RE investing when you have a highly successful career

San Francisco, California
General Real Estate Investing
4yFollow

RE investing when you have a highly successful career

Chris Orlob
Member since 2018 · 5 posts · 1 vote

Hi everyone,

First post here.

To what extent does real estate investing make sense if you have a highly successful career, and do not intend - or want - to make real estate a full-time career (as I've noticed many / most real estate investors have)?

Additional context, while sparing you some of the details:

I build B2B tech startups for a living, and that has been my primary wealth-generator in my life so far. I'm highly interested in investing in real estate to further multiply the wealth I've generated from startups, but not as a full time career, as I have no intention of leaving the world of tech startups, and love building them.

With all of that in mind, and respecting the fact that I could devote 10-15 hours per week to RE on top of what I do w/startups, to what extent does RE investing make sense for someone in my situation? Is it the equivalent of running a full-time business (as much of my reading has led me to believe)? Can it be done successfully alongside a demanding career? Are there certain types of real estate investing that DO make sense for someone like me (i.e. being an LP in apartment deals)? Are there other types that woul actively NOT make sense for me to consider given my situation?

Thanks for your patience. Could not find another post on the forum that answered this quite the way I'm looking to.

0Reply
25 views

Most Popular Reply

Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
4y

Unless I needed to diversify my asset and tax classes, I wouldn't bother with RE.  

The legacy and long-term wealth benefits are undeniable but the learning curve and time/effort  burden are steep and there are a a lot of shyster operators out there. 

I'd own it with say or stay away.  Everything else is just a mutual fund with no liquidity or marketplace. 

4Reply
See this reply in the discussion

20 Replies

Jump to latestLatest
  • Greg ScottPro Member
    Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
    4y

    Real Estate is a great asset class for growing and maintaining wealth, and when done properly, is tax-deferred. 

    Since you said your business is successful, I presume it is kicking out some cash to you.  Where do you put that cash?  The stock market is more like a casino than an investment.  So, why not put it in the asset class that has created more millionaires than any other?

    There are plenty of ways you can invest in real estate with minimal time commitment.  I started with turnkey rentals.  Another way is to invest as an LP in apartment deals, but I would spend some time getting educated so you can recognize a good deal and a good operator vs one who has a proforma that is pure fiction or makes all their profits off of fees.  Another low-commitment way to invest is with triple net lease properties backed by investment grade companies. Again, just learn enough to not get yourself in trouble.

    1Reply
  • Niyi AdewoleBusiness Member
    Real Estate Agent · Atlanta GA & Orlando, FL · Member since 2015 · 214 posts · 101 votes
    4y

    Hi @Chris Orlob

    I would agree with what Scott said around investing in Real Estate v.s. the Stock Market. I do both, but 90% of my dollars invested go to real estate. 

    I would recommend finding a partner that can function as the boots on the ground investor with experience, and becoming that individuals financial partner on deals. This will allow you to get into RE investing more passively, while still benefitting from the upside. 

    Warmly, 

    Niyi 

    [email protected]
    0Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    4y

    Unless I needed to diversify my asset and tax classes, I wouldn't bother with RE.  

    The legacy and long-term wealth benefits are undeniable but the learning curve and time/effort  burden are steep and there are a a lot of shyster operators out there. 

    I'd own it with say or stay away.  Everything else is just a mutual fund with no liquidity or marketplace. 

    4Reply
  • Shafi Noss
    Lender · Nationwide · Member since 2018 · 571 posts · 310 votes
    4y

    My perspective, when making an investment there is a tradeoff between risk, returns, liquidity, and effort. When effort is high, it starts to be called a 'business' instead of an 'investment'. There are a few other things like prestige or environmental impact which some people care about too. 

    You've said your main interest is in multiplying your wealth. Real estate usually sacrifices liquidity in exchange for better risk adjusted returns. If you're after lower risk, rentals are a good way to go. If you're after higher returns there are private value-add investments (LP like you mentioned). Since you're after scaling, this sounds like the option that accomplishes best what you want. 

