Following the yellow brick road?

[Brian Clifton]

Good afternoon from Kansas...

First and foremost - to each of you who take the time to reply to us "newbies" - thanks - I see a lot of introductions on here and many of you veterans patiently engage with us, and for that, thanks - thanks for taking your time...

I recently sold my first business of 10 years and am in the midst of making a "career" change. REI seems very attractive, both from a passive and active perspective. I have liquidity from the previous business to invest and hopefully kick start this endeavor.

Biggest challenge - I don't know this industry, I am coming from a completely opposite industry in the technology field.

What I have, I think, in my favor, are colleagues from the RE industry with experience in both traditional RE sales (agent/buy/sell) but also experience in the REI side (one owning about 70+ properties and the other owning about 25 properties, both using their properties for passive cashflow)

With an engineering/analytical background, my greatest fear right now is the unknown and I am trying to shore up that experience through reading and listening to others, but as I have already discovered, its like taking a drink from the fire hose - way more knowledge than I can consume in a short period of time.

Questions I would pose to anyone interesting in providing some feedback -

- Best way to look for that first opportunity?  I am hopeful my RE colleagues locally will be able to bring me a couple of opportunities in the beginning to help me through the waters, at least the first couple times.  But I don't want to rely on others more than I have to - I want to learn and educate myself as much as possible.

- How quick is too quick? I mentioned having liquidity from past business ventures to invest. As a newbie, is 1 property a year, quarter, month, etc too aggressive? I don't want to try biting off too much at once, but I also wouldn't mind making this a full-time opportunity for myself if it plays out correctly. If it doesn't play out as a full-time opportunity, then I will start another business and allow REI to be a supplement.

- Best educational resource for learning the industry terminology and some baseline ratios to analyze an opportunity?

Overall, anyone who can point me in a positive direction for self-education, major help.  I know any business is about successes and failures.  I don't mind stumbling along my way - but I would like to try and avoid falling flat on my face if possible :)

Thanks in advance for your time! I know its the most limited resource we have...

Brian

[Bill Gulley]

Sorry to say, but much of all that is the  fire hose.

Like any industry you begin by learning about the product and the rules of the industry.

You need to learn real estate basics before you try to  learn how to deal in real estate.

I suggest you get a text book  for Realtors to study for their license, that is the meat of the industry in all states, but states are unique.

You'll then find out that real estate is unique and is not dealt with like personal property. Real property is valuable because it is unique, you're not dealing with Ford F-150s. Many investor stuff suggest dealings as if you were car salesman, so take care in what you read.

Read my blog on BP, How to develop a good BS Meter!

It will take about 2 weeks to go through that text book, study it. Most of it is basic stuff that has not or will not change, types of deeds, valuations, how brokers work, basic RE law, rights of ownership and aspects of due diligence. You need to be able to identify your market, don't blindly select some niche and bang your head trying to hammer some system  out, be flexible so you can profit in any environment. 

Then, learn financing programs, finance is the key to  the door in real estate. Learn the terminology, you're probably already aware of your ability to borrow and business finance. So, you're way ahead of most new to real  estate.

In recent years we've had a frenzy of new laws at the federal level, mostly with financing, tax changes and settlements. You don't need to  be an attorney but you do need to know applicable laws.

Sounds like you can afford an attorney, don't jump into investor strategies without asking one, if you're not an accountant, find one familiar with real estate, we have some here on BP.

 There are no secrets in real estate, we've been in this basic structure over a hundred years and there is nothing that is really new,  just a new twist to old methods, it's been done before. Don't pay for any secret to  get rich, real  estate is full of scammers, many are referred to as gurus.

I'll urge you to take a professional  approach, learn real estate, then how we deal in real estate. Select your mentors carefully, they should have some business wisdom, they also need to be current because taking advice from an old guy still doing things the way they did  20 years ago, they are probably out of step and that can be dangerous. 

I guess I'm saying, pay no attention to that man behind the curtain and don't go down the rabbit hole!

You need to know the rules of the game before you can play, much less be a star. :)