All Forum Posts by: Jordan Thibodeau

Not an engineer, but I work at a tech company. I'm a noob at best when pertains to me using Google app script. Great to see so many tech employees here, I wrote a tech employee guide for real estate investing on the BP blog. It should be helpful for a lot of you.

No. Read every article on BP, build your RE network, listen to as many BP podcasts as possible, and read great RE books. But for the love of god, never pay for mentorship. 

SF has some stringent laws regarding landlords and if you aren't seasoned property manager your tenants can play games with you. I would definitely make sure you have read up on them. You can find some of them  here. And Read this book. Document everything. Consult with a landlord lawyer, I know of a good one, PM me. Of course lawyers aren't free. If you don't have time to manage your units, get a Property manager.

@Matt Hangsleben you need to build your cash position because if we have a slow down and you are paying a mortgage shortfall due to falling rents you are gambling with your families future. You want to make sure you're adequately diversified outside of real estate. The last 5 years was a ridiculous RE bull market that people think will continue indefinitely into the future, RE will begin to go from market outperform to standard performance. Being you have a 401k match, you definitely should max out your 401k to properly diversify your assets. The federal government is providing you a great tax break for doing so and your company is matching your contributions so that's probably one of the best investments you can make. 

If you need more cash, you should start considering ways to build a side hustle to generate more cash, not over extending yourself for real estate deals.

The following is an excerpt from my post The Tech Employee’s Ultimate Guide to Getting Started in Real Estate Investing:

Financial Housekeeping

Before we get started with real estate, you have to make sure you’re covering the basics. Assuming your company matches your 401(k) contributions, you should max out those accounts and invest in a target retirement index fund. An employee match is pretty much a risk-free rate of return that you won't be able to beat anywhere else. Then you should set up a Roth here. And if you want to learn about the RE cycle go here. 

Next comes savings. As cliche as the advice sounds, it’s imperative that you live beneath your means by maxing out your savings. Adequate savings provide you the financial security to walk away from any situation or real estate deal if you feel you’re not being treated fairly. Without being able to walk away from bad situations, your life will be filled with constant stress. At the minimum, you need to save six months’ worth of living expenses in the bank so that if you lose your job you can stay afloat during these tough times. The average person remains on unemployment for three months, but during a recession, that time can double to six months.

You also need enough insurance to provide your loved ones with support in case something tragic happens to you. We all think we’re invincible, but there’s always that risk something terrible can happen to you. Your company should provide you with the option to enroll in various accidental death, short and long-term disability, and long-term healthcare coverages. Make sure you pay for your disability coverage because if your employer pays for the coverage, you will face a large tax bill. If you haven’t applied for these insurances, please consider doing so.

Then you need to get your estate in order. I’ve seen many families suffer from a lack of proper estate planning. You need to set up a trust so that it’s made clear what your directives are when you unable to act on your own behalf. If you’re incapacitated, who will make healthcare decisions on your behalf? Who should be responsible for maintaining your assets? In the tragic event of your passing, where should your assets go? All of these questions need to be answered now, and you should speak to a trusted attorney.Finally, you need to prevent yourself from getting caught in conspicuous consumption trap of buying things you don’t need in order to impress others. It’s very easy in Silicon Valley to fall into this trap because so many people are doing “amazing” things such as traveling the world or buying luxury cars and huge homes. You need to focus on your long-term goals and not get sucked into other people’s dreams. If you follow these guidelines, you will be on part of the way there to a healthy retirement.

You can read my additional thoughts here. And if you want to learn about the RE cycle go here. 

What @David Katz  said a thousand times over.

And what I posted here. Because some of your peers aren't taking college seriously, doesn't mean you should follow suit. You were almost finished, re-enroll, and study RE on the side. Don't make your life harder. If you told me you had 10 life changing properties under contract and a booming RE business, that's one thing. But to drop out with no immediate reason to do so is more of a snap decision than a well thought out one. Give yourself some time and reconsider.

@Nick Quarandillo I would think this one through. I wrote an extensive post on why  college still makes sense. I wanted to quit at a certain point but I'm glad I didn't because it would have closed numerous doors for me. Don't turn quitting college into grass is always greener scenario. If you don't have a formal plan and better option than college, you should continue with it. 

Think of your future self, and ask yourself, "By me quitting college will I be putting my future self in a stronger position?" If you think the answer is yes, then ask yourself, "What is my plan to make sure my future self is in the best possible position to be as successful if I completed college?" If this is a matter of discipline that you don't want to do the work, RE requires its own type of discipline and it's one of the most grindy jobs you can ever have. If you don't have the discipline to cold call, door knock, and prospect for 4-5 hours per day and face multiple rejections, it won't be the right business for you.

