Preparing for a large commercial property ownership by 2028
Realtor · Saint Petersburg, FL · Member since 2015 · 7 posts · 2 votes
I am a residential realtor with experience in helping investors purchase residential properties (which is 4 units or less in Pinellas County, FL) but none in commercial. By 2028, the goal is to own apartment buildings that cashflow $200,000 per month.
Who do I need to know,
who do I need to be connecting with,
what properties should I be investing in TODAY to make this a reality 8 years from now?
Why do you want to earn $2.4 million per year and what are you willing to sacrifice to make that happen? I'd work on the "Why?" first before worrying too much about the "What?" and the "How?"
Aside from paying Uncle Sam an insane amount of your income each year in taxes, why do you want to be among the top 1% of the top 1% of USA income earners? How will you use that much money and in what ways will it improve your quality of life?
Let's be honest too: there are problems that ultra high income earners face that the rest of us don't. In what ways will that level of income be a drag on your spirit, time, and energy? Rich people have to spend a lot of time protecting themselves from the greed and envy of others. It's just a fact. Look at any celebrity tabloid or Facebook/Twitter feed. Success breeds contempt, avarice, and the desire to "take you down." Just for the thrill of it.
Here's an exercise I think is valuable: write down a list of the top 10 characteristics you think will describe your competitors and how will you overcome them. Competition for that level of income from real estate investment/business will be fierce.
People often say that large sums of money changes people. In what ways will it change you?
Lastly, not to be too political, but there is a strong surge among the populists these day that are openly trying to destroy "the rich." Would you still be happy if you work for 8 years, only to see your income tax rate rise to 90%?
I am a residential realtor with experience in helping investors purchase residential properties (which is 4 units or less in Pinellas County, FL) but none in commercial. By 2028, the goal is to own apartment buildings that cashflow $200,000 per month.
Who do I need to know,
who do I need to be connecting with,
what properties should I be investing in TODAY to make this a reality 8 years from now?
The best question to ask is why wait 8 years? Why not start today? If you educate yourself on the space and the market and align yourself with people who are where you want to be you can start today. Study syndication and become an expert and you can get there way faster than you think.
@Greg Dickerson that's the plan! :) Thanks for responding, just followed/subscribed on LinkedIn, Insta, YouTube and Facebook
@Greg Dickerson that's the plan! :) Thanks for responding, just followed/subscribed on LinkedIn, Insta, YouTube and Facebook
Awesome! I have a lot of great info and content there.
Hi Amber,
In 2028 (if you want to own it alone--by yourself) (based on today's typical loan requirements which may change by then) you will need a net worth of the loan amount of the complex, plus 20% down in cash, plus cash for CAPEX, and operating expenses.
And a lot of other things, but that's probably the biggest hurdle.
Pick a complex that will hit your numbers, look at it's price now and adjust that for inflation out to 2028.
Good Luck!
@Scott Mac thank you, I didn't even think about needing a net worth of the loan amount!
@Amber Bennett look into syndication and shoot for 1B by 2028. I’m not joking either.
@erikhatch Wow! $1billion...That's a mix between inspiring and "oh shoot" lol
@Amber Bennett
You need to know and be connecting with everyone who is already where you want to be. You need to know your A team. That is your property manager, lender, securities attorney if you are syndicating, real estate attorney, CPA, and any partners.
If you want to own apartment buildings, start investing in multifamily properties now. Commercial multifamily (5+ units) and residential properties (<5 units) are two different games. A 6 unit building operates like a 100 unit property. The difference comes in the scaling.
If you don’t have a lot of capital at your disposal, you should learn the syndication business and get involved with other syndicators where you can provide value and potentially partner with them on one of their properties to get started.
Good luck!
@Amber Bennett the first step would be getting a large cash amount of your own to accomplish this. Without that it is going to be extremely difficult or near impossible
@Matt Engle That's so true about the 6 unit property, I'm house hacking in a SFH with an in law suite and was looking for a 2-4 unit for next year so I could stay in my wheel house of residential properties/loans...but you're right: why not go for 5 if I can afford it and learn the ropes now!
@Caleb Heimsoth so true, I've got to get busy! lol
@Amber Bennett house hacking is an excellent starting point. :)
Also, with syndication, you have the ability to scale much faster which is why a goal of $1B in assets by 2028 is not unrealistic.
Why do you want to earn $2.4 million per year and what are you willing to sacrifice to make that happen? I'd work on the "Why?" first before worrying too much about the "What?" and the "How?"
Aside from paying Uncle Sam an insane amount of your income each year in taxes, why do you want to be among the top 1% of the top 1% of USA income earners? How will you use that much money and in what ways will it improve your quality of life?
Let's be honest too: there are problems that ultra high income earners face that the rest of us don't. In what ways will that level of income be a drag on your spirit, time, and energy? Rich people have to spend a lot of time protecting themselves from the greed and envy of others. It's just a fact. Look at any celebrity tabloid or Facebook/Twitter feed. Success breeds contempt, avarice, and the desire to "take you down." Just for the thrill of it.
Here's an exercise I think is valuable: write down a list of the top 10 characteristics you think will describe your competitors and how will you overcome them. Competition for that level of income from real estate investment/business will be fierce.
People often say that large sums of money changes people. In what ways will it change you?
Lastly, not to be too political, but there is a strong surge among the populists these day that are openly trying to destroy "the rich." Would you still be happy if you work for 8 years, only to see your income tax rate rise to 90%?
