Host: Casey Silveria
Guest: Derek Clifford
Summary:
Derek Clifford’s journey to passive income began with frustration about his compensation as a highly valued employee. After the real estate market downturn, he and his wife began renting out their condo, realizing the potential for earning passive income through real estate investments. Derek built a portfolio of 400 apartment units and $50 million in assets under management. The conversation focuses on the relationship between general partners (GPs)and limited partners (LPs) in real estate deals. While LPs have a limited say in how things are operated, they have a significant say in which deals they participate in. Good operators put capital in their deals alongside the LPs and sometimes use incentive structures where GPs only get paid if paid. The conversation also touches on preferred returns (prefs) and the importance of motivating and compensating GPs well. The speakers discuss their approach to CapEx and reserve budgets and their preference for investing in apartment buildings and commercial real estate over single-family homes due to the benefits of economies of scale and stability of valuation. Finally, the speaker offers a concept called the four Cs for getting traction in the real estate business while working full-time: consistency, clarity, connections, and coaching.
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Key Points: Real-Estate
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