LUR 82 Jens Nielsen | Passive Investment

 

People invest in real estate because it’s an industry that keeps thriving. It covers many different aspects including leasing, commercial, residential, and many more. Jens Nielsen joins Lisa Hylton as he speaks about passive investment and multi-family real estate investing that’s been the driving factor to his success. Jens is a multi-family real estate investor coach who has passively invested in 16 private investments. He shares some very important tips about passive investments, all coming from his personal experience, and would want to inspire people to invest more in private placements for strong cash flow and equity growth.  

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Lessons Learnt From Passively Investing In 16 Investments With Jens Nielsen

In this episode, I have Jens Nielsen with me. Jens was on an earlier episode, but in this particular episode, we are going to be getting into passive investments. If you didn’t read that episode, I want to go ahead and introduce him with his introduction. Jens is originally from Denmark and has lived in the United States since 1996. Since 2016, Jens has been investing in multifamily real estate and is currently the Co-owner of 85 apartment units and mobile home lots in New Mexico and Colorado. He has also partnered on multifamily syndications over the last couple of years. He specializes in systems, underwriting, due diligence, capital raising and investor relations. He’s a general partner on five deals totaling 885 units.  

Jens has also passively invested in sixteen syndications/private investments spanning over 800 apartment units, 2,000 mobile home park lots, over 6,000 storage units, plus mortgage note funds and private money lending. His mission is to get more people to invest in private placements for strong cashflow and equity growth. His company’s mission is to open doors to your secure financial future through multifamily investing. I am super excited to have you back on the show. Welcome back, Jens.  

Thanks, Lisa. I’m excited to talk to you again.  

In our last episode, we got in a little bit of your background. In this episode, I want to focus on jumping right into the meat of things and talking about your experiences passively investing in not just real estate syndications but private investments in general. Can you share with my readers how you even got started? 

Make sure you understand what it is you invest in because you could lose all your money essentially. Click To Tweet

I got interested in real estate years ago. Initially, I thought you had to buy yourself a small property, whatever you could afford and manage it or have somebody manage it for you, and then slowly build your portfolio that way. I had no idea that as an individual, you could go in and buy shares of private placements. That was new to me as syndications or whatever you want to call it. That was unknown to me years ago, but then we get into this world of podcasting and we start learning new ideas. I love that you are sharing your view of the world with your guests and listeners 

I started listening to a podcast and I started hearing about syndications. I’m like, “This is interesting. Tell me more.” Once I get interested in something, I would just devour everything I can around it. I started learning about it. I also learned the fact that you can invest through your self-directed IRA. I’m like, “Here’s another new thing.” When I learned that, I said, “I want to be a guy that puts these deals together in the future.” I also realized I had some ways to go. I decided, “Let me start investing passively to put my money into something I felt was a better type of investment. I set up my solo 401(k) and self-directed IRA. That’s how I took the initial steps. 

If someone is reading your story of investing in sixteen different syndications, the first thing is, what is the best way to learn? 

I would listen to a podcast. There are many amazing podcasts out there. The quality varies, the reliability of the information varies, but go around and at least listen to a handful of different ones and start learning. I would start there but then back it up with research that you can potentially do online. There are many ways to get into this. Maybe you hear somebody in a podcast. Get on to their website and start learning. Maybe even set up a call with that person and start asking questions. If you get one answer once. You may think, “Okay.” If you get the same answer ten times, then there’s probably some truth to that. Just start researching and talking to as many people as you can. That would be a starting point to start learning. 

You talked about using your self-directed IRA to make investments. For someone who’s reading, this might be the first time or maybe they’ve already known about this. For the people who don’t know about this, what were some of the things that you did to get comfortable with using your self-directed IRA or using the path of your retirement funds to invest in real estate? 

left my money with a broker that was making money regardless if I was making money up and down the market. I was like, “There’s something wrong with this.” Every Monday, there would be thousands of dollars going into his pocket and I don’t like it. I set up an account somewhere else and moved my money over. I didn’t move it all into a self-directed IRA. I took a chunk of it and I moved it into a self-directed IRA. For those not familiar, it is a custodian of your investment money that allows you to invest in non-traditional assets such as real estate, private lending, gold. There are 100 different things you can invest in and a few things you cannot, but most things you can invest in. It’s a much broader range of investments. 

