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New from SF Bay Area

Sid23

Bronze Contributor
Aug 9, 2007
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Hi all-

I'm a 29 year old guy from the SF Bay Area. I've worked for a small real estate development and investment firm for the past 3 years. My main goal at this point is to figure out how to do some deals on my own or to get some equity in the firm I'm with. I've learned a lot, but haven't made a lot. Time to put the knowledge to use.

I look forward to learning from all of you here. I'm definitely interested in the fast lane, not the slow path.
 

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MJ DeMarco

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Welcome Sean!:hurray:
 

Peter2

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Welcome Sean. :)
 

andviv

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Welcome aboard....

I think you are in a great position right now as you have been working in the field that you want and have been paid for learning!!!
 

triple J

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Aug 8, 2007
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Sean,

I got started working for free for 1 year for a rehabber/RE broker in Dallas. It was a fantastic experience and gave me a great advantage and the confidence I needed to take the plunge.
 
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Sid23

Bronze Contributor
Aug 9, 2007
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Thanks all for the warm welcome and encouragement! I hope to use the knowledge of the people on this forum to help me create a plan to move to the next level. Many of you are where I want to be.
 
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Sid23

Bronze Contributor
Aug 9, 2007
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By the way, I'd like to post my current story and get some feedback from you guys. What is the proper section to do that? Thanks.
 

andviv

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right here... I'm all ears... I mean, eyes... please tell us your story
 
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Sid23

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Aug 9, 2007
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Well here it is in a nutshell...although I don't want to leave out any pertinent details so I'll apologize in advance for the length. I wanted to share my story here to give everyone some understanding of where I'm coming from and why.

Essentially, I'm not sure what I want to spend the majority of my life doing. I haven't figured out if I would be content not working and living off passive income, or if I'd continue to work and work because I'm interested in the many things I'm doing. I will tell you this, though, my MAJOR goals are financial freedom and time freedom. Doing what I want when I want.

Right now I'm 29 and I live about 10 minutes north of San Francisco. I make a salary of $55,000 per year, receive a car allowance of $6,000 per year and am due a bonus of up to 25% of my salary at the end of this year. While that may be a good living in most of the country, it's "not much" here, but then understand I have $50k in debt ($30k credit, $20k school loan) so I'm paying almost $1,000 per month on that. So things are still pretty tight for me. (My networth is -$50k) I've been in a great relationship for almost 6 years and my gf is ready to tie the knot. She is finishing grad school right now and will be a psychologist.

I work for a real estate development and investment firm, and I've been here for over 2.5 years. Before that, I worked as an actor, bartender, law clerk, mortage consultant and in corporate recruiting for an investment firm.

My firm consists of 6 people: 2 founding principals who each own 40% of the company, 2 other principals who own 10% of the company each (ages 58 and 48), (they are not "players", they are more operational types who have made their money slowly), an office manager who works part time (age 60) and myself, age 29. Our company focuses of multifamily development in the Bay Area, and now we are starting to look at acquiring multi-unit buildings between 70-100 units. The reason I give you their backgrounds is I think it highlights the "desparity" between them and myself. I get the impression that they look at me as the "young guy" who is in a good situation but has plenty of time to get rich. At this point, I'm basically getting "experience" at my firm, and occassionally some teaching, but mainly everyone is so busy that I need to learn on my own time.

I have only been here 2.5 years and only got in the door because I said I would answer phones, make coffee, essentially do "anything" they wanted to get my foot in the door. So much of the first two years I was just doing admin work. Now that I've been here longerI've slowly been given more responsibility. I was made "Project Manager" of a 30-unit apartment development about a year ago (but its one of our few "non profit" deals) that we are preparing to build. I did get to take the project through the approval process and made presentations to the Planning Commission and City Council. Again, this is great, but I have no "skin" in the deal and won't receive any sort of bonus or equity in this project. And this project will take at least another 2 years to complete. I think if I do a good job on this project, I'll be given bigger and better projects to work on in the future, and maybe, a small piece of the profit on a deal. But that is a big "maybe" and its probably at least 5 years away before I would ever receive the $$ from a piece of a deal (and there is no guarantee that I'll be offered any). And while it may be $100-200K, to me waiting 5 years to only get $100k doesn't seem that great. To most people in my life, it looks like I'm on the "fast path," I think in reality it is still the "slow to medium" way to wealth. And with the level of development restrictions in California, I see the time frame from conception of a development project to final lease up or sell out only lengthening. We have some projects that have been in the City approval process for 5 years!

So I think if I did "nothing" other than work as hard as I can here to gain experience and eventually get in on deals, I think in 10 or 15 years I'll be doing decently enough. BUT I DON'T WANT TO WAIT 15 YEARS.

I want to start building equity and making some money now. I think a reasonable goal is to have a net worth of $1M in the next 5-7 years (not just bust my butt for $100k). I think if I only worked at my place - it would take probably the me 10 years to make the first million.

I am having trouble figuring out step one. I can see down the road a few years (once I've learned a little more) and I see steps 3-100 (buying apartment communities, developing apartment/condo communities and buying commercial deals), but getting started and figuring out the best plan of action is holding me up right now.

I think the best plan of action is to learn as much as I can about large scale acquisitions and development over the next couple of years, and try and do a couple of smaller deals on my own in the meantime. And by smaller deals, I'm thinking SFR or something like that. Minor rehab, flipping contracts, etc. I live in a VERY expensive area, so if I could do even a couple of deals over the next year or two, that would put a some good money in my pocket and hopefully allow me to learn a lot and have some money to show for it.

