Quote from @Austin Fowler:
Quote from @James Hamling:
Quote from @Austin Fowler:
Quote from @V.G Jason:
Quote from @Austin Fowler:
Quote from @V.G Jason:
Quote from @Gregory Schwartz:
Take $20M, pick up 50 single-family homes at ~$400k each. Rent them at $3k, net about $2k per door. That’s $100k/month in cash flow, plus appreciation. Low-maintenance properties, low-drama tenants, simple portfolio. It’s not flashy, but it’s clean, seats enough to self mange (for the REPS tax benefits), and lets you live well without headaches
$3k at $400k is hard, but possible. Have some higher, some lower, but mainly higher. You'll still have tenant issues, maintenance, etc. To think it'll be all roses is just naive. Fortunately have PMs, AI agents, etc.
With $10 mil continue to be focused on properties in Austin, and Phoenix. Doesn't change for me on the personal portfolio.
$1mil folks worry about protecting their wealth. $10mil folks focus on growing their wealth. But to get to the latter, you usually have to go through the former. Majority of this board shouldn't be focused on this problem though. Think it's just to sniff out potential investors for OPs fund.
Hi V.G., the goal is to encourage actual real estate experts, actual people that operate at this scale, to share techniques that work at this scale and help educate people to head in that direction as well. If you anyone wants to operate at this scale, they need to focus on learning techniques that work at this scale. When it comes to building wealth, you can waste decades of your life learning labor intensive techniques and building a portfolio that simply doesn't scale.
I "operate" with more "scale" than 99% of BP.
And I'm telling you 99% needs to stop being obsessed with scale. And start being obsessed with diligence.
You're getting it right from the horse's mouth, yet still want to push this point. It's missing the forest for the trees. You're trying to scale by acquiring outside capital, I get it. Go do that in a proper form.
Totally agree with a need for everyone to be obsessed with due diligence. For example, when I acquire an asset, it is a month+ long process involving hundreds of people doing group due diligence trying to find holes in the deal and learning more about it before anyone invests. It's an approach anyone can use. I disagree with the philosophy that there are some special people that use special techniques that are amazing and can't even be explained, and then a majority of average people that should stick with average techniques that don't scale. There are good investment techniques that anyone can use that are scalable. One example of such a technique is doing extensive group due diligence on passive multifamily. Another is simply cash or an index fund, neither of which chew up your time and scale arbitrarily. This thread is all about identifying scalable techniques that anyone can use. Or just interesting techniques that people have used at scale. Working together as a community to educate each other.
Scalability is easily and readily available for the vast majority, scalability is not the issue for most.
The issue for most is how limited their investment capitol is, the massive return expectations being sought, over an exceptionally short time-span.
Many seeking parabolic, unrealistic, compounding returns. Which are not really returns, as so many are actually seeking full income replacement via the "investing".
To boot, adding in the riders of things such as "passive", "low risk" and "certain"......
To be fair Austin, you as a syndicator are hacking the scalability via syndication, O.P.M.. Most are not capable, willing or interested in raising O.P.M. to scale and thus a natural limiter of there investible capitol.
Remove your LP capitol, you would not be at the size you are, correct? No syndicator would. So it's not fair to pretend it's the deals that make scalability alone. It is possible but it is very rare, exceptional and non-ordinary for such.
For the vast majority who are measuring their investible capitol in the tens of thousands, while balancing a FT career, a family, life in general, yes it is rare skills and talents to find, analyze and execute on profitable investments at any kind of regularized interval. And in those early steps, the outlay of capitol far outstrips the returns for years or decades limiting any reasonable expectation of scalability.
In my experience the primary focus for most is not on scalability but on certainty to achieve financial freedom. Which is often defined as a passive income about matching to current active income levels.
For most the only scalability that matters is how to get to their ends. I often see a correlation that this is meet for most between 20-40 SFR's.
For many, scaling beyond that is just added work, and no longer "freedom" as was the entire intent from start, financial freedom, not an occupation change.
Hi V.G.,
> Scalability is easily and readily available for the vast majority, scalability is not the issue for most.
