Building a real estate business while working full time.

24 Replies

I am new to the game and trying to figure out how to effectively build a multifamily real estate syndication business while working full time.

With having a full time job (50-60 hrs/wk) and a family, I'd love to hear some tactics that others use to build their business. In particular, I am struggling with how to build a business in the evenings.

I have no problem putting in the hours, but during the day I can only use about 45m of time on my lunch, if I get a lunch, otherwise it's after 8pm usually before I can work on real estate stuff.

How can someone effectively work with lenders, brokers, and other investors when limited to evenings?

@Mike Rutallie

1) You have to really think hard whether being active is feasible for you. Here's a post that should guide you in the right direction. 

https://www.biggerpockets.com/member-blogs/10850/84064-what-type-of-investor-to-be-when-i-grow-up-active-or-passiv

2) If the answer is still "I want and have the time to be Active", then partner up with someone who a) has complementary skills to yours and b) is available during the day. While (b) is not a hard requirement, it will come in handy when you need to talk to brokers, insurance agents, attorneys and etc. Alternatively, break down all the skills needed for syndications and see where you are a best fit. Then find an existing team in need of such skills set and offer to partner up. 

@Alina Trigub  

Thank you for the information. I read your article and appreciate the advice. 

My end goal, like just about everyone, is to be financially independent and quit my 9-5. With that being said, I don't think that passively investing will get me there any time soon. To do this, I would rather not be the actual landlord or property manager, but the syndicator itself. At least that is what makes sense to me now. 

Since I am a numbers guy and have found that deal analysis seems to come pretty naturally, based on your comments, it sounds like I should find someone who is already syndicating and help them with their lead inflow. That way I could get experience while working within my time allotments. 

I appreciate your help. If you have any other advice, I'd love to hear.

I feel ya. I had to do that while I worked for banks. I had to not only avoid doing real estate business while I was giving the bank 100%, but I had to avoid conflicts of interest. It's really hard and it was a strain on my marriage. Perhaps your spouse can get into it with you and that way you both are doing something together. I did that and, of course, that was a strain too. It can be done. In this electronic age, most lenders and title companies work via email anyway. Most states also allow for electronic signatures on real estate contracts and many closing agents will come to you on your lunch period for mobile closings. As long as your spouse is on board, you can do it, but it's not easy. 

You will have a difficult time raising capital for your own deal with a full time job. Any investor will want your full attention and time spent managing the deal. You probably would not invest with someone who had a full-time job. You want a full time operator.

 that being said you could partner with a full-time operator and focus on raising capital for deals or some other function you can do  on the side without affecting your current job. 

You could also look at starting a business that would not affect your Current job but would replace it at some point.

Mike,
Glad you found my advise helpful. I think you're in a perfect position to become efficient with underwriting deals. For this type of role you don't have to be available (for the most part) during the day. So your next step should be to learn the underwriting skill inside and out. Pick up a model that you personally believe in or better yet create your own (but it can certainly be achieved down the road. I think you will not have a problem finding potential partners down the road. 
Reach out if you need more guidance. 

Originally posted by @Mike Rutallie :

@Alina Trigub 

Thank you for the information. I read your article and appreciate the advice. 

My end goal, like just about everyone, is to be financially independent and quit my 9-5. With that being said, I don't think that passively investing will get me there any time soon. To do this, I would rather not be the actual landlord or property manager, but the syndicator itself. At least that is what makes sense to me now. 

Since I am a numbers guy and have found that deal analysis seems to come pretty naturally, based on your comments, it sounds like I should find someone who is already syndicating and help them with their lead inflow. That way I could get experience while working within my time allotments. 

I appreciate your help. If you have any other advice, I'd love to hear.

 

@Doug Smith

Yea, I know what you mean about my wife being on board. I imagine that this business or any new business wouldn't work well without spousal support. I appreciate the comments on electronic capabilities. I didn't realize that they work so much over email. I assumed that it was still more of an in-person and phone conversation business.

@Greg Dickerson

Yea, I would be reluctant to invest with someone who is doing it part-time as you said. I've been thinking partnering for a least a couple/few deals is a definite requirement.

