I just punched out of a 30-year career in corporate America at a high-tech firm. Working for "the man" treated me well financially, but I just couldn't deal with the politics anymore so I'm taking the money and running. I'm not ready to retire, but before I start looking for another corporate or start-up gig (either as an exec or possibly consultant) - I'll have to get past the age/big company/one company stigma - I'd like to spend a year or so investigating other options. Although I'm not necessarily chasing a dream to start a company, I'm looking at a couple different options. I'm looking for input from those who have gone down these paths already. The most popular options from reading this forum seem to be:

1. Rental properties - I've got a good chunk of capital to start with, but this wouldn't be my first choice. I've been down the landlording road before and we bailed due to too many tenant and maintenance issues. Might consider going back to it, but only if other options don't look as attractive.

2. Buying an established business and growing it - I've been looking at online businesses, both in the ecommerce space and the SEO space. I know people can be successful here, but there seems to be a lot of questionable deals to work through to find the right one to start with. It seems like finding a niche where you can private-label some products or get exclusive distribution rights in the US for some manufacturers or designers in the Europe or Asia is the best option. I've got a few contacts in these areas that I'm reaching out to, but looking for more with experience who might share some wisdom. This is what I'm most interested in.

3. Private lending/investments - I've done some of these capital investing in hotels/real estate deals that pay 8% or so. These have been successful, but they tie up a lot of capital and they're almost too passive - I'm looking for something to do for the next 10 years as part of this.

4. Teach/consult - My background is in high-tech B2B product marketing/digital marketing. I'm ready for a change, but if nothing else materializes, I'll look for ways to leverage all the BS i've done for the past 30 years.

My goal is to maintain cash flow, get the tax benefits of owning a business, and have a more flexible lifestyle than working a 9to5 gig. I know - and I want a pony too. LIke I said, I've got a year to sniff around. Looking for thoughts from this board. Thanks

TMurphforHeisman said:

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1. Rental properties - I've got a good chunk of capital to start with, but this wouldn't be my first choice. I've been down the landlording road before and we bailed due to too many tenant and maintenance issues. Might consider going back to it, but only if other options don't look as attractive.

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Seems a lot of people either don't think about or write off too quickly commercial properties.

I had a good conversation with a superintendent at my employer who talked about how he built a commercial building and he was 5 years away from paying off the building then he'd retire at 60 and have about $15k/mo income.

Think about it compared to residential;

Tenants typically sign 5 year leases. Waaaaaay different than a 1 year residential lease.

His building had 3 tenants; much more secure than a 1 tenant house. His anchor was a dentist, and they signed a TEN year lease. If the other two spots were empty, he was still breaking even.

It was a huge light bulb moment for me. Why deal with yearly 'renters' when you can deal with a multi-year business lease? A business is much more invested in the space than a resident in a house. Plus, the multi-tenant aspect of it makes it much more secure. What are the chances you have 0 out of 3 tenants at one time?

Something to thing about.

62strat said:

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TMurphforHeisman said:

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1. Rental properties - I've got a good chunk of capital to start with, but this wouldn't be my first choice. I've been down the landlording road before and we bailed due to too many tenant and maintenance issues. Might consider going back to it, but only if other options don't look as attractive.

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Seems a lot of people either don't think about or write off too quickly commercial properties.

I had a good conversation with a superintendent at my employer who talked about how he built a commercial building and he was 5 years away from paying off the building then he'd retire at 60 and have about $15k/mo income.

Think about it compared to residential;

Tenants typically sign 5 year leases. Waaaaaay different than a 1 year residential lease.

His building had 3 tenants; much more secure than a 1 tenant house. His anchor was a dentist, and they signed a TEN year lease. If the other two spots were empty, he was still breaking even.

It was a huge light bulb moment for me. Why deal with yearly 'renters' when you can deal with a multi-year business lease? A business is much more invested in the space than a resident in a house. Plus, the multi-tenant aspect of it makes it much more secure. What are the chances you have 0 out of 3 tenants at one time?

Something to thing about.

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Gotta be careful with CRE, and I say that from the perspective of someone who has done quite well in that market. Easy to get burned and sit on an empty building for a long long time...

Location and timing are key. Also, nowadays on average returns are significantly lower than residential real estate, mostly due to the assumed stability. Assuming you have a stable tenant. Which is easier said than done.

I'll add, in my story, the anchor tenant was under contract when the construction on building began. So a bit of security there from day 1.

Also Like I said, it wa a 3 tenant building, so very unlikely you have no tenants at the same time.

Re #2: I'm scared for you. I know a lot of guys who have done search funds. It typically takes 2 years to find something and you are taking on a lot of risk (usually the deal is leveraged and the goal is to pay off the debt over 3-5 years and that's how you make money plus growth.).