When it comes to scalability, I set the bar high. I want to be able to handle a very great deal of capital deployed in a lot of assets while basically on holiday. Using this perspective, to my eyes many people spend a great deal of time working real estate investing techniques that are not scalable. Passive multifamily is the most scalable technique I currently use, and I could use my exact due diligence process to easily handle $100M without changing how I operate. Just bigger checks into the deals I find.
> In my case, The issue for most is how limited their investment capitol is, the massive return expectations being sought, over an exceptionally short time-span.
So how about we focus on discussing how to solve capital limitations in a way that is doable by anyone?
> Many seeking parabolic, unrealistic, compounding returns. Which are not really returns, as so many are actually seeking full income replacement via the "investing".
I don’t work a W-2 anymore. My investing covers all of my expenses and was sufficient to add $2.5M to my net worth over the last 12 months. Full income replacement is definitely achievable.
> To boot, adding in the riders of things such as "passive", "low risk" and "certain"......
> To be fair Austin, you as a syndicator are hacking the scalability via syndication, O.P.M..
I don’t run syndications. I do invest in other people syndications. I have no desire to be a GP on a multifamily syndication with all of the responsibilities and duties that come with it.
> Most are not capable, willing or interested in raising O.P.M. to scale and thus a natural limiter of there investible capitol.
Here I disagree. I think most people just don’t know how to go about it. I have helped hundreds of people learn how to raise capital for their own investing. I have helped quite a number of people start their own SEC registered managed funds. And there is an awful lot you can do with a lot less than this. It’s knowledge that people need.
> Remove your LP capitol, you would not be at the size you are, correct?
Correct.
> No syndicator would. So it's not fair to pretend it's the deals that make scalability alone.
The multifamily deals I focus on are not mine, and from a return point of view are nothing off the charts, the general target is around 20% per annum. And no, it’s not the deal that gets you to huge scale, it is definitely learning how to raise capital. And that is something anyone can learn, and the only way to get to great wealth in a lifetime.
> It is possible but it is very rare, exceptional and non-ordinary for such.
Agreed it is not about the deal, it is about learning how to access capital efficiently. And that is a teachable skill.
> For the vast majority who are measuring their investible capitol in the tens of thousands, while balancing a FT career, a family, life in general, yes it is rare skills and talents to find, analyze and execute on profitable investments at any kind of regularized interval. And in those early steps, the outlay of capitol far outstrips the returns for years or decades limiting any reasonable expectation of scalability.
So you share the load. You don’t try to do all of the deal due diligence yourself. You do it in a group where some (even most) people can even passively ride on the due diligence of others. You don’t try to reinvent the wheel when it comes to learning how to raise capital, you leverage free tools that already exist.
> In my experience the primary focus for most is not on scalability but on certainty to achieve financial freedom. Which is often defined as a passive income about matching to current active income levels.
Financial freedom requires passive investments at scale. Speaking from experience.
> For most the only scalability that matters is how to get to their ends. I often see a correlation that this is meet for most between 20-40 SFR's.
I would argue that self managing so many single-family rentals is a burden. I’m in that range with managed rentals, and I would say that this is definitely not enough for the level of financial freedom I wish to have, even if they were all paid off, which they aren’t.
> For many, scaling beyond that is just added work, and no longer "freedom" as was the entire intent from start, financial freedom, not an occupation change.
Agreed, but to say the same thing a different way, there are more profitable and more passive investments than single-family long-term rentals.
"....I want to be able to handle a very great deal of capital deployed in a lot of assets while basically on holiday.... Passive multifamily is the most scalable...., ....I could use my exact due diligence process to easily handle $100M without changing how I operate....."
To that end, as a person who's worked in this segment, I agree 100%, community level MFH is the simplest most passive means to effectively be invested in real estate at significant $ levels.
But that is the rub, it's a ~$40m+ "pay-to-play" game. That is a level that an exceptional small % of landlords acheive, or even have a desire to ever achieve. I used to work in private equity, I had 9 and even a few 10 figure clients, I know it's attainable, and how rare that ambition of scale is. Just because you possess it, does not mean it's shared by a majority.
