Here’s the top real estate investing questions you’ll have to ask at some point in your career, but might be too afraid to ask. So I’ll ask them for you!
First, check out the video below!
3) Where the hell do I start?
Those darn TV shows just love exploiting the high-points of the real estate “fix and flip” world. If they filmed the entire process, you’d see the effort that goes into lead generation, time consumption for lead conversion, nuances to acquisition, and oversight of the entire rehab and resale process can be mundane, mechanical, and downright irritating at times. The allure of high-stakes winner-takes-all still attracts droves of newbies, all wondering “how do I get me some of that?!”
To dispel the glamour, it’s a TV show, folks. Although yes, there are certainly stressful and rewarding points through the process, none of that occurs without lead flow. The #1 thing you NEED to do to get started is to learn how to attract and generate people that are willing to sell their property to you/your group.
If you’re wondering how to get started, but too afraid to ask, then the answer is, learn and do all you can to become a master marketer. If you do nothing else, it will make or break your chances of becoming a successful real estate investor.
1) Read 3 forums on BiggerPockets.com for “lead generation” – you DON’T need to start a new one!
2) Do a google search for “finding motivated sellers in real estate” (or something similar)
3) Read the book SHIFT by Gary Keller – has nothing to do with whether you’re an agent or not. There’s chapters on marketing/prospecting that are applicable to anyone in real estate.
Beyond that, pick a monthly budget you can stick to for at least 3 months, pick 1-2 marketing techniques, and try them for at least 90 days to see what your results are. Tweak as necessary until you begin to see responses and conversions (even if dismal, a 1% response rate can still generate enough business for you to be part-time, wholesale, or do a few fix and flips yourself.)
Which leads to the next question.
2) Would you sell your house for what you owe? / Is that the least you’ll take?
Whew, this can be a tough one to get comfortable with, especially if you’re brand new. It’s embarrassing, and makes you seem cheap, money-grubbing opportunist, right? If it makes YOU feel better, then go ahead an offer whatever price the Seller needs to make them like you again, and let me know how that works out for your bottom line. I can promise, you’ll become the most popular investor in your area…”Call Jerry, he’ll pay retail price for your home, isn’t that great?!” Everyone will like you…and you’ll be bitter and broke.
You’re in the business of liquidating an illiquid asset, and for that there is a premium. If I can’t build in at least a 10% profit margin into a real estate deal for a quick resale, it’s not a good deal, at least for me. You may have different parameters for different types of deals, but the better you get at negotiating, the more you’ll learn how to volley with a serious seller, either way.
These questions are the springboard to becoming a successful real estate investor, speculator, or wholesaler. One great trick I’ve learned is to practice in settings where you don’t care, like at furniture stores, deals off craigslist, etc. Ask for an embarrassingly low price, steep discount, or concession. By building your confidence (or developing thicker skin) on smaller items, you’ll cultivate the appreciation for getting a good deal, sitting in an uncomfortable space momentarily, and when to walk away.
1) Can I have some, er, money, please?
Most people are conditioned to feel uncomfortable asking for cash, a loan, or credit from another person. In the world of real estate investing, though, it’s not only a compliment, it’s an opportunity.
Don’t ever let the fear of “not having enough” slow you down in your real estate investing career, it’s hogwash and you need to erase all thoughts of that immediately. There are trillions of dollars flowing every day, and if you’re remarkable at finding deals that make sense, put that out into the world.
Autonomy is respectable, but structuring win-win deals with partners can make you more successful. For instance, if you’re lacking the down payment on a hard money loan, and rehab and holding costs, why not offer 40-50% equity share to a money partner? You have nothing out of pocket, and still collect on any upside. They expect to earn a hefty portion of the profits, plus interest on their money, without having to be involved in the day to day oversight.
If you’re purchasing a large multi-family deal, but lack the credit to take the entire loan in your name, perhaps ask the Seller to carry a note, syndicate the deal, or bring in a partner.
By doing so, you’re also earning a name in your community as a trustworthy and “lend-worthy” businessperson. Ask most of us long-time real estate professionals…we’ve nearly all had partners at some point, on some deal, in our careers.
If you have any current leads or deals you think you have to pass up because you don’t have funds, credit, or knowledge, reach out to at least 3 people you think may provide feedback or be interested. There’s always the option to (shameless plug in 3,2,1….) sign up for a BiggerPockets Pro membership to be able to solicit your attractive deals, as well. Be sure to have a breakdown of the deal structure, what you’re in need of, what you’re offering, and what’s in it for them. Be specific!
Now it’s YOUR turn
That’s the top 3 most embarrassing questions for most real estate investors. The best part of the blogs is keeping the conversation going, so let me/us know what other questions you had. (Or what other questions you wish someone else would ask!)
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Let’s hear it….What other embarrassing questions do you have?
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.