RES 2016 | Passive Income

 

All of us want our family’s financial future to be secured. However, if you solely rely on your paycheck, that may prove to be difficult. Jens Nielsen, founder of Open Doors Investing, shares how built some passive income away from his employer’s weekly paycheck by doing business on the side with syndication. He sheds light on how his team made him work on something else as well as the CRMs that conveniently allowed him to do his jobs. Even while juggling two jobs, Jens has managed to keep the investors work with him. He reveals the most vital aspect to keeping that relationship. Discover how Jens manages to do all of these things in this episode.

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Jens Nielsen on Building Passive Income Away From Your Full-Time Work

Our guest is Jens Nielsen. Thanks for being on the show again, Jens.

I’m happy to be back. It’s great to talk to you again Whitney.

If you don’t know who Jens is, I encourage you to go back to the show WS194. I had him on then and we talked more about his background and how he got into real estate and the mindset shift from employee to entrepreneur and some of those things. Jens, emigrated from Denmark and he had that powerful mindset shift from employee to entrepreneur. He built a personal portfolio to 82 units in less than three years. He did that by leveraging a strong team while still working full-time. I wanted to get into that. I wanted him to be able to tell us a little more about how he did that and the team, how he built a good team and then also, he’s had some success raising capital. He’s able to raise $350,000 in just seven days and get into the raising money and getting into syndications quickly. I thought that could be valuable content for the readers and we wanted to have him back to get into that. Jens, thanks again for being on the show. Let’s go right into it or you can give the readers a little more about yourself and then we’ll go right into your team and what you’re up to now.

I moved here from the US in 1996. I’ve been in telecommunication, in IT for all these years. I realized that if I want to secure my financial future and my family’s financial future, I need to build some passive income that is not relying on my employer to pay me a weekly paycheck. I’ve had that shift. I’m still employed but I’m slowly building this portfolio and this business on the side. One day it can replace my W-2 income. That’s the goal and that’s the path forward for me.

Would you say that if you weren’t still employed that you may be trying to do most of this yourself instead of building a team or you’d be tempted? I know I would be.

It’s that idea of you come from being in control, being a good technician and like, “I know what I’m doing and nobody can do it as well as I can.” You suddenly try to create a business and try to do it yourself, everything. It doesn’t work because you can’t be in a hundred places at once and you are not necessarily very good at a bunch of things that you want to be good at. I think it’s important when you start out, you need to learn as much as you can about all the aspects of your business, but over time trying to leverage other people with what they’re good at. That is going to be tremendous in growing and scaling your business.

Leveraging other skills, I found those tasks that are $10 an hour tasks as opposed to the $100 an hour task which most of us have heard that before. Hiring those things out that are $10 an hour tasks so you can focus on the other things. Who was your first hire and what did they do for you?

I’m small enough, I don’t have any full-time employees or anything like that. The first thing I realized, I’ve been a guy who was doing my own taxes, my own accounting for my job and stuff like that. That’s the first thing I did. I could not figure out how to do my business taxes. I don’t even try it. The first thing was making sure that my accounting, my properties was done professionally. I would get a monthly update and status and income expenses, my P&L and everything else. That was the first thing and then hiring a CPA to do my taxes. I looked at it for five minutes. “No way, I can’t do this,” that was the first realization.

You first hired an accountant and then a CPA, right?

That was the two first things I did and that’s been tremendous. I don’t have to worry about those things. That has been done and it’s taken care of.

Surround yourself with people that are doing what you want to do. Click To Tweet

Even though those aren’t full-time employees, they’re still taking tasks off your plate that they’re good at and probably much more efficient at. Now you can go work on something else that you’re more efficient or that you want to spend your time on.

That would be stuff that’s not value-add for my skill set. That’s off my plate for somebody else to do that.

What was next? What are some other tasks that you finally discovered that’s like, “I need to start hiring this out and building a team that can do these things?”

The other path I’ve done. I’ve done some direct mail and other things to try to find that seller for the smaller property and I would try to do a lot of that work myself. Over time, I got some people to help me, just some people in the local community that wanted a little side work and stuff like that. I explained, how they go and find the owners, how do you break down the LLCs and all that stuff. After I hired the student myself, I’ve had people help me create goals to list and then also, sending out those letters. I’m not the one sitting there and stuffing envelopes and writing out envelopes and stuff like that. I had people help me with that. It’s something I’ve scaled back on a little bit more because I changed my investment approach a little bit, but that was another task that I’ve tried to outsource that way.

