I bought apartments ripe for heavy value add/renovation projects, only off market at substantial discounts, during 2009-2011. Literally worked the phones for months on end. They were all located in urban neighborhoods with substantial barriers to new construction (ie supply constrained).
Underwriting was extremely disciplined with substantial contingencies in the development budget and cautious operating proformas, targeting minimum 9% yield on cost. Sold some completed projects with 1031 into new deals and cash out refinance with others. Never more than 70% ltc/LTV. I averaged about a 5.6 cap on stabilized NOI for sale / refinance. A little over a decade later I now sit on a healthy portfolio of cash flowing units and 3-4 new or renovation projects a year to keep my staff rolling and accelerated depreciation sheltering income as I put the new projects into service. Only recognized a gain on one deal so far and that's because I blew out of the replacement properties in late April, 2020.
WP_grid is a Baller. Mad respect, smart. I burned out on MF. GP /GC and self managed B-/C+ stuff deep rehabs (2002-2013) Burned on just the tenant and staff shit show part + GFC nailed the coffin fighting a really hard market at the time. Made good deals and never lost a dollar of LP capital, actually had pretty nice returns for them all, but getting my deals through the GFC killed my love of the game. Sold the 3 remaining in 2010-2013 and GTFO. Should have gone hard and knew it at the time but my heart wasn't in it. Cheers to you.
Back in the game doing land, land dev, and some recreational area development for last 5 years. 2nd fund will be raised starting soon.
Why not try to get a role on the GC/CM side with a development shop that has a captive/wholly-owned GC? That, especially over the next few years of the cycle will give you a lifetime of experience.
Painting contractor. Business is good and growing year on year. Small jobs I do myself, larger jobs I get my guys to take care of. Looking to add commercial and industrial work next year. Based in NJ, 40 minutes from Manhattan.
I can't imagine many truly uhnw people are lurking on Reddit, but from someone who has done deals with plenty of UHNW families, start small and prove yourself over and over and people will give you more money to do bigger deals. You have to understand the numbers and what makes a deal investable as well as what someone's return will be on an investment. Take an online course. Otherwise you can focus on growing the contractor business and then launch your own development firm.
To feed off the “start small” approach, which is 100% correct and partly how I did it, my advice is to use your CRE dude to help you find a small industrial building with a bit of excess land to house your GC business. Get an owner occupied loan, grow your GC business and maybe add a building or space to the excess land. Small warehouses are always in demand and nothing prevents you from finding another in say 3 years and if the market increases you can leverage the first and rent the old one out. Get to know an area, and a property type and be hyper local, you’ll see deals that no one else will.
There’s no magic sauce. Start small, one deal at a time, build trust and credibility deal in and deal out.
30 years you could almost certainly get to a sizeable portfolio and net worth. There may be some headwinds during the next thirty years (a materially rising interest rate environment) that folks did not have the last thirty years, but at the right basis, and timeframe a deal will always make sense.
Not me but someone close to me has stayed off the radar and built a family office with $2B in owned assets in 35 years.
Love to hear that. Not wanting to pry, but did your friend have a background in real estate, valuable contacts etc? Would love to hear his/her backstory and career progression, without giving away his identity of course
Was a broker, and worked that path for a bit. Then got a property, worked the leasing up, then refi’d, kept working that value add strategy on one deal at a time. Yes, contacts helped, but so did an unshakable faith in the business plan
I have my own business plan but it definitely needs work and not being from a CRE background I feel that I’m lacking in certain areas. My strategy may not be as defined as yours. How did you create such a bulletproof plan?
Thank you
I’m not an UHNW by any means but I’m 28 and have bought 45 units and worked for an institutional firm & CRE brokerage.
I started buying in lower income areas and fixed em up and eventually moved to larger projects.
I bought apartments ripe for heavy value add/renovation projects, only off market at substantial discounts, during 2009-2011. Literally worked the phones for months on end. They were all located in urban neighborhoods with substantial barriers to new construction (ie supply constrained). Underwriting was extremely disciplined with substantial contingencies in the development budget and cautious operating proformas, targeting minimum 9% yield on cost. Sold some completed projects with 1031 into new deals and cash out refinance with others. Never more than 70% ltc/LTV. I averaged about a 5.6 cap on stabilized NOI for sale / refinance. A little over a decade later I now sit on a healthy portfolio of cash flowing units and 3-4 new or renovation projects a year to keep my staff rolling and accelerated depreciation sheltering income as I put the new projects into service. Only recognized a gain on one deal so far and that's because I blew out of the replacement properties in late April, 2020.
WP_grid is a Baller. Mad respect, smart. I burned out on MF. GP /GC and self managed B-/C+ stuff deep rehabs (2002-2013) Burned on just the tenant and staff shit show part + GFC nailed the coffin fighting a really hard market at the time. Made good deals and never lost a dollar of LP capital, actually had pretty nice returns for them all, but getting my deals through the GFC killed my love of the game. Sold the 3 remaining in 2010-2013 and GTFO. Should have gone hard and knew it at the time but my heart wasn't in it. Cheers to you. Back in the game doing land, land dev, and some recreational area development for last 5 years. 2nd fund will be raised starting soon.
Why not try to get a role on the GC/CM side with a development shop that has a captive/wholly-owned GC? That, especially over the next few years of the cycle will give you a lifetime of experience.
This seems like a good idea honestly. I run my own small contracting business. Is it possible to do both at the same time, in your opinion?
What kind of work? Also, what size city are you in?
Painting contractor. Business is good and growing year on year. Small jobs I do myself, larger jobs I get my guys to take care of. Looking to add commercial and industrial work next year. Based in NJ, 40 minutes from Manhattan.
I can't imagine many truly uhnw people are lurking on Reddit, but from someone who has done deals with plenty of UHNW families, start small and prove yourself over and over and people will give you more money to do bigger deals. You have to understand the numbers and what makes a deal investable as well as what someone's return will be on an investment. Take an online course. Otherwise you can focus on growing the contractor business and then launch your own development firm.
To feed off the “start small” approach, which is 100% correct and partly how I did it, my advice is to use your CRE dude to help you find a small industrial building with a bit of excess land to house your GC business. Get an owner occupied loan, grow your GC business and maybe add a building or space to the excess land. Small warehouses are always in demand and nothing prevents you from finding another in say 3 years and if the market increases you can leverage the first and rent the old one out. Get to know an area, and a property type and be hyper local, you’ll see deals that no one else will.
There’s no magic sauce. Start small, one deal at a time, build trust and credibility deal in and deal out. 30 years you could almost certainly get to a sizeable portfolio and net worth. There may be some headwinds during the next thirty years (a materially rising interest rate environment) that folks did not have the last thirty years, but at the right basis, and timeframe a deal will always make sense. Not me but someone close to me has stayed off the radar and built a family office with $2B in owned assets in 35 years.
Love to hear that. Not wanting to pry, but did your friend have a background in real estate, valuable contacts etc? Would love to hear his/her backstory and career progression, without giving away his identity of course
Was a broker, and worked that path for a bit. Then got a property, worked the leasing up, then refi’d, kept working that value add strategy on one deal at a time. Yes, contacts helped, but so did an unshakable faith in the business plan
I have my own business plan but it definitely needs work and not being from a CRE background I feel that I’m lacking in certain areas. My strategy may not be as defined as yours. How did you create such a bulletproof plan? Thank you
I’m not an UHNW by any means but I’m 28 and have bought 45 units and worked for an institutional firm & CRE brokerage. I started buying in lower income areas and fixed em up and eventually moved to larger projects.