There are some times of being uncomfortable and so forth. I heard a few people on podcasts that were doing syndications. I researched them and I set up calls with them. I started to learn that these guys have done some deals and they’ve done well. They seem to know what they’re doing and they’ve got good ratings. The next deal came up. I read through the offering and I was like, “It’s now or never.” I decided to put the money into it and that was the starting point. When I started seeing the cashflow, I was like, “Wait a minute, this works. Let me continue. 

This leads nicely into the next question. You have done sixteen different private investments. Everything from multifamily syndication to syndication on mobile home parks to private lending. Maybe breaking it down by different types of assets or maybe this question is just overall. What have you learned from investing in these different private investments that you could share with someone who’s thinking about making their first one? 

This is a very unregulated space. Just because somebody gives you a nice glossy brochure, that may not mean a whole lot because you’re going to end up signing a ton of paperwork that says, “We’re hoping that this is going to work.” You could lose all your money essentially. Just be aware of that risk. My point here is to make sure you understand what it is you invest in. If it is an apartment, at least study a little bit around what’s the market. If they’re projecting certain rent growth and stuff, is that realistic? If they say that everybody’s going to move to that city, is that true? Do your due diligence. 

It’s interesting as I’ve moved into this space, there are some investors who are going to ask a ton of questions, be very diligent round out it and be like, “Here’s my money, just go and invest it for me.” That makes me a little bit concerned because if it doesn’t go right, they’re like, “You told me I should do it.” “No, I didn’t. You made the decision.” Due diligence and something you understand. As we spoke offline, I’ve had a couple of deals that haven’t gone as I hoped. I invested in a secondary mortgage loan on a very expensive flip in California. They took the house. They’re going to make it into a $5 million or $7 million house or some crazy things like that. They ended up going bankrupt. The primary lender foreclosed on them and got their money back. Since we’re in a second position, we got a small amount of our money back. Luckily, I didn’t have much money into it, but I lost money there for sure. The lesson there was the return was promising. I didn’t make the connection between the high return and the risk. There are risk-adjusted and returns. That’s something we all have to think about. I got greedy and I paid for it. 

Especially in the current marketplace where the cap rates have been compressed. A lot of operators are buying at much higher prices right now. Can you speak to someone who’s looking to deploy capital in the current environment? From your experience, as you look out in the current environment, what advice would you give them in terms of things that they need to be thinking about before deploying with a syndicator? 

LUR 82 Jens Nielsen | Passive Investment

Passive Investment: Private investment is a very unregulated space. Make sure that just because somebody gives you a nice glossy brochure, that may not mean a whole lot.

 

It’s challenging. Look at their assumptions. What are they assuming for rent growth? What are they assuming for their exit cap rate? Is their exit cap rate staying the same? Hopefully, they expect a higher exit cap rate. There’s a built-in there. Are they relying on blue skies and unicorns to make their deal work or are they truly conservative on theirs? You can make money in today’s market, but if there’s a term and interest rates go up and other things, it may be harder. 

You also mentioned putting deals together. Along the way, you’ve been investing and you liked it. You like the idea of potentially putting deals together. For someone who’s thinking about, “I want to be more active in this space,” what advice would you give to them? 

