It takes massive courage for someone to shift from the corporate world and take the leap to the colorful yet complex entrepreneurial life. But that’s what Lisa Hylton did as she now leaves the employment realm to focus on her business and passive real estate investing. Enumerating five major points that helped her make this huge jump, she shares many nuggets of wisdom for those planning to become full-time entrepreneurs. Lisa Hylton also discusses some of her most important passive investing strategies and the sacrifices she made to let her money work for her.
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Leaping Into Entrepreneurship & Real Estate – The Chronicles Of A Passive Investor W/ Lisa Hylton
This episode is with yours truly only. It’s a solo episode. In place of my passive conversations with passive investors, I figured that since I do invest passively that I would replace that with an episode for myself. This episode is entitled Leaping Into Entrepreneurship and Real Estate, The Chronicles of a Passive Investor. I’m excited to have you on. For those of you who don’t know, as of March 2021, I gave notice to my employer. My last day at Ares was on April 15th of 2021. It was very challenging to make the decision to leave.
I was leaving a very comfortable position. I did work a ton of hours. It was demanding and challenging, but the people who are attracted to those types of jobs, generally, are attracted to challenge. They’re attracted to working hard, self-fulfillment, being a part of a team, and achieving goals. I don’t feel like it was out of the ordinary per se in terms of wanting to be in that type of environment and being in that type of environment for years. My career in accounting, either as an auditor and then as a comptroller which was my last role.
Financial Stability
In this episode, I wish to share the things that helped me in making this leap. I have outlined four different things that I found were beneficial to me to make this leap into real estate and entrepreneurship. The first one was financial stability and runway. It might be the accountant in me that it was super important for me to have a good foundation financially in order to take this risk. What that looks like is one, I started looking at my expenses and then analyzing it to determine what my burn rate on a monthly basis was and what was the biggest burners. The biggest burner was rent, which was something I could control and that’s one of the beauties of renting. Food is also something that is fully within my control.
That then enabled me to make decisions on how and which I choose to spend my money food-wise and then rent-wise. I used to live in West Hollywood, Westchester, and then I found an apartment in Inglewood that was four times my salary. The amount of savings you can make is extremely powerful when you can make that kind of decision and it was all strategic. Even though at the time that I made a decision, I didn’t know that I would have left Ares to build this business because at the time I made the decision, I hadn’t even started this business yet. I knew a friend of mine who’s building an accounting business and she asked me if I had any engagement letters and stuff like that. At first, I was going to say, “No, I don’t have anything,” but then I remembered that back in 2017, I was trying to start an accounting business. This was not my first rodeo in trying to do businesses.
I was trying to do an accounting business. I had signed up for a program that came with all these different tools, documents, agreements, and the whole nine yards. I said, “Let me see if I still have that,” and I did. I ended up sending it to her. I saw that I had signed up for that program in May of 2017. I learned a lot from that experience, but that’s for a different episode altogether. Point number one is setting that financial stability and runway were super important. Also, connected to that was cutting out travel, excessive shopping, and fancy vacations.
Real estate, by far, is the best way to build wealth long-term. Click To TweetBefore I started at Ares, I would do these big trips. I love to go to Abu Dhabi and Dubai. Taking a month off and living in Italy. These were things that I did. Once I started figuring out that I wanted to prepare to build a business, even though I wasn’t quite sure what business it was going to be, my decision has changed and the way I used my money was different as well. I did say no to a lot of friends when it came to traveling because I needed to be in a position where I could make this kind of decision and I needed to make sure that the foundation was at least there to build from.
Passive Real Estate
The next item that was important in terms of making this decision was investing in passive real estate syndications. I feel that passive real estate syndication investments are perfect for people who are busy. You’re either busy because you’re building a career, you’re an entrepreneur, business owner, or doing other things. There could be other things that people are doing and they don’t want to spend time. The traditional way of investing in real estate, let’s face it, requires a lot of time and commitment from out of you. If you’re going to be building a business, your business requires you to show up, be there and build it while you’re also trying to have real estate properties on top of that. The same is true if you’re working in Corporate America and building a career.
Entrepreneurial Life: Your business requires you to show up. Be there and build it while also trying to have real estate properties on top of that.
I think one of the next best decisions I made was investing passively in real estate syndications. I invested in four in two years and those deals kicked off cashflow each month. I was very strategic and deliberate with the type of deals I chose to invest with because I wanted deals that we’re kicking off cashflow. I avoided deals that were development deals, for instance, because those deals typically have a period of time when they’re not going to be kicking off cashflow, but you’re going to get a big payout in the end when the project is developed and sold, or the project is developed and now cashflowing. I also avoided preferred equity deals. Those are deals that typically only produce cashflow because I wanted deals that would produce the combination of cashflow but also had the ability to appreciate in value. That way, I would participate as an equity investor.
This point is important because a friend of mine who I went out to lunch with said to me, “Lisa, what’s going to happen with your retirement savings during this time? You won’t be contributing to retirement.” I’m not touching the 401(k). They’ll stay there. The reason she was bringing this up was she was like, “You’re not going to be contributing.” I said, “That’s a great question. These passive investments that I invest in kick off cashflow. I choose to invest in the ones as an equity partner so that way, my money is growing as the value of the asset appreciates.” As this asset has now sold, one of them has sold unexpectedly because I did not plan it. That money will come back. When it does come back, I’ll then deploy it back out into other real estate syndications, either the ones that I create or others outside of me in order to continue to generate cashflow, as well as to grow my money as I am building my business.
