Tips to help you go the long-haul and run a successful business.
Starting out in real estate investment can be daunting. There’s seemingly endless videos, articles, and podcasts devoted to helping you get your start. In fact, it’s fair to say that there have never been more resources right at your fingertips.
Ultimately though, over the long-haul, I don’t think it’s going to be any specific tactic or marketing channel that’s going to make the biggest difference in your long term success. That’s because where & how you get in front of motivated sellers will change.
It may be one prominent platform one year (like mailers) and another prominent platform the next (like Facebook Ads). As with any long-term endeavor, what’s going to matter most is your mindset. As Seth Godin says, anything worth doing is going to have a dip; a difficult period of time where things are painful, difficult, and require problem solving and endurance. Those who make it through are rewarded, while those who quit won’t reap the rewards.
So the question is, how can you keep going the long haul? If you’ve decided the juice is worth the squeeze, and real estate investment is what you want, then what mindset should you arm yourself with now? Or, better yet, what would established investors who are further down the road tell you?
Well, that’s what this article is. I asked REIs “what advice would you give to someone just starting out?”, and here’s what they said…
Learn from people who have been successful.
“My advice…educate yourself, network, and be advised, you are going to need money. But mostly know its going to take time to learn this trade, be patient, you must go out and make mistakes, learn from them..be diligent, be driven.” – Steve, owner of SOC Industries
Learning is the first step. If you’re here, you probably know that. That’s why communities like CRE Online exist. It’s important to understand the industry; the reasons why profit loss occurs, how to partner with the right contractor, etc. Jacob, the owner of In Home Buyers agrees, “get yourself educated about real estate by reading books on real estate, attend seminars, network with investors, join REI groups and if possible find a good mentor.”
However, that’s easier said than done. A quick search will reveal thousands of resources available to you. And at some point, you’re going to have to land on a few that are proven, a few you can trust, and hone in on them. Derek of KyRU Serviceswarns of the danger of jumping around from person to person: “find a mentor first and stick to one system. Often times people get “shiny object syndrome” and it can become overwhelming. If you stick to one strategy and master it you can expand from there.”
Take action on what you’ve learned.
There comes a time for every entrepreneur or starter, when you need to put the book down, and take action. If you want to be successful, you’re eventually going to have to stop watching the videos and listening to the podcasts, and get started. Andrew, the founder of Columbia Cash Home Buyers says,“take action even though it may not be perfect. You will learn by acting. You will never get to your destination without making that first move.”
Leonard, the owner of ANB Homebuyers agrees, “[new REIs] should stop thinking about getting started and just start doing it… do not quit.” His point on not quitting is going to come up later as well. Again, it’s about making it through the dip. So much of real estate investment (and any undertaking that’s worth anything, or bears any fruit) is about persevering.
Be OK with failing. Because you’re going to.
After you do your homework, learn about the industry, and soak up all you can, you’ll finally take the leap and begin. And when you do, you’re going to fail. And that’s good! Everybody fails. Literally everybody.
I watched an interview with Jeff Bezos recently and he talked about how Amazon had lost millions of dollars in failed projects and experiments. Sure, Prime is a huge success – but it only came after lots of time and money was lost trying other features. The point is, you’re going to make mistakes and you need to be OK with that, and not let it knock you down. Tyler Buttleman, the founder of Florida Coast Homebuyers agrees. “Be ok with failing forward. Don’t think you have to know everything before you start taking action. Build relationships & tell everyone you come in contact with what your doing. You never know what connections someone might have or what referrals they could send you.”
Don’t miss the added point he made about networking. It seems like it’s in our nature to keep quiet, then if we fail, we feel like we should be done. In reality, Tyler’s right. You need to tell people about what you’re doing. Don’t be afraid of competition “finding out” about you. Don’t be afraid of what people might think. Don’t be afraid of telling people you’re going to do something, and putting your name on something, and then failing in front of them. If you’re in, own it, and see where it takes you. You’re going to fail, but don’t let that stop you. In fact, it’s safe to say, if you think you’ll quit if you fail – then quit now.
These three things, 1) learn, 2) practice, 3) fail forward ( = fail, but learn from it and don’t give up) are repeated refrains from investors who have been there. “If and when you decide to start out in investing you must first invest in yourself. What I mean by that is get yourself a mentor and learn as much as you possibly can. Once you have got some mentorship you must take massive action and apply what you have learned. Along the way, you will get things wrong, make mistakes and fail over and over. As long you fail forward and learn from those mistakes you will reap the benefits in the long run. Stay focused on the goal, and consistently do something everyday to push your business forward. A marathon is 26.2 miles but you must start with the first step!” – Jordan, founder of Southeast Buyers Group
Remember that it’s a numbers game.
This piece of advice comes from IK Enemkpali, (yeah, the former defensive end of the Jets and Raiders, and now founder of ATX Home Buyers). “Real estate is truly and will always a numbers game. How many people can you get in front of to make offers and solve their problems?”
Here are some examples of simple number games:
- If you know it takes 100 DM’s on Instagram to get a lead, and you need 10 leads, then put in the work and send 1,000 DMs.
- If you know that for every 10 leads, you only get 1 close, and your goal is 20 closes per year, then you have to do whatever it takes to get 20 leads.