Go into how you’ve grown that. What are you doing now? Do you use virtual assistance, or do you have somebody locally that helps you part-time and what do they do?

I’ve had somebody locally help me part-time doing some of these tasks. I know a lot of people use virtual assistants. I’ve not gone down that path yet. It is probably something that it needs to do but I need to look into it more. Property management, a lot of investors are like, “I don’t want to fix toilets and all that.” Immediately, I was like, “No, I don’t want to manage properties.” I find professional help to do that. That’s another key thing, do what you’re good at. Do the $100 or $1,000 an hour work versus the $10 an hour.

You said you’re hiring property management and things like that. What type of systems did you have to develop? With even 82 units and working full-time, you’ve got to have some people in place or some systems to be able to manage all that. Can you elaborate on that a little bit?

The property management, I use the same company for all my properties. They have their systems to create the monthly reports, the P&L and all of that. That’s helpful in that regard. Personally, I’ve experimented with various CRMs and I tried on a customer relationship management so I can keep track on who I’m contacting and what I’m supposed to do. I’ve gone to a new one that I found interesting. It’s an add-on to Gmail called Streak and that’s a CRM built into Gmail that consolidates everything in there. Having some system for that, who are you reaching out to? When are you reaching out to them and when is the last time you heard from them? That’s key and that’s what I’ve found.

I haven’t heard of Streak, that’s the name of the CRM you’re using.

It’s called Streak. If you Google that you can find the company. I think the company is something else. There’s another one called Boomerang that’s another add-on to Gmail. They’re little things like, “You haven’t heard from this person in three days.” It will prompt you to reach out again and stuff like that. The best CRM is the one you use and all my email flow through Gmail, that way I can manage it all from in there.

RES 2016 | Passive Income

Passive Income: When you’re starting out, you need to learn as much as you can about all the aspects of your business.

 

I’ve done lots of research about numerous CRM and different platforms. Something like that is more towards the syndication business. Where investors can log in and see their investments on their phone or on the computer and have their own account so that they can watch those things. Something like Contactually, HubSpot and Podio and all these. They’re CRMs but some of them are a lot more involved than others. They’re not the syndication business specific. They’re more customer relationship management. A little different, not just for investors. It depends on what you’re looking for. I appreciate you bringing up Streak. I haven’t heard of that one. What was it about Streak that made you decide on them as opposed to other platforms?

I had tried some other CRMs and it didn’t feel like they were integrating very well. They’re very expensive, and even though it may not seem like, a lot of those monthly expense adds up. I was like, “Let me try this one.” Somebody else mentioned it to me, “This is pretty cool. You can do mail merge and you can manage a lot of stuff, and it’s simple.” It integrated with a tool that I’m already using. It’s a plug-in so it right away was working for me. Down the road, I may change to something else but it’s working for me at the moment.

I like what you said too, the one that you use is the best one. It’s a daily thing that you’re having to upkeep and keep putting information in time and time again. It’s always current and if you don’t do that, then none of them are going to work very well for you. Are there any other things like that or software that you’ve found that is useful to you or helped you create these systems? You can stay organized while you’re still working full-time but managing this real estate business.

It may sound simple but I love to use Google Sheets. I want to have everything available regardless of where I’m at. I use Google Sheets and Google Docs a lot. I use Dropbox, anything that’s in the cloud that’s easily accessible regardless of where you’re at. I don’t run my own property management. I don’t have a folio system implemented or something like that. My property management does that.

I also use Google Sheets and Google Drive a lot. I love it. I can see it right on my phone. I can have an icon right on my home screen on my phone and just touch it. I can see an Excel sheet right there that the whole team can see and that’s been very beneficial for us as well. I want to talk about your money raising a little bit. How you’ve partnered with other teams or maybe you can elaborate on that a little bit. We talked about you raising $350,000 in seven days. I want to go back a little bit and how you got into the business of syndication. When you had the 82 units, was syndication something that you were even aware of?

I started investing my own money in smaller deals. I took a shift with my retirement money. I had some IRAs sitting in the stock market, one of the big brokerage companies. One of the big things I learned early on is the idea of self-directed IRAs. I can invest in real estate, private placements and syndications through my IRA. I investigated that and a few years ago, I started moving a lot of money out of the stock market into various syndication deals. I’ve done twelve deals now through my own IRAs and my wife’s IRA because I feel like it’s a much better vehicle in my opinion than putting money in the stock market and hoping for it to go up. I started down the passive route first to learn how this is done and so forth. I have known about syndications for quite some time. I had not done any until this year.

