Probably the MOST common real estate question I get asked, and I see other investors being asked, is “How do I start investing with little money and no experience?”
I think for many this is demonstrating an unwillingness to do the work and dig in to all the free resources around you to learn the fundamentals of this business. But for those who are serious about doing the work, putting in the effort, and launching a career in real estate, what are the best things you can be doing to get started, build capital, and learn at the same time?
Well, there are many things. But I want to talk about two specific skills that will remain “evergreen” when it comes to achieving success in real estate investing. By learning these things, you can make money in an up or down market. Every investor needs to master (or have someone on their team who has mastered) these talents, but the fact is many big developers and investors haven’t spent enough time working on these crucial components of long-term success.
Which Are the Most Essential Skills to Achieving Success as a Real Estate Investor?
In all honesty, I didn’t develop these skills for my own business until I was several years into my investing career. This caused me to lose tens of thousands of dollars, do deals I shouldn’t have, and put myself at risk of losing everything.
So, to what am I referring? Drumroll… The skills are tracking down off-market deals and mastering direct-to-seller marketing.
I’m going to advise you to pursue this in a more aggressive way than most investors do. By adding these skills to your toolbox, you’ll have the potential to make way more money, own equity in the deals you find, and position yourself to become an active investor as soon as you build up a little war chest of cash. It won’t be easy and it won’t be glamorous, but the returns can truly be spectacular!
How to Track Down Off-Market Deals and Master Direct-to-Seller Marketing
Here are the basic steps.
- Develop an understanding of how to take any address and turn that into a packet that tells you who owns it, how long they’ve owned it, and what they want to do with it.
This involves two basic parts:
- Property research
- Ownership research
These two things together essentially involve being willing to Google and keep digging until you have good information. The ability to do so is insanely valuable. Most of this research will have a “county specific” component to it, so get familiar with relevant counties where people are buying or looking for deals.
Get comfortable digging through corporate records, finding company representatives, and identifying registered agents—and be persistent!
- Find developers or big investors who are looking to grow, do more deals, and have the cash to execute on opportunities.
Forget the small-time investors who are all looking at the same single family deal. Developers or investors who are looking to do much bigger deals are significantly better candidates for this sort of thing. Why?
Here are a few reasons:
- They can buy bigger deals!
- They most likely ONLY use traditional methods of finding deals (i.e., they NEED someone who does what you do).
- They will give you a finder’s fee AND equity in deals you bring them (huge bonus and resume builder).
Finding these types of deals is where you want to spend your time in real estate anyway, so perfect this skill before doing the small-time stuff.
I’m a partner in an investment and development company based in San Antonio. We invest all over the state, and I have built an acquisition team that WANTS to do bigger deals—they just don’t have the capital, team, or time to put a $5MM-plus investment together.
This creates the perfect partnership! They perform a valuable skill that I need, and in return, they get ownership in deals they could never do with their current experience level or access to funds.
Here’s an example:
We recently purchased a piece of land for $830,000. We will be doing a $6.5MM development on the property that we will sell for around $9.2MM total. Our projected profit is $2.3MM.
Our acquisitions guy gets a finder’s fee (2 to 5 percent), plus a profit share and ownership of the final product. His total compensation for this ONE deal will likely be over six figures—all for tracking down a great opportunity!
It wouldn’t take too many of these before he’d be able to take down his own [insert what you want to invest in here].
If the first investors you approach won’t give you equity in the deal, keep searching until you find someone who will. They must value having more good deals than hoarding all the equity for themselves.
- Get clear on the types of deals your investors are looking for.
Another thing I like about this type of opportunity is you can know exactly what you should be looking for. My goal in real estate is to find niches that everyone else isn’t mining. When you know what your investors want, you can go deeper when searching for exactly these types of deals instead of blasting anything and everything that may look like an opportunity.
Go property by property, street by street, through deals that make sense. Build a database of these types of properties, and stay in touch with the owner. They WILL sell eventually, and you’ll be first in line.
Like I said, it’s not glamorous, but it is effective.
- Stay organized and follow up.
The importance of these steps can’t be overstated! When you are looking for specific types of deals, many may not be ready to sell right away. This is where the successful and non-successful investors differentiate themselves. Build your list of properties, and then don’t stop following up until you acquire the asset.
- Do the work.
This strategy most likely won’t make you successful overnight—unless you just happen upon a really good deal right away. It takes time to build a database of properties and strong relationships with talented investors or developers. However, if you’re looking to shortcut your way into the big leagues of real estate, this is one of the most valuable things you can learn.
Demonstrate your value by bringing incredible opportunities to the table. Once you’ve done this, you will be viewed as a valuable member of the team and can work toward specializing in the piece of investing you’re most interested in.
In conclusion, this is “wholesaling on steroids.” It’s narrow instead of broad, niche instead of general.
You can also lean on the resume and experience of your investor or development partner and feel OK about approaching big owners with big deals. It isn’t your experience you’re asking them to believe in, it’s the experience and resume of your end buyer.
Take the leap, put your investing trajectory on the fast track, and go get good at the most valuable skills in the entire real estate world!
Do you agree with the degree of importance in mastering these skills? If not, what do you think is most imperative when it comes to achieving success as an investor?
Share in the comment section below.