1. Partner Up and/or Hire Up & Hire Out
So much more gets accomplished when you have partners, or an assistant, or a team, or vendors or others with whom you're working. It's a lot more fun too if you're growing an investment firm or portfolio with a group of good, focused, and driven individuals. Trying to go at it solo will only get you so far - and it's gonna be way harder to grow something substantial. Partnerships get a bad rep but let's face it - you're gonna need to reach out and get help from someone at some point - so you might as well figure out how to work well with others. As a real estate investor you're a housing provider, a neighborhood beautifier, a job & opportunity creator, a leader... Embrace that stuff.
2. Know Your Why - Know Your Strategy - Know Your Market(s)
What's your main goal for investing in real estate anyway? Massive income? Passive income? Both? Time-freedom? Financial-freedom? How are you gonna get to it and who will you need in your circle and in your corner to help you get there? Does your strategy even make sense for the market you're targeting? What's a deal look like right now in your target market? If you have access to some capital and you claim you want to invest and you take the time to look at or review 30, 60, 90 deals and you don't pull the trigger on anything - something is off. Let's get clear on it - If your goal is to purchase B-class single family homes, utilizing the BRRR strategy and you want to be "all in" for the purchase & rehab at 70% of the ARV - how are you gonna find that right now?? If you and your agent or team review 10-20 off market leads (from wholesalers AND various sources) over the next month, and you determine what the ARV could be for each, what the property renovation needs & costs are, you run the #'s and then realize that for most of these the "all in" amount is more like 80 - 90% of the ARV - well then, you have a choice to make! We could go on and on down this rabbit hole but, I digress. :)
3. Invest for the Long Run
We're living in a very interesting time right now... I get it, people want or need to flip their money at first - fix & flipping is sexy - potentially making a large sum of money on a deal is super attractive! The opportunity to make as much on one deal that you might otherwise make in a full year of work is really appealing! Then what? If you want to do it again then you're gonna have to get back to it. Finding the deal, working with the contractors on the renovation process, reselling the property on the open market with the brokerage, paying taxes on your newly found fortune - all of this sounds like a pain in the rear to have to deal with over and over again. Wholesaling, fix & flipping, and even brokering deals for most investors is a means to an end. What is that end for you? My thought process for the most part has been - "Wow, if I'm gonna spend 2 - 8 months or however long it takes to get through the renovation of a property - why wouldn't I want to just keep the property and enjoy cash flow from it for the next 5, 10, or 20 years or maybe even longer?" Just sayin'. Having a long term focus will help you get wealthy. It'll also help you get through, more efficiently, whatever volatility the market may bring. Investing with a short term view can be costly and exhausting. Investing in real estate is very forgiving - if you have a long-term focus.
4. Leverage The Capital
Let's say you have access to a breezy $1 million dollars in cash, setting in the bank, and you want to purchase B-class single family homes, to keep as long term, cash flow investments. It'd be kinda fresh to go in with straight cash, pay for the renovations out of pocket and then rent the houses out and keep it moving, right? How many homes would that get you? Now compare that to going the traditional route on each purchase, putting 20 - 30% down payments up for each acquisition. The properties have to meet a certain standard for condition and value in order for the bank to finance the deal. Sure, you gotta jump through some extra hoops but you'll probably be able to get some decent homes that don't require as much in the way of updates or repairs. That part is neat. You might save time & money on some of the renovation projects as well. Regardless, consider how many homes could you acquire with that cool $1 milli using traditional financing? More than the straight cash route, right? Okay, okay, so what if you were to purchase said homes using the BRRR strategy - along with hard money - how many houses can you acquire now? Hard money lenders get a bad rep sometimes but the fact of the matter is that if you work with them, they'll fund such a substantial portion of the project - if not all of it - and the good ones will guide you through the process. That's why they can command such high rates. They're giving you an opportunity and you might just have to reframe how you view it - at least early on in your career... Some day you might become one. ;) What if you were to combine the BRRR strategy with seller financing? What about being able to purchase the homes using creative financing and then resale them owner financed? You may be starting to get the idea... It's all part of leveraging the capital.
