Dear Advisor: I recently acquired two properties

The following is part of Blueleaf’s The “Dear Advisor” Campaign, encouraging open collaboration and service innovation in the financial industry like never before.

Letters are submitted by members of the general public who, at all stages of life, have an honest message to share with you. Take this first-hand insight into the client/prospect’s mind, and run with it. Let’s redefine what “value to my client” means.


 

Dear Advisor,

DearAdvisor_DanBateson

A wise man once said: Live on the west coast, but leave before it makes you too soft. Live on the east coast, but leave before it makes you too hard. And that you are never as old as you think you are. Words well spoken… but in all honestly, I turned a ¼ of one hundred back in May and I feel pretty damn old right now. So before we talk about you, and what you can do for me, here’s a little bit about my self.

I am writing to request your financial services. I graduated from Northeastern University as a social science major in 2012; during my time there I dabbled in real estate, rentals and sales. It exposed me to the market of investment real estate at an early age, and the bubble market that is student rentals. Over the past four years, partnered with my father, the two of us have taken our holdings and built a reasonable supplemental income.

My profits are primarily locked up in aggressive mutual funds, while my father has put his attention on the more stable funds of his 401k. I have been experimenting with the stock market; focusing on IPO’s and tech firm resource suppliers. I have won some and lost some, and have yet to find a secure strategy (like anyone really has) – I have more of an appetite for the risk-reward the market, while my father, hardened by 2008, is less apt to indulge in these gambles.

This said, I am looking for some guidance as to where I should divide my portion of the profits. I have recently refinanced one property, and acquired two more. I would like to create independent LLC’s for each building, and take our net profit into accounts to maximize our short-term revenue. My five-year goals pivot around my desire to build equity in the units already acquired, and maximize the capital while keeping it available to purchase additional units.

I look forward to working with you and for your advice here. I hope what I have said is useful; please feel free to reach out to me (Comments section below) with any questions or comments.

Be excellent,
Daniel John Bateson

Carolyn McRae Carolyn is Blueleaf’s in-house marketing guru. She writes on The Blueleaf Blog to make advisors’ lives easier, offering practice management and client engagement tips where and when they’re useful. Outside of the Blueleaf offices, she can be found running a 10k or cooking her famous chili. Chat LIVE with Carolyn on Twitter @BlueleafAdvisor!
  • James Juliano

    Daniel, There are two main issues I advise you focus on: 1. asset allocation 2. liquidity. There are five main asset classes you should expose your capital to (US stocks, Foreign stocks, Commodities, Real Estate and Fixed Income.) Since you have the RE class covered with your buildings, I recommend you consider the other four asset classes for investing the profits. Which bring us to point 2. liquidity. I advise clients be in fully liquid investments when possible. This is best done through low cost, passive ETFs. Since your RE investment is in buildings that are not liquid, your investments across other asset classes should be highly liquid. This also allows you to free up capital quickly when needed to make further investments in additional units. Lastly, I recommend you continue your direct investment in individual tech stocks/IPOs mainly because there is no better teacher for a young and interested investor than Mr. Market. (I am 34 and when I began in this industry 12 years ago my mentor (now business partner) made sure the market taught and humbled me directly with real money. Not many professionals do that with young graduates, but there is no better teacher.) To be prudent, I advise you keep this part of your overall portfolio small between 5-10%; think of this as your 6th asset class. I recommend you make your advisor a proactive part of this process so you can have a professional looking over your ideas in tactical terms of things like risk management, specific IPO strategies, position size etc. Hope this helps. Feel free to reach out any time to discuss things in more detail.

    • Dan Bateson

      James, I appreciate the nod towards EFT’s. I will likely be reaching out to you in the future on liquid investments and not stretching your equity too thin. Thanks for the response.

      Let’s connect – https://www.linkedin.com/pub/daniel-bateson/45/7b1/512

  • Pingback: Dear Advisor: Why haven’t I heard from you? | The Scalable Advisor()