My update...Still moving towards the Fastlane? (LONG POST)

[Sid23]

WARNING: VERY, VERY LONG POST!

A question for the great minds here. I appreciate all the knowledge everyone here has and continues to share.

A quick refresher (and update) on my current situation. I've been working for a real estate development and investment firm for the past 3.5 years. It is a small firm run by two executives who used to run a division of one of the big national development firms. Our office works on 6-9 deals at a time and only has 6 people...I'm the lowest on the totem pole other than the admin assistant/office manager.

Our firm focuses on new apartment development; although in the past 2 years we've been doing rehab projects as well (repositionings ala Steve 0). We focus on our market and do all projects within 1 hours drive from our office. We don’t even look at projects outside of our area (mainly because the owners don’t want to travel). We do some small deals ($5-20 million), but most projects are ~$50-200 million, although we have 1 deal right now that is $750 million.

My current position has me managing 2 new development projects (from site planning phase to construction completion). One is a $6 million project; the other is $18 million. I oversee and manage all project consultants (architects, engineers, general contractor, etc) throughout the process. I’m usually the youngest guy in the room by about 10 years. (I’m definitely outside of my comfort zone most days).

We operate in a “supply constrained market†and large scale projects usually take at least 5 years to complete from acquiring an option on the land to delivering the last units. Some can take even longer. We just completed the approval process on a 71 unit project…it took 6 years of City hearings to get approved. Now it will be 2-3 more years to build. In the future, I see it becoming harder and harder to develop projects in my area and these timeframes lengthening. The industry is becoming more specialized, sophisticated and capital intensive and we are one of the few “small†development firms left. Most of our market is dominated by big national firms. I see this becoming more prevalent over time.

While I am 100% aware of what a great experience this is for someone my age, I am also starting to think continuing on this path will not help me reach the goals I've set for myself in the time frame that I want to achieve them.

And I see the future of increased responsibility…and it will lead to salary increases and more hours (until I’m the boss, which could be 10-20 years and I would still be considered “young†in our industry.) While I know it may sound like a good deal to many people, I don’t see the point of working 70 hours a week for only $150k in base salary and maybe a bonus from each project, if they are successful. $150k after taxes is a bit over 6-figures, which barely supports a family where I live. And frankly, I REALLY don’t want to move. I LOVE it here, as does my fiancée.

A good example of this is the time issues is the 6 year project mentioned above. One of the project managers has been working on it as his only project for those years because it was extremely controversial and time intensive. He makes that $150k salary and his bonus was based on this project. He worked 70+ hour weeks waiting for this project to cash in and put up with a lot of shit. The approval process dragged on and we missed the market. Now, no one wants to buy this project at all. If it would have been 3 years ago, this PM would have made $400,000. Now he’s looking at maybe $50,000. For six years of work! Yikes. I’m not naïve, I understand this happens with projects and some work, some don’t. But what I’m saying is unless you are the owner of the firm, how do you get more than 1-2 projects at a time, you just can’t unless you work 168 hours a week? So you could work 12 years on 2 projects and make nothing. Seems like you need more balls in the air than that.

The experience is the upside, the pay is the downside. I make a “decent†salary, but for my area is not that much ($70k). I have $60k in debt ($40k on ccards from my early 20s and $20k in school debt at 3.75%) and live in one of the most expensive cities in the US. I’m also supporting a fiancée. So I can’t quit tomorrow and go chasing my own deals…I’d be bankrupt in a month.

I have been told that I will receive “project bonuses†from now on every time a project cashes out. I wish I had an example of how much that will be, but I don’t. One of the minority partners told me his first cash out was $150,000, but that was a big project where he managed it and the firm did well. Not small deals like mine. I’m guessing I’ll receive $5,000 per project on the low end, MAYBE $25-50k on the high end (all before the tax man cometh). But again, we haven’t had a project cash out since I’ve been eligible for this bonus (11 months so far) and although we have a couple that look like something will happen, it may be another 6 to 12 to 24 months before anything comes through. Seems like a long time to wait for $5k. If it is $150k, that is a little better though I suppose.

I am not in a position where I want to or can leave my firm (financially or experience wise)...BUT, I've also realized even though it’s a small firm, I'm still working my way up the ladder. Everyone else in the firm is 50-60 years old (I'm 30), so I'm looked at as the "young guy" who has plenty of time, etc to get to where he wants to be. Although we do fastlane projects, our founders have no passive income, but do have low 8 figure net worths.

And one thing worth noting about my bosses – neither is a mentor to me. I’m not saying they should be or anything, just stating the fact. Both are pretty narcissistic people, not really concerned with other people in our firm. Don’t get me wrong, they are nice guys and good human beings, just not “supportive†bosses, but that’s okay. I have tried many, many times to get them to take an interest in my career and guide me a bit. My annual review is basically, “You’re doing a great job, here’s a small bonus and 15% raise.†Nothing more, even when I push them on stuff. I was taken to an industry event once, and I know that is their way of saying “good job, we want to expose you to more stuff…†Just don’t get much more than that. I know they think I’m doing a GREAT job however.

