No Time, No Money, No Real Estate?

What are two of the biggest impediments keeping people from investing in real estate?Take every excuse and they can all be boiled down to the two seemingly universal hurdles of no time or no money.There is a BIG reason I decided to bridge this gap and connect these two groups of frustrated real estate wantreprenuers.Because I, personally, was stuck in one of these groups and needed to find the answer.

Using myself as a Guinee pig, I did not get started in real estate investing until I was 45 years old.Why?  Because I am a moron. Let me explain. My day job is a banker and I work with business owners and real estate investors who need loans to start or expand their business. I originally got into banking not to be a banker, but to find out what kind of business I would like to own and run one day on my own. What better way, I thought, to get introduced to various types of businesses than to become their banker and see the good, the bad, and the ugly of each particular business without having to own it to find out.

The reality of running most businesses is not all smooth sailing.When I talked to dozens of business owners, they told me what they hated most about running their business (and every business has “bad stuff” the owner must deal with).Mostly, it came down to having to deal with employees and government red tape as the business owner.So that is why I stayed in banking so long. I simply could not find a business owner I would want to switch places with.

Until one day when I finally started to connect the dots and found multiple people with a business that did not require a bunch of employees and the government red tape was minimal.It was a business that I thought would be the perfect type of business except for one major issue.This business involved real estate, and I could never see myself doing renovations or even having to hire or manage someone capable of doing the renovations without being taken to the cleaners.

This fact kept me as a spectator watching other people get rich using loans I was getting for them and being slightly annoyed that I wasn’t the one cashing in on the great deals they were finding.Until one day when I had reached a tipping point and thought I needed to jump into the fray and find out where I could add value to the process and be a participant/owner in these real estate transactions.

My goal was to find a local mentor and pay them to teach me to flip one house.I wanted them to teach me what they knew and partner with me on the house so I wouldn’t lose my shirt and never try real estate again.This was more like paint-by-numbers real estate so that 98% of the risk was covered.It was as close to idiot-proof as it could be so that I would learn the process and see what I could do on a repeatable basis.

The process was broken down into four simple steps:

1. Find a house that works as a flip or rental

2. Finance it

3. Fix it

4. Flip it or rent it

I think that is about as easy as I can make it.But the devil is in the details and there can be a lot of things that can go wrong each step along the way.After going through the class with the mentor and doing each of the steps, I came to one brilliant conclusion.I am only good at #2 on the list above!Duh!That is the skill I actually practice every day for a paycheck and it only took me about ten years to figure it out.Now you know why I felt like such a moron!

Most people tend to drift towards doing real estate on their own as a sole practitioner or as a husband/wife team or maybe even with one other partner.My thought process was, each one of these approaches has a major flaw and that is revealed when you, or your partner, run out of capital and can no longer finance more real estate.Then what do you do?

This is the time when I pitched the idea to my mentor to allow me to be on their team to find as much capital as they needed to purchase, renovate, and get permanent financing for each house they found.Then they could concentrate on what they did best (find and fix the house and get a tenant to sign a lease) and I could bring my skills to the table by making sure the money was always there to fund each purchase and renovation.

In general, the kind of people that have no time but a lot of money are successful business owners, dentists, doctors, etc.These people have the money to do real estate deals but do not have people on their team to vet deals, visit the property, take care of closing details and due diligence.In short, someone who has as much to gain or lose as they do to make sure interests are in complete alignment.

The other side of the coin are people without access to a lot of money, but they have time.Time to do the work part of the transaction so the right type of property can be located, renovated, and turned into an asset that will produce positive cash flow.These folks are contractors, real estate professionals (real estate agents/property managers) and people that can spend FULL-TIME doing what they do best.

Bringing these two groups together will unleash the power of a team so a lot more people can participate than just the few folks that possess the skills, talent, time, and money to do it all by themselves.If you take the entire universe of people and put them in one of the three categories (no time, no money, and folks that can do both), there is no question the first two categories outnumber the last one by a huge margin.

This is not just a theory I made up.I tested it out in the real world and have found this to be a powerful way for both groups to participate in real estate cash flow and appreciation instead of sitting on the sidelines wishing they could join the party.

Of course, if you are going to use the team approach and each member of the group gets a certain percentage of the pie, for someone to get the same result of owning 100% of a deal means they will need to do a much larger volume.If one individual gets 25% of a deal, they will need four deals to equal one in which they had 100%, all things being equal.But remember, the chance of a person in either of these two groups getting involved in real estate to begin with are slim to none without this team approach.

Using this very method over the past nine plus years has enabled me to have a portion of 101 rental properties and a boat load of equity and cash flow.It all started with one property and realizing what value I could add to the business system which then enabled me to tap into and participate in the goldmine called real estate investing.