How to build a RE portfolio while managing a full time job

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How to build a RE portfolio while managing a full time job

Nathan Arceneaux
Property Manager · Round Rock, TX · Member since 2014 · 9 posts · 3 votes

Hi Guys,

I work in Corporate America, typically about 40-50 hours per week plus travel at times.  At home we have two small kids.   We have little time to invest in real estate, but have managed to build a decent portfolio over an 8 year time frame.   We have had a goal of purchasing one buy-and-hold investment per year, but would like to understand how others are handling this same issue. 

How do you guys handle working full time, managing personal time with family and being an active real estate investor?

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Andrew Johnson
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
9y
Nathan 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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  • Garrett Diegel
    Rental Property Investor · NV · Member since 2014 · 241 posts · 85 votes
    9y

    @Brie Schmidt @Nathan Arceneaux

    That is fabulous advice!! From someone in the same position, 35 years old, business, real estate, 2 kids, wife, dog, etc. It really is great to hear that other people have the same struggles we do and that they have overcome it. For us, we only have one tri-plex unit currently but we are doing all we can to put the systems in place now so we don't have to scramble around later. Everything from what Brie said on the e-rent payment options to listing out what paint we use in a spreadsheet so our rehab people, or, just each other, can purchase things with much more ease. For me the struggle seems to be scale on the acquisition side. With only three units I can say my systems are great, but, I don't have enough property to truly stress test them anyway. We are hoping to scale both systems up together in order to acquire more properties quicker and manage them in the mean time. I'd say Brie knows what she is talking about here

    0Reply
  • Nathan Arceneaux
    OP
    Property Manager · Round Rock, TX · Member since 2014 · 9 posts · 3 votes
    9y

    @Garrett Diegel , @Brie Schmidt

    Thanks for the advice and time out of your busy day to respond, much appreciated!  I need to go back and listen to your podcast Brie for more inspiration!!

    https://www.biggerpockets.com/renewsblog/2015/07/23/bp-podcast-132-brie-schmidt-grew-50-units-in-1-year/

    1Reply
  • Nathan Arceneaux
    OP
    Property Manager · Round Rock, TX · Member since 2014 · 9 posts · 3 votes
    9y

    @Julian Diaz

    Thanks for the advice sir, really valuable.  I do this as well, at least so far this has been our strategy. To provide clean functional housing for a good price in a good neighborhood with good schools.  This like you mentioned,  allows for great tenants with little turnover, has helped tremendously.

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  • Garrett Diegel
    Rental Property Investor · NV · Member since 2014 · 241 posts · 85 votes
    9y

    love @Brie Schmidt 's episode - i've got a lot to learn that is for sure. 

    1Reply
  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    9y
    Originally posted by @Nathan Arceneaux:

    @Garrett Diegel , @Brie Schmidt

    Thanks for the advice and time out of your busy day to respond, much appreciated!  I need to go back and listen to your podcast Brie for more inspiration!!

    https://www.biggerpockets.com/renewsblog/2015/07/23/bp-podcast-132-brie-schmidt-grew-50-units-in-1-year/

     You should listen to #78 first, that one addresses more of the time when I was working

    Podcast Guest on Show #132
    Second City Real Estate4.821 Reviews
    WebsiteView Page
    1Reply
  • Peter TverdovBusiness Member
    Developer · New Brunswick, NJ · Member since 2015 · 1k+ posts · 2k+ votes
    9y
    Originally posted by :

    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!

     I did the same thing recently. Have been scaling a PM business and my own real estate portfolio while commuting 90 minutes each way to work (W2) and being gone from home 7-7 5 days a week. Was getting stressed out because something will have to give a lot sooner than I have been planning. Sunday's are a day of rest and family time - period. 

    [email protected]732-289-3823
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  • Shiloh LundahlPro Member
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    9y

    @Nathan Arceneaux as you have read, the way to invest in real estate while you work a full-time job and are busy with family is to develop a system where you are able to use other peoples' time. Of course you will have to pay them for their time, but that cost should be included in your calculations for purchasing the properties. Right now we have 35 doors including 1 commercial building with 12 offices, 3 duplexes, 10 SFRs that are leased, and several others that are in the stages of rehab either to be flipped or to be lease optioned.  We also have five businesses. In order to manage everything I have an assistant that manages most of the day today things that come up with the properties and taking care of all of the tasks for the business. Without an assistant there would be no way for me to work full-time and still be able to run my other businesses and invest in real estate to the level that we are investing.

    480-206-1209Podcast Guest on Show #287
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  • James Fowler
    O Fallon, IL · Member since 2016 · 48 posts · 19 votes
    9y
    Originally posted by @Joe Splitrock:

    @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.

     I am starting to think I value your approach, as we decide on our goals. Can I ask what is your dollar per door performance? And I'm assuming this is factored without paying PM fees out to yourself with your numbers?

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  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    9y
    Originally posted by @James Fowler:
    Originally posted by @Joe Splitrock:

    @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.

     I am starting to think I value your approach, as we decide on our goals. Can I ask what is your dollar per door performance? And I'm assuming this is factored without paying PM fees out to yourself with your numbers?

    Without management fees I am getting on average $400 per door after expenses for properties on a 30 year mortgage. I put a couple on 15 year mortgages and I am getting $100 a door, which sucks but it is part of a payoff strategy. I don't use the rental income to live on, so I reinvest all the money towards down payments and pay down. I have a couple paid off, so the cash flow is really good there. I don't follow the BRRRR strategy. I buy properties that don't require rehab, so I can have them producing income immediately after closing. It saves me time of managing rehab. I put the properties on long-term fixed mortgages and work towards paying them off.

