All Forum Posts by: Rick Howell

“Investment is most intelligent when most business like” – Warren Buffett

If investing is better when conducted most business like, does it mean that more real estate investors ought to be investing in a more businesslike fashion? Should every real estate investor be investing as a business? What does that really mean? What does it look like? Does that limit the types of properties and strategies that can be applied? Where can help and support be found for building a more businesslike property portfolio?

What does Real Estate Investing as a Business Mean?

“Businesslike” investing suggests a less emotional, better organized, well thought out approach to real estate. Definitions of ‘business’ can range from describing a profession, to commerce and trade, to an actual company. All of these definitions likely influence Warren Buffett’s decision to be more businesslike in investing. It has certainly worked for him, and for his own prized real estate investments, and real estate companies. It could mean running a real estate company of some type, owning an investment (which is distinctly different from managing one), or just being more businesslike in every day investment and real estate decisions.

Why Should Investors Approach REI as a Business?

There are many practical benefits of taking a business approach to real estate including:

• Scalability
• Better true investment decisions
• More profitable investment moves
• Efficiency in organization
• Separating personal from investment finances, assets, and income
• Building substantial additional value within a business entity
• Tax reduction
• More free time

What does Building a Real Estate Business Look Like?

Not everyone envisions building a company and mounting an international conglomerate when they get interested in investing in real estate. So will you need an office, hundreds of staff, and have to go back to wearing uncomfortable suits again?

Most won’t.

Many simply want to generate some extra income, and perhaps build more wealth over the long run. Others aspire to building multinational real estate empires. Yet, what we are really talking about here is approaching investment with a businesslike mentality, and structure. Even for those wishing to go really big, most will find they can now operate a multi-million dollar company from their patios via their smartphones.

However, there ought to be businesslike characteristics regardless of size. This may include incorporation and forming a registered business entity, obtaining business credit and bank accounts, setting up a new business phone number, hiring professional vendors to help out, and having a real estate website.

What Types of Properties can be Invested in as a Real Estate Business?

Not all will incorporate as a C Corp, or LLC. Regardless, of which entity type is chosen, or none is used, every type of property is open to investment.

This may include:

• Single-family homes
• Small multifamily properties like duplexes, triplexes, and 4 units properties
• Apartment buildings
• Office buildings
• Industrial real estate
• Hotels
• Retail property
• Vacant land and lots

What about Real Estate Investment Strategies?

The same goes for real estate investment strategy. Virtually any real estate investing strategy can be formalized and systemized to create a business model.

These REI strategies include:

• Wholesaling houses
• Fixing and flipping homes
• Acquiring and holding income generating rental properties
• Commercial real estate investing
• Mortgage debt investing and note investing
• Private mortgage lending
• Options
• Buying, selling and leasing various real estate related rights
• New construction

Where can Real Estate Investors find Support in Building a Business?

The majority of new real estate investors may have very little experience in starting and running a real business. So where can they find help in investing more intelligently, and building a real estate business which can produce better returns, and build more wealth over the long term?

Simply relying on out of date books, and trolling online real estate forums may not be well suited for investors that want to invest intelligently and businesslike. Look for an organized real estate course and proven system that has synergy with your big picture goals. Build on this by seeking out a mentor or coaching program which actually offers business building help, or combines both real estate and business.

Is This the Best Approach for Everyone?

Certainly not all investors want to, or are suited to full time investing, or even running a real estate investment business. There is nothing wrong with that. Yet, all can benefit from taking a more businesslike and smarter approach to investment. This applies whether simply renting out your old home, flipping one or two houses a year, or investing capital in real estate startups.

Those that want the best results, with the lowest risk, and see the value in fast tracking to their goals, while avoiding the pitfalls will see the wisdom in educating themselves on this approach to investing, and will incorporate the best elements to suit their personal goals and aspirations.

Many people are still wondering whether or not real estate is one of the best investment strategies for long-term wealth building. Is investing in homes still a smart investment for the average individual? Is a home still the best investment of a lifetime for most Americans? If so, why are some pessimists still questioning the rebound in the news?

Behind the Headlines

Real estate companies will always boast about the benefits of acquiring real estate because it is their job. That is, unless of course, they have gotten into the rental business and make their money by touting the benefits of renting instead. Let’s be honest; statistics can be found and twisted to support any point of view and argument. Entire years of real estate statistics have been revised in the past, new indexes have been created to restart the clock, and even the national GDP was revised. Most don’t even bother to tune into job and unemployment numbers anymore due to how skewed different data sets have become.

Even though the most conservative figures show housing rebounding, especially in hot areas like San Diego, there continue to be doubters. However, it doesn’t take much more than a little common sense to figure out real estate is still the best investment for most of the population. This applies to affluent individuals with top 1% income, as well as those that need to pinch pennies. Stocks have continued to demonstrate extreme volatility and risk. While UT San Diego reports local real estate is still 50% undervalued.

