Hi Clayton, good luck with your upcoming season.
That is a broad question that you ask and the answer really depends upon your investment strategy. If you are thinking of an active strategy like fix and flipping or wholesaling, you certainly are not going to have time for that. A buy and hold strategy with a good property management company is doable but it depends upon the resources that you have available to get started.
Once again, good luck and I commend your foresight to study up in the off season.
Hi Chris, thank you very much for taking the time.
Yes I’m looking into buying and holding only right now as I’m in for the long haul. That’s good news I was hoping that would be possible to do, just now time to find a deal and make it happen!
Clayton, I highly recommend that you actually search for the right location and property manager first. The property management company is going to be the key component to your success.
Your next decision is do you want to invest for cash flow, appreciation, or try for a combination. I have had good results investing in lower end houses with good cash flow but very little appreciation.
@Clayton Cook you are living many a boyhood dream (mine included) playing ball as an adult at your level. Investing for the long haul will even make it sweeter for you and yours.
Congrats on your athletic successes! BP is here for you.
@chris Thank you for the advice! I will definitely pay close attention in finding a PM. Also I would like to have alittle of both but definitely more emphasis on the appreciation side of things that obviously that could change with more time and experience in this business.
@steve Thank you very much! I’m very blessed to be able to live my dream now I’m just trying to set myself up to continue to live a dream after baseball!
Hope you upcoming season goes well, if you want to be hands on as in looking to buy the property, manage the rehab or like me micro manage all aspects of it, you will need a lot of your time.
Or you can hire an agent to buy it, general contractor to do the rehab, a PM to rent it out.
I my self do buy and hold, like a good stock that pays a dividend and goes up in value.
@Clayton Cook You are not the only Professional baseball player on biggerpockets.
@Lane A. is also a baseball player. There is at least one more but that person does not want everyone knowing who they are.
I would suggest focusing on spring training. After that you might have time for some real estate research.
The first question should be... "What area you want to invest in?"
@Clayton Cook Since you are a baseball player , tenants will think you are rich ( all baseball players ARE rich arent they ? ) I would form a LLc and keep a low profile . tenants will be looking to sue if they think there are deep pockets
Ok this is going to come from left field. No pun intended.
but I always wondered why pro athletes did not partner more. Or start their own syndicates or partnerships.. I know some have tried it with different results.. Montana is a successful developer and Steve Young as well... and a few other 49ers in the bay area.
but I would think you could get some of your mates to all go together and if your the one leading the charge you become the sponsor and not only invest but make the management fee.. we see so many sports stars go kind of busto after their big earning years this would at least get them into some long term deals.
since you took the time to get your license maybe that's the part you focus on .. put deals together take equity position for being the leader of the pack so to speak.. that's what I would focus on.. buying and holding a few rentals unless you can really really scale is not a big money play. Its great for mom and pop investors but its not going to replace a professional athlete salary by any means.
However putting a bunch of your peers together and buying 5 to 50 million dollar deals and you take a piece of each.. now that I like !!! and bet you would too.. and Dallas is ground zero for learning the syndicate game.. there are a bunch of folks that teach it based there and are on BP..
Ok that's my left field reply probably not anything you want to hear but I just think if someone rallied all the sports star's they could weild one hell of a hedge fund.
Friend of mine is an airline pilot and there are a few money guys that specialize in doing ivestments for only pilots and I bet there are others that do that only for doctors etc.
And maybe I don't know enough about it.. maybe the players relying on their agents for investment advice and maybe my idea is wishful thinking.
@Clayton Cook Good luck on your real estate journey, and have a healthy and successful season.
I'm with @Jay Hinrichs on getting together a syndication. In the meantime, I would highly suggest partnering with another syndicator or investor on the equity side so you can at least start your journey, being somewhat involved, learning first hand the ropes, while not having all of the responsibility on you. This way you can focus more on spring training, but you'll be ready once off-season comes, to find some new deals. You will also have some experience under your belt, which lenders like to see.
We have had some professional baseball players on here before years back.
Unless a superstar income if I remember right is about maybe 200k to 300k or so a year. The main concern last time I talked to a pro was that income being demoted or if you get hurt can dry up very fast. You can get hurt at anytime and then career is over is what some in the business expressed to me.
If your goal is to buy and hold then locally where you are there some of the time might make the most sense. Owning residential can be a real pain. You do not want to get PM calls for tenants,toilets, and termites while you are trying to improve your stats and income with your career.
