Everyone is asking how to get into RE. I want to know - how to get out? It was fun while it lasted, but I'm kinda done...Any ideas?
I've had oil on my mind lately, and Serge is no freaking help. Should I maybe buy some calls and hedge long or with gold.
Or, here is another idea - I could always just focus on my guru career. I'm so good-looking and well spoken. Thoughts?
@Ben Leybovich What about an Alpaca farmer?...
Bored lately? See what happens when there are no worthy deals on the market ... your mind strays. :-|
If you are really bored, you could trade futures on the ruble hand-in-hand with your oil play. ;-)
That said ... roughing out an exit strategy ... or strategies ... is a good exercise and something you should always have in your back pocket. Who knows, perhaps Brandon needs a Symphony for Waldo ....
Seriously, @Roy N. - you've hit it on the head. I've been looking for a deal for 9 months and I can't seem to find a thing that makes sense. I don't need more small stuff, and there flat out is no way to compete in the big stuff right now. I am bored!
But not bored enough to touch the ruble - that right there is...wow And it's all our doing! I figure at least oil is guaranteed necessity at some level, you know?
I feel your pain @Ben Leybovich ...been sitting on a (small) pile of money for a month with no perspective deals and it is killing me...
It's not that there are no deals out there. There are deals, but the rick/reward effort/reward profiles are not what I want them to be considering this:
Getting out to what degree?
First, it might be time for you to do some estate planning. If you have your properties in an LLC you might look into setting the company into Trust, the properties would not need to be transferred and there is no recapture of depreciation. Get a PM and go fish.
I'm under the impression you have partnership interests in RE, are you selling out, that can be a ball of worms. I can tell you that getting into creative deals can be much easier than getting out!
I know you have/had syndications, not sure what that status is, that can be a much bigger issue. Liquidation can have issues, I won't touch on the liabilities or contingent liabilities of funds management, but it can be a difficult matter to divorce yourself from as you probably won't find a qualified replacement that would take on just any structure, not to mention limited partners willing to stay. No idea where you are.
Don't know if you hold notes, Trustees will generally accept them, there can be accounting issues as the Trust accounting requires valuations annually, some may want a "market value" rather than the UPB, that means appraising and I was the only guy who appraised notes in the mid-west and I'm retired, so they may sell and roll over accounts to easily managed assets.....securities. RE has the same accounting issues. That just means higher management costs.
Ben, just saying how do I get out can't be answered properly considering my perceived picture of your current position. You can PM me for my details or give me a call, but I see an attorney, good tax accountant and Trustee in your future. It's likely going to cost you to get out. :)
Edited, lots of traffic as I was going to be the first post, I'm too slow.
Rubles, No! Oil futures, No! Gold, not really, lend to the gold buyer/dealers!
If you do something well, don't stop when you get bored!
I know bored very well, look at me now, LOL ! :)
@Bill Gulley - having read your post, I don't think I want to get out any more. Too much hassle - easier just to stay in :)
Getting out means different things to different people I guess. Getting out for me would be to stop pursuing new real estate and just sitting on a beach drinking my Mai Tai and letting the cash flow from the real estate I already have fund it. My team can handle the day to day. And who knows, if the right buyer comes along, we'll see :) I imagine if I got out completely (no real estate owned anymore) it would probably be someone buying my entire operation.
Well, it's probably time to start thinking about it!
Issue is that most are always trying to get started and build, they hit maturity and ride and keeping using the strategies used in start up. Your goals should always be reviewed with the end game in mind.
The ultimate goal is retirement!! How you want to retire is another matter, but we either retire or die, being mortal has a down side in business. A Trust can solve mortality issues.
Don't count on family picking up the torch, they may not be so inclined or able and frankly, when there is money in the pot, they know they will be benefiting without the brain damage, so why suffer when they have their own dreams?
Get a mentee! Find someone capable with a brain, education and some experience and put a carrot out there, they can buy you out over time and you can ease out. :)
@Bill Gulley - I suppose my post was more of a "what now". I am fully aware that we can't fight the cycles in the marketplace, especially when the overlap the cycles in our careers. But, there's just nothing out there to be had of what I'd want to have...makes sense?
My wife can perpetuate the business. Patrisha could't do the high-flying creative finance and all that, but she should be OK if I get taken out, which was always my goal. Now - what now. I want to do more in RE, but I want what I want, and the market ain't cooperating, so I find myself sitting on my hands re-investing CF in amortizing notes. I am bored out of my mind...
Somebody - throw me a bone. 100+ units is all it would take to get my brain to wake up :)
Go South young man!
Or, are you really fishing for an out of area deal to partner in to stimulate the mind and the bank account? LOL
I am with you. I have sold the majority of my multi-family recently and have been working on some value add retail. But most importantly, sitting on some cash.
This market has to change. The crazy buyer crap must stop at some point.
I don't see how money can be made in my market when the rent increases are already priced in for the next couple of years. So, I will just sit by and wait until the modern buyer gets bored.
