How to build a RE portfolio while managing a full time job
Property Manager · Round Rock, TX · Member since 2014 · 9 posts · 3 votes
How to build a RE portfolio while managing a full time job
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Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
9yNathan Arceneaux This isn't without risk but...find a property manager that you trust and scale around their geographic base. It's one person to call, one person to text, one set of financials each month, etc. The other (arguably harder) think to do is to not fret about the $100-$200 maintenance expenses. You can't worry that they pay a locksmith vs. a handyman. You almost have to force yourself to keep a healthy distance. You have to worry about the "big" things like a vacant unit, trees rubbing the roof, etc. I'm 100% sure I lose *some* undefined spread through not micromanaging. You will likely do that as well. But that's your cost of getting your time back, time with your family back, increased earning power by being able to focus on your job, etc. Only you can tell what that's economically worth to you. There's no right vs. wrong in doing this kind of analysis. It really does vary for everybody. Unless you're leading a syndicate! Then your 50 hour a week job is micromanaging those investments to steward my money.
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- Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes9yNathan Arceneaux This isn't without risk but...find a property manager that you trust and scale around their geographic base. It's one person to call, one person to text, one set of financials each month, etc. The other (arguably harder) think to do is to not fret about the $100-$200 maintenance expenses. You can't worry that they pay a locksmith vs. a handyman. You almost have to force yourself to keep a healthy distance. You have to worry about the "big" things like a vacant unit, trees rubbing the roof, etc. I'm 100% sure I lose *some* undefined spread through not micromanaging. You will likely do that as well. But that's your cost of getting your time back, time with your family back, increased earning power by being able to focus on your job, etc. Only you can tell what that's economically worth to you. There's no right vs. wrong in doing this kind of analysis. It really does vary for everybody. Unless you're leading a syndicate! Then your 50 hour a week job is micromanaging those investments to steward my money.
- Property Manager · Round Rock, TX · Member since 2014 · 9 posts · 3 votes9y
Good point @Andrew Johnson, 3rd party management has been a consideration as we try to move to next level. I believe we may experiment with this on the next investment for 2017, see how it goes for that one property, then if all goes well, expand the footprint from there. Day to day management has not been too much of an issue (especially since my wife handles it!), but going forward, I think if we want to expand, we most likely will need to consider it, appreciate the feedback.
- Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes9y
@Nathan Arceneaux Well if your wife is handling it then it's just a matter of looking at her "opportunity cost". And on a side note, I grew up being dragged around to open houses in weekends, sorted nails into coffee cans (back when brewing your own was an actual thing), and changed who knows how many locks. Bring your kids with you. Nothing's wrong with bribing kids with a milkshake after 3 hours of "free" labor...
- 9yOwen DashnerPro MemberLender · Omaha, NE · Member since 2008 · 1k+ posts · 1k+ votes
Hire a good PM. I worked a full-time job with 2 small kids and self-managed until I hit about 20 units, then started peeling them off as they became vacant and turning them over to a PM. Best move I ever made - it allows for scaling much, much easier. You will mentally just have to swallow the bitter pill of giving up cashflow that you worked hard to obtain. It's the cost of doing business and the only way you are truly going to be able to scale, if that is your goal.
- Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes9yI work 50 hours a week, but I don't have kids. I listen to the podcasts at work (this is how I learn mostly) and I do most of my RE at night. It seems to me between agents and brokers etc a lot of people in RE are available beyond normal business hours
- Property Manager · Round Rock, TX · Member since 2014 · 9 posts · 3 votes9y
@Andrew Johnson Funny story, My kids will work for Pokemon cards! I believe this helps build good work ethic as well, great points.
@Owen Dashner Good advice Owen, peel them off one property at a time, to allow for scale, this is definitely the goal. Not sure if we could personally handle any additional properties, but not interested in staying put with current portfolio, so PM seems best option, thank you.
@Caleb Heimsoth Thanks Caleb, I try to listen to all the podcast as well, lunches, after hours, whenever I can get them in, super helpful, inspiring and motivating.
- Investor · Houston, TX · Member since 2016 · 80 posts · 38 votes9y
Lunch breaks, nights and weekends you can find time to work on acquiring properties. Find a good property manager for your area and a good agent that'll bring you deals. I was where you are a few years ago and will be up to 4 doors rented come next Friday. Steadily growing while still working my 40+/week job and taking care of my family.