If you are accredited worth 1 million or more etc. then some sponsored deals where you invest passively can come into play where you are not active in the investment.
@Clayton Cook , I own both rental properties on my own, and passive real estate investments through syndication/crowdfunding. In my opinion, this is not something you should take on when you are so busy with spring training. Even with your license, there still is quite a bit of learning curve, and it requires time and effort to review each of the properties properly. If you shortchange it, you could easily end up making a mistake that you will regret once things slow down and you realize what happened.
If you you absolutely have to do something with the money now, I would recommend investing passively by out crowdfunding/syndication. That way you can hire and experienced manager who can do all the due diligence and work that you don't have time for.
Either way, best of luck with spring training, as well as the season.
@Clayton Cook congrats on looking into securing your future. Hopefully your baseball career will last a long time but having an investment strategy now is a great idea. I think you will find that there is a big difference between wanting cash flow and long term appreciation. Most markets that have good cash flow are low priced, and have not shown historically good appreciation. The areas with good appreciation have higher price points and lower cash flow. Before investing anywhere I suggest that you do some research on the difference between the two strategies, what owning property in the selected areas entails, and what makes you comfortable. If you are going to invest locally then you just need to study micro markets. If you want to invest out of state then using the baseball season to look at neighborhoods meet with other investors in the area can be a great way to use any spare time you may have. If you have any questions about investing in Northern Ca please feel free to ask questions. this is a long term appreciation area and only cash flows at at least 40% down. But if you are cash neutral or better historically the appreciation has been excellent.
Originally posted by @Clayton Cook :
Hey everybody, my name is Clayton Cook and I play baseball in the Texas Rangers organization. This past offseason (October-early February) I decided i wanted to get into real estate, seeing as I had no prior experience I decided to get my real estate license to get into the business and learn as much as I could. So, while I was getting my license (got it in January) I have been crushing BP podcasts as well as talking to as many people as I could in the business. Now that spring training is in full swing I was wondering if I should hold off on purchasing until after the season when i can dedicate more time and energy towards that? As well as be there to take care of things in person as i obviously travel a lot for my job. If anybody has other suggestions or words of wisdom I’m all ears and would greatly appreciate it!
Hi Clayton, fellow Dallasite here, best of luck this season (except when you are playing my Cardinals).
If I were you, I would find good people that you can trust, maybe reach out to other prominent developers in the area and look into participating in some of their syndications.
If you are thinking about doing deals yourself, spend some time to find a team. An investor friendly Real Estate Agent, a solid GC, a great property manager, a really good real estate Attorney etc. (You may already have access to some of those folks.)
I have found a few, and had really good luck with using those I find to recommend others to me.
If you model in a property manager when you buy something, a then there should be minimal need for you to be involved hands on when you are out of town as the property manager should be able to take care of all emergencies.
One question, probably should have started with this in the first place. Have you thought about what your strategy is? Is it buy and hold? Single Family? Multi Family? Commercial? Are you investing for capital appreciation? current cash flow? or maybe cash flow in the future? Do you want to participate in syndications? Do you want to invest in state? or in Dallas? or the metro area? etc. There are a billion niches,
Personally, if I was a professional athlete with a high current income, but having all likelihood a short career, I would focus on acquiring properties that had the potential for capital appreciation with the intent of having paid off of close to being paid off 5-10 years out. That way you would have a nice cash flow after your sport was over with.
Best of luck to you, let me know if there is anything I can do to help!
@Clayton Cook What a great position you've put yourself in. You're the "Real Estate Guy" on the team! You've got a ready made database of high income earners! You can learn the Real Estate game and build your business around all the contacts you make on the way up. You have the potential to make some nice commission checks by just helping your friends buy and sell their homes. Just don't learn from Lenny Dykstra ,lol.
In terms of investing you can start where everyone else is trying to end up. That's buy and hold. You need to find a property type that fits your risk tolerance and hit it hard. Just buy something and let the tenants pay it off. You can easily do that from the road with a good property manager.
Syndication is a great idea like the others have mentioned if you wanted to go big. Even a small joint venture with teammates could be very lucrative as the cash buyers usually get the best deals. Any road you choose you have to get good people around you.
It depends on what your goals are in this business. Are you looking to build a portfolio? build an REI business? Flip houses?
Regardless, you have to learn your market and learn to market.
Could you share what equity shares are reasonable or 'market rate'?
I've been exploring the idea of helping to procure deals and manage properties for people who are independently wealthy, looking for retirement income, but who don't want the headache of managing or finding properties. They just want the checks.
