. I know. I'm working on it. However, all this wasted time, along with an aggressive saver personality type has me standing at square one with a great deal of capital to leverage my start into a more accelerated journey if I play my cards right. I'm looking to make 2019 the year I finally get off my ***, and make something happen. 

All that said, when I read all the 'getting started stuff' it seems tailored to a different audience than the one I'm apart of. I'm new to this too, and some of that certainly applies to me, but most of it focuses on no-money deals, high-leverage, wholesaling, and how to get good financing, and learning about real estate while you build up enough capital to graduate to BRRR, Fix/Flip, etc. This is a perfectly logical place to start, as most people have no money, no knowledge, and no resources. Makes perfect sense.

However, I've got a large pool of starting capital, easy access to financing, a good network of cash flush friends/family for private lending and partnerships, and live in a low cost / high cashflow area (Indianapolis). I'm not a expert by any means, but neither am I a beginner with my knowledge set. I've even had a successful investment property (+$600 cashflow monthly) in the past (burned down unfortunately). 

All of this is to say, I've got a rolling start when I get my journey on the road. Yet most advice given to newbies is centered around getting them rolling rather than getting them running. So my aim, is to translate this advice, into something a little more tailored to my situation.

So my question is this...

if you were just starting out, but you had a large amount of capital available to you, how would you change/adjust your day 1 business plan/strategy to maximize your results? And how would you do that, without shooting yourself in the foot with inexperience? How would maximize this advantage to accelerate your journey? 

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Matthew Perry
Developer · Boston, MA · Member since 2017 · 125 posts · 137 votes
7y

@Curtis Robbins my advice to you would be to do the following:

1) have or create a gameplan. Know where you want to end up. Is it that you want to have a ton of rental units and income earning investment properties in a portfolio and be the check collector or do you want to be the active go out get your hands dirty fix and flip investor? Or do you want to be the CEO type which is a combination of the two. 

2) Once you have a gameplan work backward from where you want to end up and create little benchmarks that will get you to that point in time. You have probably read it over and over again in the books that say get out there buy that first property but I will tell you that real estate investing is less of a 100 yard dash, and more of a marathon. 

I would say find a local real estate investor group in your area and become a regular there. Find the big players in the area who are doing projects and start having discussions with them. You say you have capital to play- fantastic- if I was you I'd spend your time finding the person who fits what you want to do and be in real estate investing, and them help solve their capital problem. From then on it is about building a tower of success, and building on your last deal/project/whatever. Ignore the instinct that says you have to be an overnight sensation in this industry to be successful, and focus on the day by day bit. You are the answer to the problem someone is battling right now in your area, and that same person might be the solution to your problem too. 

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  • Amul Sutaria
    Rental Property Investor · Montville, NJ · Member since 2014 · 82 posts · 10 votes
    7y

    Great questions @Curtis Robbins, I'm in the same boat.  I am eager to hear from the rest of the BPers.

    0Reply
  • Matthew Perry
    Developer · Boston, MA · Member since 2017 · 125 posts · 137 votes
    7y

    @Curtis Robbins my advice to you would be to do the following:

    1) have or create a gameplan. Know where you want to end up. Is it that you want to have a ton of rental units and income earning investment properties in a portfolio and be the check collector or do you want to be the active go out get your hands dirty fix and flip investor? Or do you want to be the CEO type which is a combination of the two. 

    2) Once you have a gameplan work backward from where you want to end up and create little benchmarks that will get you to that point in time. You have probably read it over and over again in the books that say get out there buy that first property but I will tell you that real estate investing is less of a 100 yard dash, and more of a marathon. 

    I would say find a local real estate investor group in your area and become a regular there. Find the big players in the area who are doing projects and start having discussions with them. You say you have capital to play- fantastic- if I was you I'd spend your time finding the person who fits what you want to do and be in real estate investing, and them help solve their capital problem. From then on it is about building a tower of success, and building on your last deal/project/whatever. Ignore the instinct that says you have to be an overnight sensation in this industry to be successful, and focus on the day by day bit. You are the answer to the problem someone is battling right now in your area, and that same person might be the solution to your problem too. 