Take some time to cool off, and reflect. The worst thing you can do is make a big decision in the heat of the moment. 

Good luck!

@Greg Gibson the RE cycle is slowing down. I would consolidate on your wins by either doing what @Karen O. mentioned by paying down some high-interest debt and continue to build your cash pile. You want to have dry powder available for purchasing better deals in the future (higher returns and less risk), not lower priced deals in the current market (lower returns and higher risk). Also, you want to make sure you're adequately diversified outside of real estate. The last 5 years was a ridiculous RE bull market that people think will continue indefinitely into the future, RE will begin to go from market outperform to standard performance.

The following is an excerpt from my post  The Tech Employee’s Ultimate Guide to Getting Started in Real Estate Investing: 

Financial Housekeeping

Before we get started with real estate, you have to make sure you’re covering the basics. Assuming your company matches your 401(k) contributions, you should max out those accounts and invest in a target retirement index fund. An employee match is pretty much a risk-free rate of return that you won't be able to beat anywhere else. Then you should set up a Roth IRA, assuming you qualify.

Next comes savings. As cliche as the advice sounds, it’s imperative that you live beneath your means by maxing out your savings. Adequate savings provide you the financial security to walk away from any situation or real estate deal if you feel you’re not being treated fairly. Without being able to walk away from bad situations, your life will be filled with constant stress. At the minimum, you need to save six months’ worth of living expenses in the bank so that if you lose your job you can stay afloat during these tough times. The average person remains on unemployment for three months, but during a recession, that time can double to six months.

You also need enough insurance to provide your loved ones with support in case something tragic happens to you. We all think we’re invincible, but there’s always that risk something terrible can happen to you. Your company should provide you with the option to enroll in various accidental death, short and long-term disability, and long-term healthcare coverages. Make sure you pay for your disability coverage because if your employer pays for the coverage, you will face a large tax bill. If you haven’t applied for these insurances, please consider doing so.

Then you need to get your estate in order. I’ve seen many families suffer from a lack of proper estate planning. You need to set up a trust so that it’s made clear what your directives are when you unable to act on your own behalf. If you’re incapacitated, who will make healthcare decisions on your behalf? Who should be responsible for maintaining your assets? In the tragic event of your passing, where should your assets go? All of these questions need to be answered now, and you should speak to a trusted attorney.Finally, you need to prevent yourself from getting caught in conspicuous consumption trap of buying things you don’t need in order to impress others. It’s very easy in Silicon Valley to fall into this trap because so many people are doing “amazing” things such as traveling the world or buying luxury cars and huge homes. You need to focus on your long-term goals and not get sucked into other people’s dreams. If you follow these guidelines, you will be on part of the way there to a healthy retirement.

You can read my additional thoughts  here. And if you want to learn about the RE cycle go here. 

@Cameron Dye I keep hearing people down play the importance of college, but you have to understand you aren't hearing from the people who didn't go to college and failed. We are suffering from a degree of survivorship bias. You aren't hearing from the person who dropped out of school and is now working at 7-11 (not to say there's anything bad about that, but not ever college drop out story ends in success). So when making any decision you need to listen to all sides, the winners and the losers so you can come up with a well researched decision.

First of all, be easy on yourself. You’re a teenager, your life hasn’t even begun. You don’t know yourself and haven’t had that much exposure to the outside world.

Most people who graduate from high school or college don’t really know what they want to do with their lives. And that’s perfectly ok. I would by lying to if I said I know what I want to do exactly with my life, I have general things I want to accomplish, but I don’t have everything exactly figured out.

The path becomes clearer through experience. Life is a giant game of process of elimination. You try a multitude of things and you work towards figuring out what you like and don’t. You try something, you don’t like it, great! Now that’s one less thing to try in the future and you have learned more about yourself. Do that enough times and your path begins to materialize.

Lets rephrase your question: At what disadvantage am I putting myself at if I don’t get a college degree OR learn a trade (Plumbing, Carpentry, Construction, etc.)?

There’s currently a rebellion going on against going to college. A lot of cool kids like to talk about not going to school and how so many billionaires dropped out and are now doing great.

