How to Build a $200M Real Estate Portfolio Starting With Zero Experience
Episode Summary
In this episode of The Real Estate Investing Club podcast, host Gabriel Petersen interviews Jens Nielsen from Open Doors Capital, who has built an impressive portfolio of over 2,000 apartment units and 100,000 square feet of industrial real estate. Key takeaways from this conversation include:
- The journey from single-family rentals to large multifamily syndications
- Why industrial real estate offers compelling advantages over traditional multifamily
- How to find off-market deals using direct mail campaigns
- Critical lessons about debt structure and market timing
- Achieving 350% returns in three years on the right deals
- The importance of strategic partnerships in scaling your portfolio
How Do You Start Real Estate Investing When You Run Out of Your Own Money?
One of the biggest challenges new investors face is running out of capital after their first few deals. As Jens Nielsen discovered firsthand when he started investing in 2016: “Within the first, you know, year, we had actually bought three properties and then we’re kind of out of money.”
The solution that propelled his growth was transitioning to joint ventures and eventually syndications. After exhausting personal funds on three properties in Albuquerque, New Mexico, Jens moved into joint venture partnerships, starting with a 38-unit property. This strategic shift allowed him to continue growing without being limited by personal capital.
“Then we went into doing some joint ventures… first with a smaller 38 unit which we also still own. Then we was off to the races in the syndication space. I started syndicating stuff starting in 2019,” Jens explained. This progression from using personal funds to leveraging other people’s money is a critical step that allows investors to scale beyond their initial limitations.
The key is recognizing that running out of money isn’t the end of your investing journey—it’s actually the beginning of learning how to structure deals that benefit multiple parties while building larger portfolios.
Why Are Experienced Multifamily Investors Moving Into Industrial Real Estate?
The shift from multifamily to industrial real estate is becoming increasingly common among seasoned investors, and Jens’s experience illuminates why. After successfully building a portfolio of over 2,000 apartment units, he made a strategic pivot to industrial properties, accumulating over 100,000 square feet.
“Dealing with a lot of tenants in an apartment building, I mean, I’m not a property manager, but still there’s a lot of turnover. There’s a lot of people every month in and out and collections and all these challenges,” Jens revealed. “And then insurance went kind of nuts. So there was a lot of issues, not issues, there was a lot of kind of challenges and headwinds that we saw that made it less attractive to continue to invest in the multifamily space.”
The contrast with industrial properties is stark: “Instead of having 50, a hundred or 200 tenants, you may have one, right? One or two tenants. And it makes it easier to manage. I mean, they typically do all the maintenance, their business, so they know what that all means.”
This fundamental difference in management intensity makes industrial properties particularly attractive for investors seeking more passive income streams. Business tenants understand property maintenance, pay rent consistently, and typically sign longer leases with automatic increases—creating a more stable, predictable cash flow with significantly less management overhead.
What Are the Best Industrial Property Investment Criteria for Beginners?
Industrial real estate investing requires a different approach than residential properties. Jens shared specific criteria that have guided his successful industrial acquisitions:
“We’re not out there competing with the Amazons and you know, the 400,000 square feet and 40 foot ceilings,” Jens clarified. “We’re really looking at that older vintage with lower ceilings, maybe it’s 20 feet, 15, 20 feet ceiling heights. Maybe it’s just a little bit more that B-C class.”
The key metrics for evaluating industrial deals differ significantly from multifamily:
- Cap Rates: “We’re talking cap rates in the eight and nines, right? We’re not talking about four and five cap rates like you see in apartments.”
- Vacancy Risk Management: “If it’s vacant, we got to get it at a really good price because we’re taking on that risk to find a tenant.”
- Due Diligence Strategy: “We need a long due diligence period where we actually gonna try to market the property so we can try to find a tenant before we actually buy the damn thing.”
For properties with existing tenants, the evaluation focuses on lease terms, tenant quality, and remaining lease duration. National tenants are particularly valuable, as Jens discovered with his recent acquisition: “We ended up finding a telecommunication provider… a national company, a national tenant. So that’s pretty nice.”
How Can You Find Off-Market Real Estate Deals Using Direct Mail?
While many investors rely solely on brokers, direct-to-seller marketing can uncover exceptional opportunities. Jens successfully used this strategy to acquire properties that still generate cash flow today.