That, to me, is super key because I do recognize that some business owners will forsake having investments growing for them in the years at which they’re growing their business. It was important that as I was in these years of growing my business, I also had investments that were growing on my behalf on a long-term basis. As I said before, these investments kick off operating distributions. With the operating distributions, I can use those to supplement some of my monthly income and expenses, even though they were not a part of my budget. I instead save to make sure that I had enough money to cover my monthly expenses. That’s over and beyond, which is great and I love it.
Best of all, I don’t have to focus on managing real estate assets. Entrepreneurs and business owners, as well as busy professionals, your time is already called for every single hour of the day. It’s already allocated to something. When you bring on real estate investments, you need them. We know that real estate, by far, is the best way to build wealth long-term. However, it comes with being able to manage properties, having reserves for these properties for when tenants leave, and then you need to do the maintenance stuff. By me investing passively, I’m able to avoid those things because I don’t need to set up a reserve for my rental properties. Because I invest in these passive syndications, I don’t need to have reserves for the passive investment opportunities, which is in my book, is great.
Let’s talk about the elephant in the room. Whenever we talk about investing passively in real estate syndications, one of the things that usually come up is, “I could use that money to go buy a house.” I could have used that money to go buy a house right here in Los Angeles, but a couple of things to note is that, “Would that house be generating any cashflow?” Probably not. Unless I had people living in the house as roommates and then you know hacking the house, perhaps. I don’t rule that out. At least, I love the flexibility this investment strategy gives someone like me. I am talking to the entrepreneurs, the business owners, as well as the working professionals out there who are similar to myself. We’re building and we’re at a point in our careers as well as a point in our business journey where we need that flexibility and that freedom.
I feel that this is an awesome way to invest in real estate because I don’t have the huge mortgage that I need to think about. My money is out there working for me in real estate, bringing home money every single month, as well as appreciating in value in this inflationary environment. It’s something to definitely think about as you’re thinking about building a business of your own or even investing in real estate in general. You don’t have to do it the traditional way. There are non-traditional ways of doing it, such as investing in these real estate syndications.
Time
Two more, the third one is time. I’m not getting any younger. As every year goes by, your responsibilities could get increased like family responsibilities, financial responsibilities, the whole nine yards. I also looked at the marketplace and said, “Recessions are the perfect time to build businesses. These are the times when people are consumed with fear and uncertainty.” I feel that the people who have the courage to be able to take their fear, it’s not that I don’t have any fear, I do, but it’s taking those fears, turning it into courage, fueling it into building your business, and building the next chapter of your life knowing that no one is going to come and save you. Every year that goes by, if you have something within you that is telling you that there’s something out there that you should be doing, then do it because time is not going to stand still for you.
Sometimes, it takes trial and error to get to where you need to go. Click To TweetFocus
The last item that was so beneficial for me was focus. I can’t say this enough. I think that focus is important. Creating the life that you want for yourself will sometimes mean that you might need to turn down the noise that is around you. A lot of that will mean you probably need to be able to be open to other people’s opinions. At the end of the day, sit with yourself and determine what the next best path for you is. One of the gifts COVID gave me was so much time alone. During that time alone, I was able to begin to form a deeper relationship with my inner knowing, my intuition, to be able to then sit with myself. Some of the things that you can do to get in touch with that for yourself is meditation and exercise. It helped me. Even going on walks in the evenings helped me to gain clarity and get in touch with my inner knowing in terms of what is the best next step for me and to stay focused on what it is that I’m trying to accomplish as well as what it is that I’m trying to build.
Staying in that place of being in touch with that inner knowing within yourself helps you so much because you can then start to hear and feel the calling of the next chapter. There’s no doubt. You just feel it. I can’t explain it. You know within yourself that there is something else that you need to do and to make that next step to go for it. Connected to the focusing is taking actions that are in alignment with what it is that you are trying to manifest in your life. From taking those actions, then sitting back on the feedback and observing what is going on to determine whether this is truly the right next step for you.
Entrepreneurial Life: When you are not true to yourself and what you want to do, you might choose things that aren’t necessarily in alignment with you.
The Right People
One last thing that I didn’t write down, but I think is important, is the power of being around the right people. I made strategic investments in coaches and business mentors. That was super important to me in being able to make this next step. I’ll tell you that it’s not the first time I’ve made investments in the past. Sometimes, it takes trial and error to get to where you need to go. Going back to focus, it also takes you getting clear about what it is that you want to do. Some of that comes from you getting clear on your unique ability and being able to own what you are uniquely here to do, what works for you, how you want to, and wish to show up in your business.
From there, you can then better choose the right people to be around. Choose the right coaches that you need to have around you to help you to get to that next chapter. When you are not true to yourself and what it is that you want to do, that’s when you might choose coaches, programs, situations, communities, or environments that aren’t necessarily in alignment with you. They’re not bad. They’re just not in alignment with you because you haven’t yet figured out what your unique ability is to then be able to say, “This is who I am. This is the kind of vision I see for myself and what I want. This person, community, mastermind, or program is best in alignment with what it is that I want.” It starts with you.
Be gentle with yourself always because it does take time for some of that to crystallize and form but when it does, beautiful things happen because when you start playing in alignment with your deepest calling and unique ability, amazing things happen. There’s so much abundance when you’re playing in that space. To recap, focus, time, and passively investing in real estate syndications. The first one was setting the financial stability and runway to make this even possible. Give myself the greatest gift, the gift of time. Time to focus on building my business and coming into the fullness of who it is that I am, standing in my truth and standing in my light 100%. Guys, I hope this episode inspired you and provided nuggets to you in terms of wherever you are in your journey now. Keep leveling up. See you next time.
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