Typical search fund guy has a background in Private equity or ibanking and nows how to due diligence the deal and can run it after purchased.

Corporate world (depending on how big) is not the same as small business ownership. It's really hard work until you know the business, process and procedures and have the right people in place.

I know a guy who bought 8 FedEx ground routes. About a month before he closed, he was telling me how easy it would be. Drivers run their routes, it's all set up, just collect checks. A month after he closed all he did was ***** about the problems and hard work.

I know a guy who did a search fund and bought a sewage service business. He killed it (money wise) but still worked long hours.

If you want flexible, semi-retirement, I don't believe buying a business is for you. I don't meet many business owners who don't work a lot (and don't answer that with I'll hire a manager).

If this is really your lead option, find other guys who have done search funds or bought businesses and understand their work life / hours vs. what you are looking for.

Go read this book:
https://www.amazon.com/HBR-Guide-Buying-Small-Business/dp/1543601200

Why not fully passive?

Dump it in an index fund and be done with it.

It was pretty clear that he wanted to stay active etc and leverage his experience.

Don't get me wrong - I'm not opposed to hard work. When I say flexible lifestyle, I'm thinking more about business opportunities where I can live wherever I want and work primarily for myself. I've been reading up on ecommerce businesses as one option - with lots of positive and negative stories behind them. Just curious if anyone on this board cares to share their experiences in the ecommerce world - or has walk through a similar transition and discovered other options.

I've had others mention commercial real estate to me over the years, but I never really investigated. That's another avenue to consider. Thanks

With your user name, perhaps partner with Terrance Murphy on his real estate business? Signs all over BCS.

Think about the business you left and see if there are any aspects of it that are a type of residual income. Everyone likes rental houses because of the residual income. But I don't really feel like they are passive (at least not when you have enough properties to replace an Income). Someone has to manage them even if each one doesnt take 40 hours a week to manage.

What aspect from the business you just left could be run from anywhere and had some sort of reoccurring income?

That's what I did. I now have a business that can be run from a cell phone for the most part. I have to manage it. And I HAVE to answer my cell phone no matter what. But I can answer my phone while on a boat fishing.

I'm not the wealthiest of people but I do very well and have more free time than anyone I know. And my time is more valuable to me than anything.

Real estate will also get you there. But I took something from the business I knew and understood and turned that into something very similar to rental property. But do what you know. Don't blow 30 years of savings trying to work something you know nothing about.

Move to Colorado. Work a ski lift.

for commercial re, take a look at Loop Net if you're not already familiar with it.

https://www.loopnet.com/

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Everyone likes rental houses because of the residual income. But I don't really feel like they are passive (at least not when you have enough properties to replace an Income). Someone has to manage them even if each one doesnt take 40 hours a week to manage.

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We don't spend much time on our properties once we purchase, renovate & rent. We have 13 tenants and spend very little time on it.

I'll add my two cents on commercial real estate. Full disclosure, I'm a commercial broker in DFW.

In my opinion, commercial real estate is a fun, thought provoking and engaging industry. There are a lot of good, smart people in the industry who (typically) are willing to help and genuinely hope to see you succeed.

If you identify a solid investment strategy and do proper due diligence on your investments, there is a lot of money to be made. However, there are many (sometimes unforeseen) risks that can wipe out any potential profit.

When talking to individuals who are looking to invest in commercial space, most of the time they fail to properly estimate amount of capital it will take to keep their properties leased. Not only do the expenses include maintenance and repairs, but you also have to take into account tenant improvement allowances (for new and renewing tenants) as well as brokerage/property management fees, attorney fees and any subsequent downtime for vacancies.

I could talk ad nauseum about the pros/cons of commercial real estate. Ultimately, I believe it is a great livelihood - I'm biased - but when starting out, your success will greatly depend on finding a quality partner who understands your goals and can point you towards opportunities that fit your objectives.

Last comment - Read up on 1031 Exchanges. They can be a great avenue to defer taxes and substantially increase long term returns.

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We don't spend much time on our properties once we purchase, renovate & rent. We have 13 tenants and spend very little time on it.

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What do you attribute this to because that's not the experience of many of the landlords I have talked with? Having properties in great condition and being able to properly vet the renters in advance are two factors that come to mind but I'd like to hear your thoughts.

Depending on how much money you have/risk profile/return expectations you may want to think about buying a NNN lease high credit retail building such as a 7-Eleven or a Sherwin-Williams. AA- credit

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We don't spend much time on our properties once we purchase, renovate & rent. We have 13 tenants and spend very little time on it.