Knowing what you know about me, how would you start if you were in my shoes?

Thanks guys. Hope I didn't kill you with information overload.
 

MJ DeMarco

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Getting in the Fastlane often requires that you take a job.

You'll find that many top entrepreneurs held jobs before they hit the fastlane. Their job served as a proving ground and an educational resource. More importantly, it gave them the vision to see a need in the particular industry they worked.


For example in my own story -- A crappy job that I held in my mid-20's provided me the insight into an industry and exposed a need -- a need that I solved via the internet. Without that "crappy job" I would have never saw the opportunity.

I know having a "J-O-B" is not a fast-track to wealth -- however some jobs serve as beacons to new opportunities -- they give you insight into an industry and expose opportunities all while simultaneously educating yourself.

Jobs can be a springboard to the fastlane - the fastlane is learning, educating yourself, and then starting your own company which provides high end-value to society. You want to own the car (your business) driving the fastlane, not be stuck in the passenger seat, subject to the mercy of the driver.
 

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Sid23

Bronze Contributor
Aug 9, 2007
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MJ, I appreciate the thoughts and I agree that starting with a job is a good idea.

My issue at this point is this. I have very little money on a month to month basis after paying living expenses, so I am having a hard time paying down my debts and putting aside capital to use for deals. I know paying down debt isn't the fast way to wealth and I'm not spending any extra money on paying them down at this point.

I really feel like if I had $50,000 in capital, I could make it multiply. Granted, NOT a big development deal in the SF area, but something to get me started on building my asset column. I have had the opportunity to get into a few deals with other people, but each time I didn't have nor could I find the necessary capital. For example, my brother is a commodities broker who has invested many of our friends money and done very well by them. He also did one RE flip in LA last year and made almost $80,000. We were back in our hometown in the Midwest last weekend and he saw a house right by the football stadium that was priced $100,000 less than everything on the street. The place had just sold and he called and convinced the NEW owner to sell him the house anyway. He made the deal work because he had $30k to put down on the spot, AND he can cover any rent shortfalls during the rehab. He wants to rehab it and eventually make it a luxury home for out of town guests to stay it on football saturdays. I know people will pay great money for weekends like this. I could have been involved in the deal, but he couldn't include me because I couldn't add capital AND he had a guy in that town that could add value and capital. He is 26 and it drives me nuts he is making all these deals. He always tells me just figure out a way to do 1 deal and have some capital, then I can take some risks and find other deals to do. I don't think I'm going to make enough "extra" money at my job in the next couple of years.

Its not easy to run a development / acquisition firm in my area. Not saying its not impossible, because its not, but everyone I know who runs their own RE shop worked for someone else until the were around age 40, then went for it. Our market is too sophisticated and there are too many large, national real estate firms chasing deals here to give the little guy much of a chance.

I love leaving here (so does my gf) and I would love to always live here, but I also feel like maybe I need to figure out a "side project" or something while I continuing learning and growing with the firm I'm with.

Anybody have further thoughts?
 

andviv

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Go spend the time finding a deal, then sell it to your brother or another investor... you can sell it for cash (wholesaling) or ask for equity. You do not need the money for this, you need the time. Ask your brother or other potential investors what their requirements are for investing so you can find a deal that suits their needs.

It sounds to me that you are capable of this, so stop focusing on the money you do not have and focus in finding a deal with the expertise and knowledge that you DO have. Changing your focus will help you change the results you are getting from life.

And stop increasing your debt. Reduce expenses so at least the credit card debt does not increase... I understand it is difficult to pay it off right now, but at least do not make it worse.
 

MJ DeMarco

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Sometimes you gotta use the slowlane to get to the fastlane. The slowlane is frugality and saving. To build any kind of momentum you're going to need to make some choices. What kind of car are you driving? Can you downsize? If you're driving anything over $20K, you're priorities could use some reorganizing. How about the apartment? Can you downsize? Move to a better area?

First I advise is to get control over your choices and move into the slow lane. Start by cutting back on everything -- start saving and paying off debt so when opportunity presents itself, you can make a choice, instead of being closed out. Understand that the slow lane is temporary. You might need to make some BIGGER choices as well. I remember a made a big choice 10 years ago to move out of Chicago - I felt it was limiting my growth. My move to Phoenix was a choice - and one of the best I've ever made.

Second, start a small business, even if you only can work at it 10 hours per week and earn little. This puts you into a tax-advantaged situation and accelerates your activity in the slow lane.

Third, continue to network within your industry. The contacts you make now can pay dividends years down the road. There is a lot of truth to "its not what you know, but who!"

MJ
 

MJ DeMarco

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Go spend the time finding a deal, then sell it to your brother or another investor... you can sell it for cash (wholesaling) or ask for equity. You do not need the money for this, you need the time. Ask your brother or other potential investors what their requirements are for investing so you can find a deal that suits their needs.

It sounds to me that you are capable of this, so stop focusing on the money you do not have and focus in finding a deal with the expertise and knowledge that you DO have. Changing your focus will help you change the results you are getting from life.

And stop increasing your debt. Reduce expenses so at least the credit card debt does not increase... I understand it is difficult to pay it off right now, but at least do not make it worse.
Kudos to the above! Excellent advice :iamwithstupid:
 
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Sid23

Bronze Contributor
Aug 9, 2007
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107
71
Thanks guys. Great advice.
 

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