@erikwhiting
I want to do so because the returns from my investment will allow me to live my dream life and provide for the generations that come after me as well. I'd also want to find a way to have a family trust that works as a bank of sorts for my family members for schooling and low interest business loans. Plus, I figure that its better to have tangible assets and a skill to pass along (investments, knowledge of investments/connections) than stocks or money.
I currently tithe my 10% and live on 70% of what little I have now so I figured it would be much bigger tithing and even more charitable giving! As far as quality of life, I would love to travel whenever I want and purchase what I want based on convenience and value, not just price.
I have thought about the problems that I would face in terms of having to keep my circle small and I think that's one thing I'm most wary about. But I didn't think about the punch in the gut the taxes would feel like, even if I could afford it and had much more...
And I LOVE the idea of writing down a list of the top 10 characteristics I think will describe my competitors and how I will overcome them! I was only thinking of who I needed to become, not necessarily what I would need to overcome the competition. I was short-sided in hoping there would less competition in the multiple hundred million arena than the lower priced markets that I'm in now.
I hope that having an excess of capital changes me in that I become more creative in the sense of building something of my own if it doesn't already exist(figuratively and literally I guess!) versus waiting on opportunities to be presented to me. I hope that I don't lose touch with the thought process of the rest of the 99% of people....I don't want to feel their pain but I want to at least be able to understand! haha
And I don't think any one should pay taxes over 33% but I'm okay with paying my "fair share" as long as the money is being managed properly by the government...which may be the more improbable feat lol
Thank you for all of the thinking points! Creating my list of 10 characteristics now!
@Erik W.undefined
Hi Amber great to hear your interested. I follow Grant Cardone on youtube. I dont agree with everything he says but he really knows the apartment game. I learned alot just by watching him analyze deals from people calling in to his podcast, to deals he has under contract, and even his past deals. There is a huge playlist on his youtube channel dedicated to apartments. Check it out! And keep us posted on your progress. Good luck!
@Amber Bennett... I'm glad to see you have given this some thought. Charitable giving, family legacy, travel, freedom, etc. Yes, all fine goals. Will having $2.4 million / year income allow you to achieve all of those? Or could you "do more with less?" I invite you to get more specific. Start turning these dreams into goals with amounts, time frames, steps to achieve/milestones.
A lot of REIs go into this biz thinking that they will strike it rich, only to find themselves in a job they bought for themselves that gives little to no time to do all the things they thought the "freedom" of being rich would bring. They forget to consider how much time and effort one has to spend defending wealth from aggressors once it is obtained. Aggressors can be friendly faces too....family, friends, even charitable organizations.
People who have money never run out of people asking them for money. Whether they want you to pay their rent, buy them a car, send them $100,000 for this charity or that (or a dozen), etc. Just look on BP at how many people here are asking for someone to "partner" with them on their latest deal when they have no money, no credit, no experience. Probably 2-5 posts daily! Expect to get a lot of those kinds of offers as the word gets out that you have a high income. They'll probably ask you to mentor them too.
33% tax... I hope you're that lucky. Marginal tax brackets top out 37% once your income passes $612,000 filing jointly or $501,000 filing single. Make sure part of your plan includes an aggressive tax reduction strategy. Your "fair share" is paying what you owe legally and not a penny more. Direct your giving to charities you investigate and select vs. Uncle Sam, who is rarely a good steward of public funds.
I am hoping people like Mr. Sanders and Ms. AOC do not get their way. If they do, 37% will look like a bargain. Their ideas appear to be gaining in popularity. Keep in mind: a swing in political mood could easily wipe out 8 years of hard work. Just be sure you're happy with whatever amount they feel inclined to let you keep as they reward their voters with more stuff. I'll be interested to see if the wealth redistribution crowd gets into power if they decide ROTH IRAs are unfair and will start pilfering them in the name of "fair share." Those two words make me shudder.
Regarding competition: at the larger size end multi-family (100 plus units) you will be in direct competition with the high rollers. Insurance companies and hedge funds with hundreds of millions or even billions of dollars looking for a place that gives good returns. They will have armies of lawyers, accountants, and analysts scoping out the same properties you are. When you bid $4 million, they'll bid $4.1 million....because they can. When you bid $4.2 million...they'll bid $4.3 million. They can play that game long past the point where there is any reasonable profitability for a smaller timers. Not trying to sink your boat, just telling you what a friend of mine said who runs in the same circles as these kinds of folks. He's a non-recourse capital finance specialist. He works with companies that have lots of money to invest, and on occasions he's seen them run around the deal-finder and beat them using a 3rd party proxy bidder.
Smaller multi-family might work. There's a certain price point below which the big boys aren't interested. It will vary by market, but usually if the deal won't support a full-time on site manager and maintenance person, that's a sign that it may be good for the individual deal hunter. Then you'll just be in competition with people like me who have been at this for 15 years, although to be fair I'm only just now getting started in MF. I'm looking at 20-50 unit complexes. Not enough cash flow there to support a full time staff, and the big boys want an asset they can hand off to a professional manager and move on to the next deal.
Ever thought about getting into property management? I have. I've found that there aren't a lot of good PM companies in my area except the ones who dealing with their own inventory. Example, a local company here buys lots, builds apartments, then turns them over to their own management subsidiary. They create their inventory vs. trying to buy it from someone else. There could be a niche opportunity though for someone willing to manage smaller MFs, like the one's in the previous paragraph.
Anyway, good luck. Sounds like you have some big dreams. I hope that in some way these rambling thoughts have helped.