ROI : The Expense of Knowledge, Time, and Experience and its Beneficiary

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ROI : The Expense of Knowledge, Time, and Experience and its Beneficiary

Matthew F.
Member since 2013 · 13 posts · 3 votes

I am 21 years old and a Real Estate Junkie. I quit my day job for a full-time night job, and another day job. I am a house mouse , a residential real estate agent primarily working with investors (big eyes and small pockets so they say). So that I can learn the ropes, raise some capital, and network for future investments.

Basically I subtract my pathetic social life from 2 months of my time which is equal to 600-1,000 dollar commission plus minimum wage from my overnight job. I really do not mean to whine and complain, But I am exhausted.

I love where I am, Sometimes I am actually helping people build "retirement funds" or wealth and real estate knowledge, while learning for myself, but right now I am barely breaking even on the investment of simply getting my real estate license, much less marketing expenses or the time/lack of sleep I put in to this.

I am learning about market trends in specific residential areas. I have even gone as far as to formulate and assign numeric values to such things as one side of vinyl on a house vs. brick in more than one zip code in my area or the number value of Laminate vs. Hardwood per square foot in a couple of different zip codes. So that I can sleep instead of comp !

I Know this is common for a lot of Agents in understanding specific areas they serve. I am truly focused on the return for my clients as well as ROI for my time and money, and not being stuck.

Thank you, If you are still reading, either it hits you where you are or you have been in similar shoes,

Please share your experienced advice.(be harsh if need be)

Am I being a baby ? on the right path, just suck it up ?

Should I take out a loan, get a bachelors in Real Estate Finance, and explore options ?

Maybe Work it out, learn the business more, get a brokers license ?

Aim to Sell commercial real estate as an agent/broker ?

Just focus on capital now, quit agency w/ stress, and save to invest?

Dump RE , get my series 7, become a stock broker, financial advisor and possibly hedge with real estate ?

What do you all believe should be my next step to Real Estate Holdings, or In general wealth or ROI ?

**If you've been there, please share, what would you do in my shoes ? The sky is the limit , Pilot is ready for absolutely anything, Engine 100 percent full. I just need to figure out (maybe be reminded) where the sky is !

and i'll post a picture because most people don't on forums, and i don't know if it will bring more traffic and/or solid experienced answers or not.

Regardless, Thanks for reading my plea in sleep deprived exhaustion at the very end of the week.

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Bill Gulley
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
12y

Matthew, you're just lost like all new agents, LOL

Don't advertise unless you have a listing to advertise, not on a thin budget.

Not sure what you meant by getting your client a ROI, that is a myth that a Realtor can determine a property's ROI, you can't, unless the client gives you their financial information and their use of cash. You're spinning your wheels trying to do financial calculations for prospects, don't even go there. If your clients are investors they will figure their estimated ROI.

If they aren't investors, sell the sizzle not the steak, a homebuyer isn't interested on financial returns (except that they'd like to know an average appreciation rate for the area) as they are living in the home.

People buy homes they don't buy houses, investors buy houses. It's the personal and sentimental aspect of a home that sells the home not the Realtor. And, investors buy investments they understand and that meet their investment needs, which you won't know, so your job is to advise, find potential deals and present them as units of inventory, as potential investments.

Walk and talk (I just posted about this, search BP for "walk and talk")

RE is a people business more than it is about dirt, sticks and bricks. You need to walk and talk face to face with people. You find deals through connections with people, if it's already listed or on the internet, that means it's in the public domain, you have to get lucky to get a deal if it's presented to the whole world.

Take your advertising dollars buying a few lunches with Realtors, closing agent/title folks, an appraiser, loan officer and mortgage brokers. Build a network of team players that can facilitate your deals. Find the personnel manager at companies that have a good paying work force, the goal is to get your name in the grapevine of industry, public and private organizations and government service areas.

Know yourself, you likes, hobbies, sports, education, religious and social niches where you feel most comfortable. Look for residential areas of like folks and know those areas. Wear out a pair of shoes, walk and talk those areas and introduce yourself.

All you young'ns out there are getting too caught up in technology, real deals in your area are made with people, again, get face to face.

Analysis has a place in RE, but you can get bogged down in irrelevant data. I could care less about the difference in value of siding materials, it's not that big of an issue that the intrinsic value of a 2 story all brick home over that of one of lap siding won't be obvious when you look at it. Your client isn't that interested in knowing the brick comps out at $4,200 more at that size as they are seeing the home and simply being more appealing to their eye. Buyers use their heart first, then their mind in buying a home, it usually comes down to affording a payment. Or, for an investor, the cash flow.

Get a formal education, degrees in RE, finance, accounting, engineering, construction management are all good for RE, lots of specialties.

Probably your next educational hump will be RE financing, know the basic guidelines and understand what your bank will do and why, most Realtors don't get to the why stage, that's important to understand as exceptions to rules are based on the why it is done this way. Finance is the key to the door of real estate.