Tell us how you then started to get into the syndication business.

I talked a little bit about this joint venture we did with some friends. It surprised me how it was not that difficult to get people involved in the investment because they trusted me to know what I was doing. They looked at the deal and they were like, “This makes sense, let’s go.” There’s probably a lot of people and money looking to invest somewhere. That gave me a boost of confidence to move forward. I also realized that I was not in a position, with my full-time job to go out and go to all these big markets and invest and create the relationships with brokers, look at all these big deals and be the key principal on a big deal at this point in time. I started networking with people that are doing that work themselves. They are the ones finding the deals. Those are ones that are drawn to writing it and once they have everything on a contract, I then look at that and make sure it makes sense. If I feel comfortable with it, I say, “I would like to help you raise money for this deal.” That was the path of the investment I took. I felt like that was a natural progression for my business.

You found that you can start raising capital and partner with somebody, get in the syndication business. Tell us about the capital raising process that you went through maybe the first time.

Just stepping back, how do you find a good offer? How do you find somebody you trust? That has gone back to this thing that if you want to be successful in this business, you need to surround yourself with people that are doing what you want to do. I’ve spent the last couple of years going to conferences, building, networking, creating masterminds and finding the people that are doing what I want to do. They’re ahead of where I’m at but I still try to provide value to them. I went to a conference and met some people and when they had a deal in Atlanta that came up and they say, “Is there an opportunity for me to get involved here?” I said, “For sure. We need some more money and we’ll be happy to work with you.” I got into it a little bit late in the game because they need a little bit more capital there. I said, “You have money to be wired next Friday,” and this was getting close to that date. I was like, “Let’s get on it.” I started reaching out to the people that I had talked about this for a long time and say, “This is the deal. Here are the numbers,” and people were very responsive. Given the short timeframe, some people are scared away from that, but other people are like, “I’m ready. I’ve got the money, let’s do this.”

If you spend the time to get to know people, they will trust you. Click To Tweet

It’s a little bit about what we talked in the last episode, getting uncomfortable, putting yourself out there, but having confidence in your deal and the team that you’ve met at this point, the due diligence. You talked about finding a good operator and that’s key. You’re going to partner with somebody. You’re going to bring your investors to somebody else’s deal and partner with them and help them on this opportunity, so you can be on the general partnership side of that deal to gain some experience in this business. It’s great way to get started. However, finding that good operator and finding somebody that you trust is the key there. When you’re having those conversations with those investors, tell us about how that played into this team that you had found. When you’re talking to an investor, did they ask about the team? Did they ask about, “How did you get into a property these many units?” What were their questions?

Initially, people invest in you. They trust me to know what I’m doing. They trust me to bring them a deal that makes sense that I can fully stand behind. It’s about credibility and trust with you as an individual. That’s step one. First of all, if they don’t know what you’re doing, if they don’t trust you to deliver, that’s the relationship that you have to build up over time. The next thing was what is the market and what is the operator. I like to look for somebody that has some track record, not their first syndication, not their second syndication. They’ve done five or six or at least they have some experience. Somebody that’s gone through a full cycle or have actually purchased something and implemented their business plan and sold it. That’s a little bit harder because it takes five, six or eight years to go through that process and if you wait too long, they know their opportunities are gone.

For this specific team that I work with, they have 800 units ready and going quickly. They exited one and they have shown that they can deliver. I trust the team. I got good referrals from other people around this team and I met them in person. These guys know what they’re doing. The market as well, what’s the market? Does the market make sense? Is the market growing? These specific deals in Atlanta has been growing quickly and they got a good price of this property and it had some upside to it. The whole package and everything, I checked all the boxes: low leverage and good interest rates and everything else. I felt like it looked like a deal there.

You mentioned many key things there that are important when looking into an operator and making sure there’s somebody that you want to partner with. One thing too, you said you got some referrals. Where did you get the referrals from? Did you ask the operator for those or did you just know of other people that were also investing with this operator? How did you find them?

It’s a small world out there. When you and I met, we know some of the same people. Once you start getting out there, you realized it’s a small world. If you don’t do right, it’s going to come out very quickly. We all make mistakes and things happen but if you are being dishonest or anything like that, that is going to become very quickly apparent. I would ask around and say, “These are the guys that are doing this deal, what can you tell me about them?” I didn’t get any negative feedback and everybody was like, “They’ve done great. They deliver on what they say.” Just ask around. People are going to be giving you their honest feedback in most cases. Research what they’ve done in the internet, it’s hard to hide stuff these days. Do your research and make sure that it makes sense.

