Advice on next step: Multi-units

[Broker]

I am new to the forum, this is truly a great forum offering a wealth of knowledge. I would like to get some advice from the board. I am a Licensed Real Estate broker with the state of California, I have been in the business for four years. I worked my a$$ off in the first few years 7 days a week 10-12 hours per day to get where I am at. I have skyrocketed in my business from a no body to a well respected Broker averaging roughly 50 sales per year averaging $9,800 per deal in commission (by no means am I bragging since there are several agents averaging over 100+ sales per year.)

I am at time in my life where I am doing some soul searching. I love the Real Estate business and I am passionate about it. I enjoy doing it and would like to be involved the rest of my life. I am 26 years old and I am determined to be a multimillionaire by 30. I would like to start investing in multiple unit income properties as soon as possible but as you know I still have to work for the money I make. I want to create a large passive income every month but I only have 150k saved for investments or units. I don’t know if I should concentrate on opening my own Real Estate office first with the money I saved or keep working independently until I have enough money to buy some investments. I thought about buying some cheap properties at auction and flipping them to earn some extra capital. Or should I do both at the same time? I guess I am afraid to pull the trigger and I don’t know where I should start to ensure I hit my goal.

My main goal is to expand my Real Estate business into owning multiple unit residential, commercial units, and Real Estate Development while creating a new Real Estate brokerage that I can eventually franchise. I want to basically own everything .

To give you some background when I first started in this business I was fortunate to succeed right away. I started making a lot of money, bought a big expensive home, expensive cars, and before I knew it I had $20k a month in bills and I was no longer working for myself. I was working to pay off debt.. So I decided to make a change and this was one of the most invaluable lessons I learned. To quote someone else on this forum they wrote "Entrepreneurs live below their means so later in live they can live like no one cant." Or something like that.. Anyway I sold my expensive home short sale, paid off all my credit card debt, and reduced my expenses 85%.

What would you suggest I start with to get off the slow lane and onto the fastlane an ensure I do hit my goal by thirty? I really appreciate you reading and any insight is greatly appreciated. Thanks again!

 

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[MJ DeMarco]

Welcome to the board and a very nice first post. Thank you. Question ... did John Assaraf ever write a book about real estate millions via brokerage? You might want to look into that since he would be someone I'd might follow since his wealth was made that way and now he does speaking engagements and LOA trainings.

 

[Broker]

Actually I'm glad you brought that up. I noticed you mentioned John Assaraf in another post and I just visited his website. Thanks for the heads up!

 

[Salinger]

I would like to start investing in multiple unit income properties as soon as possible ... I only have 150k saved for investments or units.

I don’t know if I should concentrate on opening my own Real Estate office first with the money I saved or keep working independently until I have enough money to buy some investments.

I guess I am afraid to pull the trigger.

My main goal is to expand my Real Estate business into owning multiple unit residential, commercial units, and Real Estate Development while creating a new Real Estate brokerage that I can eventually franchise. I want to basically own everything .

What would you suggest I start with to get off the slow lane and onto the fastlane an ensure I do hit my goal by thirty?

Okay, I know SoCal is expensive, but I'd say $150k is enough to start investing. With the LTV ratios a couple of years ago you could have bought $600k+. Now you should still be able to get $450k worth of property. I'm sure you know this.

Also, being in the business, you have access to the best information, and can see properties as soon as they come on the market, if not before. That's a huge advantage.

It sounds like it really does come down to being afraid to pull the trigger. Like Nike says: "Just do it." If you don't yet know how to evaluate investment properties, get some help. There's some here, and probably some experts in your office.

If you eventually want to own EVERYTHING, you'll need to start with SOMETHING.

Welcome to the Fastlane.:Welcome:

 

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[Sid23]

What part of California do you live in? What type of broker are you - multifamily, industrial, commercial?

I ask what type because I think you next step depends on that. Did you really do 50 transactions in 2008? Are you on pace for that this year?

 

[Broker]

Thank you for the posts, and Salinger I think you are right. I was just writing down my goals and I am going to Commit to purchasing a multiple unit property. My goal to open my office is by August 1st, 2010. This gives me a year to prepare my business plan and save enough reserves to keep me comfortable. I am experienced with multiple unit income properties and I have worked with alot of investors in the past. I guess its silly since I'm selling the product but not buying it.. Anyway thats going to change. I just recently closed a 3.3 Mil commercial deal (which was my only my second transaction.) So I'm not really experienced at all when it comes do commercial.

