Have you heard the great cry? The popularity of real estate investing is exploding. Several factors are responsible for its widespread appeal.
There’s the high disposable incomes of many Americans, plus the technology to link up with people across the nation, coupled with a surge of interest in achieving financial freedom—just to name a few. However, a lack of knowledge about investing in real estate is contributing to a great cry among new and even experienced real estate investors.
“Where can I find a mentor?”
I have been a blogger on BiggerPockets, a real estate author, a syndicator/investor, and a podcaster for a number of years now. I can’t even begin to count how many times this question of mentoring has come up. But I can tell you that it’s quite often.
And I am certain that many millions are spent annually on mentoring and coaching programs and on less than helpful gurus—some of whom are fleecing the flock.
Are these programs worth it? How do I find a great one? Which ones are a fit for me? And what do they cost? I’ll provide answers to these questions and more in this post.
7 Paths to Success in Real Estate
I’ve identified several paths to profitably invest in commercial real estate:
- Path #1: Work your way up the ladder slowly from small to large deals.
- Path #2: Jump in big if you have access to large capital.
- Path #3: Be a deal-finder for other syndicator/sponsors.
- Path #4: Become a capital-raising partner for a syndicator/sponsor.
- Path #5: Get a job in the industry in property management, asset management, brokerage, or some other capacity.
- Path #6: Invest passively.
- Path #7: Hire or find a great mentor.
Now let’s talk in depth about path No. 7, hiring or finding a great mentor.
2 Types of Mentors
I’m certain that mentors come in all shapes and styles, but I believe they generally fall into two categories.
Master-Apprentice Style Mentors
In prior centuries, the master-apprentice relationship was a great way to learn a trade. A young apprentice would offer his services to a master at no charge, and the master would teach him his trade and sometimes provide room and board. This relationship commonly lasted for seven years.
Much of America was shaped by people who learned trades from these types of masters. Though this practice is uncommon today, it is certainly one way to learn about commercial real estate.
If you are in a position to do so, you may want to find a master in the field of your choice—say, a multifamily or self-storage owner/syndicator—and ask them to teach you their trade. But don’t approach them with that pitch.
Everyone is busy, and you’ll likely get a “no.” I’d recommend that you invite them out for coffee to get to know them a bit (and you should buy). Tell them you’d like to eventually get into a business like theirs, and ask them if you can provide your services to them for free.
Tell them you are good with X (whether it be spreadsheets, research, administration, SEO, direct mail, grunt work, or something else). Say you’d be happy to help them out in exchange for the opportunity to hang around their office and get to know what they do.
If you get a good response, they’ll likely be skeptical of your willingness to follow through for long. They’ve probably had offers like this before. So don’t make the offer unless you’re committed. You may want to make an initial time commitment and/or agree to take on certain projects.
Once you have secured this role, go the extra mile. Provide the timeliness and quality of service that they wish they had from their own staff. Do it like you’re doing it for your own company or as if you were being paid on commission for quality. Do more than is asked and think of ways to serve them that they haven’t even thought of. (There’s a great book by Barry Farah called Customer Success that details this level of service.)
Make yourself indispensable to the boss if possible. At some point, you may get an unexpected check—or job offer! At the least, you will hopefully be given a sneak peek at what they’re doing and an opportunity to learn more. This boss may even eventually become your business partner or allow you to buy the business from him someday.
If you want to go down this path, the first thing I’d recommend is that you look closely around your own community. Ask for references at local real estate meetups or real estate investor associations. Look online to see who is based in your city. You may be happily surprised.
If you can’t find who you’re looking for locally, you may have to widen the net. This might include a visit to a regional player or maybe someone farther away. Browse BiggerPockets’ forums or contact someone you see on a crowdfunding site or elsewhere online.
If you’re flexible and really committed to this path, you may find that you would be best served by finding the perfect master wherever they may be, doing a trial run with them, then moving to their location to make the most of the relationship. This would certainly speak volumes to the mentor, by the way.
Finding the right unpaid mentor may take a few tries, but I believe that your persistence will pay off. When you approach the unpaid coach, you may want to consider a short, written proposal. I once did a very long (20-plus page) proposal for a contractor position, and I learned the hard way that it was ignored and unread.
There is a great book called The One-Page Proposal: How to Get Your Business Pitch onto One Persuasive Page that provides the reasoning and outline for a short proposal to use with busy people in situations like this. It took some convincing, but years later, I see the great wisdom in this summarized approach to dealing with “important” people.
The more common version of a mentor is a paid coach. The number of paid coaches in the real estate arena has exploded in the past several years, and they offer a wide variety of program types.
