How do new investors compete with the top dogs?

How do new investors compete with the top dogs?

Hartford County, CT · Member since 2019 · 6 posts · 5 votes

Established, long time investors and large investment groups have clear advantages over new investors like myself, particularly when it comes to acquisitions. Extensive buyer / seller lists, capital to pay cash for properties, consistent wide spread marketing...not to mention people doing it full time while many of us beginner investors are working at it part time on top of our 9-5 jobs. 

When you're just starting out, the cash is hardly flowing, and saving up for a couple of years to put that next down payment on a duplex you found on the MLS doesn't feel like it's cutting it. But finding motivated sellers to wholesale, flip, or BRRRR feels impossible when everyone knows that all you have to do is google "cash for houses" to get an offer. How many motivated sellers are sitting at home thinking "if only someone would send me a letter offering to buy this place!"

I'm trying to lose the scarcity mentality here...but how have others just starting out managed to scale beyond their first property to the first 5 - 10 doors?

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Andrew SyriosPro Member
Moderator
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
6y

There are a lot of properties out there and you only need to find one to start. There may be a lot of "big investors" but even the biggest rarely buy more than 10 a month (other than hedge funds, who usually buy in bulk anyways). There are lots ands lots of cracks to slip in as a new investor.

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  • Real Estate Agent · Phoenix, AZ · Member since 2019 · 80 posts · 30 votes
    6y

    Hey Nate,

    Honestly, I think the best way is to partner with people who have money. Learn how to analyze deals really well, then present them to friends/family/coworkers who you can pitch to. Thats a way to go from $0 pretty quickly if you find the right deals. Thoughts?

  • Rental Property Investor · Cincinnati, OH · Member since 2020 · 380 posts · 588 votes
    6y

    @Chris Risi I agree with you. Also, it helps knowing a well connected Realtor in the area. My Realtor is always sending me gems before they go on the market. Ask your friends and family who they use and start interviewing. 

  • Hartford County, CT · Member since 2019 · 6 posts · 5 votes
    6y

    @Chris Risi @Tanvir Sattar 

    Thank you both for the replies. I think you're right, even if finding partners as a new investor sounds like a tall order. I guess it's time to double down on my local networking.

  • Real Estate Agent · Phoenix, AZ · Member since 2019 · 80 posts · 30 votes
    6y

    @Nate Hayes have you used the BP calculators on here? They are super helpful and you can download a nice, colored report for each deal you analyze. Its a helpful tool to help convince someone to give you their money to invest with you :)

  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    6y

    There are a lot of properties out there and you only need to find one to start. There may be a lot of "big investors" but even the biggest rarely buy more than 10 a month (other than hedge funds, who usually buy in bulk anyways). There are lots ands lots of cracks to slip in as a new investor.

  • Member since 2018 · 200 posts · 123 votes
    6y

    @Nate Hayes you've gotten some good advice but don't under-estimate the hustle.  You have to want it more than others.  You have to be willing to do what others aren't willing to.  You can get there but you have to hustle, network, be creative and be determined!  Keep working and keep dreaming.  You'll get there. 

  • Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
    6y

    @Nate Hayes those advantages exist, absolutely but real estate is one of the few areas where you can level the playing field a little by being the expert in a particular area. City, neighborhood, bloc, house. That brings value to u and others.

    And if you know zoning codes you will see opportunities others dont

  • Realtor · NY · Member since 2020 · 167 posts · 169 votes
    6y

    @Nate Hayes, there is hope for us all, starting local really helps, the possibility that a top dog will sniff out a  deal 1 mile from you faster than you is really down to your network in the area, and part of your network should be lenders too...you'd be shocked at the 'power' you can command if you put a juicy deal under contract. Money wont be the problem. 

  • Flipper/Rehabber · Lakeland, FL · Member since 2019 · 131 posts · 91 votes
    6y

    @Nate Hayes if you don’t have capital, time, or knowledge - then you are going to need to partner with someone. I’ll be honest - I have a good friend that wants to partner with me but she doesn’t add anything to the game. No expertise - no liquid capital - no time. So you are going to have to put something in the deal - many people start out by giving their time and then they learn so later they will have expertise.