They both love working and do not have any plans to retire or do anything else. While I respect and admire all they have achieved, I do not want their lives.

My PLAN is different. While I may be working on development projects in my 50s and 60s, I will only be doing so because I WANT TO, not because I need to keep the money coming in. My 10 year goal is to have $50,000/month of passive income each month. WHEN I reach this goal, I may choose to continue to work, but I may not. I can’t tell how I’m going to feel then.

I do not think I have the experience or resources to put together a development deal of my own, although I do think I may be able to put together a $500k - $1M apartment rehab deal. I would have to start in a different part of the country though.

My employer would not be open to doing an apartment rehab in another part of the country, and frankly, I don’t think they’d be happy about me stretching myself thin to do a project of my own. They tend to criticize other people’s “dumb deals†a lot, and I can already hear them making fun of my idea. Granted, I’m not one to care what others think, but these guys have done over a BILLION DOLLARS in real estate deals in their careers, so they know what they are doing.

The issue is this: I feel like I should work hard and continue to excel and my firm, but also look for an apartment deal I can put together. I am, however, a bit nervous that maybe I am looking at my current job all wrong. Maybe this is a fantastic opportunity and I am not being smart about it. I think I’m working for some extremely talented real estate guys, and I’d hate to not get the most out of this situation. I left my last job prematurely and left a good deal of money on the table. There was no way to see that coming, so maybe I am holding myself responsible for something I could have never anticipated and that is clouding my judgement now?


We have a number of projects that may cash out in the next 2-4 years and I would hate to leave and then see I left a million bucks on the table, so I’m thinking the best plan right now is to keep working hard, put together a business plan for apartment investing and try and do a couple of deals on the side. Maybe I can get the company interested? Or maybe I can at least get their blessing to pursue them while continuing my employment?

Any bright ideas? I feel like I'm missing something somewhere in my line of thinking. Any insights would be appreciated.

 

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[andviv]

And one thing worth noting about my bosses – neither is a mentor to me. I’m not saying they should be or anything, just stating the fact. Both are pretty narcissistic people, not really concerned with other people in our firm. Don’t get me wrong, they are nice guys and good human beings, just not “supportive†bosses, but that’s okay. I have tried many, many times to get them to take an interest in my career and guide me a bit. My annual review is basically, “You’re doing a great job, here’s a small bonus and 15% raise.†Nothing more, even when I push them on stuff. I was taken to an industry event once, and I know that is their way of saying “good job, we want to expose you to more stuff…†Just don’t get much more than that. I know they think I’m doing a GREAT job however.
...
My employer would not be open to doing an apartment rehab in another part of the country, and frankly, I don’t think they’d be happy about me stretching myself thin to do a project of my own. They tend to criticize other people’s “dumb deals†a lot, and I can already hear them making fun of my idea. Granted, I’m not one to care what others think, but these guys have done over a BILLION DOLLARS in real estate deals in their careers, so they know what they are doing.

Well, I wish I could provide a great answer just like JScott did.
However...
I do want to point you to a couple of things of what you mentioned:

1. I have tried many, many times to get them to take an interest in my career and guide me a bit. In my opinion, you are taking the wrong approach. Why should they take an interest in your career? Just because you are a great employee? Well, for being a great employee you still have a job with them and they keep paying you your salary even though the market is not what it was a few years ago.
But what if you change your approach? Point 2 is about that:

2. Bring something to the table. Go find a deal, prepare well, call them to a meeting and present your idea. Yes, I read what you wrote: They tend to criticize other people’s “dumb deals†a lot, and I can already hear them making fun of my idea. Is your fear to be criticized bigger than your desire to succeed?

I suggest you force them to teach you by presenting deals, maybe one or two a month, until you find one that does match their criteria. That will make them pay attention because they have a vested interest on the project. Do you really think they care if it is you or other who brings them a great deal?
Of course they, being the way you said they are, will criticize them and make fun of the worst of them. But what if they actually treat you with respect and start telling you what they are looking for?
What if you actually listen to why they don't like and learn form that?
You have a great chance to learn from real experts.

 

[MrPink]

+rep for taking the time to post this - really interesting

I think your in an interesting position and unsure what is the best path for you, but one thing that came to mind is you may want to consider paying off the 40k in ccdebt (assuming its at a considerable interest rate)

 

[Mrs. BRKb]

Sid23, what a wonderfully thoughtful and fair-minded assessment of your situation.

The part that caught my eye was this:

I do not think I have the experience or resources to put together a development deal of my own, although I do think I may be able to put together a $500k - $1M apartment rehab deal. I would have to start in a different part of the country though.

