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SHOW NOTES FOR EPISODE 443: 82 UNITS IN 3 YEARS WHILE WORKING FULL-TIME
In just three years, Jens Nielsen was able to amass a diverse real estate portfolio comprised of 82 rental units, 2000 mobile home park units, 14 syndications, 6,000 storage units, mortgage note funds and private money lending – all while working full-time. In today’s podcast, Jens shares how he did it and what makes it work.
What You Will Learn
- Why is real estate is the best way to generate passive cash flow
- The power of a good partnership and team
- Where to find partners and team members
- Why owning more units is better than owning less
- The challenge of buying older properties
- The value of real estate asset diversification
- Why certain assets have better returns than others
- How syndication investments round out an investment portfolio and generate “true” passive income
- Jens two-pronged personal investment strategy
About Our Guest
Jens Nielsen
Jens emigrated from Denmark in 1996 and after a long career in IT he decided that his financial future would be better served as a multifamily entrepreneur and investor. Over the last four years, he has passively invested in 14 syndications and private investments, spanning over 800 apartment units, 2,000 mobile park lots and over 6000 storage units plus mortgage note funds and private money lending. He owns 78 apartment units and mobile home lots in New Mexico and SW Colorado. In the past year, Jens expanded to the apartment syndication business and he is a General Partner in three large syndications, with over 650 units around the country. Jens also has a passion for coaching new investors and accelerating their success through strategy, accountability and personal growth.
More About Jens
- Born and raised in Denmark
- Moved from Denmark to the UK in his early 20s
- Worked in telecommunications – technician – install equipment for telecom companies
- Moved to the US in 1996
- Transferred through the telecommunications company he worked for
- Got his undergrad and graduate degrees in Computer Science in the US
- Traveled all over the world
- Telcom slowed down, so he moved into IT – back-end, servers, main frames, etc.
- Living the “American Dream” – bought a house, 401K, etc
- Started on East Coast (Maryland) and moved to New Mexico
- He now lives in small town in South Western Colorado (Durango area)
- He loves living in the US – great job opportunities, outdoor sports, skiing and biking
- Jens knew, that as much as he loved his life and job, he knew he wouldn’t achieve financial freedom for another 20-30 years (provided the stock market doesn’t crash)
- This revelation came to him about 5 years ago
- He knew he had to do something for his fanancial future
Diversification Into Real Estate
- Jens also wanted to broaden out, should he become unemployed or there are economic changes
- He was looking for ways to generate additional cash flow – thought of consulting but it still seemed too much like just another job
- He happened to pick up a book on real estate investing and started listening to real estate podcasts
- Real estate make a lot of sense
- You buy property
- Improve it
- Put tenants in it who pay rent
- Pay-down the debt
- Get cash flow
- Leverage it
- What could be better than that?
- It’s slow but it’s a good way to generate additional passive income
First Purchase
- Jens met up with a friend who owned mobile home parks
- He discouraged Jens from buying single family homes
- His friend said you can buy a single family home easily, however, you often only make a few hundred dollars a month – it would take a long time to replace income
- It’s also difficult to scale
- You’re competing with every home buyer out there
- Jens’ friend told him to go straight for multifamily
- He referred him to a broker/property manager he knew in Albuquerque
- In 2016, Jens bought a fourplex, his first investment property, and it worked out well
- So, he bought another fourplex
- Then an 11 unit
- All within 6 months
- He bought the properties in Albuquerque while living in Colorado – about 3 hours away
- His broker managed the properties
- He wanted to learn how to work “on” the business not work “in” the business
- He partnered with the friend who referred him to the broker, and leveraged his experience, to purchase a 1970s era 38-unit heavy value-add project for about $1.2 milion 2 years later. They also brought in a couple of JV partners as well
- The seller who owned the 38-unit paid too much for the property and didn’t have money left over to fix the property up, so Jens had to invest a lot to stabilize the property
- That’s the challenge of buying older properties, you don’t know what’s required until you start digging and and are already managing the property
- He wanted to scale up to more units
- So he is selling (or has sold) his fourplexes to move into larger unit sized properties
- If you get bigger properties, you can share the risk and get better management to run the property
Mobile Home Park
- A friend in Durago, Colorado told Jens about a mobile home park for sale down the road from where he lives
- They partnered to buy it
- They are self-managing
- It turned out to be one of his best investments
