Posted about 3 years ago

THE number one most important thing in REI....

A magic pill???

This topic is probably covered all the time, and everyone has a different answer. I have thought about it for months now, because I knew I wanted to do a post (and video) about this topic. I have spoken to a few newer investor meetup groups, and invariably some form of these questions gets asked:

How do I get started? What is the most important thing to do when you want to get going? What do I need to know? I think they all have the same answer: The most important thing in real estate investing is……….knowing how to speak the language.

A little disappointing to hear if you were hoping that there was some titbit of knowhow, or some mathematical formula that would solve all the problems. I do not think there is, but there are a thousand guru courses out there that will try to convince you otherwise.

It’s all about communication, man.

That’s right, first and foremost you have to talk the talk before you can hope to walk the walk. I can tell you that will 100% certainty, no one will take you seriously if you don’t at least sound like you know what you’re doing. If you cannot communicate effectively to someone the type of real estate, the pricing (cap rate, GRM), ARV, what return, or what exit strategy, how can you hope to find an off market deal through a broker? Or convince an investor that you are a worthwhile investment of their hard earned money?

When ya feel it, ya feeellll it…

Maybe you have heard of those things, like cap rate and IRR, NNN leased property, tenants in common, or the BRRRR method. That’s great! But do you KNOW them? Do you have an understanding of these concepts that you could comfortably use in a conversation? How about well enough to illustrate an investment to your grandmother?

The funny thing about our language, it’s more than just words we use to communicate with. Language actually formats the way we think and perceive information. We are able to speak our native tongue fluently, giving us a way to share our unprocessed thoughts in a way that others can understand them. We understand the language, but more than that, we understand the meaning behind the words we are saying, and possibly the meaning behind the meaning. The same is true of anything, especially real estate and finance.

That even applies to math. I’ll admit, I am not great at arithmetic. I usually have to double check with a calculator. I even took Algebra I & II for a total of 5 years, and did college algebra and NEVER got it. Math was just not my thing…until I took business and corporate finance. Not only did I excel, like a lot, but I loved it! I realized that, while I never understood the meaning or point of a binomial equation, I understood fully what a bond was, why it existed, and what return on equity meant. I understood the language of finance.

I am not saying you have to learn complicated finance theory to be successful, but you do need to understand the language.

Rosetta stone??

No, it is cheaper and easier than that. You will learn the language of real estate by putting your ego aside, asking questions, and spending time with people who are willing to correct you when you’re wrong (like we did learning how to speak for the first time). Practice does make perfect, and you won’t even notice that when you’re “fluent” you will also have a much deeper understanding of how to make money with real estate.  I'd even be willing to bet that you won’t need an answer about how to get started…instead we will be asking you how you did it!!