You absolutely have what it takes to do a project apart from your work.

If by "resources" you mean financial resources, you may not need to worry about that. What you would bring to a deal could be your professional skill. Most people do not know how to do what you are doing. Maybe you bring project skills, and the other guys bring the money.

I'm doing pre-development work now for our own parcels. If *I* can do it with no pertinent professional background, just imagine what you can do.

There is a pending subdivision next door. This is the first show the young project manager is running on his own. Yeah, he was a wee bit stressed the day several hundred acre feet of irrigation water started gushing onto his graded dirt. But he'll be okay. (It's impossible to know all the possibilities of what might happen on a project!)

I guess my counsel would be to put yourself in as many situations as possible, where you have the opportunity to meet other investors and/or mentors. Don't look for what you might gain from any situation, just give of yourself, and keep upgrading your peer group. You'll be paid back in due time, as the teachers you need will appear.

Being able to Mastermind with like-minded folks has significant advantages. The biggest one is that they will believe in you, even when you are skeptical of believing in your ability to do something. And, somehow, you will manage to accomplish those stretch goals!

 

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[Sid23]

First off, a big thanks to JScott, Andviv, Mr. Pink and Mrs. BRKb for taking the time to add their insights to my initial post. That is the beauty of this forumn in my mind - you can post all of these thoughts in your head and then you have successful, like-minded people who take the time to comment and offer their ideas. Absolutely invaluable!

A few additional comments:

1) I am all for paying down my $40k in debt (Mr. Pink's suggestion), but that is part of the issue I was trying to outline. I'm stretched every month and the debt paydown is slow, slow, slow. The cost of living in my area is not something that most people understand, unless you live or have lived here. I know, moving might be an option, but then there goes the job if I move.

2) I agree 100% about looking outside of my organization for a mentor, mastermind group, etc. I think that is a great point and something I need to spend more time focusing on. I attend industry events, network when possible, but I've realized that this is something that needs my FOCUS, not just my casual thoughts.

Andviv has a great point about my bosses not caring about my career. After I posted my story, I reread it and that caught my eye. I knew someone would point that out. The suggestion of bringing deals to my bosses on a monthly basis to get feedback is a great idea. It is something I have tried, however. See point #3.

3) I set a goal last year to focus on finding deals that I could present to my bosses. I spent 6 months network, calling brokers, visiting sites, etc. I found 4 deals that I thought were good. (And before you say, "Look harder," keep in mind finding adequate $50million development sites is a little more difficult that finding some SFHs to flip, especially in a supply constrained market.)

Each time I presented a deal to the bosses, I got the same response..."Oh, we heard about that last month and passed." At least I was able to find out why and it made sense and I did learn something each time.

A few days after presenting the last of the deals to my bosses, one of them invited me to join him on a lunch with a 41 year old developer who was leaving a big firm to start doing his own deals. Over the course of the lunch, this developer outlined his plan to my boss. My boss gave him some helpful suggestions and notes to think about.

As we were walking back to the office, my boss said, "That poor kid has no chance." I inquired why. "Because, in our market, its all about who you know. That kid is going to spend massive amounts of money and energy driving all over the Bay Area looking at sites, networking with brokers, etc. But you know what? I will hear about every deal he finds a month before he does, and I won't have to leave the office. We have our contacts all over the area and people call us when deals become available. That is why you couldn't find a deal that we hadn't already heard about."

Well, at least that made me feel a little better about not finding anything for them to look at.

But that brings to my point. I'm not sure HOW I will ever find a deal in this market that they haven't already heard about.

That is why I started thinking about looking for apartment rehabs for us to work on in other markets. But then that raises the issue: won't there be guys like them in every market? If so, it doesn't mean I will be able to find anything elsewhere. Or maybe it is easier in a less sophisticated market and I can track something down? Or hell, if there are guys like them in every market, why look elsewhere, why not just keep plugging along in this market?

I would love to hear thoughts on this line of thinking.

4) Another thought is moving to Portland or Seattle or another area with a lower cost of living to get us started.

Thanks to everyone in advance!!!!

-Sid23

 

[SteveO]

As we were walking back to the office, my boss said, "That poor kid has no chance." I inquired why. "Because, in our market, its all about who you know. That kid is going to spend massive amounts of money and energy driving all over the Bay Area looking at sites, networking with brokers, etc. But you know what? I will hear about every deal he finds a month before he does, and I won't have to leave the office. We have our contacts all over the area and people call us when deals become available. That is why you couldn't find a deal that we hadn't already heard about."

This is true to a point. That kid may very well stand a chance. If he busts his a$$ hard enough, he may become competition.

There is always a network. Agents get paid by utilizing this network to sell deals. That is what feeds them.