There will be busy times that seem to come along at the most inopportune times but outsourcing will allow you to focus the small amount of time you have available to building the systems and acquiring more properties.
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes9y
@Nathan Arceneaux my story is similar to yours, corporate job, small child, adding one property a year. We chose to focus on SFH in family neighborhoods and we sold our MFH. It is pretty easy to manage because our renters are long-term and really make it their home. Everyone tries to say get more doors, but I try to have less doors with higher dollars per door.
- Investor · Union, NJ · Member since 2011 · 838 posts · 295 votes9y
Hi Nathan,
Some sound advice here... I too work a full time job in NYC (live in Jersey have an hour + commute each way) also have 2 kids and currently manage ~ 25 doors myself... Yes it is overwhelming at times and things can get crazy, however I am just not ready to hand things over to a PM just yet....
I am all about trying to maximize cash flow now so that I can retire early and put around in my pickup truck and cut the lawn at my properties and collect the rent to keep me busy lol My goal is be done with W-2 income by 55 60 the latest... At least that is the plan - subject to change!
I have a mix of condos, multis and single families all of which throw off + cashflow. I am first and foremost about monthly cashflow and tax benefits... equity, appreciation are secondary but almost come automatically when you have cashflow and you buy right.
What I do isn't for everyone but I have somewhat of a nice system that allow me to manage pretty nicely. I have a great network of Tradesmen that I reply on as I definitely do not deal with leaks, and other issues that arise but I field every issue that arises as I need to know what is going with my property at which time I than delegate.....
Do what works best for you. Try to manage yourself and if it gets too much hire a PM to oversee your property just be sure to screen and interview and get references before hiring a PM.
Good luck!!
Chris
- Real Estate Investor · Charlotte, NC · Member since 2016 · 92 posts · 103 votes9y
As suggested by others, hiring a PM is a good place to start. I work around 60 hours a week in the corporate world and have 82 units. I don't have any issues balancing my time, however, I'm 24, single, and have no kids.
If you truly want to expand your portfolio, hire a quality PM and focus your time on acquisitions. I know many will disagree with me, but I find self managing to save money penny wise and pound foolish.
- Property Manager · Round Rock, TX · Member since 2014 · 9 posts · 3 votes9y
You guys are great inspiration, impressive figures all around, wow! @Chris Masons , @Kyle R., @Joe Splitrock, @Jieh Larson you guys are killing it!
Chris, sounds like you would be done well before your 55-60, unless you are going for a larger amount of monthly cash flow. That commute must be a killer in and out of the city, unless this is where you get caught up on things for your day job and RE business.
Kyle, sounds like your just destroying it at 24, wow. You must have a larger multifamily in your portfolio??
- Investor · Union, NJ · Member since 2011 · 838 posts · 295 votes9y
Thank You... I am 43 now and bought my first property @ 23 so been at it for awhile. It truly is a labor of love for me for the most part....
While I have a good amount of leverage in this low rate environment I feel like money is just so cheap to borrow and it makes sense to leverage these amazing low interest rates....
When I first started in 1997 I bought a 4 family and my rate was 7.875 I cash out refied a single family investment property @ 4.25 from 4.75 and pulled out 44k My payment only went up ~170 bucks
These truly are great times to be investing...
regards,
Chris
- Investor · Philadelphia, PA · Member since 2010 · 739 posts · 372 votes9y
It's not easy. But there's light at the end of the tunnel (so I'm telling myself)
- Austin, TX · Member since 2015 · 2 posts · 0 votes9y
Haven't even posted before, but your goals are so similar to mine, I had to. I am moving very close to your location while picking up a job in corporate America myself. I too am hoping build a passive RE portfolio outside of my full time job. I am looking closely at various turnkey companies and property managers in the Austin Area. I am willing to reduce my margins if it means keeping my investments truly passive. I would love to hear more about your experience in achieving your goals. Thanks for posting.
- Real Estate Investor · Charlotte, NC · Member since 2016 · 92 posts · 103 votes9y
Originally posted by @Nathan Arceneaux:
You guys are great inspiration, impressive figures all around, wow! @Chris Masons , @Kyle R., @Joe Splitrock, @Jieh Larson you guys are killing it!