Sid23: I specialize in residential properties including 1-4 units. I have sold a large amount of properties with over 5 untis as well. Commercial I only have had a few transactions. I do average 4-5 transactions every month. My office is located in the city of Long Beach, CA. I grew up in Orange County and still live there now. I specialize in Orange and L.A. county becuase I know the area really well. I can tell you based off a city of crosss streets the average sales price of an REO or standard sale when it comes to 1-4 units. In 2008 I opened escrow on 42 properties. So far this year will be my best with over 30 properties sold so far and on schedule for atleast 50.

Thanks for your input, I appreciate your responses.

 

[Sid23]

wow, you sound like one of the most successful brokers in California. 50 transactions this year...unreal.

i work in multifamily development and acquisition (focus on 40 units +) and most of the brokers I know haven't done a deal all year.

 

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[Broker]

Re: Advice on next step

Sid23,

Perhaps you are right about those other brokers, If I dealt with large transactions like that one I would be slow too. I mainly deal with first time buyers and investors with an average sales price of 300k. I prefer to stay within this market range because I would rather sell 50 homes and make 500k in gross closed commissions instead of 1 or 2 deals with a sales price of 20+ mil and make the same amount. The momentum feels better.


Everyone I speak to asks how I am doing with this concerned and almost sympathetic tone when they hear I am in the Real Estate business. All I can say is I learned from one of the most acknowledged and respected brokers/trainers in the industry and I had the drive to work harder than most of the other Realtors..

 

[Cat Man Du]

Anyway I sold my expensive home short sale, paid off all my credit card debt, and reduced my expenses 85%.

What did the short sale do to yor credit???

 

[Yankees338]

Sounds like you need a plan, Broker! Hey, I do, too.

That should at least minimize your worry about doing a deal of your own. Once you have a plan in place -- as long as you follow it -- you'll feel a lot more comfortable about the whole process.

... At least that's what I hear.

Damn... I need to start listening to my own advice.

Good luck! We're glad to have you aboard, and thanks for the intro. It was a nice read!

 

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[tchandy]

Broker,
I'm not an expert in the field that you work in daily. But I was wondering by what you stated that you wanted to own commercial RE as well as start your own RE brokerage and then franchise the business. Wouldn't this be two completely different things? I'm not saying you couldn't do both but it looks like you combined two of your goals that you want to accomplish in the next year. Do you have a basic plan how you'd do this?

My main goal is to expand my Real Estate business into owning multiple unit residential, commercial units, and Real Estate Development while creating a new Real Estate brokerage that I can eventually franchise.

and

I was just writing down my goals and I am going to Commit to purchasing a multiple unit property. My goal to open my office is by August 1st, 2010.

Tom

 

[andviv]

Welcome to the board. Your numbers are very impressive, given the current market.

If you already know the REO market and are very experienced (your numbers prove that), then why not stick to it and ride it? You know when it is a good deal, you know how much it would sell for, you would make money out of the commissions of your own deals, heck, you may even qualify as RE professional and get extra tax deductions. Why venture far away from what you are an expert already?

 

[cmaq]

Great work. You should definitely focus on opening a brokerage, because that can create some passive income (Fastlane style), but don't lose sight of buying some property as well. Perhaps start with something small so you have some cash for the new business and a chance to get your feet wet as well.

 

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[Broker]

Thanks for the posts everyone. The short sale damaged my credit alot, lowering my mid fico from a 802 to a 653 according to a report I ran last month. This is creating a problem with buying a multiple unit, I cant really get financing unless I take on a partner to help obtain a loan.

I think you are right Yankees338, I need to right down exactly what I will accomplish within the next twelve months and how I am going to do it.

Tchandy: Perhaps the way I wrote it was a bit confusing, I didnt spend a lot of time correcting any errors. My long term goal is to own all different types of investments including multiple unit residential, and commerical properties. Opening my office and creating a franchise is the base of my business goals and would primarily be a residential office. Owning commercial and residential properties is my investment goals. Hope this makes sense.

Again thanks for your input everyone, I appreciate it!

 

[hatterasguy]

Go for it. I know a very successful broker who owns a RE sales office with multiple locations, builds spec houses, and owns/invests in any other kind of property you can name.

From what I have seen its a very good business model.