    But your main question is whether you can leverage that 10-15hrs a week to increase your returns even further. You could try to do value-add deals yourself, but this is like running a business, it requires creating a network effect to do deals which is very time intensive, similar to a tech startup I imagine. Perhaps with your background you'd have a head start at it though. You could also spend that time searching for and vetting the private value-add investments. These are not public options, so they take time to find and vet, but as opposed to a completely passive option like a REIT, yield higher returns.

    That's would be my framework for thinking about your situation at least. 

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    4y
    Quote from @Steve Vaughan:

    Unless I needed to diversify my asset and tax classes, I wouldn't bother with RE.  

    The legacy and long-term wealth benefits are undeniable but the learning curve and time/effort  burden are steep and there are a a lot of shyster operators out there. 

    I'd own it with say or stay away.  Everything else is just a mutual fund with no liquidity or marketplace. 


    NNN properties might fit the bill .. and be the bank if you want some interaction with folks with as Steve points out much higher liquidity than long term owning.

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    4Reply
  • Chris Orlob
    OP
    Member since 2018 · 5 posts · 1 vote
    4y

    These are all incredibly helpful replies and perspectives. Thank you everyone!

    0Reply
  • Mike Kehoe
    Wholesaler · Chicago, IL · Member since 2018 · 84 posts · 83 votes
    4y

    @Chris Orlob I have a similar background as yours but went full-time into real estate a few years ago. 

    Real estate is an excellent way to diversify, grow wealth, and mitigate taxes (assuming you have passive income from your tech startups). 

    Investing passively as an LP in syndications is the way to go for you. 

    You should spend the extra 10-15 hours per week reaching out and networking with General Partners of multi-family, self-storage, and industrial syndications while educating yourself on how syndications work. Through networking, you'll learn a lot about the different verticals and will begin to prefer one over the others. 

    I'd pick one or two operators in the vertical that you like and do some background research on them. Then, assuming the background research checks out, I'd start to educate myself on their real estate vertical. You want to know how to evaluate and underwrite deals in the vertical to understand what you're looking at and ask the right questions when an opportunity is presented to you. 

    Yes, this is a lot of work upfront, but as long as you document your findings, you'll have this information for the rest of your life. Furthermore, I think that you'll find that the information learned and the people you meet will help you in your tech startups. 

    After selecting the suitable GPs, evaluate their opportunities, and make your first passive investment. 

    Hope this helps!

    3Reply
  • Dwayne Poster
    Investor · Van Isle · Member since 2021 · 455 posts · 226 votes
    4y
    Quote from @Steve Vaughan:

    Unless I needed to diversify my asset and tax classes, I wouldn't bother with RE.  

    The legacy and long-term wealth benefits are undeniable but the learning curve and time/effort  burden are steep and there are a a lot of shyster operators out there. 

    I'd own it with say or stay away.  Everything else is just a mutual fund with no liquidity or marketplace. 

    I agree, stick with what you know and enjoy.  The successful people I know in real estate are all in. There is the lending side, but personally, I look for entrepreneurial start ups. 
    1Reply
  • Jon KellyPro Member
    Investor · Bethlehem, PA · Member since 2016 · 929 posts · 951 votes
    4y

    @Chris Orlob It makes all the sense in the world. You're in an ideal spot to invest in real estate.

    If you want something completely passive you can consider investing in real estate syndications. 

    If you have 10-15 hours per week to devote to real estate and the capital you should consider large multi-family properties. You should find the price point required to have full-time staff (e.g. property manager, maintenance, etc.). You will be hands off on the majority of the day-to-day decision making. 

    0Reply
  • Tony Kim
    Rental Property Investor · Los Angeles · Member since 2018 · 844 posts · 1k+ votes
    4y
    Quote from @Steve Vaughan:

    Unless I needed to diversify my asset and tax classes, I wouldn't bother with RE.  

    The legacy and long-term wealth benefits are undeniable but the learning curve and time/effort  burden are steep and there are a a lot of shyster operators out there. 

    I'd own it with say or stay away.  Everything else is just a mutual fund with no liquidity or marketplace. 