Chris, sounds like you would be done well before your 55-60, unless you are going for a larger amount of monthly cash flow. That commute must be a killer in and out of the city, unless this is where you get caught up on things for your day job and RE business.
Kyle, sounds like your just destroying it at 24, wow. You must have a larger multifamily in your portfolio??
Thanks, Nathan. I do, I recently sold the majority of my condos/SFH and bought an 80 unit complex.
- Property Manager · Round Rock, TX · Member since 2014 · 9 posts · 3 votes9y
Welcome to Austin, I work in Tech as well. I think you may have to look outside the Austin area to see positive cash flow. We have had good luck in Round Rock, Pflugerville, Georgetown. With prices so high in Austin, seems folks are lucky to break even on a recent purchase. I would assume if your looking at Turnkey, you may consider outside of the general area for additional margin. You may want to look into "house hacking" for your initial move into the local market, something to consider.
But welcome and thanks for the intro.
- Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes9y
Great post and replies. I have 5 kids, a 60+ hour a week job, and 34 doors....but only 3 properties. Having only 3 properties makes a big difference (as does having a 3rd party PM).
On a more personal side, I have goals around my marriage, family, job, and finances. I am particular about only spending time on the things that best achieve those goals and, more importantly, not spending time on stuff (and people) that are not aligned with them.
"You need to be doing fewer things with more effect instead of doing more things with side effects."
Gary Keller
- Investor · Indianapolis, IN · Member since 2014 · 208 posts · 137 votes9y
I handle this by being self-employed. That helps a lot. :) When something real estate-related demands my time I can take a break and deal with it. I also have a property manager and a contractor I trust - these are invaluable. The property manager is not perfect but they save me tons of time and the cost is more than worth it. I wouldn't have lasted long in this business if I had to deal directly with all the stuff they deal with. It's not just leaky toilets, but stuff like giving relationship therapy to tenants who are boyfriend and girlfriend so that they don't break up, causing one of them to break their lease, etc. If I wanted to conserve even more time, I'd probably stop even looking at properties in person. If you have a good real estate agent, they can give you feedback on properties and send you photos - you just have to take care of the numbers. I don't think this business has to take a lot of your time if you learn to let some of the details slide and build a good team.
- Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes9y
Hi Nathan! Well you used a key phrase there- "active" real estate investor. The answer to your question is- don't be an active investor, be a passive one. There are plenty of ways to be extremely hands-off with investment properties. For instance, if you pick a property that needs a massive rehab and then you want to landlord it yourself, you have maximized how much time and effort will be required of you. Versus if you buy a rent-ready house and use a property manager, your only job at that point is to make sure the manager is doing his job. And then there's every combination in between. Hope that helps!
- 9yShawn AckermanPro MemberReal Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
@Nathan Arceneaux The short answer is Team, Team, Team. Since you've clearly pointed out that time is your biggest issue then you must find a way to mitigate that barrier. I've been in your shoes and quite honestly it took me over a year to put my team together 750 miles away in the Mid-West market. But now I don't have to step foot in the market to close on new deals or to wholesale deals to other investors. One of your biggest investments for your REI business will be building your team. If your looking for guidance on how I accomplished it PM me and we can set up a call. Best of luck to you. Always remember to persist and you will WIN!!!
- 9yTony WooldridgePro MemberRental Property Investor · Walla Walla, WA · Member since 2016 · 480 posts · 346 votes
@Nathan Arceneaux, GR8 post, good question that challenges many to think about their current circumstances! Disclaimer, I am fairly new to the REI world but EXTREMELY active in it at the same time. I just bought my first FLIP recently and have a full time W2 much like a lot here on BP. It is quite challenging especially with doing a good majority of the work myself (GCing the project). It certainly isn't for the faint at heart.
I recently came to the conclusion that I personally need to take at least 1 day off on the weekend to regroup and spend quality time with the fam cause if you don't you will absolute burn yourself out and not to mention more importantly be missing out on aspects of your families lives! So my newbie advice as it applies at least to my minimal experience and situation is to always no matter what PUT YOUR FAMILY 1st above all else cause without that what is the purpose/reason to doing anything? Best of luck to you and will be looking forward to seeing you around the site. Thanks for allowing me to share here is to wishing you a successful 2017 in your REI ventures!