    No cash - you might want to start in wholesaling because you don’t need capital.

  • San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
    6y

    I so agree with @Joanne Eriaku.  The deals I got were because I knew the local market.  I was patient, I studied, I watched certain properties, even, that I saw sitting there and sitting there, and I saved up.  I learned what it cost and what was involved in putting in wells, and roads and septic tanks, I learned about homeowners associations - everything that was involved in the properties I thought I might be able to afford after I saved and if the market came back down, etc.

    So, don't be in a hurry.  Take this time to learn, learn, learn, watch, watch watch.  Then, when a truly good deal comes along that maybe nobody else is paying attention to - you will KNOW, because you are educated, that it is a deal worth investing your hard-earned money on.

    I don't buy into the idea of convincing other people to give you money, before you have proven yourself to be a winner.  And the way to become a winner is through education.  So, educate yourself, save, be patient and wise.  And it will pay off.

  • Investor · Orlando, FL · Member since 2019 · 19 posts · 19 votes
    6y

    @Nate Hayes work hard and read. You don't need to buy big to retired wealthy. One door a year sounds doable. Money wise investors are out there. Tell everyone you're an investor and sooner or later someone will want to know more. They need to trust you

  • Ian WalshBusiness Member
    Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    6y

    Find good deals.  Top dogs find good deals , are consistent in process and execute .  That is the only real difference in the end.  You are also not 'competing' with other investors.  That is a distant thought.

  • Rental Property Investor · OK · Member since 2019 · 126 posts · 114 votes
    6y

    I've found that just by talking about real estate with friends and co-workers, word has spread. People have started mentioning homes they saw for sale on their way to work or their friend who wants to sale their place. Usually, the "deals" aren't great from an investor's perspective, but I'm getting more practice at analyzing the properties none the less. I am always looking for new properties. Some drive for dollars, I've started running for dollars. I'll get some exersize while getting a feel for the neighborhood a property is in. Finding the right realtors is also a big plus. I have a couple realtors at the same brokerage I work with and they know what I'm looking for. My best deal to date was from one of these realtors alerting me to a property that fit my criteria and was an absolute steal. Don't give up! Rejection is part of the game, start making smart offers and be happy when they say yes or no. 

  • Jason G.Pro Member
    Rental Property Investor · Long Island, NY · Member since 2015 · 434 posts · 495 votes
    6y
    Originally posted by @Nate Hayes:

    Established, long time investors and large investment groups have clear advantages over new investors like myself, particularly when it comes to acquisitions. Extensive buyer / seller lists, capital to pay cash for properties, consistent wide spread marketing...not to mention people doing it full time while many of us beginner investors are working at it part time on top of our 9-5 jobs. 

    When you're just starting out, the cash is hardly flowing, and saving up for a couple of years to put that next down payment on a duplex you found on the MLS doesn't feel like it's cutting it. But finding motivated sellers to wholesale, flip, or BRRRR feels impossible when everyone knows that all you have to do is google "cash for houses" to get an offer. How many motivated sellers are sitting at home thinking "if only someone would send me a letter offering to buy this place!"

    I'm trying to lose the scarcity mentality here...but how have others just starting out managed to scale beyond their first property to the first 5 - 10 doors?

    You aren't competing with long time investors or large investment groups. Drop that thought now. Secondly, this isn't a get rich quick scheme. REI takes decades, not years. Save money, buy, repeat. By the time you hit normal retirement age you will have a nice passive income stream. The faster you can accumulate money to spend on REI, the faster you can expand, and maybe retire. For many that means advancing in their day job, others it means taking on partners that have capital, to you it may mean something else.

