Brooklyn, NY · Member since 2010 · 24 posts · 4 votes
Hi All,
I have done relatively well for myself and have build a portfolio of over $10M, mostly in the Brooklyn, Queens, and the Jersey City, NJ markets. The issue that I'm having now is scaling the business from a $10M to say $100M. How does one do it?
Without partnering or doing JV how does one grow their business. My capital is always tied up and whenever I have any cash I just dump it into properties. Anybody going through this growing pain as well? If so, how have you handle it and how are you able to scale up?
The only thing I can think of is to obtain a line of credit with banks that will be able to cross collateralized the properties and offer a line of credit, does anybody know of a bank that would do it in the NYC/NJ areas?
@Howard C - how did you get to $10M in the first place? That might be the best place to start. If you don't have any capital and do not generate any from $10M in property, then you might be better off focusing on improving margins rather than expanding.
@Howard C - how did you get to $10M in the first place? That might be the best place to start. If you don't have any capital and do not generate any from $10M in property, then you might be better off focusing on improving margins rather than expanding.
Why rule out partnering or JV? If you're out of capital, you'll need to get it from somewhere. A line of credit from a bank might work, but if you can get access to OPM through partnership, why not explore it?
I generate pretty solid cash flow, low 6 figures, but to purchase a property in Brooklyn or Queens, you're looking at easily a 1M purchase for a 2 family (in an average neighborhood with a solid tenant base). The cash flow derived in a year would be sufficient to go towards the down payment of a property but this is, in my opinion, way too slow to grow. I mean I don't mind buying 1 property a year but the issue is about scaling and getting to the next level quickly (time frame of 10 years for example to hit the 100M portfolio). I can buy 1 property a year but won't get to the 100M mark until I'm old and senile. I just want to do it while I'm still young and still have the energy and vigor to source deals and the risk tolerance to invest in a little riskier neighborhood for a greater return.
Steven,
I don't mind partnering with somebody else, and have in the past with my brother, but in this business is hard to trust somebody unless they have a proven record. I've been trying to meet up with other investors but just haven't had the opportunity to form that relationship yet. Finding a right partner with sufficient capital to fund the deals are hard, but I guess not impossible, just have to continue to look and network. Also, at this point in my investment business I would rather do it alone and retain the equity for myself as a partnership will expose me to unnecessary liabilities such a personal guarantee, making sure the partner perform his end of the bargain, etc.
And to answer your question how I got to 10M+ I started by saving up a decent nut and then used the funds towards the down payment to purchase my first property in 2009. From there, just used several different strategies, like purchase, rehab, cash-out refinance, rinse and redo. The uptick in the NYC market from the past 5 years helped as well as the deals I was seeing back then for 350-400K were now worth 900-1.2M. It goes without saying it was a lot of hard work and luck, buying in the right areas in the right time, etc.
Howard C congrats on your success. Have you read Garret Keller's book millionaire real estate investor? In it he talks about finding a successful model to follow.
In New York there are many that have done what your talking about I know one investor that turned 2m into hundreds of millions. He bought in Chinatown when everyone was selling 1981.
Unfortunately this model won't work for you it took thirty years. I do think he probably crossed the 10x his money well before that. He took big risks. At the time no one wanted anything to do with big buildings in Chinatown or Soho. From your post I gather you don't want big risks( you mention solid tenant base) so this model won't work for you.
You just need to find someone that did what you want in the time frame.
Grant cardone might be that guy.