Ep 92: The truth about building real estate wealth

There is a natural progression of wealth in real estate, and it’s not what most people think. Most people decide that they want to get into real estate, little to Bigger Pockets, and set their sights on buying their first asset whether it be a house, a storage unit, an industrial building, etc.

There’s a common thing about wealthy people in real estate: it’s entrepreneurship. I started out with a student pickup and storage company; we were scrappy entrepreneurs doing hard, sweaty work. After four years of operating, my partner and I had about $400K in our checking accounts and raised an additional $500K to build our first self-storage facility. This entrepreneurship experience taught us about management, growth, financial decision-making, and operations, and gave us the funds to start out.

My story isn’t unique. A guy I know started selling t-shirts out of the trunk of his car, building that up into a screen printing and apparel company. He sold it to Fruit of the Loom for millions of dollars and used that cash to get into buying, selling, and flipping shopping centers. Now he’s worth over $30M. A guy from my small hometown started out by constructing houses and built up the cash to start building, buying, and selling nursing homes, and he’s built insane generational wealth.

Francis Greenburger, Donald Trump, Sam Zelle. They all either drove into real estate through their own small businesses or their family business. For all of them, the window into real estate opened up through entrepreneurship and small business.

Many people listening to this have a W-2 job, and I’m not saying that you can’t generate wealth with a W-2 job. But more often than not, these massive real estate portfolios are built on a bunch of cash. That cash came from somewhere, and it came from a small business. You don’t wake up at 25 with $400K in the bank without entrepreneurship.

The learnings you take from entrepreneurship will also give you a massive edge in real estate. The money we made in our sweaty startup was great, but the most valuable thing was everything we learned when managing 6 full-time and 150 part-time employees every year, figuring out the logistics of leasing warehouses and finding boxes, working as a team, and delegating. It allowed us to attack real estate with confidence. We knew how to lease a building, run a facility remotely, hire a team, delegate, and compensate good talent.

Real estate starts with being an entrepreneur because, at the end of the day, it’s a business. Gaining cash and experience as a small business owner will help you transition into the high-capital business of real estate. You need to start with a war chest of cash; cash is fuel in real estate. It keeps you out of trouble because if you run out of cash, it’s game over. And it’s a lot easier to get that war chest of cash while cutting your teeth in a small business.

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About Me

I started the Sweaty Startup in December of 2018 because I believe the Shark Tank and Tech Crunch culture is ruining the real spirit of low-risk entrepreneurship.