My goal is to get to the point where I can di it full time and quit my day job. I am planning on starting an LLC to do all these ventures, and grow that into a full-fledged business.

In terms of capital raising vs operating, what sort of equity split could be expected? Being new to the game, I figure it will be almost nothing for me because I get education out of it. However, looking to the future, I'm curious what I could expect when structuring or being proposed a deal.

How much time goes in to being a full-time operator if you have a solid property manager in place? This is something I haven't been able to find the answer.

I really appreciate your thoughts Greg.

@Alina Trigub

Thank you for the encouragement. I've been spending most of my efforts around general education of syndication and practicing deal analysis with the limited knowledge I have.

Do you have any suggestions around a great resource to really dig into underwriting? There is so much out there, I hate to spend my time on something that isn't the most impactful use of my time. I've been doing the basics around deal analysis, such as forecasting out rent rolls, expenses, value add effects, calculating IRR and CoC, but I feel like there is more that I am missing.

Are there any models in particular that you might recommend? I was considering buying Michael Blank's Syndication Deal Analyzer (SDA), but if there is something better, I'd love to hear.

Also, do you, or anyone else reading this, know of a place that has deals to practice underwriting? I know the answer is probably "just go do it" but the problem is, I don't know if my underwriting is effective. If there is a method to "check my work" I'd love to know about it.

Thanks again.

Think of the end goal. Does that lead you to being a full time real estate investor or does it lead to freeing your time to do what you love? Either way, investing passively could help you get to either scenario. Once you generate enough income through passive investments, you can then pivot from your full time job, if that was your intentions from the beginning. 

There is nothing wrong with starting from passive investing and working toward active. If that is the end goal. 

Mike,
Totally fair: Adventures in CRE site provides pretty good content and they even have some free tools. In terms of whose tools to buy, I can offer my feedback offline on that. 

Originally posted by @Mike Rutallie :

@Alina Trigub

Thank you for the encouragement. I've been spending most of my efforts around general education of syndication and practicing deal analysis with the limited knowledge I have.

Do you have any suggestions around a great resource to really dig into underwriting? There is so much out there, I hate to spend my time on something that isn't the most impactful use of my time. I've been doing the basics around deal analysis, such as forecasting out rent rolls, expenses, value add effects, calculating IRR and CoC, but I feel like there is more that I am missing.

Are there any models in particular that you might recommend? I was considering buying Michael Blank's Syndication Deal Analyzer (SDA), but if there is something better, I'd love to hear.

Also, do you, or anyone else reading this, know of a place that has deals to practice underwriting? I know the answer is probably "just go do it" but the problem is, I don't know if my underwriting is effective. If there is a method to "check my work" I'd love to know about it.

Thanks again.

 

@Mike Rutallie I will start with WHY. Why do you want to be in the REI game?

Is it really:

1. To be an active syndicator and doing your own deals?

2. To figure out a way out of your 9 - 5 grind?

There was an interesting study which concluded that people who kept their full-time gig while building your side hustle had a 35% more chance of success. Success meaning getting out of the 9 - 5 grind

The reality with the syndication model is that it is somewhat complicated by nature (from A - Z), and you need to be hands-on unless you have great partners to help you along the way. 

Now, you may want to start by partnering with a syndicator while you keep your day job and learn the business (learn and earn), as there will be part of the business you don't want to be involved with or like to do, so you can start to think of how you want to run your own business when it becomes a full-time gig. 

I think the best approach for someone in your shoe, with 60 hrs/week and a family, is to ease your way into it. 

Though it does take some time, many of have done it. Google "AnnaReiMom Kelley" and hear her story. She did exactly that!

Originally posted by @Mike Rutallie :

@Greg Dickerson

Yea, I would be reluctant to invest with someone who is doing it part-time as you said. I've been thinking partnering for a least a couple/few deals is a definite requirement.

My goal is to get to the point where I can di it full time and quit my day job. I am planning on starting an LLC to do all these ventures, and grow that into a full-fledged business.

In terms of capital raising vs operating, what sort of equity split could be expected? Being new to the game, I figure it will be almost nothing for me because I get education out of it. However, looking to the future, I'm curious what I could expect when structuring or being proposed a deal.