- They own trailers they can rent out, the others are owned by the residents
- Returning 25-30% of their capital
- Too small to hire management – 9 units
Syndications
- Started out as a limited partner (LP) for other people’s projects to see how a syndication works
- Used his self-directed IRA
- Because he is still working full-time, it’s nice to be in truly passive real estate investments
- But he wanted to be more involved and asked himself, “How can I add value?” to a syndication project
- He is now involved/connected with operators who have projects in Arizona, Atlanta, and Pennsylvania
- He stepped back and analyzed the situation
- Later became GP on projects
- How he evaluates a deal
- Check out the operator’s track record
- Look at the person’s background
- Carefully underwrite potential investments – He is good at analyzing deals and good with numbers
- He networks a lot and has helped him significantly
- He has also invested in platforms but did not do too well
- High projected return
- High risk
- Ended up foreclosed
- Also helping new investors to syndicate
His Current Investing Strategy
- Two-Pronged Approach
- Jens and his wife investments – As a couple, they will buy smaller deals (16, 20, 25 units) that they can hold on to for longer terms – for financial independence
- His criteria for his personal portfolio
- Workforce housing
- 70s-80s
- In Albuquerque
- Interested in Tucson, Wester PA (Erie)
- C+, B- in B area
- Good value property that makes sense
- People can afford to live in
- Light value-add to make place look better
- Increase rent $25-50
- Direct mail campaign
- 200-300 mails every few months
- Hand write envelopes
- Bought a 16 unit off-market
- Jens and his wife enjoy working together for their future
- His criteria for his personal portfolio
- Syndications and Partnerships – Working with others on bigger and more diverse projects
- Jens and his wife investments – As a couple, they will buy smaller deals (16, 20, 25 units) that they can hold on to for longer terms – for financial independence
Biggest Mistake
- 38-unit with heavy value-add
- High risk
- Didn’t anticipate the amount of work required and additional capital necessary to stabilize property
Biggest Successes
- Going bigger
- Building a team
- Partnering with others to buy bigger and better properties
- Started his own multifamily/out-of-state investors meet-up
- Attends a lot of networking events nationally
- Buying larger properties with better management
Advice for Old Dawgs Looking at Real Estate Investing to Help in Their Retirement Years
- You have to decide whether you want to be an active or passive investor
- If Active
- Learn the business
- Find properties
- Small multis
- Larger multis
- If retired, you can self-manage
- If investing out-of-state, hire property manager
- Either way, it takes a lot of work
- If Passive
- Find a good syndicator
- Invest in a syndication
- Find something that produces steady cash flow
- Get 7-10% cash flow on preferred return
- 70-30% split on top of the preferred return, or only offer a split
- Bump in equity after they sell property
- Some people get these super long interest-only loans
- They can barely make there preferred returns while the loans are interest only
- Then they go in to full amortized and it may not work too well
- You have to careful around that
- He’d like to double his money at the end of the term but it’s challenging in today’s economy, especially if the property has already gone through a few value-add cycles
- Jens is in one syndication that has not gone through a full-circle yet (he’s in year 3 of 5 year hold)
- In the next year or two, they might try to sell the properties
- He’s also aware that the economy is volatile right now
- They don’t want to be forced to sell
- You need to have enough runway to hold on to it if it’s not favorable to sell
- He wouldn’t invest in anything that has less than a 10 or 12 year term on their loan
- If you’re investing in cash flowing real estate
- Your principal is preserved
- If you’re living off your 401K
- You have to sell of your stocks and bonds to get any income
- Returns are so low that you keep eating into your principal
- If you invest in real estate, your principal will grow AND you generate cash flow to live off of and cover your expenses
Current Business
- His goal is to exit from his current job in 2020
- He wants to do as much as he can with his capabilities
- He wants to:
- Create a good lifestyle
- Be able to visit his family in Denmark as often as he wants
- Not have to worry about paying the bills next month
- Generate financial abundance for his family
- To give back:
- Safe, clean and affordable housing for his tenants
- Loves the outdoors
- Wants to create opportunities for kids that have never been out to enjoy the beautiful nature around us
- He knows what his income needs to be and and he’ll be there soon
How to Reach Jens
- Email: Jens@opendoors.com
- Free Consultation: https://opendoorscapital.com/call/
DISCLAIMER: Many of the above strategies take knowledge and have a higher degree of risk. You need to do your research and/or work with someone who is experienced to reduce your risk.
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