Now, the point of those simple math examples isn’t to insult your intelligence. The point is that most of this stuff is really simple, but requires loads of effort, and people usually don’t want to put in the effort.
Get in front of enough people that are your target audience, and have them trust you, and you will close deals. The problem is that you have to go through 10 or 20 leads sometimes to close 1, and getting that many can be tough. So people naturally get discouraged. So understand going into it, that it’s a numbers game. That doesn’t mean you can’t do things to increase your conversion rates, or better serve your customer, so that you close 1 in 10 instead of 1 in 20. But it does mean that no matter what your ratio, it’s always a numbers game in the end.
Invest time in learning your market.
Letron Brantley, owner of Bright Star Home Buyers advises, “get to know your market intimately. Speak to local real estate agents and ask questions about the local market health. Also visit the local chamber of commerce and start asking questions about the businesses coming to town and what parts of town are candidate locations for these businesses.” So get a handle on your local market. Learn what the pricing is like. Learn from real estate agents. Attend meetups from people that know the market better than you.
Know your numbers, then just make your offer, no matter how scary it is.
“When I first started out working with homeowners looking to sell their home to my real estate company, I sometimes found myself hesitating in making them an offer,” says Christian, the owner of Core Real Estate Properties, “I felt that maybe what I was willing to pay was going to be much lower than what they expected. I did not want them to perceive me as that home buyer making them a low ball offer. However, we can not help someone with their financial situation without making offers. I encourage anyone starting out is make those offers, make as many as you can because that is the only way to close deals.”
If you’re new to the game, does that sound familiar? It can be a scary thing to stay a definitive number. They may reject you, laugh at you, or cuss you out. But if you know your number is right, offer it. Of course, this assumes that you’ve taken the time to make sure it’s accurate so you don’t lose profit on the deal, and that you are offering an actual fair offer. Many investors (maybe “all” investors?) claim they make “fair cash offers”, but here’s a litmus test for you: are you willing to be transparent and break down your pricing in front of the customer if they ask? If you don’t think that’s possible, I could point out REIs that do exactly that. When you have nothing to hide, no shady pricing, no hidden agenda, you can be free and clear with your offer. You may still get rejected, and people may still get insulted, but you can feel confident in it if you’re able to show them exactly why it is what it is, how much profit you want to make, and at the end, how this is the most you can pay them.
Have your “why” established, because you’ll frequently return to it.
This last piece of advice is from Tyler, the co-founder of Winn-Winn Home Buyers. “First, figure out your “why”. What is motivating you to invest in real estate? You will frequently ask yourself this question, so make sure you have a good answer. Then consume as much educational content you can about the topics you are interested in. Read books, listen to podcasts, network with others in the industry. Find yourself a mentor who is already doing what you want to do and offer some value to them in exchange for their knowledge and experience. Most importantly of all, take action. You will not achieve your goals after only reading books and listening to podcasts. Put what you learn into action. Don’t be afraid to make mistakes, just try to minimize them.”
Maybe your “why” is to provide better for your family. Maybe it’s to provide some hope and love to people that are hurting, and need a way out of their financial troubles. Maybe you just want to work for yourself and leave the 9 to 5. Maybe it’s all those things. Whatever yours is, have it firmly fixed, and use it to help you make it through the dip.
Wrapping it up in a nice package.
To me, any time you hear things repeated from professionals, it’s worth taking note of. I felt that way when I began to learn about startups, business, and watched videos from founders and entrepreneurs I respected.
One of the things you begin to take note of is the repeated pieces of advice you hear. In my example, “focus” was the constant refrain, when people what asked what made these founders successful. I took that to heart, and strive to try and remain focused in what I do, and guard my attention (though, I still say “yes” to too many things!).
In the case of these investors, it’s not surprising that the same values are repeated:
- Learn all you can, from a few trusted investors who you can model yourself after.
- Take action on that knowledge. At some point, if you want to do it, you’ve got to do it. Be OK with failure, and make sure you take calculated risks (don’t put your family in debt, don’t leverage your house, etc.) and learn from each mistake.
- Persevere, and keep at it. It’s a numbers game.
- Learn your market well, and get your numbers on-point, so you can transparently make offers to homeowners and break down exactly why you’re offering what you are.
- Keep going, and holding to your “why”.
And, because I’m a big fan of practical nuggets and takeaways, here are a few I picked up on, in case you didn’t:
- Reach out to investors who may be willing to coach you, and offer them some unique value (do some data entry for them, work for free for them for a while, etc.) in exchange for their knowledge.
- Learn your conversion numbers quickly. You can double down on what works, and throw out what doesn’t. Once you find a profitable channel, stay with that, and try and improve conversion to make even more profit.
- If you haven’t read it yet, I highly recommend The Dip by Seth Godin. It’s available anywhere, short, and very
Lots of people start investing, few end up really becoming successful. Same with business owners, lawyers, doctors, or anything else that’s hard, and promises reward at the end. I think your mindset is what will help you keep going. In my mind, we need more ethically minded investors that put people above profit, who mean what they say, and really provide a service that benefits the homeowners that can so easily fall victim to less reputable REIs. This is a tangent, but there are so many people leaving conference halls pumped up on just making money at the expense of someone’s misfortune. Don’t be one of them. I hope you’ll be an ethically-minded investor who provides a service that truly solves people’s pains. And if you are, I wish you success.
By Jeremiah Rizzo