How much time goes in to being a full-time operator if you have a solid property manager in place? This is something I haven't been able to find the answer.

I really appreciate your thoughts Greg.

 It really depends on the deal and business plan. It takes a significant amount of time to get a property under contract and closed. Post closing depends on the business plan and how much work you intend to do on the property. 

The real issue is your investors will want access to you.

Find partners or invest passively. You are already putting in a lot of hours during the day and finding deals, talking with lenders, property managers, etc needs to be done during the day. If you can't be building relationships and viewing properties, you won't be able to get started. Find others that have the flexibility or partner with those who are already doing it actively and full time. 

@John Fortes

So my ultimate end goal is to free up my time to do what I love. Spend time with my family, help others, and build a business.

I presumed the best road to that is to ramp up real estate investing to start generating passive income until I have met the threshold needed to support my family’s lifestyle then quit my full-time job. It seems that the fastest way to do that is through active deal finding, capital raising, and/or operating a syndication. Now, it is clear to me that I can’t do all those while working a full-time job.

The problem with passive investing for me at this point is that I don’t have $500K+ to start generating much passive income. What I do have, I figured should be used to invest in deals that I sponsor so that I have skin in the game. If I put my cash into others’ deals now, I assume it will be harder to raise capital later if I don’t put my own skin in the game.

@Mike Rutallie read the book “ focal point” if you can only free yourself up 45 minutes a day look for a partner. I work full duty full time. I also been real estate investing, successfully, for the last ten years. I can double dip at my job. Ie search mls, text agents, make offers, cut loose to look at properties or meet with people, etc.. Work with and train a realtor for exactly what you’re looking for. Are your weekends free? A lot of properties are listed on Saturday. Personally I made sure that 100% my 9-5 is completely covered. That I am first the impactful employee that my company would feel the pain of loosing for years to come. Once you’re in that position it’s easy for you to say you need to cut loose for an hour or two.

@Mike Rutallie  Many people will have an opinion on what's the best approach. Understand there is not a one-size-fits-all approach and you will find your way, an opportunity will present itself over time. Sidebar, if you do your research, many of the top syndicators in the space started relatively small and surprisingly with little or no coaching, for example: 

  • @Greg Dickerson started as a remodeling contractor, turning a lucrative handyman job into becoming one of the respected names in the real estate game (i.e., syndication, development, you name it) 
  • @Jake Stenziano and @Gino Barbaro tackled their first property (25-unit) by themselves. It took them roughly two tough years to get to that point. However, they understood the basics and took action. 
  • Joe Fairless was a successful businessman (i.e., Advertising) and leveraged friends, family, flag football team, friends of the family and others totaling 12 investors and gave the broker ownership - 168 units on his first deal.

You're a midwest guy (so am I, proud Spartan #GoGreen), so you're not afraid to put in the work. One of my mentors informed me to do the following: In the evening, research and identify who you need to call by market (brokers, property management, insurance agents, etc) and during lunch call them to build rapport. However, at some point, you will need to find a way to the market to meet with them, walk properties, etc. I think it's imperative to find someone (mentor/coach/KP) you trust to assist you on the first deal (especially if you're raising capital) and compensate them with equity. Many of the deals I see range anywhere from 5 to 20%, maybe more depending on risk.  

You seem like a smart guy who is motivated. Continue to master the basics and get after it, your family with thank you for it (maybe include them). Believe in the law of the first deal! I'm right there with you.

@Mike Rutallie

I think it's very hard to run a syndication business while working full-time. Something has got to give. If you manage it, your job will definitely suffer. The big caveat would be if you have a management partner (like 50/50) who is fully dedicated. Usually you can only do this if you bring a serious funding arm to the relationship.

I think you'd do well to find a few syndicators as partners. Build long-term relationships and help them on the funding side. You have something they lack: full-time employment, with other people, who also have money and want to invest in real estate (whether they know it or not). This kind of network brokering is very useful for those raising money, and will certainly increase your visibility and interest from potential partners.