Some coaches offer weekend events, where they provide as much training and instruction as they can in two to three days. These events can be a great preliminary introduction to the business, and they can even teach you all you need to know to get started. But more often than not, short events like this conclude with an invitation to join a mastermind, an ongoing mentoring program, or another event with related but different material.
These events can be great places to meet others in the business and perhaps even connect with a future business partner. If you are going down one of the other paths on my list (like deal-finder or capital-raiser), you may find someone else with a complementary skillset to join you.
Most paid coaches offer an ongoing mentor-student relationship. This may be with the coach himself or one of his affiliates or staff members. These ongoing coaching programs typically also offer the opportunity to connect with the coach’s resources (like lenders, brokers, appraisers, inspectors, and property managers), which of course can be very beneficial and save a lot of hassle and time.
Paid coaches will sometimes agree to partner with you on deals when the time is right. This can be a great opportunity to join up with an experienced pro, who will benefit by your services, as well.
A coach like this who has trained dozens of students across the nation may tap into those connections, offering to be their deal-finders or capital-raising partners (but all parties should be careful of legalities here).
Some of these students eventually go on to become a part of their coach’s staff as he or she grows their team. I know quite a few students who have taken this path into a paid position or even a partnership role with their former coach.
I’m sure you’re wondering what these paid coach programs cost. They are obviously all over the board. Some of the weekend events cost as little as $1,000 or so. The ongoing coaching programs tend to cost between $10,000 and $30,000. And some of the intensive masterminds cost substantially more but come with guaranteed outcomes like deal partnerships or something similar.
I will warn you that these “guarantees” are predicated on the energy you invest. There is no way a coach can guarantee you will get a deal. You have to exert the effort, and it will likely be harder than you expect up front.
My Mentoring Program Experience
I paid $25,000 for a one-year intensive coaching program. It was worth every penny and more. My wonderful experience certainly affected my view of this path, and it is the reason this is my preferred path to mastery.
This program included:
- Bi-weekly training calls (live and video)
- Homework assignments
- Assigned books with reading deadlines
- Demographic and deal research
- Practice underwriting real deals
- Two live events in the field where the information was reviewed, the coach’s assets were toured, and the students got to know their trainers and each other on a personal level
- One final event with team competitions, applying what we learned in the program
- Introductions to brokers, lenders, attorneys, and other resources
- The opportunity to be paid by referring deals, investors, or other students to the coach
- Virtually unlimited phone and email access to the coach and his staff
- The opportunity to have the staff review deals
- Assistance in all steps needed to underwrite, make offers, execute contracts, perform due diligence, raise capital, qualify for financing, prepare to close, and operate a deal
Note that this last step (assistance) was available as part of the program, but there were limits. If we chose to bring on the coach as a co-guarantor on our loan (I didn’t), it would come at a steep price (co-ownership). If we chose to hire the coach’s team as a co-asset manager (I did) for a certain time (like a year), that would cost a portion of our acquisition fee and our asset management fee while they were involved.
I know many people who took this path to enter the commercial real estate business. I think I know more who have gone this route than in all the other paths combined. At the same time, this path can be paired with other paths, as well.
For example, a doctor (Dennis) in the same program as me had a strenuous full-time job in the emergency room. He went through the program and made a plan to make the jump from his career into full-time commercial real estate. After his year of paid coaching, he decided to be both a deal-finder and a capital-raiser for the coach.
Dennis leveraged his medical contacts to raise hundreds of thousands—and eventually millions—of equity for the coach/deal sponsor. The coach paid him a legal flat fee per investor for these referrals.
He leveraged his marketing abilities and disposable income to pay for costly direct marketing campaigns and sponsored investor lunch and learns in various large U.S. cities. Dennis also spent a significant portion of his time developing broker relationships in a few chosen cities. He gained the brokers’ trust with the backing of the coach’s firm and reputation, and he was able to access a pipeline of off- and on-market deals most newbies would only dream of. He was paid well at closings and got a nice piece of ownership.
His goal was to start his own firm. He had all of the marketing collateral, he had the contacts, he had the resume (due to partnerships with the coaching firm), he had access to capital, and he knew how to get deals. But he never ended up starting his own firm.
Dennis was so valuable to the coach’s business that he was offered a position. I’m guessing it came with some ownership. I’m also guessing he’s happier (and hopefully more prosperous) as a partner with a medium-sized firm than he would be as the owner of his own company.
A Note About Bad Mentors
One of the reasons I love BiggerPockets is their stance against guru-type mentors. These gurus make big promises of an easy path to wealth and happiness. But their underlying plan usually seems to be to line their own pockets at your expense.