"So how about we focus on discussing how to solve capital limitations in a way that is doable by anyone?"
In the sage wisdom of Ratatouille; anyone can cook, but not everyone can be great.
For those who want to, they can, OPM, it's just that simple and really there is no other way around it, it's just the reality of the math of things. Or they need to be hyper active in it to be able to achieve the parabolic returns from strategies that get to infinite returns in rapid order, ie not passive at all.
The issue is not inability, it's desire. I stepped down from the world of private equity on purpose to work with "average" John & Jane Doe's, from wall street too main street, sacrificing profit for passion of purpose. I have seen the stark difference first hand, the vast majority simply do not desire to achieve "yacht $". Their goals are much more humble and focused toward simplicity.
"....I think most people just don’t know how to go about it. I have helped hundreds of people learn how to raise capital for their own investing. ....It’s knowledge that people need."
For some, very true. Although in this day and age, access to information is so available and so simple, there really is no barriers anymore. Via ai one doesn't even need to put much effort into seaking out the info, one can literally talk to the GPT of choice, for free, and get answers, direction, action items, really everything needed. So again, were back to interest not access being the primary issue.
"....no, it’s not the deal that gets you to huge scale, it is definitely learning how to raise capital. And that is something anyone can learn, and the only way to get to great wealth in a lifetime."
Yes, as I said scalability is readily available.... for those who want it, but that's the point, most don't care to scale, they don't, they want a certain passive income as simply, safely, and quickly as possible.
As for scale being the "only way to get to great wealth", I couldn't disagree more. yes, it is a way, but not the only way. Not to mention "great wealth" is a perceptual thing, for one that may be $100m, another it may be $1b, and for another it may be $50k a year.
I find many "main street" investors consider their "wealth" at $10kmnth inflation adjusted passive income, and the vast majority consider $20k mnth passive income "Great wealth". In the market's I play in, that's readily acheive with less than 10 free & clear SFR's. Or 20 moderately leveraged SFR's. Add in 15% - 20% for security buffer, that's a small, simple, easily managed portfolio that provides flexibility (ie options and control) on how one chooses to run their portfolio and life.
Again, massive scale is not of interest for everyone, or even most.
"So you share the load. You don’t try to do all of the deal due diligence yourself. You do it in a group...."
Nobody ever cares about your $, like you do; this is the credo of main-street investors. Not to mention the loss of control, the dependency of not being self-capable. That equals fear for most on main street, not safety or security. This is antigen to the pursuit of financial FREEDOM, freedom is independence.
"Financial freedom requires passive investments at scale."
Again, strongly disagree. I know of a great many who have acheived financial freedom without significant scale. Again, financial freedom is a perceptual thing that is different and personal person to person. The scale to meet that bar will vary person 2 person, and most are rather humble bars to meet.
"I would argue that self managing so many single-family rentals is a burden."
Well, it can be, it depends on the person, there abilaties, and how savy they are to get professionals when and where one is needed to hire their problems away. Those who do that, can find it very very simple. My best average was managing 184 properties in 7hrs a week, measured over a quarter. Me, as in me, personally actively managing them, not my PM's. So it's doable. I spent 8 months building out the systems and structure to get there but point is, 20-40 is very reasonable to manage in a number of simple ways.
"there are more profitable and more passive investments than single-family long-term rentals."
I disagree, and I have the math to back me up. MFH is not nearly as liquid as SFR's. SFR's allow a person choice of liquidation via revenue valuation OR retail O.O. valuation, you don't get that with MFH. Capitol costs are less, inventory is more available, less regulatory impact, more options for monetization, financing is simpler, accessing equity is simpler and more available, operation options are simpler and with greater control.
Reality is for the vast majority who seek Cadillac $ not Lambo $, value simplicity, control, reliability and consistency, SFR's reign supreme, they do.
MFH's is for scale, 100%. But as said, not everyone or even the majority want to scale, they simply don't.
#2 General Real Estate Investing Contributor