Go walk and talk and meet people! Good luck :)

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  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    12y

    Matthew, you're just lost like all new agents, LOL

    Don't advertise unless you have a listing to advertise, not on a thin budget.

    Not sure what you meant by getting your client a ROI, that is a myth that a Realtor can determine a property's ROI, you can't, unless the client gives you their financial information and their use of cash. You're spinning your wheels trying to do financial calculations for prospects, don't even go there. If your clients are investors they will figure their estimated ROI.

    If they aren't investors, sell the sizzle not the steak, a homebuyer isn't interested on financial returns (except that they'd like to know an average appreciation rate for the area) as they are living in the home.

    People buy homes they don't buy houses, investors buy houses. It's the personal and sentimental aspect of a home that sells the home not the Realtor. And, investors buy investments they understand and that meet their investment needs, which you won't know, so your job is to advise, find potential deals and present them as units of inventory, as potential investments.

    Walk and talk (I just posted about this, search BP for "walk and talk")

    RE is a people business more than it is about dirt, sticks and bricks. You need to walk and talk face to face with people. You find deals through connections with people, if it's already listed or on the internet, that means it's in the public domain, you have to get lucky to get a deal if it's presented to the whole world.

    Take your advertising dollars buying a few lunches with Realtors, closing agent/title folks, an appraiser, loan officer and mortgage brokers. Build a network of team players that can facilitate your deals. Find the personnel manager at companies that have a good paying work force, the goal is to get your name in the grapevine of industry, public and private organizations and government service areas.

    Know yourself, you likes, hobbies, sports, education, religious and social niches where you feel most comfortable. Look for residential areas of like folks and know those areas. Wear out a pair of shoes, walk and talk those areas and introduce yourself.

    All you young'ns out there are getting too caught up in technology, real deals in your area are made with people, again, get face to face.

    Analysis has a place in RE, but you can get bogged down in irrelevant data. I could care less about the difference in value of siding materials, it's not that big of an issue that the intrinsic value of a 2 story all brick home over that of one of lap siding won't be obvious when you look at it. Your client isn't that interested in knowing the brick comps out at $4,200 more at that size as they are seeing the home and simply being more appealing to their eye. Buyers use their heart first, then their mind in buying a home, it usually comes down to affording a payment. Or, for an investor, the cash flow.

    Get a formal education, degrees in RE, finance, accounting, engineering, construction management are all good for RE, lots of specialties.

    Probably your next educational hump will be RE financing, know the basic guidelines and understand what your bank will do and why, most Realtors don't get to the why stage, that's important to understand as exceptions to rules are based on the why it is done this way. Finance is the key to the door of real estate.

    Go walk and talk and meet people! Good luck :)

    3Reply
  • John Moore
    House Flipper · East Stroudsburg, PA · Member since 2013 · 1k+ posts · 205 votes
    12y

    Get some prospects in your face and learn to sell. Don't attempt to dazzle a home buyer with numbers, show and tell. The idea is to make a living not starve yourself out of the industry. When you start getting cash flow you can then choose what area you would like to specialize in. I would talk to my Broker for guidance and if he can't give you the assistance you need, choose another firm. I don't mean to sound harsh but you need an income to keep the wolf away from the door, stop doing busy work and start making an income. Food for thought.

    0Reply
  • Andy Luick
    Real Estate Investor · atlanta, GA · Member since 2013 · 456 posts · 237 votes
    12y

    @Bill Gulley - offers you great advice that should be required reading for anyone BEFORE they even get a license. Technology is great and it can give you and edge but not when every agent, old & new, is probably doing the same thing. Try to partner with another agent who is also likely starving now and team up. Find someone with your same passion.....hard to find but they are out there. Most agents are part-timers for a reason....there's no money in it once you run out of friends and family. Learn to listen, develop a pleasing personality and service the heck out of the clients you do land. Knock on some doors and meet some people....every house I buy or work on as a contractor, i still knock on the neighbors' doors and introduce myself....usually landing more work for the contracting company or once in a while finding a deal. BUT - decide what you want to be and do.....and pursue it to it's fullest while burning the bridge for other employment opportunities. Sadly, maybe not you but most of your generation have never had to work hard to achieve much of anything...it's all been given to them. Break past this, thoroughly immerse yourself in your chosen trade and be determined to be the very best! It's sales and anyone can succeed who is determined enough to do so.....LUCK!

    0Reply
  • Bryan L.
    Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
    12y

    @Matthew F. - I'm not going to contradict what Bill said, but there ARE deals on the MLS. Over the years I have bought about 30 houses to rehab and most of them (all but 3 I think) have been MLS-listed deals. And one thing that I like about doing MLS deals is that it is less of a "people" business. Especially when I'm buying REOs (again, most of mine have been REOs). The key to finding deals on the MLS is that you have to hunt for them. The good deals on the MLS are not standing there screaming "I'm a deal, buy me" like most people think.