    4Reply
  • Amul Sutaria
    Rental Property Investor · Montville, NJ · Member since 2014 · 82 posts · 10 votes
    7y

    @Matthew Perry Could you please explain what you mean by "work backward"? i've heard that before but dont know what it means exactly...

    0Reply
  • Matthew G.
    Specialist · Pasadena, CA · Member since 2017 · 133 posts · 86 votes
    7y

    @Curtis Robbins I would suggest you figure out what your goals are. There are a lot of types of real estate investors on this forum, some are active investors because they might have little capital and need to leverage and grow their capital. Others investors are passive, so they become equity partners, invest in apartment syndications or do private lending. Active investors are really like business owners, you need to put time and effort to market, network and manage projects. Even rentals require a lot of management. Passive investing is probably the type of investing you would want to do if you had a lot of capital, but this will really depend on your goals.

    You say you can easily get financing and have friends/family with cash, but the only way to leverage their money is if you are actively investing. If you find your own deals, start your own apartment syndication, etc. then you can use their money, but if you are just passively investing you won't be able to really make money off their money.

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  • Matthew Perry
    Developer · Boston, MA · Member since 2017 · 125 posts · 137 votes
    7y

    @Amul Sutaria best way to describe it would be to say for example you wanted to have 100 rental units in five years so okay at the end of five years you need to hit that goal, so what goal do you want to set for year four that can build to 100? It be twenty units each year, or it might be progressive where it starts at 10, next year is additional 30, next is 25 years, next is 25, and the last year is another 10. It is just creating a roadmap for what you want to achieve, but it is hard to figure out what to do first if you do not know where you want to end up. 

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  • Matthew G.
    Specialist · Pasadena, CA · Member since 2017 · 133 posts · 86 votes
    7y

    @Amul Sutaria I think what @Matthew Perry means to "work backwards" is once you know what goals you want to hit, it will give you an idea of what you need to do to get there. If my goal was to turn $100,000 into $1,000,000 in 10 years, it would require a different game plan than if my goal was to turn $100,000 into $250,000 in 10 years. If my goal was just to get to $250,000 I could invest passively and get a 10% return annually and meet that goal. To get to $1,000,000 in 10 years requires a lot higher annual return than what passive investing could achieve, so I'll need to fix and flip or BRRRR.

    1Reply
  • Charles LeMaire
    Rental Property Investor · DFW TX · Member since 2018 · 179 posts · 260 votes
    7y

    Curtis and Amil, 

    I'm not sure if multifamily (MF) is where you want to go, but...  I will present the possibly unpopular suggestion of finding and paying for a mentor.  There are several around; I choose Brad Sumrok in DFW.  He has taught me all about the process - I met him in 2010, knowing nothing about any of it.  I saw the MF presentation, could understand the math and logic of MF syndication (Sponsor and Passive investors) and went for it.  

    After training, there is the 'ecosystem' (I like to call it Sumrok University) of students. Success requires being around several times a year to network (as a passive investor, you must have a relationship with the Sponsor).  Once you are known to a sponsor and he puts together a deal, he will send it to his 'buds'.  You decide if you want to jump in; it is a bit of a foot race for some deals.

    Using the above, I have gotten into 37 deals (10 have sold).  My average returns on the sold properties is 30% annualized yield - you mileage may vary, no guarantees!

    You may desire to be a Sponsor.  If you wish to be hand-held, the fee to Brad is more, but the rewards are potentially greater.  Sponsors take a cut of sweat equity in the deals.  

    It is not my intent to discuss Brad's fees, but it is much less If you take the option that is without hand-holding and without harvesting money from the group.

    There are many other options out there.  There was a guy that did similar training for hotels and motels.  There is a fellow that promotes old folks facilities.  

    I do suggest that you only pay for training if there is a network behind it.  It is invaluable to have the knowledge base available in the network.

    Charles LeMaire

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  • Mike Krieg
    Investor / Syndicator · Austin, TX · Member since 2015 · 367 posts · 220 votes
    7y

    Multifamily is where I've chosen to target my efforts both due to my lack of desire to deal with landlording (I am currently 50% through converting my holdings to multifamily syndications) and also legal liability. My investing thesis for multifamily is here: https://www.biggerpockets.com/blogs/10553/79631-se...

