Starting out, How To Proceed

[Justin Morris]

I've been posting a lot through my beginnings in REI and I'm trying to firgure out what the best course of action is at this point. I have two investors that are willing to invest in me but want to see a plan. The issue is I'm not sure if a business plan per say is the best way to present this idea to them. The reason I say that is I haven't done any deals and I don't have team of people behind me. I don't feel like I can build that team before I have the real capacity to do a deal. For instance I cannot go to a realtor in my area and say hello so and so I'm a wanna be investor and I want you to be on my team. Would you be willing to help me sell houses and pull comps for me when I'm buying? Because they will say ok do you have a house to sell now? I'll say no and they'll hang up on me. I feel like I need to do a deal first so my future team that I seek out during this first deal will know I'm for real and will want to create a long term relationship with me. That being said I think a better idea would be to come up with a plan to present to my investors on how I would do my first deal, my profit numbers and exit strategy. What does everyone think? I'm thinking maybe finding a real deal first that I could base the proposal around maybe the best plan of action for me. I'm open to all advise and suggestions. Thanks.

[Glenn Espinosa]

Justin Morris - It seems like you are between a rock and a hard place - I don't have a team because no one wants to work with someone who has no experience, but I can't build a team until I have experience...

My question is - How comfortable are you right now? Have you been told flat out "NO" yet? The reason I ask is that by your post you don't seem to have stepped out your door and put yourself out there yet.

Until you engage in unfamiliar and uncomfortable situations regarding real estate, you won't be able to grow.

You will be told "NO" numerous times before you get a yes. Each time try to figure out what the other person really wanted from you and take action into providing that for the next person. Many Realtors won't give you the time of day - thankfully for us there are many Realtors.

You have to figure out the value you bring to the table when building relationships and leverage those points. I paraded myself out like the next best thing to sliced bread when I first started my career. Did I lie to people and tell them I had numerous deals under my belt? No. But I didn't focus on that, instead I focused on what my plans where, how that person could be a part of my future success, and most importantly, what they stood to gain from helping me out.

As for the business plan - check out this BP article http://www.biggerpockets.com/renewsblog/2010/01/26/outline-real-estate-business-plan-step-success/

The business plan is exactly that - A plan that you will implement. You don't have to have a deal already done to write one. My advice is not to focus too much on it, rather focus on finding a great deal. Your plans will change and I think most lenders know that.

When you have zero credit, zero experience, zero money the main thing that will matter to a lenders will be the deal itself. When you find one, lock it up. Put together an investment prospectus that outlines the numbers and make sure you highlight what the lender will stand to make from funding you. During all this you also need to be working on networking with mentors, other lenders, Realtors, contractors, attorneys, title companies, accountants, designers, etc. etc. etc.

Eventually you have to get out of your front door. That's the hardest part. Get uncomfortable and put yourself out there.

I'm putting together a BP blog about this very issue so it's fresh in my mind.

Sorry if this is all pretty vague advice but I promise you it's true. Maybe someone can word it in a more step-by-step fashion.

Till then,

Glenn