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From Corporate to Commercial: Making the Leap into Full-Time Real Estate · The Academy Presents podcast

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  Did you know that 90 % of the world's millionaires
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  invest in real estate? Well, I'm Angel with the
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  Academy Presents Real Estate Investing Rocks,
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  and I'm here to help you if you want to go for
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  your piece of that pie. Are you new? Are you
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  new to this and you just don't know where to
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  start? It's okay. Are you someone that has invested,
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  but you feel stuck, you feel like you've lost
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  momentum, you don't know where to really head
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  from here? Are you a seasoned real estate investor
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  who is doing great but maybe you just want to
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  hone a few skills here and there? This is the
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  place for you. The Academy Presents Real Estate
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  Investing Rocks podcast will connect you with
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  industry experts so that you can save time, avoid
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  costly mistakes, and begin living the life you've
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  dreamed of all through real estate investing.
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  You're already taking the first step. just by
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  joining us here today. Hey guys it's Angel and
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  you are here at the REI Rock Spring Summit and
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  it has been amazing. These are my favorite six
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  days of the year because we do this twice a year
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  and I have been talking to some amazing people
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  and this is just one more amazing person. We're
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  going to talk to Clive Davis and he's talked
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  to us about transitioning from year nine to five
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  into full -time real estate. I know that's a
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  really scary thing right now with all the uncertainty
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  and the inflation and the economic environment.
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  There's just a lot of things going on and you
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  you may be really apprehensive. It may be something
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  you want to do. You're ready to jump straight
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  in and you're like, man, now I can't and who
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  knows how long this is going to last and I'm
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  never going to be able to achieve my dreams and.
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  That is not the case. And it certainly doesn't
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  have to be how it works out for you. So I'm going
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  to hand it over to Clive. And if you could just
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  give us a little bit of your background and we
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  can get going from there. Sure. So the background
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  is I am a recovering corporate transactional
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  lawyer. That's how I started out professionally
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  out of law school. Did that for several years
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  at a Wall Street firm in New York City. And then
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  I transitioned into the pharmaceutical industry.
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  joined Pfizer, big pharma company, and obviously
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  in the news for all the right reasons in connection
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  with COVID. But I joined them and ended up spending
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  six years with them in a variety of roles supporting
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  their business. And they actually relocated me
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  and the family to Atlanta, which is how I transitioned
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  from New York, New Jersey down to Atlanta in
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  2005. and stayed on with them for another two
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  years before transitioning again to another pharma
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  company, this time a Belgian pharma company with
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  its US headquarters in Atlanta. So I came on
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  board as their chief compliance officer and then
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  progressive roles led to me being responsible
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  for their America's business, which was US, Canada,
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  Mexico, Brazil. And so all in all, a 20 -year
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  corporate career. And at the end of 2016 is when
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  I just said, if not now, when? And the question
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  I was asking is, when are you going to give this
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  real estate slash entrepreneurship thing a go
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  and see what you can make of it? I had been investing
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  in real estate for the entirety of those 20 years,
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  but it was always smaller stuff. A duplex that
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  I bought way back in 1999 held that all the way
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  until 2018. I had a single and we still have
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  the apartment in New York City that once we moved
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  out of it we just continually rented it since
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  then and that's been rented since 2000. And then
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  one of the first things I did when I did leave
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  corporate at the end of 2016, in spring of 2017,
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  I bought a five unit. And that was more of a
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  proof of concept to see, do you really want to
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  roll up your sleeves and get more involved in
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  this real estate? That turned out to be a great
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  investment for us, did really well. You know,
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  I just got to the point where I said, no more
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  small stuff. How do I get into this real estate
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  space at a bigger scale and do the types of deals
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  that I had started to invest in as I transitioned
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  out of corporate and move my retirement funds
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  into a self -directed IRA? I started heavily
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  invested in commercial real estate, primarily
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  multifamily, but not just acquisitions, also
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  ground up development. and so I tended to invest
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  in the types of deals that I aspired to do you
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  know one to two years down the line and so that
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  was part of my education and part of my learning
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  was you invest with these institutional quality
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  sponsors and you get to learn so to speak on
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  the job of how do these elite institutions do
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  these mega deals. What does the business plan
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  look like? What does the capital stack look like?
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  What does investor relations look like? All of
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  those things, you get to see them from the passive
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  investor side, from the LP side of the table.