I am at the point that the deals come to me for the most part. But I am not going to let my guard down while I sit and wait. There are some deals that are uncovered by digging in and doing some detective work.

You also need to find a niche. Everyone wants a cheap rehab. I find that fewer people can recognize management issues or dont trust the results of changing mismanagement. So it is easier for me to find deals this way. The rehabs have their margins squeezed so thin and they take a lot of attention to make them work.

I see why your company does not go out of their location. They have the network set. I have to rebuild my network each time I change areas. It is a lot of work but worth it to me.

 

[Yankees338]

I don't know exactly how these large firms operate, but I assume that since they have a higher overhead and are so established, they are more picky about their deals than they probably need to be.

Even if they pass on a deal, there still may be room for profit. If they pass on a $20 million deal, there may still be profit in there for another investor; it may just not be enough for their situation. Also, perhaps you could figure out a way to maximize its profits that they wouldn't.

You said your firm as 6 or 8 employees, right? That means they all have to get paid. If you're working on even a $10 million deal on your own, a profit of $1 million would be more than enough for you. A big firm like that, though, probably doesn't wanna bother with such a project for only $1 million.

I may be way off base here, but I hope it's something relevant that you can think about. Good luck, and keep us posted!

 

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[andviv]

Each time I presented a deal to the bosses, I got the same response..."Oh, we heard about that last month and passed." At least I was able to find out why and it made sense and I did learn something each time.

A few days after presenting the last of the deals to my bosses, one of them invited me to join him on a lunch with a 41 year old developer who was leaving a big firm to start doing his own deals. Over the course of the lunch, this developer outlined his plan to my boss. My boss gave him some helpful suggestions and notes to think about.

As we were walking back to the office, my boss said, "That poor kid has no chance." I inquired why. "Because, in our market, its all about who you know. That kid is going to spend massive amounts of money and energy driving all over the Bay Area looking at sites, networking with brokers, etc. But you know what? I will hear about every deal he finds a month before he does, and I won't have to leave the office. We have our contacts all over the area and people call us when deals become available. That is why you couldn't find a deal that we hadn't already heard about."

Well, at least that made me feel a little better about not finding anything for them to look at.

But that brings to my point. I'm not sure HOW I will ever find a deal in this market that they haven't already heard about.

Have you explored the option of another markets that your company may be interested in? As SteveO said, they probably won't spend the time trying to establish their network in other markets, but you could do that in your spare time, opening new doors not only for you but for your company also. They could bring their resources (financial, expertise, brand recognition) while you find the deal. That is another possibility.
Also, JScott's point is very valuable. What if you find a smaller deal for yourself and then ask your bosses for their feedback, explaining to them that you want to tackle it on your own? It seems to me that they will provide feedback and will help you, based on the comments that you have made here.

I understand how this situation is very frustrating... it makes me think of working in catering for fancy parties, with fancy food that you have to serve but can't eat. It is being so close to heaven and can't enter. But again, this is a great opportunity to learn from experts and shape your career. Today you can pick up the phone and call brokers and say: "This is Sid23 with ABC company, I'm looking for deals". That opens doors.

 

[Sid23]

I understand how this situation is very frustrating... it makes me think of working in catering for fancy parties, with fancy food that you have to serve but can't eat. It is being so close to heaven and can't enter.

It's like you are inside my head. EXACTLY what it feels like! I get to do all this cool stuff and manage people twice my age...yet I'm still broke!

Thanks to all for all the advice. I am going to look into various options:

1) my own small deals
2) bringing deals from other markets to my firm
3) possibly starting an online or other small business on the side, primarily for the tax benefits

Look forward to future thoughts if anyone has them.

Best,
Sid23

 

[Jito]

I would be looking at options 1 or 2. You know real estate so stick with it and narrow your focus. I know how tough the bay area market is - which is why I'm staying out of it.

I remember a few months back you were asking about Portland, OR. Has your firm entertained the idea of opening another office or expanding into other Markets? Or are they old dogs that really don't see the need to establish a network elsewhere?

In whatever you may decide, bets of luck to you, I'm sure you'll make the right decision.

 

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[Yankees338]

I would be looking at options 1 or 2. You know real estate so stick with it and narrow your focus. I know how tough the bay area market is - which is why I'm staying out of it.

I remember a few months back you were asking about Portland, OR. Has your firm entertained the idea of opening another office or expanding into other Markets? Or are they old dogs that really don't see the need to establish a network elsewhere?

In whatever you may decide, bets of luck to you, I'm sure you'll make the right decision.

Along these lines, what if you came to some agreement with your firm's owners about expanding to another city? You could lead a branch located in a city like Portland or Seattle, but you would still have the reputation of an experienced, credible firm. I assume they finance their own deals, so you could use them for that. Even if they don't, being an affiliate of the main branch would give you credit with lenders.