    It is all about goals. I acknowledge that my approach will not scale a rental empire as quickly as other approaches, but I should be able to quit my day job by 50 and have $100K income on 10 paid off houses with only ten tenants. Or I keep working my day job and scale to higher income. I have a good job and like what I do, so for me rentals are "plan b" or "side hustle" or "retirement plan".

    2Reply
  • Timothy Gleason
    Military · Pensacola, FL · Member since 2014 · 53 posts · 63 votes
    9y

    Love this discussion.  Like many here, my story is similar:  young kids, +50hr work weeks, 1hr commute each way, etc.  I'm at (1) VR, (2) SFRs, (1) Triplex in 3 yrs.  Here's my strategy:

    - Don't give away your 'POWER HOUR'.  We all have a time each day where we're most efficient.  Mine is 5:30-6:30AM.  That hour is goal hour and dedicated to my real estate pursuits.  I won't give away my power-hour to a W2 job.  Find your power hour and take custody.

    - Develop a metric for return on time, RoT.  I went into the short-term rental game with big eyes.  It's my most profitable property, but also my biggest time suck and I'm currently looking to transition out of the game.

    - Scale up. I've already realized the disparity of my properties causes headaches for maintenance & CAPEX. I'm heading to MFH so I can buy the 'same kitchen' over and over without having to re-measure, re-bid, etc.

    - Make it a game. Additional to the "1 property per year", I also make it a goal to shield all of my W2 income with my REI each year. This generally means I pick up a property and put some rehab $$ into it. Usually between closing costs and repair expenses, I zero out my W2 tax liability which really feels like WINNING.

    - I also use a full PM for my SFH & Triplex. I self-manage my VR and it's burning me out quickly. I don't sweat the PM fees. If I tip my waiter 20%, I shouldn't moan about the steward of my properties earning ~13%.

    2Reply
  • Account Closed
    Contractor · Los Angeles, CA · Member since 2015 · 887 posts · 323 votes
    9y

    @Nathan Arceneaux

    Sounds like you may need a property manager. I just heard a podcast from simple wholesaling (@Brett Snodgrass). The guy they interviewed stated you can start by looking at what you are doing-cut out the busyness in your life and focus on what is productive. You can make the same amount of money working 20-30 hours a week by focusing on the productive parts. Outsource other parts of your business. In other words if you need to do marketing and spend say $5K but in return makes you say $50K that would not only be a great ROI but a great ROT (Return On Time-just made it up!)- time with those that matter to you most. Hope this helps and all the best to you.

    Jorge

    0Reply
  • Marcus Johnson
    Investor · Saint Paul, MN · Member since 2015 · 663 posts · 512 votes
    9y
    Why is your goal to have more units? Couldn't you focus on paying these off and having some serious cash flow with very little risk. To me it seems like there would have to be a good reason to take on more risk. For example say you have 5 paid off duplexes each Renton for $2100 and after expenses your net profit on each duplex is $1200, that would allow you to draw $6000 a month. Now scale that up to 8 properties and now your at $9600 a month with very little risk. Yes it will take time but down the road you're really going to be profitable.
    0Reply
  • Bob Lachance
    Specialist · West Hartford, CT · Member since 2016 · 549 posts · 53 votes
    9y

    Hiring a Virtual Assistant is one option to look into. Building buyers lists, generating leads, working the phones, running comps, and marketing, it all can be done using a virtual assistant. This is a great way to spend more time analyzing deals and talking to buyers and sellers. Our services provide 4-6 weeks REI training for VA's that include the different systems and processes in ones personal business.

    0Reply
  • Dustin Lavender
    Investor · searcy, AR · Member since 2016 · 147 posts · 111 votes
    9y
    Dude you have to Nike up and just do it. I am doing it with a full time job and 4 kids. It is a lot of work and commitment to where you want to be 10 years from now. You have to work for it.
    0Reply
  • Brett Snodgrass
    Investor · Indianapolis, IN · Member since 2014 · 2k+ posts · 601 votes
    9y

    The biggest thing is to learn in a “needs­only” incremental approach and to take action. When you are just starting out, there is so much information out there that it’s easy to get bogged down. First determine what strategy you’d like to start with. Then only learn what is needed for the next step. Then once that’s completed, learn what’s needed for the following step, and then the next and so on. This way, you won’t get distracted or overwhelmed. If after you’ve done some deals you want to try a different strategy, that’s fine but when first starting out pick something and stick to it until the end. Whether it’s getting your first flip down, wholesaler deal or rental property, choose only one, see it through and then assess if you’d like to make any adjustments from there. Hope this helps!

    1Reply
  • Brett Snodgrass
    Investor · Indianapolis, IN · Member since 2014 · 2k+ posts · 601 votes
    9y

    @Account Closed Thank you for listening in our podcast. 

    1Reply
  • Com M.
    Rental Property Investor · Murrieta, CA · Member since 2016 · 129 posts · 67 votes
    9y

    @Nathan Arceneaux we have a lot in common!  I am working a 60 hour a week job, with 2 small kids.  I am also planning on adding 1 property to my portfolio each year for the next 10 years.  The way I am able to do any of this is with a great PM company. I am investing out of state - and the PM takes care of most of the day to day work with the property. My numbers all figured management fees as well as repairs/maintenance/capex so they still cashflow and I know it could do even better if I kept that 10% plus fees but then I wouldn't be able to focus on my work which is not what I want to happen for now. 

    How many are you currently self managing while working? I just purchased my first duplex and didn't even think about trying to self manage even the first - so a big tip of the hat - keeping that extra bit in the beginning and reinvesting can really make a big difference but I knew with my work schedule it wouldn't be fair to the tenants to not have a professional available to work with during normal business hours and a local to call for emergencies.

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