I would be interested in helping them find deals that fit their criteria, rehab, and manage their properties with a small piece of the equity on the property as well. My initial thinking was BRRRRing a house (investor puts up 100% of the capital), cashing out their principle via a refinance, and then splitting the net rents + house at something like 70/30. Is there a 'standard' for deal structures like this as far as the ratio?
@Clayton Cook @Jay Hinrichs always has good counsel. I'd say keep your powder dry while you get educated, focus on your first income stream (baseball) and find partners you can invest with passively. Also, maybe pick up Daymond John's book "The Power of Broke." Starting off with a lot of $$ in real estate can be a quick way to lose a lot of money!
If you want to truly massive success in the "business" of real estate it's a lot like baseball. It takes years of 24/7/365 PRACTICE! The other route is maximizing your income from other sources (like your high paying day job) and funneling that income into passive, professionally managedd investments (notes, syndication, etc). But wait... don't do that just yet.
Go get educated first and don't be in a hurry! A fool and his money are soon parted.
All the best DAWG!
@Clayton Cook , I agree with a lot of the posts. Focus on learning right now and building up your wealth. I would also focus on building relationships in a business sense. Right now the market is high, so taking time to learn now is great.
I also agree with partnering. You could partner with real estate investors with experience to help gain experience or partner with other players to help purchase larger buildings. Larger buildings may sound like more work, but when they are large enough to support employees and property managers, they become easier. For instance, a 10 unit apartment may take more time than a 100 unit apartment.
@Clayton Cook My unsolicited advice: Focus on baseball.
1.) Let's say you do super-duper-uber awesome in buy-and-hold real estate. You invest $100K and instead of 10% cash-on-cash you get 20% cash-on-cash! Well, that's $10K per year but it's probably going to take a lot of your time and be a distraction.
2.) If you can apply that same extra "attention" to your baseball career and get super-duper-uber awesome (can you tell I have a 4 year old?) you will go from what, $300K per year to $3M? I don't know the averages but the good vs. great curve has to be incredibly steep.
So your ROI on doing "disproportionately better than a peer" is so much higher in baseball, as is the career window in which to do that. But that's my theory anyway. I think if I were in your shoes (and I have no idea how much you have to invest) I'd be looking at a small B- to B+ apartment building. Use a PM as well but with a high(er) quality asset you won't be getting those PM calls/emails nearly as much as if you seek out the nice spreadsheet proformas of C- assets. It gets you "in the game" so to speak and also does set up to lead a syndication for the second deal.
@Clayton Cook While I'm not an athlete, I can relate to getting my license in hopes to find my own properties, but then life getting in the way. As nice as it would be to get that rebate on each purchase/sale, I started outsourcing my "deal finding" to an agent again. I just didn't have the time to justify paying for MLS and driving around at properties, but I still wanted to be in the game. If you can get an agent who understands your profession, then they'll probably be willing to go to properties for you, take videos, and then you can watch them on your phone (between innings?). You also wouldn't have to tie yourself down on travel days with paperwork. Obviously it's not ideal to "waste" your license after studying for the exam, but it'll help keep you in the game while you focus on your career.
Another consideration in this is that as an agent yourself, you could refer yourself as a client to other agents. This would likely allow you to get a small referral fee while still focusing primarily on baseball. My feeling on this though is it should depend on how hot the market you're looking for is. I'd wave the referral fee in a hot market because you don't want to disincentivize agents from sending the best listings to full commission buyers before you. In a slower market without the competition, then you could easily still make it worth their time to give you a referral fee. That's strictly my opinion though.
Ditto on property managers. Most of the ones I've looked at will give you a small referral fee as an agent, even to refer yourself as a client.
Great start Clayton...I'd probably wait until end of the season. I know you guys are busy and out of town a lot during the season. My thought based on the players I've been around is while you have the headphones on...be listening to something worthwhile like the BP podcasts and less music. When you are in the room on the road, be studying real estate and not playing games. That's what the successful former athletes were doing, knowing pro was probably not going to last forever. Study study study and be ready to hit the ground running at the very last day of the season. Have everything lined up.
I like what someone else mentioned here....baseball and other sports can have a tight family. You want to be known as the real estate guy. You want every referral from every player and coach you can get today. Build your database now. You can make some easy money doing this today. When someone gets called up to the majors, make sure you are there to help them find housing with a referral agent.
At our brokerage we just rolled out a nationwide referral program that can help you with this....but of course you can do it the old fashioned way as well.
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