“What do you think sets apart successful real estate investors from those who give up, fail, or never get started?” As many of you may recognize, this is one of the final questions asked on the BiggerPockets podcast by @Brandon Turner and for about four years, it made me cringe. Every time I heard this question, it was a reminder to me that I still wasn’t “in the game.” I still hadn’t gotten started. I was doing what everyone cautions against – I was stuck in analysis paralysis mode. I felt compelled to make this post for all the newbies out there that might be stuck in analysis paralysis mode, like I was for the past 4+ years. For all you seasoned real estate investors, feel free to read on (it’s going to be a long one), but you may or may not derive as much value as those looking to get started. This is the story of my journey into real estate investing, and I still feel like I’m in the infancy stages, but I no longer feel like I’m stuck in analysis paralysis mode. Hopefully you can get out of analysis paralysis mode a lot faster than I did.
About 5 years ago, I built my primary residence. I always knew I wanted to get involved in real estate investing, but I didn’t know how. After a few simple Google searches on real estate-related topics, I noticed a recurring theme: BiggerPockets kept popping up. After reading some of the forums and trying to absorb all the information, I was hooked. I signed up for a free account (at the time – then upgraded to a paid Plus membership along the way for the Rental Property Calculator Tool) and began reading the forums. Up until this point, I had been a big believer (and to some degree, still am) in the stock market. It’s what I knew/know and what I was familiar with; we can save the whole stocks vs. real estate debate for another day (there are plenty of others that have written about it on BP and elsewhere, and it’s not really relevant to this post – other than to say, I was unfamiliar with real estate investing). I began listening to the BiggerPockets podcast every week, religiously (and still do – I’ve never missed an episode!). Before long, I discovered that I was most interested in buy-and-hold investing/rental properties.
I began to analyze deals, made offers (and went through several different real estate agents in the process), but unfortunately (or looking back now, fortunately) nothing came through. I was looking at the least expensive homes within about an hour of where I live and then trying to find reasons to make the numbers work. I now realize this is backwards. I quickly realized I knew absolutely nothing about rehabbing and would end up having to hire contractors and pay top dollar (and likely even get ripped off due to my ignorance) for the rehab. Strike one. Then I would have to market for, show the property to, complete the screening of, place, and ultimately be responsible for maintenance/repair calls from, tenants. Given my personality type, dealing with tenants was just not something I was interested in. Strike two. At this point, I continued listening to podcasts, reading the forums, etc., but sort of took my foot off the gas and became somewhat disinterested. Despite all the benefits of REI, I tried to convince myself that it was just too much work, too hands-on, and that the stock market was a better investment from a time-adjusted return standpoint. I had this internal debate, or got stuck in sort of an analysis-paralysis mode, for years...until I stumbled across Keith Weinhold's Get Rich Education (GRE) podcast at the beginning of 2017.
Here was someone who, like me, didn't want to spend time managing tenants and admitted that he was not very handy at all, yet he was financially free after a period of about 15 years of real estate investing and the best part was he did so passively. He believes in responsible leverage, utilizing turnkey providers with in-house property management, and the freedom of time â or as he puts it, Return On Time Invested (ROTI). How could you own rental property and receive the benefits of REI, yet be almost as hands-off as a passive stock investor? He found a way, and I was determined to learn, too.
I decided that I wanted to own many different types of real estate investments with one thing in common: have them all be as passive as possible. I went back and listened to every single podcast (still haven’t missed an episode) to learn as much as I could and decided that 2017 was going to be the year of action. I would make mistakes. I wouldn’t know 100% what I was doing. I might even lose money. But I was determined to get out of analysis paralysis and just take action. Anything.
In January of 2017, I contacted Mid South Home Buyers (MSHB), talked to them about their offerings in the SFR turnkey space, and got on their waitlist. In February of 2017, I took the trip out to Memphis, TN and met with the team personally and took a property tour. I got to meet individuals from all over the organization â from sales to acquisitions to accounting and even the owner himself, Terry Kerr. I had heard him on several podcasts before and it felt like meeting a celebrity. Despite being on the waitlist longer than originally anticipated, I got under contract with MSHB in August of 2017. Rehab took a bit longer than expected, but ended up looking fabulous at the end, and we closed in November of 2017. I got my first rent check this month and it was a little surreal. It actually works! For those interested in specifics of the deal, you can check out one of my other threads here: https://www.biggerpockets.com/forums/12/topics/405686-best-turnkey-cash-flow-markets-in-2017?page=3#p3157106 (page 3, halfway down). Nothing goes exactly as planned and there will always be hiccups. In my case, it was missing garage doors. You can check that out here: https://www.biggerpockets.com/forums/67/topics/508085-missing-garage-doors?page=2#p3128910.
In March of 2017, I got started with a tiny investment into American Homeowner Preservation (AHP) Fund, which invests in real estate notes. Investors get 12% preferred returns if all goes well. You can read some funny posts about it here: https://www.biggerpockets.com/forums/70/topics/417171-american-homeowner-preservation-ahp-fund.
In April of 2017, I purchased my first 0.5 acre raw land coffee farm parcel with International Coffee Farms Corporation (ICFC) in Boquete, Panama. This was my first agricultural real estate investment that fit in well with the passive, turnkey management approach. It’s also non-correlated with the U.S. real estate market and provides even further diversification. Cash flow won’t begin for 3-4 years, but since I don’t necessarily need the cash flow at this very moment, I’m okay with waiting as the pro forma cash-on-cash returns over a 20-year time period are in-line with my return expectations. I also like the social sustainability component of the investment. Feel free to PM for more info if you’d like to chat about it.