    0Reply
  • Matthew F.
    OP
    Member since 2013 · 13 posts · 3 votes
    12y
    Thank you all so much for the taking the time to read and help me out , I am going to print this page for all of its useful information to me , usually I am not open like this, but I know I need a little guidance, and telling it like it is every once and while, especially from some RE vets. I'm sure there are or will be other newer agents/investors that can relate to this as well, but Real Estate is a people business , lesson learned. I am taking it to heart , as well as everything else I've learned in this and my experience. At this point if I can eat from real estate I will be happy ... before I am thinking of making the "big bucks"or thinking I'm some sort of "analysis or numbers prodigy." -just being honest with room to learn , Thanks again everyone !
    1Reply
  • Matthew F.
    OP
    Member since 2013 · 13 posts · 3 votes
    12y
    Thank you all so much for taking the time to read and help me out , I think I am going to look back on this for a long time and use it , usually I am not open like this, but I know I need a little guidance, and telling it like it is every once and while, especially from some RE vets. I'm sure there are or will be other newer agents/investors that can relate to this as well, Real Estate is a people business , no matter how many times I hear it Its just hitting me in my sleep deprived almost starving state , learn from that and get out of your comfort zone , I'm trying to right now ! Im seeing more and more every day ! I am taking it to heart , as well as everything else I've learned in this and my experience. At this point if I can eat from real estate I will be happy ... before I am thinking of making the "big bucks"or thinking I'm some sort of "analysis or numbers prodigy." I apologize if this doesn'take sense , been up for 3 days ... And I understand what you mean about REO deals on the MLS being less personable and a little more of a number game , that's what I've been dealing with, and essentially why I was asking about education and reaching toward commercial instead , somewhat similar game , bigger numbers, and I'm ready to jump in any education I can. I think I just need to catch up on some sleep now it can be a dangerous game. Up for 3 days at a time trying to start as a full time agent , and working full time overnights. -just being honest with more than enough room to learn , Thanks again everyone !
    0Reply
  • Mark Ferguson
    Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
    12y

    Mathew, I have been an agent since 2001. I have a degree in business finance, which did not help at all with actual selling real estate but helped me run a business.

    Successful agents don't make their money selling houses; they make their money running a business. Use you analytical number side to analyze your business not roi on houses. Where are you getting the best return for your time, advertising, and type of client?

    I have 9 people on my team and sold 190 houses last year. There are many agents that make a lot of money. Being m individual agent that works with investor buyers is a tough road to make money. Investors are too needy unless they are experienced and dot need their hands held.

    Read the millionaire real estate agent by Gary Keller. If you just started it takes time to build a client base. Once you get a client base and hopefully a lot of listings, then you hire other agents and they make money for you.

    0Reply
  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    12y

    BTW, I don't disagree with Bryan, you can dig through the MLS and while it may not be a great deal, you can make it a great deal, so absolutely use it. My point was more to getting the deal before it hits the MLS, which already saves 6% in my area. The better deal will come from face to face meetings. :)

    0Reply
  • Matthew F.
    OP
    Member since 2013 · 13 posts · 3 votes
    12y

    I don't know why I haven't really done this before. I listen to the podcasts, have read a bunch of forum posts and blogs for a while now. , this direct info is helping a lot, and hopefully helping others as well. Thanks again everyone. I really appreciate it. I'm taking everything in ... And thanks Mark I actually have that book , I'll read it again and hopefully "really read it this time" . That's both encouraging and informative just hearing of the volume of success and in viewing it as a business in that realm of REO listing and investment. I don't know exactly why but I've almost been ashamed to call myself a salesmen but it's time for me to capitalize on that business , and take advantage of the REO deals in my path that I am familiar with .

    Thanks Again Everyone !

    0Reply
  • Jerry W.Pro Member
    Moderator
    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    12y

    @Matthew F. great post, there is nothing wrong with asking for advice. When you are young you have figured out what path you want to walk on. it is unfortunate but true that experience does count but it is hard to get. most get it from working jobs that do not pay a lot. Find out what you want to do. it may take awhile, then figure out what part of that pays the best and go after it.

    No offense but you seem normal. its easy to see other folks doing well but most of them walked the same path you are walking now. It always looks more fun or easier when we see them miles further down the path.

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  • Matthew F.
    OP
    Member since 2013 · 13 posts · 3 votes
    12y

    @Jerry W. Thanks, I appreciate the response. Reality is setting in, It's great to hear from experienced people who have been there before, and realize there are others doing this. I believe I am just beginning to understand the value of persistence. I know it's just the beginning I am realizing more and more that I don't know what I don't know. This is school I'll be in for the rest of my life. Thanks again to everybody participating. Very informative and encouraging.

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