That’s fantastic, but what’s wrong with those arguments are a few key issues:

• Most people saying this have college degrees and are financially better off for doing so (assuming they didn’t run up the college loan credit card, more on that later). The data still shows that having a college degree results in higher earnings potential than non college degree holders.[1]

• Not getting a college degree or developing a trade is like going to war without basic training. Sure, a lucky few will equip themselves on the field with guns they stole from the enemy, and a lucky few will be able to rise to the ranks of generals, but for all that weren’t lucky might either get critically injured or killed by all of those who were taught the basics of how to fire a weapon, work as a team, navigate in the field, and learning . Most companies require a college degree and you’re setting yourself up for a lifelong disadvantage.
• Unless you have a better opportunity than college or working a trade, you’re better off getting some sort of an education. Most of the people who planned to return to school later didn’t because they had a kid and became tied to their low paying job.
  • Life becomes immensely more difficult as you age. You might get into a relationship, start a family, or your parents might get old and you need to take care of them. When you’re 18, it’s peak time to focus on your development, you will never have the same window again.
• Companies use a college education as a filtering mechanism for hiring.Some large companies will deny potentially great candidates job opportunities because of the lack of a college degree. Now hopefully this will begin to phase out, but you don’t want to put into a position where you’re at a disadvantage for not having one. If you look at it from an employments perspective a college degree at least serves as an indicator that a person is conscientious enough to complete assignments, has an ability to work on a team & follow instruction, and has a baseline level of communication skills.
• The people who have survived without them are suffering from survivor-ship bias (meaning we aren’t hearing from the people who failed).
  • Sadly, we aren’t all as gifted and lucky as Zuckerberg, Steve, Bill, Dell, and etc. While these arguments seem to make sense on face value, we have to understand the importance of base rates. Base rates are the standard probability of an event concurring. For instance if 1 out of every million high school drop outs have the probability of being successful as Steve Jobs, that means you have a 0.000000000001% chance of that happening.
• Most of the people who are saying college is too expensive aren’t including the huge cost-savings involved with community college.
  • Most of the people making arguments against college focus on private schools costing $50k plus per year (not including interest if you take out a loan), which is a high price if you don’t finance it properly. It doesn’t make sense to spend $100k for two years of General education classes that can be completed at community college for $15k.[2] By going to community college we saved $85k because we didn’t go to private school for two years OR almost $38K if we went to state school. Then you can decide to either go to state school, lets say San Jose state. You’re looking at $19,000 per year assuming you live with your parents .[3] All in, you’re looking at ~$53k for college. Now if you go back to the graph above and multiply the differential between college graduate and non college graduate (about $17k in pay), you’ll discover that your degree will pay for itself in about 3 years and 2 months.
    
    Or, you can go to private school for two years which will cost you $100k + community college of $15K = $115K. That will take you almost 8 years to pay off. With private school, you have a longer payback period for loans, but you could argue that makes up for itself with the perceived credibility (meh) and network you develop.
    
    Finally, this assume you didn’t apply for any scholarships, which is the biggest mistake you could probably make. Yes some of us our financially better off so don’t qualify for certain types of aid, but there’s always a scholarship out there for you if your grades are good enough and you know how to hunt for them.

• Even if you get a random social sciences degree and you take your studies seriously you should be able to:
  • 1. Communicate clearly.
  • 2. Persuade people with well thought out arguments.
  • 3. Develop a strong network that leads to new job opportunities.
    • I’ve spoken extensively on the importance of networks.
• The three aforementioned points are critical for your ability to function well in our society and can be honed inside of college. Of course you can do it outside of college, anything is possible, but it takes a special person do hold themselves accountable to develop their skills on a regular basis.
  
  In the end, college and the trades, are still worth it if you finance it correctly and don’t run up the credit card. Nothing in life is for certain, it’s really what you make out of the college and trade school experience. But basic on the numbers, if you don’t do basic training, the odds of you surviving the battle are greatly diminished.

Awesome! You should continue reading as much as possible. I wrote a piece on building your network that should be helpful for you. I would talk to commercial brokers, investors, mortgage lenders, etc about all the different aspects of real estate investing and talk about their careers in real estate (two different things the former is about deplying capital, the latter is about making money on RE transactions to pay bills).

You can invest in real estate while working full time job ( you can learn more  here). Some people decided to work in a completely different industry than real estate so their salary and investments aren't based on the same asset class. You get a degree of protection from that in case the market turns, but you miss out on working deeply inside of the RE industry to spot opportunities as soon as they appear.

Regarding mentorship, I would set up chats with people in the RE industry, but don't make them too formal because people are short and time are wary of committing to a mentorship. 

Being the RE market is slowing down, you're young and going to college you have time on your side, so don't feel pressured that you're missing out. RE is a longterm game.

Good luck!

The thing about mentors is you don't just have one, you should have multiple so you can get all sorts of advice. Your mentors will disagree, and that's fine, but in the end, it's your decision and you have to decide if you can live with the decision you made even if it doesn't turn out your way. 

That's why networking is so important so you can meet a wide array of people with different opinions.