“Back in the day, like we’re talking eight, 10 years ago, I did do direct mail campaign. I did find I have a 16 unit deal that I still own through direct mail. Right. So I think that still works. It takes time and effort,” Jens shared.
Host Gabriel Petersen emphasized the importance of adequate marketing budgets: “If you’re trying to do direct to seller, have at least five to $10,000 in your pocket that you can use for marketing because it takes more than you actually think to get those deals start to flow. You can’t put a hundred bucks, a thousand bucks out there and expect a return.”
This approach works particularly well for smaller properties where you can avoid competition from institutional buyers. As Jens noted, “If you’re trying to maybe not compete with all the other buyers and the brokers and everything else, you may want to do something like that. Now that doesn’t work on a 200-unit deal, but something smaller.”
The key is consistency and patience—direct mail campaigns require multiple touches and sustained effort to generate results, but they can provide access to deals that never hit the public market.
What Are the Most Critical Mistakes to Avoid With Real Estate Debt?
One of the most valuable lessons from this episode involves debt structuring, particularly the dangers of short-term financing. Jens learned this lesson through experience with deals that didn’t perform as expected.
“Be very, very careful about short term debt,” Jens warned. “That was a three year plan, always everything looked good three years ago. But right now, this is a different market that’s causing all kinds of challenges for us.”
The rapid interest rate changes from 2021 to 2024 caught many investors off-guard, particularly those with floating rate debt or short-term loans requiring refinancing. Properties that looked profitable at 3% interest rates became challenging or impossible to refinance at 7-8% rates.
Beyond debt structure, Jens emphasized the importance of accurate rent comparisons: “Be careful about your rent comps, right? What are you comparing the rents to? Are those true, right? Or are you just kind of pulling to buy it over in the area and it doesn’t really [match].”
Host Gabriel Petersen reinforced this point: “You can’t compare class A rents to class C rents. You really have to be comparing apples to apples and interest rates. Nobody knows where they’re going to go. If anybody says they know they don’t, it’s really difficult to get or at least you need to be conservative when you’re looking at your debt.”
How Do You Build Strategic Partnerships in Real Estate Syndication?
Successful syndication requires assembling the right team with complementary skills. Jens’s approach to partnerships has been instrumental in scaling his portfolio to over $200 million in assets under management.
“The thing about partners is that that has usually been on my partner’s plate to do that. They have actually been helping that,” Jens acknowledged when discussing deal sourcing. This division of labor allows each partner to focus on their strengths—some excel at finding deals, others at raising capital, and others at operations.
When selecting markets, partnerships can provide crucial local expertise. Jens’s connection to Albuquerque illustrates this: “I’ve been here 25 years. I know the market really well. It’s a good stable market, right? There’s military, there’s university, there’s national labs, there’s Intel, there’s Netflix.”
The lesson is clear: you don’t need to be an expert at everything. Building partnerships with people who complement your skills can accelerate growth far beyond what you could achieve alone. Whether it’s someone with local market knowledge, capital raising abilities, or operational expertise, the right partnerships multiply your capacity to execute larger deals.
What Returns Can You Realistically Expect From Real Estate Syndications?
While not every deal produces exceptional returns, understanding what’s possible helps set appropriate expectations. Jens shared his best-performing deal as an example of what strong execution and good timing can achieve.
“That was the one I think I mentioned early on. It was in Phoenix… I think we did a 3.5x in like a three year, 350% return on that investment for investors. So that was huge,” Jens revealed.
Equally important was the timing of the exit: “I’m so glad we sold it too, because it was right before the market kind of shifted and interest rates. So I don’t know how those buyers are doing, but we got out of it right in the right time.”
This exceptional return came from a combination of factors: buying at the right price, executing value-add improvements effectively, and—critically—selling at the peak of the market cycle. While not every deal will achieve 350% returns, this example demonstrates the potential of well-executed syndications in strong markets.
The key takeaway is that successful syndication returns come from multiple factors aligning: market selection, timing, execution, and sometimes, as Gabriel noted, accepting luck when it appears: “Sometimes luck is on your side when it does. When it shows up, you take it because nobody never say no to luck.”
Want to learn more about our guest? Connect here: jens@opendoorscapital.com