    If syndications are your method of choice as they have been mine, there is a process you follow and a plethora of questions that will really help you choose the best 1)markets, 2)syndicator teams, and 3) deals. Happy to share my list of questions and process with you.  

    0Reply
  • Paul B.
    Rental Property Investor · Dallas, TX · Member since 2015 · 503 posts · 504 votes
    7y

    Invest passively in syndications...I do it with apartments, but it can also be done with retail, office, and warehouse properties. I think apartments are easier to understand, so it's a good way to start. There are many training and mentoring programs which can be worthwhile.

    Another option when you have a bunch of money is private lending. I don't know of a training program for that though, so you'd have to just network and learn it on your own. There are mentoring programs for learning notes, which is a form of private lending. Lending is also relatively passive, but you'll pay higher taxes on the income you make than you would on the money you make investing in properties, like apartments above. 

    You should probably skip single families since you already have enough money to start bigger. 

    1Reply
  • Jim S.
    Flipper/Rehabber · Cleveland, OH · Member since 2018 · 80 posts · 51 votes
    7y

    I'm in the exact same spot too.  I've been studying this stuff for a while now and am ready to go.  Like you, I have the capital I'm just looking for the right spot to start.

    0Reply
  • Alina Trigub
    Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes
    7y

    @Curtis Robbins @Amul Sutaria @Jim S.

    I'm assuming all of you want to be active investors to get there faster! 

    My response may surprise you. I believe anyone can make money if they are passionate about the topic - the chosen niche. In other words, if I were to use MFH, the asset class I start investing in first, you must have your mind set that investing in MFH is an absolute gold and it will make you millions. Once you do that, you have to come up with a game plan. It may or may not include mentorships or other things. Ultimately it is up to you how you get there and what tools/programs you decide to use to expedite the process. Bottom line, people have made money in every single RE niche. But you have to be thrilled and speak with excitement and truly believe in it to make it happen!

    If the plan for any of you to chose the passive route. My advise will differ. Feel free to PM for more details.

    Best of luck!

    2Reply
  • Jamal Davison
    New York City, NY · Member since 2015 · 33 posts · 6 votes
    7y

    Find your niche and mastered that first. I am currently looking at multifamily and some single family ( if the numbers work). It is much easier to focus on thing than the  several other avenues of making money  in rental estate. 

    It took me over 10 years to buy property. The reason why it took so long because.... I didn't know where to started and I was scared with no help. 

    I say find out which one make sense with your situation and take the dive because if you don't... you will be in the same spot asking the same questions  several months from now.

    1Reply
  • Ray Johnson
    Irvine, CA · Member since 2016 · 545 posts · 614 votes
    7y

    @Curtis Robbins You didn't mention a range of what you consider to be "large capital", depending on your interpretation of large capital the journey will be different. For me  "large capital" would be a minimum of $5 million or more in cash allowing you to have nationwide options versus $1 million in cash limiting you to certain areas of the US (Midwest and South) and certain classifications of Assets to pursue within those areas if you're targeting commercial Multi-family.

    It seems like you're set on Indiana based on your reference in your post. I would take the approach that @Mike Krieg uses since once you're into the commercial arena things are a lot different than when you had your SFR generating $600 a month in Cash Flow.

    0Reply
  • Theo Hicks
    Rental Property Investor · Tampa, FL · Member since 2015 · 1k+ posts · 969 votes
    7y

    I would start by passively investing, like in apartment syndications. Even better if you are an accredited investor. Then, with the remaining capital, I would start small with a duplex and fourplex. Once you've proven your ability to execute the business plan on a smaller scale, you can consider scaling up to larger community, and raise money as well.

    0Reply
  • Ellie Perlman
    Multifamily investor · Boston, MA · Member since 2017 · 281 posts · 521 votes
    7y

    @Curtis Robbins - you're asking a VERY important question... Even with capital, you should be careful with your first steps in real estate. My advice is to partner with someone with more experience. For instance, help a syndicator find a deal or raise money. Go with someone who's doing big deals and have a track record. You can also invest passively with them and learn bout real estate this way. happy to chat and share my experience and my story (how I started) with you! Feel free to reach out to me.