This is a long game, but I've known a few to say "Well, I have the 9-5, so I guess this is not the time." They waste good years because they only see themselves as the one 'running' the operation. Their greatest asset is right in front of them. It's a matter of finding the right people that have more time and less opportunity cost to 'run' the operation. Take it from me, this is definitely my strategy, and it has worked out well so far.

@Larry Caper

Thanks for the encouragement. I'm a Spartan too (#GoWhite), graduated with my Masters in Management, Leadership, and Strategy a couple of years back with a 4.0 GPA, all while serving as an officer in the Air Force National Guard, serving as the treasurer on my local Board of Education, and leading/building engineering teams in my full-time job. So yes, I love making things happen. 

I think I'll try what your mentor suggested and make my call list at night and execute on lunchtime. I have been reluctant to do that to this point because I don't want to develop a newbie reputation and not be taken seriously. But heck, everyone has to start somewhere. 

Now I just need to find the right mentor/coach like you said. 

Thanks again for the advice.

@Trevor Ewen

Thanks for your insight.
I'm also in the technology space, have been for 17 years. I 've lead technology teams in software development, systems engineering, telecom engineering, and network engineering. If you have time to chat and would be willing to share, I'd love to hear more about the strategy that you described and the outlook of that approach. It's always nice to connect with others who share my passion for technology and investing. 
Thanks again for the advice.

@Mike Rutallie Good question. I found myself in a very similar spot many years ago; however, I wanted to be on the limited partner side of the syndication and not the GP due to lack of available time. I was working 98 hour work weeks in the oil field and managing several single-family properties and a vacation rental. Needless to say, I was in over my head. I decided to invest in apartment syndications for cash flow and to take a 100% passive approach to real estate, usually only investing the minimum (50k in most cases) so I could get some additional diversification. I have now invested in 14+ syndications and it's been a fantastic decision. Best of luck!

Like @Travis Watts   I had a job working for a tech company, but I was never so dedicated, my kids knew what I looked like... :)  

In 2010, I saw a presentation about SF and MF at a week-end seminar; SF no, and MF yes -- I could understand how it worked. Over the almost 10 years since, I (actually we, my wife is my partner in this) have gotten into 49 (#50 is in progress).  14 have sold, so holding about 35 at this moment; around 5000 doors (but maybe only the door knobs of each -- MF sort of exaggerates this).

Perhaps I should mention that I had no prior experience before that presentation.  I still work with the fellow that gave that presentation, my current mentor.

If your goal is to leave your job, in my network of investors, you become a KP then work to become one of several sponsors on one and the another deal.

If you don't feel the need to create a new job in RE, you can continue to be a passive.  I am the this person.  BTW, the sponsor will make more than I do, but I do less. 

My experience was that at about the 4th year,  a deal sold (the buy order is unrelated to the sell order).  The next year 3 sold.  Yes, as I was working, most of this went back into other deals.  Now I am retired, several sell each year, and I roll some back in and keep what I want/need.  The average annualized returns have been 30%.  Expect less for a while, but better than the bank rates.

Regards,

Charles LeMaire

@Travis Watts and @Charles LeMaire Thank you both for your input. I keep contemplating that strategy of staying employed and just passively investing. The problem is I feel I'm an entrepreneur at heart; I just don't get the corporate "clawing your way up the ladder" to make someone else money and killing yourself for it. I love building systems, building teams, and creating process around chaos in order to create self-sustaining systems. Kissing other people's rear to get ahead has never been in my DNA, I care too much about integrity and what really will make a long-term difference in the company, not just short-term wins to turn my boss's head. This is why I am looking to venture out on my own, or build a partnership with someone else who shares my values.

Oh well, enough with my rant. 

My issue at this point is that I feel I need the experience before I can get in the game, however, I don't already have the network to quickly find those who I can help in order for me to get that experience. I keep reading that people pay for mentors to help them grow their business, but I am concerned that would be a waste of money this early in the game.

Regardless, I'll find a way to move forward. I just hope and pray that I can learn from other's who are experienced so that I can accelerate my success.

I appreciate all the input from everyone, its very helpful.

Hi Mike,

I am currently working with a few people interested in syndication, and we are looking to create a team. We might be able to help each other out, feel free to PM me if you're interested in talking more.