Hey everyone! I just finished listening to Episode 09 about how to start a business with no/little money. It sounded very rooted in the idea that @Brandon Turner always says that to be successful in Real estate you need two of three things; knowledge, money, and hustle. A couple of the key takeaways that I got were: 1) test an idea or product by selling it first before going into debt developing it, and 2) fail fast and fail cheaply.
I’m curious as to how people may be applying these ideas to their real estate investing business. What aspects of investing can you test sell and which aspects of investing can you fail at fast and cheap in order find a successful niche?
Something I thought about doing when I was just starting out trying to flip my first property was trying to “paper trade” my first flip. So in stock’s new people are encouraged to try to paper trade for a while before putting money in the game. They will start out with x amount of fake money and using that to buy stocks and then track their performance.
So with my flip what I wanted to do was look for a property that needed to be flipped. Once I found one I would analyze the deal. I would try to figure out what my costs and hold time would be. I would then set all that aside and I would wait for someone to purchase the property and actually flip it and once the property was sold, post-flip, I would look at what I thought I could buy it for, what my costs and hold times would be and then I would look to see if my ARV was the same as the sale price and then I would look to see if I made any money. If something didn't come out right then I know that I messed up in my figuring.
A big problem as you might of already seen is that could take months if not years depending on the extent of repairs and the length of time it sat on the property or it may have been something the owners wanted to live in so it never even was listed for sale.
What I would suggest if you want to do this, is I would find someone who is actively flipping a house. When they find a perspective deal you should ask them if you can analyze the property just for learning experiences. Annalise it separate from them so you can compare it to what they got and see how close you were to their numbers. Then follow that property throughout its renovation assuming the flipper moves forward with it after analyst. After the project is done compare what your estimated hold time was to their actual, as well as their construction costs. Then again figure out how close you were. Then again when it sells figure out how close you were to the ARV that you estimated in the very beginning.
This can be a fairly long process but if your learning from an investor that does high volume you could do maybe 10 properties like this over the course of 6 months or so and that would be one heck of a semesters worth of schooling. Also not much time invested into this.
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