I can’t tell you how to recognize these people at a glance, but I can tell you that many who sign up for these guru programs do so with the hope that they can buy large properties with no money down, no experience, few lender connections, and little to no capital. They’re told that if they find a great deal, the equity will be drawn like a magnet.
They’re told that many sellers can be convinced to provide owner financing. And from what I’ve heard from friends who’ve been their victims, they leave most seminars with more information than they came in with but not enough to really get into the business.
But not to fear—the guru has another advanced program that will teach you all you need to know to make your move to Easy Street. It comes with a heftier fee than the last one, but surely this will be the seminar or mastermind group that takes you over the top.
I heard about one of these gurus who announced that he was about to retire and said he had a few limited spots left in his last super duper, mega-millionaire, inner circle, mastermind dealmaker community. All that for only $100,000 (or some such number).
This was many years ago, and he’s made the same announcement at every annual event since.
You can often spot these gurus because they do a great job with slick direct marketing. You may see pictures of them at their mansion or driving an expensive car. And they often lead people into an ascent of ever-increasingly priced courses that they promise will eventually give mentees the secret keys to success. It’s always just one seminar away!
That’s not to say that all great marketers are charlatans or that everyone who has an expensive program is a con artist—not at all.
But what I will say is that the best coaches I know are happy to give you the whole menu up front. I knew that I would pay $25,000 once and get lifetime access to my mentor. And I knew that if I wanted his partnership on deals or as a co-guarantor on a loan that I would pay for that separately. I knew how much it would cost, too.
For me, it was a great experience, and I still call on them for advice many years later. I even had the CEO review and edit my second book, and he offered detailed, helpful suggestions over several revisions.
Just like you would take a very close look at a deal sponsor before sending them a large investment check, I recommend you take a deep dive to look closely at the track record, references, and reviews of any potential mentor before attending their program. I don’t want to see you get sucked in by a guru in sheep’s clothing (or mentor’s clothing).
What Makes a Great Mentor?
I’m sure there are as many great qualities as there are mentors out there, but I will attempt to outline some that I personally would look for.
- Access. You have a chance to speak with them directly. You don’t have to go through a contact form or staffer before you make a payment.
- Guarantee. There’s not always a great fit. I think a great mentor should offer a limited money-back guarantee.
- Clarity. Transparency on both pricing and program. Ask your mentor for a list of all the costs in advance, and what is covered. Also ask what you will need to know that is not covered, and how you will obtain this knowledge.
- Teacher. Some practitioners are not great teachers. Make sure yours is both knowledgeable and able to relay that knowledge (or has a great team to fill in the gaps). I once bought an expensive sales training course from a guy who knew how to sell but not how to teach it. What a disappointment.
- Honest. A few of the most memorable and helpful (yet painful) memories with my mentor were the times he challenged me on my thinking or actions. Once he said, “I’ve told you to do X for a long time. Don’t call me again until you’ve done it!” Ouch. That call (with others listening in) motivated me to take the action I’d been avoiding for over a year. And it set me on the course for my success today.
- Program. I would hate to pay for a training program that had no set outline, goals, or curriculum. This may be fine for the master-apprentice style program but not for paid coaching.
Who Is an Ideal Candidate for Mentoring?
As I said earlier, this is my favorite path of all and the one that led to my success. I’ve done a lot of things in my career. The two times I hired a paid coach led to two of the most profitable and enjoyable ventures of my life. Though these were unrelated fields and separated by years, each program cost about $25,000.
It can really pay to invest big in your own success. There are few better investments. So you can take into account my pro-mentoring bias. But I will tell you that I believe that almost anyone, at any beginner or early stage, along any of these paths, can greatly benefit by finding a mentor. In fact, there are few instances where I would not recommend getting a mentor at some point in your career.
As I consider this further, I will revise my statement. No one is an expert in everything they need to do well. I think that everyone at every stage can benefit from some form of mentoring or coaching. Even pro greats like Michael Jordan, Tiger Woods, and Tom Brady have coaches.
I just spoke to an already successful real estate broker who said his career took off when he hired a coach. Another friend and business associate I just met stayed in the home of an uber-successful private equity fund manager on the slopes of a Colorado ski resort.
The guy told my friend he was doing fine before, but then he hired a strategic coach. That was when his business took off. He took his firm to another level.
Your mentorship may take a different form than I’ve outlined here. But I’m convinced that most of you can benefit from a master-apprentice relationship, mentor, or paid coach. There’s always something to learn, and if you don’t agree, then I’d wonder if you’re set up for a fall.
Have you found a great mentor?
Tell us about your experience.
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.