Putting syndication together is a ton of moving parts. Don’t do it by yourself because that’s probably very difficult. You can do a few things. If you can find a team that’s already done a deal for you, you can come in there and add some value to that team. Maybe you have access to capital. Maybe you are willing to put up some of the earnest money or other at-risk money. Is there a way that you can add value and then tag along with an experienced team? That’s what I did. I got the first 2 or 3 deals with an experienced team where I was able to help them a little bit. I got a small percentage but it got my foot in the door. I started seeing how they were operating, and then I saw my unique opportunity. I saw somebody who was doing his second syndication. He needed somebody that could look at what he was doing with fresh eyes. I helped him there. I looked and then helped with some other things. We’ve been partners ever since. We’ve done 4 or 5 deals together now. I wouldn’t call it luck. I have to say this is preparation. I have to meet the right guy at the right time and we were able to partner in that way. 

It’s funny you said that because the question that came to me was like, what advice would you give for finding partners and building teams? Over the time that you’ve invested in different deals, granted many of them have been from a passive perspective but some have been active, what are the lessons you’ve learned around partnership and team building? 

A lot of people don’t want to do it by themselves because they’re afraid of partnership. They’re afraid of the challenges they may have. There can be challenges. The key thing is I would not do something by myself unless there was a small deal I could buy by myself. Otherwise, I would always partner because I feel that the team is more than its individual parts. It’s that synergy. You want to find partners that you like but different from you. I’m an analytical person. I’m someone that’s going to be like, “Wait a minute, you guys are being too optimistic here. Let’s hold on and be conservative and everything.” That’s just my nature and that’s how I operate. Whereas other people, they’re out there drumming up the deals and talking to the brokers. That was certainly not my strength. The bottom line is to find somebody that you like, that you can get along with but is not exactly like you are. 

That is so important and complementary, which comes back to you being aware of yourself, your strengths, who you are and your abilities. That enables you to then look for people who might be different from you and be comfortable. Some people aren’t even comfortable with people that are different from them. Recognizing that it is a strength to have people around you who are different from you. They can see things that you are not going to be able to see. That’s the benefit of having them on your team. Anything else that you would like to share on this topic of investing in private investments for someone who’s reading and ready to deploy their capital but wants to listen to a veteran and passive investor. 

One of the reasons I’ve invested in mobile home parks and storage unit is because I felt like it’s very close to multifamily, but it’s not a space I’m active in. I felt like I can go and try. I own this mobile home park and have since sold it. I felt like I want to get more exposure to that. I want to go and do the deals myself. I hadn’t gone down that route. I was like, “Let me diversify my portfolio in markets that I’m not otherwise exposed to.” That’s why I chose the fund model a little bit as well in a different asset class. 

The other thing is, what risks are you exposing yourself to? If you’re doing ten syndications and they’re all in Dallas, Texas. You’re very exposed to the Dallas, Texas market, which is an awesome market but it may not continue to be that way. Think about that a little bit. Also, are you going to choose one operator that you feel comfortable with and want to continue? Are you going to find multiple operators that may operate? It’s just looking at what baskets do you put your eggs into. That’s a key thing. Also, are there correlated risks that you’re not aware of? Now, we’re getting into investment strategies and everything. I’m not giving investment advice. It’s just the things that come across at me. I feel like there’s still a place for stock investments. This is still a place for bonds but there’s certainly also a place for those private investments that are going to have a different risk profile. 

You mentioned funds and it made me think about the current marketplace. I do notice that a lot of syndicators are creating funds. When I say creating funds, they’ve always created funds technically, but they’ve been single asset funds. Investors knew what fund and what this entity was being created to buy. Whereas now we have situations where they’re blind funds where people know the investment strategy, but they don’t know what the deals are going to be like because those deals have not been acquired yet. A couple of questions for you is have you been involved in any of those kinds of structures? If you have, what has been your experience. If you haven’t and if you were to think about investing in them, what considerations would you take? 