In the meantime, my wife and I may start another business for fun.
@Steve Olafson - money cannot be made. At best, people are hedging with yield, but at these prices they will loose. Most don't even care about that, though...
@Bill Gulley I am bored. Writing for BP blog is about the most fun I have. I take care of my kids all day every day, and I am much better at doing deals. So - I am sitting idle and it's getting to me - a deal would be nice, but I can't compete with the marketplace whose agenda is so different from mine...
My wife was born in Lima. I know why you are bored. There is not much to do around there. We went back to visit and the "highlight" was Squirty Worm. (What a creepy thing.)
On a serious note I appreciate reading your blog and hope something pics up for you soon!
Seriously. They should use him for a horror movie.
@Ryan Dossey - ahahaha
I've never actually gone there - seems pretty lame lololol
I actually like it out in the country. I was born in St. Peters-burg, Russia - population at that time 7 million. I then lived in Roma Italy, and Vienna. Then Columbus and Cinci OH. Kinda over the traffic and people. Yep - I like BP, not to be confused with liking people lol
I am like Sherlock Holmes - need a deal or a shot in the arm. Either would do, but I prefer a deal :)
Well Ben, I would happily sign you up as an "Avon Dude." Free training will provide you with enough knowledge to know your "best colors"[ I'm thinking pinks] and teach you everything you want to know about lipstick application to make your lips always appear plump and kissable, all while earning the "big bucks" and passive income [ I have brought in as much as $20 a month...but, it takes time and hard work to get that far]
I hear you.....I've been looking for a bigger multifamily project for a while but the deals just aren't there. I can still find single family deals but they aren't as exciting to me anymore.
For me I've always kept myself busy with more than one business. When my other business was slow I focused more on real estate and when real estate slowed down I started devoting more time to that business to generate more cash for future deals.
@Ben Leybovich What happen to that "road blocks are just stepping stones" attitude?
You mean every multi in your areas is running at top performance, no room for forced appreciation? Can't change the use of some ho-hum to a rehabbed senior living complex or lease up to a non-profit for their clients?
You might sign up for my mentoring course, "Second Wind For Burned Out Guru Landlords" and "How To Relearn Real Estate"....... LOL
@Ben Leybovich - maybe a Squirty Worm franchise? I am sure that would go over well in DFW.
I personally think oil is a crazy win/win buy right now and probably will be for the 1st quarter of 2015 although who knows if it will stay this low or go lower. we all use oil/fuel so if its cheap then we are benefiting by lower cost for our consumption, if the costs go up then we win by being long in oil, win/win! I bought in at $60 via oil ETFs (not a fan of futures personally), hopefully it stays low or goes lower in the next 2 months when I have more liquid funds to continue phasing in long positions.
This reminds me of 2009 when the DOW was around 7,000 and I thought to myself will I ever see it this cheap again, I was kicking myself for standing on the sidelines in retrospect from something so obvious. I think its similar with oil, do you recall the last time you saw oil trading in the $50's? there will be some crap that happens in the middle east unfortunately and then we will be back to paying out the butt at the gas pump again....
Gas is under $2/gallon in some places, amazing.
@Ben Leybovich So I watched your video and I think that's something great to shoot for, but that seems to be a strategy that isn't going to work in the long run. I feel like you're setting yourself up for failure by always looking for a home run.
Perhaps you're exiting the entrepreneurial phase of your real estate career and entering the phase of just running a successful business. I haven't been in real estate long, but I've been a part of multiple startups and it happens in all industries to the entrepreneurs. The day to day grind is less fun than the hustle of building the thing up. It's less sexy, but if we're going to carry the baseball analogy further, sometimes the guy who always gets on base can be more valuable to the team than the guy who hits the long-ball.
Maybe it's time to hire a manager for your mature RE business and let your entrepreneurial spirit take you in another direction.
@Ben Leybovich My advise is more of a "pause" strategy and not an exit one but who knows, It might cure your "itch to exit" :)
Not knowing your exact situation, but I still totally understand your views on not wanting to take on any additional hassle and risk unless is worth your time and hassle. If you been in this business for a while (and no longer starving) It is understandable and make perfect sense that you get selective in your choices, same here.
Here is something I have been doing, and you and others can easily do while "sitting in idol" between purchases:
It does sound sort of obvious but It was point it out to me years ago my mentor
(he started 25 years ago with a townhouse and now in 2014 has an 8 figure net worth)
when is nothing (sensible) to buy, one of best thing to do for our investment portfolio is to accelerate paying down the existing dept our properties carry as a normal course of business.
This can financially put us in a very strong position for when the "big opportunity" comes around, which will sooner or later if we keep our eyes open.
The other thing one can do to stay a wake between deals AND to increase our deal opportunities is to mentor others. Provided that the candidates for mentoring are carefully selected, this can be a lots of fun and us mentors can most of the time benefit from the additional networking opportunities.
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