    This was stated perfectly. You don't need cash flow and I suspect you fall under the realm of qualified client or purchaser. With your connections within the industry, I'm sure you have access to some very sophisticated investments and opportunities. Why not focus on well established sponsors that target qualified purchasers? That's what I would do. This forum is the best resource for someone who wants to become a millionaire via sweat equity. You on the other hand, sound like someone who is already there and exploring a potential allocation to real estate because every hedge fund/asset manager right now is doing the same thing and buying up properties like crazy. 
    0Reply
  • Colton Hahn
    Specialist · Member since 2021 · 322 posts · 273 votes
    4y
    Quote from @Chris Orlob:

    Hi everyone,

    First post here.

    To what extent does real estate investing make sense if you have a highly successful career, and do not intend - or want - to make real estate a full-time career (as I've noticed many / most real estate investors have)?

    Additional context, while sparing you some of the details:

    I build B2B tech startups for a living, and that has been my primary wealth-generator in my life so far. I'm highly interested in investing in real estate to further multiply the wealth I've generated from startups, but not as a full time career, as I have no intention of leaving the world of tech startups, and love building them.

    With all of that in mind, and respecting the fact that I could devote 10-15 hours per week to RE on top of what I do w/startups, to what extent does RE investing make sense for someone in my situation? Is it the equivalent of running a full-time business (as much of my reading has led me to believe)? Can it be done successfully alongside a demanding career? Are there certain types of real estate investing that DO make sense for someone like me (i.e. being an LP in apartment deals)? Are there other types that woul actively NOT make sense for me to consider given my situation?

    Thanks for your patience. Could not find another post on the forum that answered this quite the way I'm looking to.

     Definitely think the responses are phenomenal here. Would echo Mike's response that if you are busy, and do not have much time then parking your capital with a tried and true operator that you trust.

    Being an LP in a real estate syndication gives you the benefits of owning real estate while not having to deal with the day to day headaches. Your biggest hurdle will be finding a company you trust and align with on a strategy level.

    Good luck!

    1Reply
  • Seth Young
    Specialist · Southlake, TX · Member since 2021 · 213 posts · 157 votes
    4y

    @Chris Orlob I would suggest checking out turnkey key real estate investment opportunities. Real estate is beneficial when a longterm resident is paying off the mortgage on a property. It is a great way to start generational wealth, enact numerous tax benefits and the top secondary market to hedge against inflation. 

    0Reply
  • Jim PfeiferBusiness Member
    Investor · Dublin, OH · Member since 2014 · 241 posts · 495 votes
    4y

    I think RE is a great way to balance our your other investments. Active real estate is not possible for you at 15 hours per week. I would argue, from experience, that turnkeys are not passive - you are managing the property manager and that can be incredibly frustrating and time consuming. I transitioned a few years ago to passive investing in real estate syndications. As others have mentioned here, there is some work up front - educating yourself, screening sponsors and evaluating deals - but once you are in a deal it is completely passive. You are hiring an asset manager to do all the work for you. The returns are as good or better than you can get in SFH turnkeys and even some other active real estate.

    I recommend you start with a book - The Hands-Off Investor by @@Brian Burke.  It is a comprehensive introduction to passive investing in syndications.  I would also recommend joining a Community and leveraging the experience of others - this helps with education, finding quality sponsors and analyzing deals.  I have become a much better investors once I joined a few different Communities.

    Good luck!

    4Reply
  • Mike Dymski
    Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    4y

    Lot's of high net worth individuals invest in real estate syndications (or NNN) through their RIA or their own networking (online or in person investment clubs, podcasts, crowdfunding sites). Check out 506investorgroup.com as an example (no affiliation). There are tons of opportunities thoroughly vetted there, many of which are institutional grade sponsors.

    0Reply
  • Bill F.
    Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
    4y

    @Chris Orlob

    You can think about investing in RE as a small business owner a few ways, but the one that makes the most sense to me is opportunity cost of capital.

    Don't get me wrong, RE has great long term wealth generation abilities and can honestly change lots of people's lives for the better in the long term. However compared to small business ownership, it just can't compete in terms of returns. Heresy on BP I know, but I have experience in both spaces and know that most RE can't hold a candle to most business that do low to mid seven figures top line from a return on capital perspective. Layer on you want to do this super part time and the ask becomes even more herculean. 