This would allow you to increase your income, yet you could still stay connected with your firm. It'll make building a base in the new market a bit easier, and you'll have some of the benefits of being with an established firm. Your firm will also benefit because they'll be entering markets that they otherwise would have avoided, and they'll be opening themselves up to a whole other sea of opportunities.

If all goes well, you can negotiate to have this done in another city afterwards, and perhaps earn a stake in ownership with your firm!

 

[Sid23]

Along these lines, what if you came to some agreement with your firm's owners about expanding to another city? You could lead a branch located in a city like Portland or Seattle, but you would still have the reputation of an experienced, credible firm. I assume they finance their own deals, so you could use them for that. Even if they don't, being an affiliate of the main branch would give you credit with lenders.

This would allow you to increase your income, yet you could still stay connected with your firm. It'll make building a base in the new market a bit easier, and you'll have some of the benefits of being with an established firm. Your firm will also benefit because they'll be entering markets that they otherwise would have avoided, and they'll be opening themselves up to a whole other sea of opportunities.

If all goes well, you can negotiate to have this done in another city afterwards, and perhaps earn a stake in ownership with your firm!

Yankees, good memory and good idea! That is definitely one of the options that is worth some serious consideration. rep speed ++.

Jito, rep speed for you also. ++

I've been doing a lot of thinking lately and mulling over the various suggestions put forth here. I think it comes to down one thing:

TAKING SOME SORT OF ACTION.

I thought that being the best project manager I could be would be the way to drastically increase my income in the shortest amount of time. I realize now that while I am learning a lot and getting some great experience, things are not moving FAST enough for me.

I need to evaluate all the options outlined, think of additional options and take action.

 

[andviv]

I thought that being the best project manager I could be would be the way to drastically increase my income in the shortest amount of time.

This quote really reminds me of my former self.

I used to work hard-er so my boss would notice how good I was. Being the best and the smartest was my goal. I enrolled into a Master's degree class just to out-do my co-workers. Little I did know that the only thing I was accomplishing was to get myself deeper into the rat race. Working this way was a sure formula to keep being the best employee, which is great for the company owner, but was not taking me anywhere.

Problem is, deep down, what I was looking for was not workplace recognition (although I recognized that it was a great motivator for me as I was raised that way). What I really wanted was freedom, financial freedom. So, that made me realize I was in the wrong path and started switching to what really was what I wanted. Still, years later, sometimes I crave that same need for recognition and struggle with it, but hey, I am getting better and better. Realizing that what you are doing is not working is the first step to make radical changes in your life.

 

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[Runum]

This quote really reminds me of my former self.

I used to work hard-er so my boss would notice how good I was. Being the best and the smartest was my goal. I enrolled into a Master's degree class just to out-do my co-workers. Little I did know that the only thing I was accomplishing was to get myself deeper into the rat race. Working this way was a sure formula to keep being the best employee, which is great for the company owner, but was not taking me anywhere.

Problem is, deep down, what I was looking for was not workplace recognition (although I recognized that it was a great motivator for me as I was raised that way). What I really wanted was freedom, financial freedom. So, that made me realize I was in the wrong path and started switching to what really was what I wanted. Still, years later, sometimes I crave that same need for recognition and struggle with it, but hey, I am getting better and better. Realizing that what you are doing is not working is the first step to make radical changes in your life.

Been there too Andres. I wanted to be the best teacher. It got me praise and recognition, and more work and responsibilty(stress) for no more pay and less freedom of time. I had to make the choice for myself also. Good luck to all with those choices. +++ speed Andres for putting into words.:cheers:

 

[PEERless]

Yeah, I think you need to stop thinking like an E and be an S or a B... Maybe later an I!

I still have my slow-lane J-O-B(s), but every extra minute is spent trying to turn my interests into a system that will turn over automatic profit.

So... Keep your day job (for now) but be working on your own stuff.

 

[Sid23]

A continued thanks to all for your thoughts and contributions. I DEFINITELY need to get my head out of the E mindset...

 

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[Sid23]

Once again, a big thank you to everyone for all your assistance and guidance.

I've worked through Russ's PLAN thread, ATW "Financial Freedom Fases" and many other exercises. Through these, I've realized I know EXACTLY what I want in my life.

A quick refresher...

1) Create or be involved in recognizing and appreciation of VERY COOL (at least to me) spaces. Creations like:

California Home Design - May 2008 (see pg. 110 "Aptos"
Contemporaine
Single Family (see 1442 North Mohawk)
California Home Design - May 2008 (see pg 128 AIA Awards)

I could honestly look at, walk thru and talk about these types of structures all day, every day.

2) Be my own boss - not work for big company. Be able to run my own show, with my environment (creative, supportive, etc) and MUST have 100% or close to freedom of schedule. (I don't want to be a "process" guy at a big development firm churing out "cookie cutter" projects).