The money that you raised, where did these investors come from?

They’re friends and family that I had met through various organizations, from the local meet-up. My cycling is another big thing. Raising money for some occasions, we have to have a personal relationship with people. Every time I talk to people, “I’m not a real estate investor, I’m not an IT person anymore.” There was just a list that I had generated over time. It’s 50 or 100 people on there and that was enough to get started.

It was people that you’ve had a relationship with a long time and they knew and they trusted you. You’d built relationships outside of the real estate. Tell me about how you introduced yourself to them in this new light as far as a real estate investor.

I’ve had the conversation for a couple of years saying, “I’m investing in real estate for ourselves, me and my wife but I’m looking at a bigger deal. I created little sample packets and this is what it may look like. Are you interested?” They’re like, “Sure.” I started creating a monthly or bi-monthly newsletter. I put everybody in the list and I’ve been sending out what I’ve been doing. I’ve been front of mind to these people and then I’ll also ask for any referrals, “Anybody you know that may be interested?” I slowly started building this list of potential investors and then stay. Even if it took a year or a year and a half before I had something, I touch them if you will on a regular basis. I was like, “Here’s a deal.” They’re like, “You talked about that and there’s something here so let’s do it.”

What’s been the hardest part of the capital raising process for you so far?

RES 206 | Passive Income

Passive Income: Allow people to participate in investment for their benefit, not yours.

 

This was a short timeframe. People felt a little bit rust. Having more time, which is hard because you get a comp up here, you’ve got to close it at some point. If you have a month that would be more comfortable. The other challenge is some of these deals you can’t advertise. Just growing your network, it’s a slow process. I live in a very small town. Having enough people around is a challenge too.

Are there any big problems that you see that stick out from other people that are trying to raise capital? Maybe things that you see like, “You don’t need to do it this way or do this instead?”

You don’t want to sound desperate. You want to try to sell something. You are giving them an opportunity to participate in an investment for their benefit and not for your benefit. It’s just, “This is what it is. This is why I think this is a great deal. This is why it makes sense.” You’re not trying to sell them something. I like to throw out a little quote. Here’s another one that I heard from somebody about how do you get somebody to like you enough or trust you enough to invest with you? There’s this thing that says, “Know me, like me, trust me and buy me.” Buy me is tough and in any kind of relationship we have, it’s like, “Know me and buy me.” In a sense this shortcut, that whole process of getting people to trust you. If you spend the time to get to know people, they trust you, then eventually they go, “Jens is not going to try to mess you over or anything. He’s a trustworthy person.” People would be much more likely to want to invest with you.

Jens, you have been a great guest and I appreciate you coming back on the show again. Tell the readers how they can reach out to you and can get in touch with you.

My email is Jens@OpenDoorsCapital.com. My website is also OpenDoorsCapital.com and I’d like to offer anybody that wants a free call. They can go to my website OpenDoorsCapital.com/call and they can get on a free call with me to talk about real estate, anything else, cycling, skiing, the outdoors, whatever you want to talk about. I’d love to offer that to anybody that wants to.

That’s a big opportunity right there. I hope the readers are taking these guests up on these offers to speak to them just like Jens is putting it out there his email and a way to talk to him. If you’re getting started in this business, you should be taking these guests up on these offers and taking action in that way and asking. Fifteen minutes with any of these guests are going to help get you probably a little further in the process of what you’re trying to achieve in real estate. I appreciate the readers being with us. I hope you’ll go to our Facebook group, the Real Estate Syndication Show, so we can all grow our businesses together. I hope you’ll go to Life Bridge Capital and connect with me. You can also contact us and put your information in and then I’ll call you as well and we can have a conversation. I’m thankful for everyone that’s with us and we will talk to you soon.

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About Jens Nielsen

RES 206 | Passive IncomeAfter the success as a KP, Jens recently branched out to raising money as a GP for syndication in Atlanta where he raised $350K in a week. This is his second multifamily equity raise, the earlier raise was a JV for the 38 units property in Albuquerque. Jens is also just starting to raise money for a deal in Pennsylvania.

He has also passively invested 12 syndications, spanning over 800 apartment units, 2000 mobile park lots and over 6000 storage units plus mortgage note funds and done private money lending.

Jens has a long career in IT, but over the last couple of years has had a mindset shift from being an employee to an entrepreneur, which is a change for someone that grew up in Denmark.

His mission is to get more people to invest in private placements for the strong cash flow and equity growth, and his company missions is to “Open Doors to your secure financial future through multifamily investing.”

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