What makes real estate such an interesting and unique career is that it’s filled with aspiring entrepreneurs who have an obsession with the business. While almost everyone wants to do their own deals, running a start-up is tough, there are countless obstacles. That’s why I love interviewing groups that are just on the verge of launching and growing their company.
Adam Dunn and Tripp Bell are the founders of BLDG, a real estate investment firm acquiring multifamily properties in the Raleigh-Durham submarket. They’re in the trenches grinding it out 24/7 which makes it the perfect time to ask them about the challenges and surprises they’ve encountered starting their own real estate investment firm.
Enter Adam & Tripp:
After 2 years of attempting to build BLDG, Adam and Tripp called it quit. In a recent post I caught up with them to hear what they learned from that experience. You can read about that here.
How’d you decide to go off on your own and launch your own firm? Why was the timing optimal and how’d you determine a market and product type focus?
Deciding to launch The Building, Land and Development Group, or “B-L-D-G”, has been culminating with discussions over the past year. Tripp and I were classmates at Elon University, sharing the common interest of real estate long before talk of a firm began. I come from a multifamily property management and brokerage background, and Tripp’s experience is in finance and operations. Following further discussions, it was apparent that our diverse experiences were key for a very successful business plan. Given our respective backgrounds and experience, we want to focus on what we know, and that is multifamily.
The timing was optimal because we were both cognizant of the boundless opportunities within the multifamily sector of investment real estate. Digging deeper, we felt the secondary submarket of Raleigh was and continues to experience tremendous population growth fueled by millennials seeking diverse job opportunities. Further, Raleigh is one of the fastest growing cities in the U.S.
We put a lot of emphasis on analyzing economic drivers and demographics of the submarkets in which we invest. The Triangle submarket of Raleigh, Durham and Chapel Hill boasts a highly educated population and an unemployment rate below the national average. The excellent connectivity and reasonable cost of living that this area offers has made it very attractive to businesses looking to expand, relocate or startup. With the constant influx of jobs, the supply is being absorbed at a healthy pace. The fundamentals make sense to us.
What issues have you encountered and how have you overcome them? What surprised you most?
Our biggest challenge as a startup is not having a track record and existing balance sheet. We know it is in our best interests to align with an experienced partner to compress time frames. Real estate is a relationship business. Establishing them now has been a top priority for us and has proven effective on several levels.
The biggest surprise to us so far has been the amazing support of our network and the willingness from everyone to make warm introductions to those they feel may be able to provide insight and share experiences as we embark on this journey. Navigating hurdles is key to a successful startup.
What has been your best source of advice and guidance?
We have received excellent advice and guidance from everyone we have met with, including a number of financial institutions that prioritize their client relationships. BLDG is a client centric business, so we have welcomed advice relating to managing those relationships.
In the world of startups, building a well-rounded deal team is important. We had a lot of business structuring questions, as it relates to raising equity from Limited Partners. Our outside counsel has been an excellent resource in setting up a strong foundation.
Some of the best advice we received over the years is making sure that we had well-funded savings accounts before leaving our jobs to focus on our startup. We didn’t think we could balance a full-time job and launch our startup simultaneously, all while maintaining a fiduciary responsibility to our investment partners. We both agreed that if we were going to launch BLDG that we had to give it 110% of our focus. Knowing that we were going to lose our salaries, we wanted to make certain that we had budgeted for personal living expenses for at least 18 months and most importantly that we had the necessary operating capital for our startup expenses before launching our business. This planning put us into a position to implement fully integrated business development technology, rivaling our competitors who have been in the business for decades.
What advice would you give to someone thinking about venturing off on their own?
If you are thinking about venturing off on your own, devise a strategic and responsible exit strategy out of your current job while planning for your startup career. Unless you already have a Rolodex of experienced professionals to help you navigate the potential barriers you will soon be facing, you must cultivate relationships with veteran specialists in the same industry. Seeking advice from these pros will inevitably help you along the way.
Don’t sit on the sidelines wishing you could be working for yourself. Be fearless, as the majority of successful entrepreneurs are more than willing to share their experiences with like-minded professionals.
If you have any questions for Tripp and Adam, feel free to post them in the comments.
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