3) Create great work environment for my ppl

4) Have good balance btwn work, family, friends, travel, etc (not work 80-90 hours a week my whole career --- I understand though that early stages will take massive amounts of work, hours)

5) Work to help underprivilidged kids - either directly through my business or spend time in a volunteer position

6) My fastlane vehicle (even retirement vehicle) doesn't have to be 100% passive, or "mailbox" money. I'm okay having to spend a "little" time overseeing things each day/week.

7) Total financial freedom


I know I need to do research to figure out how to make this happen. But I guess that is where I am confused. What are some ways you fastlaners evalute and review your options and the possibilities that exist?

For example, Russ, how did you even think of B&B's as a possibility?


I've thought of some additional questions that I know I need to answer, but I'm not sure where or how to start.

Some of the questions I know need answering are:
How do I tie this (above) all together?
What is my entreprenuerial premise?
How do I meet my shorter term life $$ needs?
How can I help more people get what they want? How can I serve people?
Sustainable, green, architecturally stunning spaces for the middle class?
New twist on baby boomer, retirement communities?

How do I combine my love for amazing spaces with a way to profit and give the market what it needs?
Is another US market better suited for my idea? (other than SF Bay)

I ALSO WANT TO APOLOGIZE. I'm sure many of you read this and think, IT'S ALL RIGHT THERE IN FRONT OF HIS FACE, WHY CAN'T HE SEE IT? WHY DOES HE KEEP POSTING THIS STUFF? I am having a missing link somewhere in my mind and I've found by writing it out, posting it and getting comments seem to be the best way for me to tie the dots together.

:iamwithstupid:

THANK YOU!








http://www.chdmag-digital.com/chdmag/may2008/

 

[Yankees338]

Once again, a big thank you to everyone for all your assistance and guidance.

I've worked through Russ's PLAN thread, ATW "Financial Freedom Fases" and many other exercises. Through these, I've realized I know EXACTLY what I want in my life.

A quick refresher...

1) Create or be involved in recognizing and appreciation of VERY COOL (at least to me) spaces. Creations like:

California Home Design - May 2008 (see pg. 110 "Aptos"
Contemporaine
Single Family (see 1442 North Mohawk)
California Home Design - May 2008 (see pg 128 AIA Awards)

I could honestly look at, walk thru and talk about these types of structures all day, every day.

2) Be my own boss - not work for big company. Be able to run my own show, with my environment (creative, supportive, etc) and MUST have 100% or close to freedom of schedule. (I don't want to be a "process" guy at a big development firm churing out "cookie cutter" projects).

3) Create great work environment for my ppl

4) Have good balance btwn work, family, friends, travel, etc (not work 80-90 hours a week my whole career --- I understand though that early stages will take massive amounts of work, hours)

5) Work to help underprivilidged kids - either directly through my business or spend time in a volunteer position

6) My fastlane vehicle (even retirement vehicle) doesn't have to be 100% passive, or "mailbox" money. I'm okay having to spend a "little" time overseeing things each day/week.

7) Total financial freedom


I know I need to do research to figure out how to make this happen. But I guess that is where I am confused. What are some ways you fastlaners evalute and review your options and the possibilities that exist?

For example, Russ, how did you even think of B&B's as a possibility?


I've thought of some additional questions that I know I need to answer, but I'm not sure where or how to start.

Some of the questions I know need answering are:
How do I tie this (above) all together?
What is my entreprenuerial premise?
How do I meet my shorter term life $$ needs?
How can I help more people get what they want? How can I serve people?
Sustainable, green, architecturally stunning spaces for the middle class?
New twist on baby boomer, retirement communities?

How do I combine my love for amazing spaces with a way to profit and give the market what it needs?
Is another US market better suited for my idea? (other than SF Bay)

How about partnering with some contemporary, green architecture firms to manage, design, and execute the development of some unique -- yet functional -- properties?

Retirement communities, condos, single-families -- whatever your market could use, but with a unique "green" spin to it.

Just throwin' some ideas out there...

I ALSO WANT TO APOLOGIZE. I'm sure many of you read this and think, IT'S ALL RIGHT THERE IN FRONT OF HIS FACE, WHY CAN'T HE SEE IT? WHY DOES HE KEEP POSTING THIS STUFF? I am having a missing link somewhere in my mind and I've found by writing it out, posting it and getting comments seem to be the best way for me to tie the dots together.

Wrong! I love threads like these. When we have real-life opportunities to showcase our Fastlaning abilities, it's really cool. The responses that are given are really, really interesting to read about.

Don't apologize.

In fact, thank you for posting this and sharing it with us!

 

[Sid23]

As Yankees said so well, no need to apologize...it we all had all the answers, we wouldn't need to be here, would we?

Thanks guys!

