Breaking Into Commercial Investing (Multi-Family)

Breaking Into Commercial Investing (Multi-Family)

Investor · Louisville, CO · Member since 2014 · 26 posts · 6 votes

Hey BP -

I'm looking for advice/recommendations for a plan to break into commercial real estate investing. I am currently 25 and my end goal is to own/manage a 10-20 man multifamily acquisitions, management, and development shop in the Denver / Boulder Colorado metro area. My big question is, how do I get started and what is the best path?

I currently work in management consulting (Strategy and Operations) for a big 4 firm and travel Mon-Thurs to my clients. If I stay in my current role, next year I will be expected to get my MBA (two years) and come back to the firm for another two years. I am at a crossroads and have three fundamental options:

  1. 1) Should I pursue an analyst / associate position at an already established commercial investment company to learn the ropes and gain experience? These positions seem to pay much less than consulting,  but could be well worth the learning experience for a few years.
  2. 2) Would a higher level of education (MBA, Masters in Real Estate, or Masters in Real Estate Development) help me achieve my end goal? I am in a strong position to go back to school, but not sure if the investment of time/money will help me in my entrepreneurial endeavors.
  3. 3) Should I drop everything, dive in head first, and attempt to start syndicating deals? I have a decent cushion of savings, that could buy me time to get the ball rolling. Immediate next steps would be locating potential deals, putting a full analysis and business plan together, searching for and pitching JV/capital partners, closing deals and building relationships.

I would really appreciate any and all feedback. Thank you in advance for your help!

My very best,

Jeff

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Rental Property Investor · Las Palmas de Gran Canaria · Member since 2014 · 220 posts · 256 votes
11y

There is a maxim in commercial that loans are based upon the property and not the individual. While I'm sure there is plenty of truth to that, my experience is that my personal income, experience and net worth have an ENORMOUS impact on my ability to get loans on properties. I just got off the phone with a commercial banker in the midwest who wanted to see a personal net worth of over a million for the loan I wanted and 9 month of capital in the bank. They also wanted proof of experience. Thankfully I have these, but I didn't start with them. I grew into multifamily of this size one deal at a time.

I know there are people who can hustle their way past any obstacle, but if I was to give advice when you are at a crossroad (since you asked), I would continue growing your career and your cashflow. Lock down some deals and qualify for the loans using your cashflow from the job (unless you have a substantial net worth). Get the experience to back the vision.

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  • Dan MackinBusiness Member
    Real Estate Agent · Erie, CO · Member since 2014 · 1k+ posts · 512 votes
    11y

    I won't speak from qualification myself here, but one of my favorite quotes I ever heard from a fairly successful entrepreneur I met was "I don't have an MBA.  There is no point in me having one.  Those are the people I hire to take care of the boring things."  

    Since you're down in Boulder it may be worth seeing if you can get in with the Tebo group.  They own/manage half of Boulder County and there's got to be a lot of opportunity with them if you can get in the door.

  • James ReyPro Member
    Ellicott City, MD · Member since 2014 · 60 posts · 23 votes
    11y

    I think there may be some value in an MBA but I think experience and partnering with a successful investor that is where you want to be might be an alternative.

  • Rental Property Investor · Las Palmas de Gran Canaria · Member since 2014 · 220 posts · 256 votes
    11y

    There is a maxim in commercial that loans are based upon the property and not the individual. While I'm sure there is plenty of truth to that, my experience is that my personal income, experience and net worth have an ENORMOUS impact on my ability to get loans on properties. I just got off the phone with a commercial banker in the midwest who wanted to see a personal net worth of over a million for the loan I wanted and 9 month of capital in the bank. They also wanted proof of experience. Thankfully I have these, but I didn't start with them. I grew into multifamily of this size one deal at a time.

    I know there are people who can hustle their way past any obstacle, but if I was to give advice when you are at a crossroad (since you asked), I would continue growing your career and your cashflow. Lock down some deals and qualify for the loans using your cashflow from the job (unless you have a substantial net worth). Get the experience to back the vision.

  • Realtor · Denver, CO · Member since 2013 · 2k+ posts · 1k+ votes
    11y

    Look at DU's program for real estate and construction management. Several friends of mine swear by it. I have looked at the program for years, but haven't pulled the trigger. Now that I qualify for their executive program, I will probably go that route.

    If they pay for it, I would definitely do it because you will learn in the field & at school on their dime. Once you do your time, then split off or stay. At least you'll have some options.

  • Huntington Beach, CA · Member since 2012 · 73 posts · 57 votes
    7y
    Originally posted by @Matt M.:

    Look at DU's program for real estate and construction management.

    What does "DU" stand for and why do some posters think that everyone knows the meaning of the acronyms they use?  Annoying.

  • Investor · Front Royal, VA · Member since 2013 · 586 posts · 418 votes
    7y

    EDIT: just realized this post was 4 years old. How did it turn out, Jeff?

    DU = University of Denver. 

    @Shane Pearlman I've not heard many people on BP say this, but totally agree. Just because you have a phenomenal commercial deal, operators with poor money management experience can run it into the ground. Banks understand this, which is why they want to look at a lot of personal stuff. 

    @Jeff L. I can share my experience moving into the syndication world. I would strongly suggest keeping a job you have. Plenty of people I know are syndicating with 9 to 5 jobs. 

  • Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
    7y

    If you enjoy what you are doing now, then keep on that path, if not then find something else to do. Either way, get educated in RE so that you can buy/partner on properties on the side, until it can become full time (if that is what you want). Here is an article I wrote on how to get started in multi-family that applies to other niches: https://www.biggerpockets.com/blogs/10145/70092-ge...

  • Rental Property Investor · Atlanta, GA · Member since 2017 · 221 posts · 188 votes
    7y

    @Shane Pearlman This is a blueprint! Well said

  • Realtor · Denver, CO · Member since 2013 · 2k+ posts · 1k+ votes
    7y
    Originally posted by @Catherine Coy:
    Originally posted by @Matt M.:

    Look at DU's program for real estate and construction management.

    What does "DU" stand for and why do some posters think that everyone knows the meaning of the acronyms they use?  Annoying.

     LMFAO. The OP is in Denver and asking about school. Complaining on a 4 year old thread.... now that's not annoying but it is funny...

  • Real Estate Lender and Broker · Dallas, TX · Member since 2013 · 966 posts · 500 votes
    7y

    I have a masters degree from DU (University of Denver) in real estate and construction management.  DU has the oldest and best college level real estate program in the country.  I would highly recommend this program, although Dr. Mike Crean has retired and he was a legendary professor at the school.

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