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  And that helps, hopefully, inform the type of
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  sponsor you're going to be when you step into
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  those shoes. And so that was kind of the groundwork
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  that I laid for myself. And then it was just
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  an aggressive pursuit of knowledge, information,
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  networking, attending conferences, signing up
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  for a mentoring program eventually at the end
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  of 2018. And then, yeah, it was off to the races
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  of pursuing these larger scale deals. And I'll
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  pause there and let you jump in, Angel. OK, so
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  I'm just going to kind of stop for a minute,
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  because I think a lot of people here you need
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  to have really replaced your income before you
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  jump into full -time real estate. And I'm hearing
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  you talk and I'm thinking multiple six figures
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  to replace. And that would be really tough because
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  like we replaced mine. I'm a teacher. It was
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  like $50 ,000 we had to replace. Yeah, that's
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  a far cry from a few different six figure numbers.
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  Yeah, you're absolutely right. And I will say,
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  hopefully, I can disabuse folks of that notion
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  that you do need to replace your income. And
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  here's how I approached it. And had I waited
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  until such time as I could replace my income,
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  I may be working for another 10 to 15 years.
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  And so that could lead to me just continually
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  defer in the leap of faith that I ultimately
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  took at the end of 2016. And so going into the
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  decision to part ways with corporate life and
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  leaving the W -2 behind, you got to, at least
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  for me, one thing that was true and remains true
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  today was that we always lived not only within
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  our means, but below our means. And so every
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  year as compensation got improved and bonuses
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  got bigger and other forms of compensation looked
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  better, my and our lifestyle as a family didn't
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  incrementally increase to keep pace with the
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  new income that I was earning. So I was always
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  kind of, I come from humble background. parents
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  who didn't go to high school, didn't go to college.
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  I'm the first college graduate, first law school
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  graduate. I'm the first in my family on a lot
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  of fronts. And so I know what it's like to live
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  paycheck to paycheck and to go without and to
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  live a modest life. And so I didn't adjust that
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  now because I found myself in a setting where
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  I was well compensated and pretty regularly,
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  and on an annual basis, I was seeing an improvement
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  in my total income. So we didn't have the vacation
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  home and a note on that. We didn't have cars,
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  my cars. Today, my car is a 12 to 15 years old.
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  I could probably afford a new car, but that's
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  just not a priority for me. In my priorities,
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  it's making sure that the education of my children
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  is well in hand for each of the kids. As soon
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  as they got a social security card, we opened
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  up 529 plans to fund their education. And I have
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  one college graduate. you know, the 529 played
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  a huge role in getting her through and out. And
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  I have another one in school now and it's the
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  same thing. And so the one thing I would say
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  is I was not, my goal was not, I've got to replace
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  my income before I make this leap. As I mentioned,
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  if I had done that, I'd still be toiling away
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  at what I was doing. And so you do need to have
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  savings. You do need to prepare yourself, because
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  you got to figure out how do you sustain yourself
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  until that new venture takes off. And even when
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  it takes off, it's not it takes off and now I've
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  just got, you know, I'm inundated with money.
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  I'm just flushed with cash because I did one
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  deal. You know, it's a journey. And just like,
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  you know, those 20 years in corporate was a journey
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  over 20 years. I don't believe in quick money.
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  I don't believe in kind of overnight success.
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  In fact, I tell people it took me two years from
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  the very first LOI letter of intent that I submitted
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  to buy a property. I think it was like a 92 unit.
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  Didn't get it. Yeah. I figured, okay, you know,
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  I'll get the next one a month or two from now.
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  And fast forward, it took me ultimately including
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  kind of a dormant period. of COVID, it took me
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  the better part of two years before I got that
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  first breakthrough deal awarded to us, 244 units
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  that we acquired for 30 million. So I went from
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  a five unit that was the proof of concept, and
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  my next real estate acquisition that I was associated
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  with was that, was the 244 units. But I had to
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  sustain myself over that more than two year period.
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  Part of it was savings that I took into this.