And a BUMP for more ideas on how to begin my research. If you had the list in my last post, how would you begin trying to tie the pieces together?

:thankyousign:

 

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[fanocks2003]

WARNING: VERY, VERY LONG POST!

A question for the great minds here. I appreciate all the knowledge everyone here has and continues to share.

A quick refresher (and update) on my current situation. I've been working for a real estate development and investment firm for the past 3.5 years. It is a small firm run by two executives who used to run a division of one of the big national development firms. Our office works on 6-9 deals at a time and only has 6 people...I'm the lowest on the totem pole other than the admin assistant/office manager.

Our firm focuses on new apartment development; although in the past 2 years we've been doing rehab projects as well (repositionings ala Steve 0). We focus on our market and do all projects within 1 hours drive from our office. We don’t even look at projects outside of our area (mainly because the owners don’t want to travel). We do some small deals ($5-20 million), but most projects are ~$50-200 million, although we have 1 deal right now that is $750 million.

My current position has me managing 2 new development projects (from site planning phase to construction completion). One is a $6 million project; the other is $18 million. I oversee and manage all project consultants (architects, engineers, general contractor, etc) throughout the process. I’m usually the youngest guy in the room by about 10 years. (I’m definitely outside of my comfort zone most days).

We operate in a “supply constrained market†and large scale projects usually take at least 5 years to complete from acquiring an option on the land to delivering the last units. Some can take even longer. We just completed the approval process on a 71 unit project…it took 6 years of City hearings to get approved. Now it will be 2-3 more years to build. In the future, I see it becoming harder and harder to develop projects in my area and these timeframes lengthening. The industry is becoming more specialized, sophisticated and capital intensive and we are one of the few “small†development firms left. Most of our market is dominated by big national firms. I see this becoming more prevalent over time.

While I am 100% aware of what a great experience this is for someone my age, I am also starting to think continuing on this path will not help me reach the goals I've set for myself in the time frame that I want to achieve them.

And I see the future of increased responsibility…and it will lead to salary increases and more hours (until I’m the boss, which could be 10-20 years and I would still be considered “young†in our industry.) While I know it may sound like a good deal to many people, I don’t see the point of working 70 hours a week for only $150k in base salary and maybe a bonus from each project, if they are successful. $150k after taxes is a bit over 6-figures, which barely supports a family where I live. And frankly, I REALLY don’t want to move. I LOVE it here, as does my fiancée.

A good example of this is the time issues is the 6 year project mentioned above. One of the project managers has been working on it as his only project for those years because it was extremely controversial and time intensive. He makes that $150k salary and his bonus was based on this project. He worked 70+ hour weeks waiting for this project to cash in and put up with a lot of shit. The approval process dragged on and we missed the market. Now, no one wants to buy this project at all. If it would have been 3 years ago, this PM would have made $400,000. Now he’s looking at maybe $50,000. For six years of work! Yikes. I’m not naïve, I understand this happens with projects and some work, some don’t. But what I’m saying is unless you are the owner of the firm, how do you get more than 1-2 projects at a time, you just can’t unless you work 168 hours a week? So you could work 12 years on 2 projects and make nothing. Seems like you need more balls in the air than that.

The experience is the upside, the pay is the downside. I make a “decent†salary, but for my area is not that much ($70k). I have $60k in debt ($40k on ccards from my early 20s and $20k in school debt at 3.75%) and live in one of the most expensive cities in the US. I’m also supporting a fiancée. So I can’t quit tomorrow and go chasing my own deals…I’d be bankrupt in a month.

I have been told that I will receive “project bonuses†from now on every time a project cashes out. I wish I had an example of how much that will be, but I don’t. One of the minority partners told me his first cash out was $150,000, but that was a big project where he managed it and the firm did well. Not small deals like mine. I’m guessing I’ll receive $5,000 per project on the low end, MAYBE $25-50k on the high end (all before the tax man cometh). But again, we haven’t had a project cash out since I’ve been eligible for this bonus (11 months so far) and although we have a couple that look like something will happen, it may be another 6 to 12 to 24 months before anything comes through. Seems like a long time to wait for $5k. If it is $150k, that is a little better though I suppose.

I am not in a position where I want to or can leave my firm (financially or experience wise)...BUT, I've also realized even though it’s a small firm, I'm still working my way up the ladder. Everyone else in the firm is 50-60 years old (I'm 30), so I'm looked at as the "young guy" who has plenty of time, etc to get to where he wants to be. Although we do fastlane projects, our founders have no passive income, but do have low 8 figure net worths.

And one thing worth noting about my bosses – neither is a mentor to me. I’m not saying they should be or anything, just stating the fact. Both are pretty narcissistic people, not really concerned with other people in our firm. Don’t get me wrong, they are nice guys and good human beings, just not “supportive†bosses, but that’s okay. I have tried many, many times to get them to take an interest in my career and guide me a bit. My annual review is basically, “You’re doing a great job, here’s a small bonus and 15% raise.†Nothing more, even when I push them on stuff. I was taken to an industry event once, and I know that is their way of saying “good job, we want to expose you to more stuff…†Just don’t get much more than that. I know they think I’m doing a GREAT job however.