In July of 2017, I visited Spartan Invest in Birmingham, AL and got to meet the team there. While I thought all the people were great individuals, their operation did not seem as well polished as MSHB and I honestly wasn’t very impressed with the properties that I viewed on the tour. I know they’re constantly working to improve, as we all are, and I will definitely keep them in mind for the future.
In September of 2017, I decided to go on the 2nd annual tour with the Belize Cacao Consortium in Belize. As they mention on several podcasts, if you simply remove coffee and insert chocolate, this is virtually an identical opportunity to the coffee farm parcel ownership opportunity. On this tour, I got to meet Keith Weinhold of Get Rich Education along with several other real estate investors, many of whom live in states bordering mine here in Kentucky. It was amazing to spend several days around other like-minded individuals and it was really motivating for me. From the newbie of the group, me, just getting started and only having a coffee farm parcel under my belt at that time, to folks on their 2nd – 4th rental property, to those who are doing syndications and are already financially free through REI. Amazing! I ended up buying two cacao farm parcels in a newly created self-directed ROTH IRA â another concept that I wasn't really familiar with until recently. It took months, lots of paperwork, lots of back and forth, but we finally got everything done.
In October of 2017, I got involved with my first real estate syndication / crowdfunding deal with Holdfolio (a 50-unit apartment deal) in Beech Grove, IN. At first, I was skeptical and got a lot of help from folks here on BP regarding analyzing the deal. At first, the terms didn’t seem all that favorable to investors, but after some changes, I decided to move forward. You can read about that deal in this thread: https://www.biggerpockets.com/forums/88/topics/472840-crowdfunding-50-unit-deal-are-these-fair-terms?page=2#p3028884.
In December of 2017, I decided to get involved in my second syndication / crowdfunding deal with Holdfolio â this time on an 80-unit apartment deal in Indianapolis, IN. The terms for this deal are almost identical to the one above and they really seem to be doing great things. These fit in line with my goals of passive, hands-off real estate investing with a focus on buy-and-hold strategy. I wouldn't be able to / feel comfortable at this stage in my REI career taking down a deal of this size on my own, so I'm happy to be able to be a part of it via syndication.
Some people will look at the above and claim it's not really real estate investing. They are likely the types that are able to / want to be more hands-on with their investing and can likely generate higher returns. You also need to factor in your time. For me, I'm happy with continuing in my full-time career and investing on the side with the primary goal of passive cash flow. I'd really like to continue leveraging money (like in the Memphis SFR) while interest rates are still low, so I will likely slow down on the syndication / crowdfunding and all-cash (parcels) purchases in 2018, bringing my focus back to turnkey SFRs. Looking back on 2017, I'm happy with the mix of REI investments I was able to get involved with and hope to continue to build with each successive year.
In 2018, I am looking to:
- 1.) Purchase second turnkey SFR with MSHB in Memphis, TN (am told I'll be up on their waitlist again in February, 2018 â by the time we go under contract, they rehab, and we close, I'm hoping by summer, 2018). Possibly get a third SFR with them by end of 2018, depending on waitlist.
- 2.) Expand into my next turnkey market – considering Missouri at the moment, but open to others. Trying to stay away from the coasts.
- 3.) Continue my REI education via BiggerPockets, reading books, listening to podcasts, etc.
I hope you enjoyed reading this. Feel free to share your thoughts. Happy Holidays!
Longest post ever. But awesome job jumping in. Good luck in 2018.
First one is the hardest. It gets much easier time!
I go to several real estate events and local REIA's, there are so many people who never take action. Congrats.
Congrats and good luck!
Great Job Mark!
@Mark S. great post mark! I am in the paralysis/analysis stage right now...I have looked at several properties 2-4 units and couldn't make the numbers work or was concerned over age of building, etc. I have attended a few REI meetings here in Pittsburgh and was impressed with the content and amount of people who showed up. they have a mentor program and I think I am going to sign up, just to help focus my interests. like you I have listened to all the podcasts and read extensively, but the problem is there are so many ways to be successful in REI, at least thats what I keep explaining to my wife ;-)
Yours is just another example of different ways to achieve financial freedom, help retirement etc.
best of luck, hope to crack the seal this year!
There is analysis paralysis @John Bucknum , but then there is patience in finding a great deal. Easy to confuse the two. I wrote a blog post titled 'Purchasing Our First Duplex', where I talk about this specifically. I want to encourage you to take the next step. Are you evaluating opportunities and walking away or are evaluating opportunities to the point where the #s DO make sense for you & your goals and then making offers? Reading into your post, sounds like your next step is to make an offer. Am I wrong?
Congrats @Mark S.
Right just buy with cashflow and then learn along the way.
hopefully not hijacking the thread here:
@Jay Helms thanks for the reply. I think you are right. I think the numbers are making sense and in fact, a couple of the properties I looked at, I believe, had more potential than what the seller was seeing, i.e. one property listed as duplex, but had a small cottage in the back of the property which could also be rented out, and appeared to be at one time. However, i just joined the WPREIA here in Pittsburgh and they have a mentoring program. In my case, I think this will be beneficial for me for several reasons
1. I don't know what I don't know
2. I think it will help focus my efforts. I see so many avenues to REI but want to pick the path that can get me to my goals most efficiently.
3. hopefully fast track my networking, as this is an area that I am probably weak in, I am not the one to start conversations in a group of people.
I am looking at it from the perspective that it is more effective and efficient to learn a new skill with coaching/mentoring than to learn through trial and error. For instance, when I wanted to improve my golf game I went to an instructor, and they were able to point out things I was not aware of and help to focus my time and efforts into productive practice sessions.
hope that makes sense and sorry for the long reply..
@Mark S. Great post, and love the candor in your review of you different investment experiences. A lot of our investments overlap except for some of the foreign investments. As a fellow Richmond, KY native, great to see you succeed and learning.
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