- Rental Property Investor · Phoenix, AZ · Member since 2015 · 222 posts · 126 votes9y
@Nathan Arceneaux Handling all of these is NOT easy. For me, my wife and business partner have been wholesaling for the past three years, while I'm working a full time and part time job, and my wife is raising our two boys at home. One is 22 months, the other is two months old. I have also started a side project to create passive income, directly related to real estate.
We are also actively searching to buy an investment property out of state.
How is all of this done?FOCUS FOCUS FOCUS FOCUS FOCUS
After the boys and wife are in bed, I work. To be most diligent, I use Asana to create tasks for myself. This way, I can stay on task and stay focused. Before bed, I set my day ahead, so when I'm at break at work, I can make calls, take calls and use my time wisely.
Used to be a news junkie. Gave that up and only listen to podcasts and Audible books from work to home.
Saturday mornings are a glorious time. I go to the YMCA, work more and everyone comes up and we spend time together. Sunday is our day of rest. No business talk, no nothing. Family time only. Everyone needs a break to recharge.
It's not easy and can be really frustrating, but if you focus, it can be done.
- Investor · Bonifay, FL · Member since 2017 · 24 posts · 8 votes9y
I had to develop a system that would not only work around a full time job, but also allow for extended absences as my job took me other places. What I found to the most crucial was finding the right tenant. I fell on a process of purposely planning my rents to be $75-100 below market value. This $1200 a year I recover by my lower turn over rates (carpet, paint, advertising etc). With a lower rate I can look at problematic tenants after making required repairs that they have the option to leave if they want. Being a signed lease it is my option to let them out of it. Usually they don't because my rates are better and using this process I have had a few bad apples come and go, but without actually tracking it I'd have to say my tenants average about 3.5 years per lease. I had one going on 7 years. This keeps things easy as they know my expectations and trust that I will take care of them.
I also use property management and have authorized them to make required repairs up to $200 without calling me. I require an immediate email with the description and invoice. This also eliminates most of the midnight calls and only draws in my attention when its truly an issue.
Hope this helps and best of luck with your family.
- Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes9y
@Nathan Arceneaux - I was in your shoes a few years ago (except for the kids) working 50+ hours a week and travelling all the time. I quit my corporate job (actually 3 years ago today) to do this full time but I did it for a few years while working. I set up my business to be as automated as possible by doing online rent collection, setting all my leases to expire at the same time (yea it sucks when I have 3-4 turnovers at once but since they all expire at the same time I only have to do it once a year) I also figured out what my time was worth and hired out things that were not worth my time.
I have handymen, electricians, HVAC guys, ect I trust that I just send if there is an issue and they charge my credit card. Putting lockboxes on the property makes it easier to provide access when needed. So when I have a turnover I put a lockbox on the property. The tenant has to move out by noon on the last day of the month and they just leave the keys in the lockbox, the cleaning company comes at noon and uses those keys, the painter comes at 3 pm and uses the same keys, if there was damage I noted in the pre-move out inspection I leave the supplies in a common area and have the handyman over in the afternoon. I come by around 7 pm and it is cleaned, painted, and fixed up. I change out the locks, put the new keys in the lockbox and the tenants moving in on the first use it to get into the unit and move in. Takes me about 2 hours total.
Don't like doing the books, hire it out. Don't like leasing out the units, hire it out. You can pretty much hire out all aspects you don't like or don't do well without hiring a full service PM. But sometimes that is best. Part of my portfolio is a 90 minute drive, and for the first 18 months I was involved in managing it. It was too much of a time suck for me so I hired a full service PM. I got about 20 hours a week back in my life by doing so and what I pay them is worth it to me because I have my time back.
Most of us do this for a reason, freedom. Remember why you do this. My Dad passed away the day before he was to retire from his job of 25 years. He worked 50 hours a week to give us the life he wanted for us, and I am so grateful for that. But I am sure when he was about to die he was thinking of all the baseball games we went to, or the family vacations, or the picnics in the park, not how much money he had or what he accomplished professionally.
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