They both love working and do not have any plans to retire or do anything else. While I respect and admire all they have achieved, I do not want their lives.

My PLAN is different. While I may be working on development projects in my 50s and 60s, I will only be doing so because I WANT TO, not because I need to keep the money coming in. My 10 year goal is to have $50,000/month of passive income each month. WHEN I reach this goal, I may choose to continue to work, but I may not. I can’t tell how I’m going to feel then.

I do not think I have the experience or resources to put together a development deal of my own, although I do think I may be able to put together a $500k - $1M apartment rehab deal. I would have to start in a different part of the country though.

My employer would not be open to doing an apartment rehab in another part of the country, and frankly, I don’t think they’d be happy about me stretching myself thin to do a project of my own. They tend to criticize other people’s “dumb deals†a lot, and I can already hear them making fun of my idea. Granted, I’m not one to care what others think, but these guys have done over a BILLION DOLLARS in real estate deals in their careers, so they know what they are doing.

The issue is this: I feel like I should work hard and continue to excel and my firm, but also look for an apartment deal I can put together. I am, however, a bit nervous that maybe I am looking at my current job all wrong. Maybe this is a fantastic opportunity and I am not being smart about it. I think I’m working for some extremely talented real estate guys, and I’d hate to not get the most out of this situation. I left my last job prematurely and left a good deal of money on the table. There was no way to see that coming, so maybe I am holding myself responsible for something I could have never anticipated and that is clouding my judgement now?


We have a number of projects that may cash out in the next 2-4 years and I would hate to leave and then see I left a million bucks on the table, so I’m thinking the best plan right now is to keep working hard, put together a business plan for apartment investing and try and do a couple of deals on the side. Maybe I can get the company interested? Or maybe I can at least get their blessing to pursue them while continuing my employment?

Any bright ideas? I feel like I'm missing something somewhere in my line of thinking. Any insights would be appreciated.

I just wonder why you aren't asking the owners (your employers) if they would consider letting you buy shares in their company (buying existing shares). That way you can share on their level of pay instead of only as an employee. Also you don't have to start your own company.

Just a thought you could consider. Seems easier at least. And when you own shares you also have a future opportunity of cashing out when liquidating your stock. You also have a shot on dividents every year (and you can also, influence the majority owners if you own shares. Usually owning 1%-11% would be more than enough to rub som feathers).

Where are those money to buy shares coming from? Well, everytime you get some bonus money, why not buy shares in your employers company? Invest the whole thing and load up those shares. Who says you need to start a new company if you love the company you work for already?

They use to say "think outside the box", but being creative also means "thinking inside the box".

 

[Sid23]

I just wonder why you aren't asking the owners (your employers) if they would consider letting you buy shares in their company (buying existing shares). That way you can share on their level of pay instead of only as an employee. Also you don't have to start your own company.

Just a thought you could consider. Seems easier at least. And when you own shares you also have a future opportunity of cashing out when liquidating your stock. You also have a shot on dividents every year (and you can also, influence the majority owners if you own shares. Usually owning 1%-11% would be more than enough to rub som feathers).

Where are those money to buy shares coming from? Well, everytime you get some bonus money, why not buy shares in your employers company? Invest the whole thing and load up those shares. Who says you need to start a new company if you love the company you work for already?

They use to say "think outside the box", but being creative also means "thinking inside the box".

Fanocks, this is a great idea. My company is privately owned, however, and I didn't think this was possible.

Is it? Not sure if I mentioned before, 2 partners own 40% each and 2 own 10% each.

 

[Allthingznew]

How do I meet my shorter term life $$ needs?
How can I help more people get what they want? How can I serve people?
http://www.chdmag-digital.com/chdmag/may2008/

Just addressing the above, aside doing things the way they've always been done, what do your bosses need? (They may not realize they need it until you show them) They're older and have no passive income. Can you find a way to give them this? Is there a way to partner with them (or just one of them) outside of the company on a project? What happens when they become too old or disabled to work? If they're in a position that they have to work to keep the company going you may have opportunity.

Are there unconventional deal partnerships you can orchestrate with them and someone else?

Is there a business that would compliment their strategy that would either save them money or make them money if they started to do in house or started/bought their own company? Do they only develop or do they hold and manage anything?

Are they residential or commercial or both? (In regard to what they build) If zoning allows, a commercial project next to a residential project each might be rejected by the firm by the projects merits and size, but if the projects could somehow be combined to create on unique project that was big enough for them...

Just trying to help get ideas flowing.

 

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