    2Reply
  • Ned J.Pro Member
    Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
    7y

    Member of the same club. Had 3 SFH and sold one......been doing really well with those here in CA.....got lots of capital but so far haven't found another deal I want to invest in. Considered OOS, but where? Looked in performing notes.......cash flow is good at first but dwindles year by year..... have looked at some syndication but still reluctant since its still a matter of who to trust...

    Got the $$....just need to decide where to invest it....so many options can be paralyzing......

    0Reply
  • Hank Keller
    Rental Property Investor · Mansfield, OH · Member since 2017 · 151 posts · 117 votes
    7y

    If youre either working full time or have limited RE experience, your in a great city for turnkey and there’s at least a couple companies there. Go talk with them; i can send you a contact for the company i use if you’d like.

    0Reply
  • Scott KronePro Member
    Investor · Northbrook, IL · Member since 2017 · 352 posts · 295 votes
    7y

    @Jim S. @Amul Sutaria  @Curtis Robbins

    I have fortunate enough to know a lot of people who are starting off in real estate.  It is exciting and overwhelming at the same time.  I know them through a large real estate investment group that focuses on education.  I am not their coach or work for the company.  That being said, the vast majority of people believe or feel they "have to" start with wholesaling or flipping.  My question to them is simple - Why?  The most common response is, "Well, I thought that is where everyone starts".

    My suggestion to them is this - what do you want to do?  The three of you appear to be blessed that you have the ability to start doing what you want to do.  So, what are you good at doing.  How can you take that skill and translate that to your real estate career.  Build off those skills.  Why go into something that you don't like because you felt you had to.  There are so many areas of real estate that most people don't even consider.  

    Just this week, I met with a "newbie" for breakfast.  He was from out of state, and was in my city for a convention.  He asked if we could meet about self storage (which is our specialty).  We began the breakfast with him telling me how he wanted to do wholesaling so he could get into low income housing.  Like you, I was totally confused by the direction of the conversation.  I asked him 2 questions, "Why" and "What did he do before real estate".  Turns out he was a financial risk adviser for a national brokerage and worked with high net worth families.  He went on to say how he really enjoyed that but was getting to old and expensive so he was forced into retirement.  He is apart of the same community I spoke of earlier.  I suggested the community could really use a person like him to assess the risk in deals and connect them with high end investors - as both are major concerns for both parties.  Newbies typically don't realize risk well enough, and investors need to know deals have been properly vetted.   It appears he is now moving his business in that direction.

    Hope the story and feed back helps.  Best of luck to each of you.

    3Reply
  • Anthony GaydenPro Member
    Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
    7y

    Jumping in with a lot of capital and limited knowledge of investing means that you need to find an experienced partner. Someone who knows the business well. 

    You can try jumping in by yourself too, but be very careful. I know some people with a lot of money who basically can pay cash for a deal and force it to cash flow, but that doesn't mean it was a good deal.

    Podcast Guest on Show #21
    1Reply
  • Ivan BarrattBusiness Member
    Investor · Indianapolis, IN · Member since 2015 · 764 posts · 953 votes
    7y

    @Curtis Robbins great question and great problem.  

    Starting broke is oftentimes a real estate entrepreneur's best gift. Starting small and failing small is an important part of the equation. It certainly aided me and I didn't mind paying lots (thousands of dollars in mistakes) of tuition before seeking to be a steward of others' capital.

    Also, be careful who you listen to at this stage in the cycle.  "First you get innovators, then you get imitators, then finally come the idiots," Warren Buffett. We are likely in the idiot stage. :)

    I have been in real estate my entire adult career and I'm somewhere north of 37,000 hours of "practice." I worked for a mentor for the first 8 years of my career (after studying real estate finance in college). After the crash I started my management company in 2010 with one duplex and a few management clients. By the end of the year I'll own 2500 units and manage about 3200 in total.  Bottom line; this game takes a lot of expertise to execute; especially in the later stages of the cycle where it's really tough to find a D-E-A-L.