  • Dave PoeppelmeierBusiness Member
    Realtor · Maumee, OH · Member since 2015 · 491 posts · 722 votes
    6y

    @Nate Hayes I agree with everything said here, but find a good Realtor that deals with Investors primarily, so they know what you're looking for instead of finding your parents their dream home. We started out simply with a Realtor who knew investment property and the MLS, and took personal 30 yr mortgages out that we still have to this day. Its not as easy as it easy as it was, but there are gems in there. Find some listings from your Realtor or even go to Realtor.com and find houses available and plug them into the calculators here on BP (the Pro membership is worth it). You'll get a sense as to what works for you for your goals, whether it's appreciation vs cash flow, SFH vs Multifamily, etc. But the biggest thing to know is that there is plenty of Real Estate out there for everyone, you just have to keep looking.

    Keller Williams Citywide | Dave Poeppelmeier534 Reviews
  • Rental Property Investor · Albany, NY · Member since 2019 · 31 posts · 19 votes
    6y

    The hustle is real! Put yourself you out there - It's a numbers game so ultimately you will find a great deal if you give it time and don't get discouraged when you lose a deal. 

    Also, if you find ways to get creative and unique you will stand out. 

  • New to Real Estate · NJ · Member since 2020 · 124 posts · 63 votes
    6y

    @Nate Hayes There's quite a bit to unpack here, but luckily you've received a lot of good comments.

    One thing to remember, "big-time" investors, those with millions to throw down, (most likely) aren't looking for one duplex, or a lone triplex or quad. Most people searching for their primary residence aren't looking for those either. So the "competition" isn't as crazy as you might think.

    I'm still very green, but here is what is/has been working for me. I have been wanting to get into real estate for years now. I have been putting money away, saving as much as I can for quite some time. Now, I have more than enough for a downpayment that, in most areas, would be enough to buy an entire home (but that's NJ for you).

    Since I wasn't born with money, I have relied on hustle. I don't have a mentor, and I move constantly, so finding one is nearly impossible. Again though, I have hustle. Since January, I have devoured seven real estate/business books, probably 200+ hours of real estate podcasts, honed in on a target market, and am figuring out exactly what my requirements are.

    Currently, I am closing on my first "duplex." I put that in quotes because, by reading through my counties bylaws I figured out I can legally inhabit the basement level and live there, effectively making this a triplex. When searching for this property, everyone told me that wasn't possible, but I like to research things for myself. Again, hustle.

    Next week, I'm starting a real estate program with some of the top professionals in my area. All of my money is being set aside for investing, so I found a way to get this all paid for through different sources such as grants and assorted programs.

    The point of saying all of this is as @Brandon Turner puts it, find your "unfair advantage". For me, it's the unrelenting amount of research I put in. For you, it may be friends in the industry, or the ability to talk to anyone about anything. Find out what it is and run with it. Don't worry about everyone else, just focus and you will find your success.

  • Rental Property Investor · Woodstock, GA · Member since 2017 · 517 posts · 772 votes
    6y

    The more longtime investors I meet...the more I realize there is an abundance of opportunities out there.

    just talked to a guy today about his vacant house I may buy from him. He has been spec building 20 min from me for 40 years. He has just been chugging along. As friendly as can be.

    Notice abundance ...not scarcity :)

    ---

    1. Forget working with a realtor..you'll overpay, lose money her discouraged

    2. Have 5 marketing tactics to find deals. Execute consistently 

    3. Find a deal and find long term investors. Show them the deal.

    4. Sell them deal or get funding

    5. You are now "in" with the players 

    ...

    Most people give up on step 2

  • Rental Property Investor · Gulf Breeze, FL · Member since 2014 · 1k+ posts · 733 votes
    6y

    Great question @Nate Hayes and I love that you recognize obscurity as a competitor. Quick question, in your most immediate circle (the 5-10 people that you spend the most time with), when's the last time you told them or reminded them about your REI focus?

  • Real Estate Investor · Springfield, MO · Member since 2017 · 1k+ posts · 2k+ votes
    6y

    @Nate Hayes, hi and welcome to BP!