    That being said, if you want to take some chips off the table and get some stable uncorrelated returns, RE is great. I would explore syndications or NNN leases if I were in your shoes.

    Big caveat about asking for ideas on a forum like this is you will get people who, through purely confirmation bias, think the asset class they work in is the best thing sliced bread. Take away: check posters bio and see if they make their living by selling you the thing they recommend. 

    I would also be cautious about syndications from an investment perspective due to the fact that you haven't changed the amount of time you need to dedicate to the space, but rather shifted the expertise needed to make the investment. For example, instead of needing to have the knowledge, skills, and abilities to buy and run a 100 unit apartment buldings, to invest in a syndication you need to have the knowledge, skills, and abilities to vet GP's in that space. A subset of that vetting skill is understanding how to buy/run an apartment buldings with more things added on. 

    Best of Luck 

    0Reply
  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    4y

    If you highest and best use for your time is at your tech business then you should not lose sight of that.

    Being a LP leverages the expertise and connections of a syndicator. The trouble is getting connected with the right circles first with reputable people.

    1Reply
  • Andrew Frowiss
    Real Estate Agent · Austin, TX · Member since 2016 · 96 posts · 69 votes
    4y

    Hi @Chris Orlob I think someone in your position and with that amount of time per week could invest in real estate. I would recommend looking into long term rentals. If you can find a good Property Manager to take care of the Tenants and the property, then it's more of a passive type investment. This wouldn't take too much of your time since they should be handling the makereadies, Tenant placement, and everything else. Spend your time finding and buying properties, and utilize the people who make this their full time career. 

    You could also try and find some Property Managers that specialize in short term rental properties. It would have a higher up front cost since you have to furnish the units, but it's a similar process with higher profits/turnover. My PM company only does long term rentals so not all will.
     

    0Reply
  • Todd Goedeke
    Contractor · Sheboygan, WI · Member since 2016 · 917 posts · 266 votes
    4y

    @Chris Orlob check into buying a short term vacation rental . Then triple net lease the property to an experienced property manager. As a truly passive investor the property manager who leases the property from you will pay for all interior maintenance, insurance ,RE taxes, and furnishings.You should be able to lock in a guaranteed return of 20-25% ROI based on cash flow alone.

    If you are a business owner with no full time employees consider starting a Solo401k in which to own your RE properties. They are great for passive investing.

    Steer clear of RE syndications as they are full of upfront middleman,organizer fees and costs . They offer no guaranteed returns but promise future returns after they take their property management fee. You have no control over money invested as far as selling your investment. Avoid all middlemen by investing directly in properties of YOUR choice.

    0Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    4y

    It can be the equivalent of running a full time business, it's all in how you build your systems and processes. You can stream line everything and hire out work if you want to run a real estate operation. If you'd like to be more passive there are many ways to do it, be a lender, syndicator, hire property management companies to run your portfolio. 

    0Reply
  • Paul MoorePro Member
    Commercial Real Estate Fund Manager · Lynchburg, VA · Member since 2015 · 1k+ posts · 1k+ votes
    4y

    Hey @Chris Orlob. Great question.  And you got some great replies here. I am quite opinionated on this topic in part because of my past failures and also because I’ve spoken with about 2000 real estate investors, many who have tried to balance a profitable career or enjoyable retirement With real estate investing.

    I personally think true success comes from being obsessed with one thing and doing that very well… And outsourcing almost everything else. Michael Phelps won 27 gold medals because he was obsessed with swimming. Every American has gotten to enjoy his success, not by being obsessed with swimming, but bye cheering him on. We all shared and his victory in a tiny way. 

    But imagine that Phelps would have competed in a dozen different events. High jump, long jump, shotput, and more. We would never have heard of him and he would’ve ended up frustrated I predict.

    I wrote a post on this so you can see more of my thoughts here: https://www.biggerpockets.com/...


    by the way, I have spoken with some people who have been able to succeed at more than one thing and you may be one of them. I would just say these people are the exception and it often takes a toll on their family, health, and overall happiness.  Happy Investing! 

    Podcast Guest on Show #533
    1Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free