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  And then another part of it was the small real
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  estate that I refer to ended up being a lifesaver
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  because in 2018, I sold that first duplex that
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  I had since 1999. So that gave me kind of a lump
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  sum of cash from the proceeds. So that enabled
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  me to sustain myself and sustain the family while
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  I'm awaiting the breakthrough. The five unit,
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  I ended up selling that at two weeks into COVID
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  at the end of March of 2020. That ended up being
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  in large part my skin in the game for that first
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  deal that I ultimately did in late 21. So, it's
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  a combination of things that enabled me to step
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  away even. while I was not replacing the income
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  that I was making at the peak of my corporate
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  career. And so, you know, I would definitely
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  tell folks that, yes, you've got to prepare,
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  but if you've kind of organized your life in
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  a certain way and you've lived, you know, within
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  or below your means, it's not as daunting a task
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  as you might think. And, you know, preparedness
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  is everything. Well, and we had. Not necessarily
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  super similar, but sort of we didn't have a lot
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  of savings saved up. But what we did have was
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  Jason got a severance package that basically
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  meant that he got paid for six months after he
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  was laid off regular income. So until December
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  of this past year, there wasn't a lot of difference
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  for us. But once that ran out in December, it
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  was like. So what do we do now? We were able
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  to get another deal across the finish line, but
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  I mean, it's there's other people in the team
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  that money gets split and until you until you
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  are fully subscribed, like there's not a whole
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  lot happening. So it's. Sometimes when you make
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  the leap into it, there really isn't a whole
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  lot there. And it is our single family or our
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  residential portfolio that keeps us afloat. We've
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  got six singles that are ours, 100 % ours. And
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  then there's a quad and a couple of duplexes
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  that we're part of. And then we got a couple
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  of oil wells. And those investments help us bridge
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  the gap from month to month. Because we like
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  investing in our backyard. And there's not a
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  whole ton of deal flow here. Yeah. I think folks
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  have just got to, there is no taking a leap of
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  faith like what we're talking about without sacrifice
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  and without a little bit of pain. If you're trying
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  to kind of make this pivot and transition and
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  keep everything in your life the same, that is
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  not reality. That's not going to happen. And
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  so part of being an entrepreneur is recognizing
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  that there are no guarantees. There is no guaranteed,
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  to the extent it's even guaranteed, there is
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  no guaranteed direct deposit hidden in your account
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  every two weeks. Your success ultimately is going
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  to come down to what you're able to do and you're
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  going to ultimately eat what you kill. And so
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  you've got to give up the comfort. And I posted
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  something in the last week or so about getting
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  beyond your comfort zone or stepping outside
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  of your comfort zone. And I don't think you can
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  make this type of transition, in my case, especially
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  after 20 years, where I had gotten very comfortable.
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  You have a secretary, you've got people, you've
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  got someone in IT when the laptop's not doing
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  what it's supposed to do or the desktops. You
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  just pick up the phone and someone comes to your
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  rescue. When you step into the world of being
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  an entrepreneur, It's you. So you can call yourself.
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  But at the end of the day, you are your rescue
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  plan. And you've got a way to look at it, too,
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  because you are your rescue plan. So instead
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  of relying on somebody else to say, oh, yeah,
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  you get a 3 % raise this year. You get to be
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  the driver of that. So like I think about so
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  I have my little measly TRS account for being
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  a teacher. It made five hundred dollars last
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  year. And I'm like, I'm going to I'm going to
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  moan and complain about this every year until
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  I finally get it. But it's like I could turn
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  that into so much more than five hundred dollars
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  a year. And it's would it be risky for me to
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  pull it out? It's say twenty three thousand,
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  I think is what it is. Would it be risky for
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  me to pull that out? Of course it would be. If
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  I was not educating myself on what to do with
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  it, if I was planning on just spending $23 ,000
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  on a new car or $23 ,000 on a vacation, yeah,
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  that's risky. That's not smart. But I've educated
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  myself about good investments, good investment
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  practices. And so it's not nearly as risky. And
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  I bring that up because one of the cool things
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  that happens when you step out of your position
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  is you get access to those retirement accounts.
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  TRS is a whole different beast. I will one day
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  break through it and get my money. But my husband
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  got his and he was able to pull it into a self
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  -directed plan and immediately invested in seven
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  deals. Seven deals that we're getting passive
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  cash flow from. And again, did it replace both
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  of our incomes? No. But like Maurice Villagene
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  says, all you got to cover is your expenses.
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  Is it going to cover your expenses? We're doing
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  all right. We're not able to like go have some,
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  you know, European vacation, but we eat supper
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  together every night. We got food for breakfast
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  and lunch.