    Hustle, grind, grit...+ some dumb luck that will happen if you're ready to take advantage of it.  I'll give an example of dumb luck then tell you about how the first 3 primed me to take advantage of it.

    I've been in this game since 2005, but my first big break came around earlier last decade when an older gentleman who already owned 100+ rentals inherited his father's portfolio (also 100+ units). He already had a construction business and more tenants than he really wanted, so he sold off the whole thing. I was one of the ones who found out about him and bought some. Steals! 5 SFH units, livable "as is", for under $100,000. Plus he 100% owner financed them all at 4% interest. He wanted them sold yesterday.

    The "big boys" never got anything from him, so how did I out-compete them?

    Simple, I didn't.  I asked my handyman one day if he knew anyone who was selling rentals.  He knew the older man from doing work on some of his houses.  Bada boom!  Is there anything magic about that?  Not really, other than I was in the game.

    So why are hustle, grind and grit important?  They are what got me in the game.  If I hadn't gotten in the game in the first place, I'd never have heard of the deal.  Plus my rentals were all in good condition and returning decent cash flow.  Once I showed the Seller I was trustworthy, he was fine with doing the owner finance.  I didn't have to really negotiate much at all.  Just being a responsible person and polite worked wonders.  Hustle, grind and the grit building and managing my portfolio set me up for further success.

    As others have said: you have to want this.  It's easy to read a blog or listen to a podcast about FIRE and going from 0 to 300 doors in 2 years and get excited.  My advice is start analyzing at least 50 properties per week, making 10 or so offers, and get used to being turned down 49 times out of 50.  2 "yes" answers out of 100 attempts is enough to put you in the top 10% of REIs in your market if you are consistent.

  • Hartford County, CT · Member since 2019 · 6 posts · 5 votes
    6y

    @Jay Helms

    My girlfriend is certainly sick of hearing about it...

    The real answer to your question is I'm sure I don't bring it up enough. I've mentioned it once or twice, but since I'm just starting out I think I'm afraid of talking a big game about my hopes and dreams and then falling flat on my face. I definitely need to bench my ego and potential hit to my pride and discuss my plans and interests with more people, because as others have pointed out, nobody can help you if they don't know what you need.

    So, great question. Thanks for the therapy session :)

  • Hartford County, CT · Member since 2019 · 6 posts · 5 votes
    6y

    @Erik Whiting

    What is it they say, luck is when preparation meets opportunity?

    Its definitely a numbers game. Maybe I'm overthinking the process of finding deals. Not to say it is quick or easy - but if I'm networking and analyzing and offering at high volumes, I'm bound to "stumble" on something eventually.

  • Real Estate Investor · Springfield, MO · Member since 2017 · 1k+ posts · 2k+ votes
    6y

    @Nate Hayes, yep.  Real estate investing will do one of two things to your ego: inflate it or deflate it.  Sometimes both in the same day.  Eventually, you learn to look past a lot of things that upset or shock you.  The first time a tenant cussed me out for having the audacity to remind him he hadn't paid his rent and was 2 weeks past due was an eye-opener for me.  I was raised to be responsible.  Not paying a bill on time is a source of shame and I would apologize profusely and offer ways to make amends.  Not true with some folks.

    Yes, get out there are start doing your homework.  Also, I like the idea of finding an experienced investor you can tag along with.  Offer to do some grunt work for free like knocking on doors or running comps.  Lots of ways to learn.

  • Rental Property Investor · Gulf Breeze, FL · Member since 2014 · 1k+ posts · 733 votes
    6y

    You're welcome @Nate Hayes. This kind of stuff goes on in my mastermind. Always like seeing people challenged with their own thoughts. Also, two things: 

    1. you might need a new gf :)
    2. if you don't have experience you shouldn't be talking game at all. You should position yourself to seek and understand. Tell everyone you know "hey, I'm an aspiring RE investor. Do you know anyone I should be talking to about <insert niche>. Ive also found it highly interactive to post on social media, you never know who you might have a connection to. 

    Best of luck!

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