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What do you attribute this to because that's not the experience of many of the landlords I have talked with? Having properties in great condition and being able to properly vet the renters in advance are two factors that come to mind but I'd like to hear your thoughts.

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You are right on the 2 big things that keep our real estate venture hassle free.

#1 is that we purchased the worst houses on the block in good neighborhoods. That's the first criteria - we don't feel right renting a place we would not live in. We renovate top to bottom so we don't expect any maintenance problems for a few years because everything is new. Also, most of our rentals are close to us & we drive by often. All are in the same town & we see them every week or so. We schedule "maintenance checks" every couple of months to go in, change air filters, check for leaks, etc. That allows us to see the overall condition before anything gets out of control. We notify everyone via text a day before going in and if we see some issues we do a blanket text reminding people to do whatever we think they should (like not leaving food out, overflowing kitchen trash, etc.) to not target anyone specifically but to remind them that pest control is a high priority for us & them.

#2 is that we have high leasing requirements & charge more that other similar (size but not finish out) units in town. That tends to draw young professionals with responsible jobs. We check credit, background & eviction records thru mysmartmove.com - it has worked well for us so far. We don't make friends with our renters (we'll charge a late fee) but give them a gift certificate to our favorite restaurant when they move in & we give everyone a small gift at Christmas. It goes a long way in how they see us. When they do call us about anything they are kinda apologetic about "bothering us" & we strive to right things quickly.

We have a good team of people to fix what we can't and have great relationships with them. We've worked to find good people, we pay quick & use them for all of our properties. There might be cheaper people, but ours are reliable & because of our relationship, they answer our calls.

I don't know if we are just lucky or have a good system. Overall, we have very little contact with them & they are always friendly if we see them at the store. We started in 2015 & haven't been doing it long, but, so far, so good.

dcAg said:

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Depending on how much money you have/risk profile/return expectations you may want to think about buying a NNN lease high credit retail building such as a 7-Eleven or a Sherwin-Williams. AA- credit

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That's exactly what I'm looking into going forward. I will not buy commercial without long term Corp-backed triple nets in place, like CVS/Walgreens (Americans love our meds) which likely will be stable despite online presence. Otherwise, for how much is required down upfront the risks can be great in the long run even if short term sees solid gains. Yes, the returns aren't as great in these leases but the long term stability and not needing to be hands-on makes this worth it for me at this point in the game.

As mentioned earlier, having an anchor tenant in place can provide a stability for awhile. But if that tenant leaves or goes out of business in 5 or 10 years, what will you do? There's literally no way to foresee how long it will take to find a replacement. It might only be months, but I've seen empty CRE for years with for-lease signs in the window. Can you weather that time frame in terms of fixed ongoing expenses (mortgage, property taxes, insurance)? Also, if there's a downturn in the economy the impact often impacts businesses to the point of seeing higher risk of losing a tenant as a consequence. Even stable ones you might currently think are bulletproof. On the other hand, in a down economy people still need a place to live, so residential real estate is better in that scenario. People would be more apt to rent than buy during these times as well, so filling vacancies is likely not as big a challenge.

That being said, I'm a believer in CRE. I will continue to buy properties in the future and diversify by buying in different markets to try to hedge my bets in case of any future downward trends in one location that could arise as I get older. But you have to be very careful in location and the business in place, as well as long term outlook of that local economy. If you're smart, and maybe a little lucky, it is a goldmine. But keep the risks in mind as well. Do your research. Consider long term predicted trends and how that could impact the business you are literally linked to as part of the investment.

Thanks for sharing that info. Much appreciated.

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Thanks for sharing that info. Much appreciated.

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You're welcome! I'm happy to share anything I know.

Some good advice in this thread on commercial real estate so I won't repeat it. If you happen to be in SA, I'm a commercial broker and can give you an overview on the market.

NoahAg said:

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Move to Colorado. Work a ski lift.

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Colorado is full, try Kansas.

Agree with those suggesting NNN as a good commercial RE option to consider. That said, I am not sure you aren't just better off buying NNN REITs and diversifying over a multitude of relatively safe investments rather than having your cash tied up in 1 or a few properties.

schwack schwack said:

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Thanks for sharing that info. Much appreciated.

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You're welcome! I'm happy to share anything I know.

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schwack schwack

If you don't mind helping a a newbie, I would love to get some advice from you on real estate investing. My email address is:

*********************

email sent

Thank you!

@schwack schwack

I know you're busy, but I noticed your background in rental properties and was wondering if I could bounce some questions off of you (coming from a newbie trying to get started in rental properties). If you have a spare couple of minutes, I'd really appreciate it.

Thanks.

Email: maroonwhitemaroon@gmail.com