6 Lessons Learned in my first 6 months Investing
Hey BP. I wanted to write a post compiling six of the lessons I have learned in my first 6 months investing. This first half year has been a whirlwind and I have been fortunate enough to do several deals. So with that, I wanted to take a moment to share some of my learnings with the BP community. Please keep in mind all of this is just my opinion based on my very limited experience... so keep that perspective as you read. I too am still a "rookie".
1.) Have a foundation in honesty, transparency, and integrity.
Before i started doing anything my wife and I decided that no matter what we do, we were going to be honest and up front with people, and if that meant we don't get a deal or two, but end up helping someone, then we would be good with that. I have approached every relationship with this mindset. When i speak with a seller, I make sure they understand not only that I intend to make money on this deal, but how I will make money on the deal. I never want anyone to get to the closing table and be surprised that I made a profit on their home. Every single person has understood this and has been perfectly fine with how I intend to make a profit. What they are concerned with is how I am going to help them out of the situation they are in. Also if I meet with a seller who calls me from my marketing and they have a perfectly nice home in a great neighborhood the first thing I tell them is that they can get top dollar from the sale of their home with a realtor, and they most likely don't need to sell to me, because I will have to buy at a price where I can make money on the deal. I will even share a CMA with them so they can see what kind of money they can make on a sale. Sometimes this results in me referring a good realtor to them, and sometimes this results in me getting to the real reason they are looking to sell to an investor. But in either case it builds a good reputation for me, because they know that I am not there to "steal" their home from them. I want to help them, the best way I can, even if that means I am not the one making a profit.
2.) Don't chase a deal that makes you uncomfortable. There are plenty of good deals out there.
When I was first getting started the one thing I heard from people over and over again was "there are just no good deals left out there." Which is frustrating to hear for someone who has never done a deal. But i refused to believe this. There are just too many people out there successfully investing in real estate for that to be true. Once i started my marketing and leads started to pour in, I quickly realized that there is PLENTY of opportunity out there, you just have to be willing to put in the work to capitalize on them. This lesson really hit home for me when I put a home under contract against my better judgement at a price which was well above what i originally decided was my max. I compromised on my numbers in order to not let the deal slip away, and the second i signed that paper anxiety set in. I knew I agreed to pay too much and from that day forward I worried about how I was going to make it work. I spent a lot of time an energy trying to figure out what i was going to do with that property, when that time and energy would have been much better spent working to find my next profitable deal. Luckily for me, my bank would not loan on this property due to the price and the area of town it was in. I was however able to assign this deal to a cash buyer who was much more interested in this area of town and it all worked out in the end. But I learned a valuable lesson. The stress of chasing a deal is much worse than the stress of letting a potential bad deal go.
3.) Networking has been my most powerful tool.
Of all of the books i have read, marketing i have sent out, research i have done. My most valuable tool has simply been the networking i have done. The relationships that i have been able to build and leverage has been invaluable. I would not have completed a single deal if it wasn't for a relationship i built via networking. My house hack deal was found via a coworker who knew i bought houses. My first rental was purchased from a co-worker who found out i buy houses. My current business partner i met via my local REIA. My newest rental is being made possible by a relationship i have built from a local foundation repair company. The list goes on and on. I truly believe you can not be successful without a good team, and you build a good team by networking. Take every chance you get to tell everyone about what you are doing. Many deals come via word of mouth and even more deals close by leveraging good relationships. So reach out to people and take them to lunch. Attend your local REIA. If you don't have one, create a bigger pockets meet up! Do whatever you can to get the word out about what you are doing.
5.) Follow up with everyone!
I get several leads on houses and many of those leads do not actually pan out into an offer to purchase. Its very easy to just move on to the next lead once i know i'm not going to make an offer because the deal is too thin, but I've found its best to make sure and take the time to call everyone back and let them know why you are not going to make an offer. The main reason being its important to keep your word. If you said you will call back, then call back. But most importantly you never know who this person may refer you to. They may not have a deal you are interested in, but they may have a friend who does have a deal. And if you treat them right and keep your word, they may refer you to your next deal.
6.) Give back
I understand that this is a personal choice, but i firmly believe that you get back what you put out. As investors we are find ourselves in many situations where we can help people. We help beautify neighborhoods, we provide affordable housing, we help sellers out of difficult situations and we get to make a profit while doing those things. Starting my investing business has afforded me the ability to help others in ways I could have never imagined prior to starting this journey. I have been able to buy Christmas gifts for children in need, donate supplies to families who were devastated by a house fire, purchase electric lawn mower for a home owner who had an allergy to carbon monoxide. As you start generate some success please take the time to give back to these communities which you are working in. You will find that not only does it feel good to help others, but that it will come back to you ten fold.