    Happy to have you by the office sometime between the holidays to chat. We're located downtown.

    All the best either way man!

    0Reply
  • Shawn Ward
    Real Estate Investor & Consultant · Los Angeles, CA · Member since 2016 · 620 posts · 386 votes
    7y

    @Curtis Robbins since you have the money, partner with someone who has an abundance of experience in doing EXACTLY what you want to do. 

    Team up, and make money the smart way. 

    All the best!

    sjw

    1Reply
  • Scott Meyers
    Investor · Fishers, IN · Member since 2012 · 520 posts · 499 votes
    7y

    Hey Curtis!

    A little late to the party, but hopefully it's still going on...

    My vote is for what Scott Krone said - Self Storage!  Actually he just said that that was his specialty.  But I certainly agree with his advice, specifically "WHY?" are you doing what you're doing or choosing to go where you're choosing to go?

    If you read back through all of these posts, we're pretty much giving the same advice just worded differently. 

    Maximize your strengths & minimize your weaknesses.  And above all else - enjoy what you do.

    My take would be is that there's two types of people - those that have money & those that don't.  Those that do are looking for a place to park it.  And those that don't are going to need to bring deals to those that do.   

    So your first decision would be do you 1)  want to actively invest , meaning get out there & hustle - generate leads, pound the pavement, cold call, aka "marketing" and then bring those deals (because you've learned how to determine what are leads vs. what are deals regardless of asset class) or do you want to 2) be the one whose desk the deals come across and you make the decision is this where you should park your capital because it meets your criteria (a passive investor).

    Again, as Scott K asked, "why?". Whether you decide to pursue SFH, or multi-family, residential RE or commercial, Self Storage (still gets my vote!) or Private Lending (FYI @Paul B - please look up George Antone with "The Banker's Code" he has an entire training Program on Private Lending), you'll want to have picked one that you enjoy.

    Please note that there's a book out there by Cal Newport called, "So Good They Can't Ignore You: Why Skills Trump Passion in the Quest for Work you Love".  

    And it expands upon what was asked & implied earlier.  What are you good at?  Build upon these.  What are you not good at?  Try to minimize this exposure.  But also look at your past (aka what did you do before real estate?).  What is your previous work experience, knowledge base, personal & professional network, etc.?  

    And the best advice may be not necessarily for YOU to take inventory of yourself, but to ask 5 or so persons close to you.  What is my "genius" - what comes naturally to me that I'm really good at?  Because if you're operating in your genius and it comes easily & naturally, just imagine what happens when you apply yourself...

    When this aligns with what you're wanting to do and where you want to go, you're going to get some quick wins, everything is going to begin to align both short-term & long-term, and you're going to enjoy yourself.  You'll know you've found it when (and I'm paraphrasing because I can no longer find the source of this quote): You found your passion when you have endless energy & creativity.  If not, it's going to turn into a grind and you may question yourself as to why you ever chose THIS (whatever "this" happens to be).   

    It's not about maximizing your money but rather a balance between what is the most financially rewarding for you & your family AND what causes the least headache & heartache.  (As this is a real estate forum, all of these suggestions are real estate related, so you can't really go wrong in "this" niche asset class versus "that" niche asset class all things considered.)  I can assure you that operating in your wheelhouse, in your strengths, where you're good at will cause less headache & heartache and THAT is sustainable.  After that the money will follow.  Promise.

    I hope this helps.  Regardless, best of luck to you! 

    1Reply
  • Joe Tomko
    Specialist · Easton, PA · Member since 2018 · 137 posts · 48 votes
    7y

    @Curtis Robbins @Amul S. @Jim S. @Ned J.

    When people think real estate investing, they seem to automatically just think buying rental property.  If you have cash and are not sure where to start, I suggest looking at becoming a joint venture partner to fund a deal for a delinquent note investor.  You can find a lot of knowledge online including videos.  You don't need a ton of knowledge to determine whether a deal is a good deal or not.  The returns are better than anything else I've seen (I've done a lot of different types of deals).  I'm investing actively and passively in notes.

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