5. Go to a Live Event
A good live conference can be positively life altering. Being in the same room with a bunch of super smart, really experienced, wealthy people - millionaires, and other go-getters can be really inspiring. These types of events will allow you to learn all kinds of cool stuff, network with some amazing people, stay up with with REI technology & trends, and it gets you out of your comfort zone - which will stretch you and help you grow. Especially, if it's out of state and you're forced to travel. This can make the whole experience even more remarkable and enjoyable - if you choose for it to be so. See what kind of cool sights you can see or venues you can drop in while you're in that place away from home. Maybe have a spa day or treat yourself to some neat stuff - kinda like a work & fun vacation mixed together a bit.
6. Get (More) Access to Private Capital
This is an absolute game-changer. It seems like most of the investors who are willing to talk about this in depth will admit that getting access to private money changed the entire trajectory of their investing career. Maybe that could be part of the reason why it seems so few talk choose to talk about it. lol. This can tie right in with leveraging the capital. With private money you may have way more flexibility and likely better rates & terms than you would for hard money or traditional financing. You may just have more overall control and say when it comes to your investing business. You'll likely be able to move faster on deals and you can be more aggressive, knowing that your overall costs to operate will be significantly lower. Then again there could be additional risks involved here and more pressure to perform well. You could be dealing with mom & pop, maybe some friends, colleagues & associates and perhaps other family money. It's important to treat it with the respect & care required. Right now we're in a unique storm where more people with money are wanting to put their capital into investments with a strong track record - the stock market has been volatile - crypto & bitcoin has been iffy lately - people want to invest and they may need someone like you to assist them. Long term real estate investing is so tried & true. See yourself as having the leverage here.
7. Utilize Seller Financing
This, too, is an absolute game-changer. It boggles my mind why more investors aren't using owner financing strategies. A lot of pros are mostly intrigued by the thought of being able to purchase properties using seller financing but what about on the back end!? If you're able to find, negotiate and then purchase property on notes - by all means, do it. Consult with whatever attorney or professionals are doing it properly - make sure that the paperwork is on point - and act diligently and with integrity. Right now, however, in 2022, selling houses on notes, aka installment sales, may be the best it's ever been. If you continually combine, what could be considered some of the "old school" tactics of creative real estate financing, along with some of the "new school" tools & resources - you will get wealthy. If you're able to buy creatively and then resell as such - you will get wealthy. Take your time - learn the ins & outs of this stuff - and then go put it to use - regularly. If done properly, you may never want to rent out any of your single family homes, ever again. :)
8. Make Your Overall Well-Being a Priority
This is a given - Maybe this should've been #1 on the list... Either way, it's 2022 and so much has happened over the last few years. It's okay to put yourself first and take time for yourself, when needed. Mind, body and spirit all need to be considered when referring to one's overall well-being. Do things that naturally enhance your energy. You're gonna need it as part of running a business and/or organization. Real estate investing is not for the feint of heart. At some point you're probably gonna lose money. You may even have to deal with splitting up a business and losing partners, relationships, etc. The stuff can get stressful. What are you going to do in order to unwind or decompress every single day? How are your eating habits? Are you exercising regularly? Data on getting adequate sleep is something that is coming up more and more nowadays. Same thing with mediation. Look into them both. We all know about the importance of a eating well, regular exercise, and so on. Actual taking the steps necessary to form the habits that ensure it is the hard part. It's okay to start small - it's okay to start over. Just. Keep. Going. :)
Lots of great advice in here. To specifically recognize a couple of points:
6. Get (More) Access to Private Capital - "It's important to treat it with the respect & care required." Absolutely, 110%.
#8 is so important, and it's not pointed out often enough in our real estate world! I'm glad you said it.