My mobile home park and the mobile storage unit are funds, and one is even a mixed fund. I’ve done three different investments in various combinations of that where they buy multiple assets in multiple states and so forth. The benefit is that you get a portion of it and you spread your risk. The challenge is to keep identifying properties that they can buy that make sense. If you have a rising of a few years and prices keep going up, I can deploy the money and you end up buying. There’s that risk around execution in the fund versus, “We have the deal on the contract. We’re going to buy this specific asset. My experience was that the returns are lagging a little bit from their projections maybe by 50% or something. It’s been decent and this is through COVID and everything else. The second part of your question is, what to consider when you do that? 

That was more if you haven’t but obviously, you have. That takes care of that. Do you believe that networking was important for you in terms of being able to meet the different deal sponsors to then find out about deals? How do you find out about all these different deals? 

A team is more than its individual parts; it’s that synergy.  Click To Tweet

A lot of them were through one individual who I heard on a podcast years ago. I connected with him and I have been investing with him and had my wife invest too. Some of the deals have gone full circle and have done well. I trusted him to do it. Now, as I’ve gotten much more involved in the market, I prefer to invest in my own deals if I can. If I have money and I feel like I can invest in it because it’s my time and money, I will go to my network. I will go to people that I know and trust, and I’ve had a track record and said, “Can I put my money into your deal,” versus someone I don’t know very well. A key thing to understand is that you invest in the individual. If I was going to invest with Lisa, it’s because I like and trust Lisa to make the right decision on the partners that she wants to take. This is where this is different from investing in a stock market. I couldn’t name an executive in most of the companies that I have invested in the stock market. 

Thank you so much for coming to the show. This was a lot of good information. I hope that the audience enjoyit and got something from this episode. If they would like to learn more about you, what is the best way they can go about doing so? 

They can send me an email. It’s the best way. My email is Jens@OpenDoorsCapital.com. If anybody wants to get on a free call and love to talk about coaching or investing or anything, go to OpenDoorsCapital.com/call, and that will take them to my Calendly link to book a free strategy session so we can talk about or whatever. I’ve had tons of these calls and it’s always fun to meet new people that way. 

I don’t think I covered my level-up questions either in the first episode or this one. I want to cover it on this one which is what are you grateful for in your life right now? 

I’m grateful for the abundance that I’ve been able to create through real estate investing, no questions asked. 

What has attributed to your success and continuous growth? 

Developing the right mindset and partnering with the right people. 

Lastly, what do you now know that you wish you knew at the beginning of your journey? 

LUR 82 Jens Nielsen | Passive Investment

Passive Investment: You can make money in today’s market but if there’s a term or interest rates go up and other things, it may be harder.

 

I don’t have any regrets about my journey but I didn’t realize how quickly you can scale with the right strategy. I thought starting out bigger, I could have accelerated. I had to take the path I took and there are no regrets on them. 

Thank you so much for coming to the show. It was good and that’s it. 

Thank you so much, Lisa. I enjoyed it. 

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About Jens Nielsen

LUR 82 Jens Nielsen | Passive InvestmentJens is originally from Denmark but has lived in the United States since 1996.

Since 2016 Jens has been investing in multifamily real estate and is currently the owner or co-owner of 85 apartment units and mobile home lots in New Mexico and Colorado. Jens has also partnered on multi-family syndications over the last couple of years. He specializes in systems, underwriting, due diligence, capital raising and investor relations. He is currently a General Partner in 5 deals totaling 885 units. Jens has also passively invested in 16 syndications/private investments, spanning over 800 apartment units, 2,000 mobile park lots, and over 6,000 storage units plus mortgage note funds and private money lending. His mission is to get more people to invest in private placements for the strong cashflow and equity growth and his company missions is to “Open Doors to your secure financial future through multifamily investing.”

Jens is passionate about teaching and helping others achieve success. He is using his knowledge and skills to coach and train new students in multifamily real estate investing.

In the past two years, Jens has coached 30 students and conducted over 300 coaching calls.

Given his long IT background, Jens provide IT solutions and system support for the deals he is involved in.

He lives in New Mexico with his wife and two dogs. When he is not looking for the next deal, Jens is riding his bike, skiing, or hiking.
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