I had actually done several of those things. I invested in 4 units, condos, and single families while working. About a year ago I went full time into real estate. If you go this route make sure you are ready to suck it up for a while since getting started is difficult for even the best. I am a broker in CA and am now working on commercial deals and larger residential stuff. Real estate folks care what deals have you been involved with since there are a lot things to be aware of. If you can find a mentor at a brokerage or investment firm part-time that is what I would recommend. There are opportunnities in real estate in any market. Real estate is not just buying and selling properties there are deeds of trust, re stocks, and a huge list of other money making avenues related to a collaterilized asset. If your willing to suck it up you will do very well in the long run and will build up equity a lot faster than working for someone - just keep your eyes open.
I know this is a little bit off topic, but I hope that you can give me some suggestion.
I am in my mid-thirties, have been working in IT for over 10 years, and looking to start investing in commercial real estate, and in fact, I am so interested in real estate investing that I got my real estate license and passed the 1st course of CCIM a year ago.
My dream is to have my own real estate investment / development company one day, just like Ray.
There are different career path I am considering to achieve my dream, and I hope that some of you who are experienced in this field or have similar experience give me some advice:
To stay in IT industry, save enough money to start investing in commercial real estate part time, and learn the skill along the way. Work as a commercial real estate agent part time to learn about this business. Also get a CCIM and Appraiser designation.
To work in a national commercial real estate brokerage firm to learn about the business, and to build the network, and save money to start investing in commercial real estate. Also get the CCIM designation and appraiser designation.
try to get into a small developer / real estate investment firm and learn the business from there. But the salary in the beginning may not be able to support my family (I have 4 kids)
get an MBA or enrolled in CFA to get into pension fund or real estate private equity fund as an analyst, and learn this side of this business, not sure if the experience and knowledge learn in these kinds of big fund is useful towards my dream.
study full time 1 year for a Master in Real Estate to enter a development company in a higher level position to learn the business.
Any suggestions about the above paths, which one has the best chance of achieving my dream of owning my own real estate investment/development company one day?
I know I can have a comfortable living staying in IT industry, but life is short, and I really want to do something now that I won’t regret when I looks back when I am old.
I don’t have much savings now to invest in commercial real estate now, what is the minimum amount of money I need to start investing in commercial real estate? I just want a rough figure so that i can have a target. I am in a big city where a small apartment buildings with 10 units will cause 1 million or 2…
My advice is to keep your good paying job and build up
capital with a plan. Saving money until you can invest
in commercial real estate is not a good plan, because
most people would never be able to save (from paychecks)
as fast as the market goes up.
I started out in my early 30’s as well. I was working
long hours for a software startup in bay area (CA).
I built up capital by:
buy a home I could afford in up-and-coming area.
commute may be not ideal, amenities may be lacking,
but within 3 years equity built up allowed to
upgrade to the next one. built up tax free capital
this way by moving 3 times in 10 years, each time
moving up in price (but keeping the mortgage
payments the same - you dont want to lose your home)
buy and hold small houses in up-and-coming areas
(FL in 1999). had to go out of CA to find these.
cash flow positive, 65k per house was easily
affordable. and sold when prices appreciated
(2004-2006).
start with 4-plex to get feet wet. again must be
positive cash flow to be affordable when capital
is low. I found one where owner passed away, and
the kids wanted to sell asap to divide up the money.
next to university, rental to students. money is
good, and students tend not to be too picky. but
unfortunately they dont keep it up either.
provided great experience, sold it later for good
profit
1031 exchange multiple little sales into one big
commercial property, where 25-30% down was needed.
you need to figure out your own version of some such
plan.
it is possible to build up >1M capital in less than 10
years, all while working at a company full time.
I cant speak to development and more active forms of
investing. I am a passive investor. I browse loopnet
and MLS for fun, and buy low in up-and-coming areas,
and get property management companies manage all
properties.
since 2005, I have been a buyer of stocks more than
buyers of real estates, except to park my real estate
profits in university condos in Austin TX (where I
live now).
I think when the real estate prices come down more,
maybe some time next year, I will be in the market for
water front condos if they ever cash flow.
You and I are in the same situation. Although I don’t plan on leaving my job. However I do invest part-time. I have often thought about going into commercial real estate, but working for someone else at a lower salary is not an option. Option 1 is your best bet. A license is good, but beyond that I don’t think any more formal education is going to provide any significant benefit to reaching your goals. You can learn more from this forum than most places. I would suggest that you practice your license part-time as an independent rep with a small development firm if you want to learn the development/leasing side of the world. As far as investing the developer might sell you some of the development at a discount and then you can turn around and rent it. In all reality you don’t need that much experience in investing…you just need to make sure that you do your due diligence, make sure the numbers work, bring a little money to the table, and know what responsibilities your taking on as an owner. Most importantly don’t bite off more than you can chew. Start small and then work your way up…just like monopoly! By owning your 1st property you can create leverage to buy your next property. As far as how much things cost go to loopnet.com and check out all of the different types of commercial properties that are for sale. You can buy things in a range from $200,000-$10,000,000. This gives you an idea what is out there and what the market is doing. It’s always best to find deals on your own to get a higher cap rate, but loopnet is a good baseline. I hope this helps and I wish you luck. You will never regret trying regardless of the outcome!
Re: Advice on career choice and investing - Posted by brandoncbsre
Posted by brandoncbsre on October 12, 2007 at 08:51:51:
Im no expert, but I would keep your current job. Try working part-time in a commercial brokerage to get a feel for how the deals go down and when you run across a good deal try to go into it with as little money as possible. With that said make sure you have reserves, as a highly leveraged property doesnt cashflow a whole lot. Take it one deal at a time and if you stick with it you should reach the point where it makes sense to leave your job. Good luck.
Being a pessimist on the economic and real estate outlook, I would be real careful about taking on a lot of leverage in a market like we currently have. As long as values are increasing, leverage is great. But I think the real estate market going forward is going to be very precarious in both residential and commercial. If values don’t rise like they have in the past, then highly leveraged properties may turn out to be an anchor rather than a bonus. I’d be real careful in this environment.