In the stock market, plenty of Americans have lost 6 figures, literally overnight. Direct investment in real estate isn’t that volatile, and nothing is ever lost until a property is sold. For example; some Southern California homeowners saw their home values rise and fall on paper during the last couple of decades, but if they don’t sell for a few more years when prices exceed their previous peak, they will come out handsomely.

Invest in Real Estate, Even if You Can’t Afford Your Dream Home

One of the top excuses for many not to buy a house is that they can afford their ideal dream homes yet. Of course, unless they invest in real estate in some way now, the odds are against them ever being able to afford that dream home. Incomes haven’t been going up, but rents and home prices have. Those wanting to buy a home should not invest any money in stocks or bonds, but should prefer cash. Of course, in reality, cash depreciates too. It can be at risk whether it is in the bank or under the mattress.

Investing in real estate is the best way to build up more wealth and cash to buy that dream home. Can’t find a home you’d live in even for a few years? Then buy a rental property.

Many Americans are sadly being seduced into the lifelong renter mindset without realizing the horrific consequences it could be dooming them to. Consider those paying 50% of income in rent right now. Rents have been going up 20% a year in many places. If rent goes up another 20%, many could be priced out of both buying a home and renting too! Then what?

With Americans living longer, and with company retirement plans evaporating, they also need to consider where they will live for 40 years of retirement on limited income? Even legendary billionaire investor Warren Buffett, with all of his endeavors into energy, insurance companies and holding sizable stakes in companies like Coke and Wells Fargo, still calls his own home his best investment ever.

Awesome Travis!! Our entire team has had great results implementing these practices!!

TIME BLOCKING is the key!!!

Hello Travis!! 

Have you read the book "The One Thing?" by Gary Keller?

We can all agree that killing productivity is not usually the goal. However, many are doing just that—without realizing it. In this world of go, go, go, we are easily sidetracked, and we find ourselves very busy yet not necessarily making any progress. After all, “working hard” and “working smart” are not always the same. To take this a step further, “working smart” does not look the same for everyone. However, if you find you are spinning your wheels more than you are moving forward, take a look at these four common actions that may be to blame.

Working Without Breaks

Investors tend to approach their day with the “I’m not leaving this desk until the next deal is done” attitude. Great in theory, but not in practice. Extended periods of intense work can have negative effects on your productivity, including burnout. Instead, break large tasks into smaller goals, and take a quick break after you meet each goal. Working for 45-minute stretches (give or take) instead of for hours on end will ultimately allow you to clear your mind, grab an occasional snack or meal, and stay energized to meet your goals.

Social Media Distractions

Though it may feel like staying plugged into our social media accounts is a necessary part of our jobs, the constant alerts and updates just drain our time and energy. You will better meet your goals without distraction. Emails, Facebook, and others tend to be digital “rabbit holes,” with one “quick check” turning into more emails, more texts, more updates. Instead of that constant connection, work social media into your 10-minute breaks between chunks of productive “unplugged” time. If this does not quite work, use one of your 45-minute sessions on social media, and then unplug for a while. The important thing is to find the balance that works for you.

Finishing up “Later”

Don’t be fooled: if you start a project or task, you need to see it through. This is not the time for procrastination. If you have something you can wrap up today, do it. Property investing is full of long-term tasks, but you will find you have plenty you can do today, too. Once you start pushing off tasks, it gets easier and easier to keep pushing them off. Out of sight, out of mind. Working smart means not avoiding the things that are within your power to address today.

Multitasking

People love to claim they are master multitaskers. It’s a badge of honor. “Look how much I can do at once!” Unfortunately, people generally are terrible multitaskers. It is easy to have five tasks partially started. It’s very difficult to complete five tasks well and at the same time. Put your focus on one task and see it through to the end. Of course there will be times when you have multiple pulls on your attention. Investing is a complicated process, and not all tasks can be finished quickly. But when you are working on Issue A, work on Issue A. Don’t also attempt to advance the ball in Issues B and C if they can wait a moment. Your productivity will improve with some focus.

Property investing is competitive, and all good investors are willing to work hard. To get ahead of the competition, you must find ways to get more out of your day. By making small changes to your daily routine, you will see positive impacts on your overall productivity.

We can all agree that killing productivity is not usually the goal. However, many are doing just that—without realizing it. In this world of go, go, go, we are easily sidetracked, and we find ourselves very busy yet not necessarily making any progress. After all, “working hard” and “working smart” are not always the same. To take this a step further, “working smart” does not look the same for everyone. However, if you find you are spinning your wheels more than you are moving forward, take a look at these four common actions that may be to blame.

Working Without Breaks

Investors tend to approach their day with the “I’m not leaving this desk until the next deal is done” attitude. Great in theory, but not in practice. Extended periods of intense work can have negative effects on your productivity, including burnout. Instead, break large tasks into smaller goals, and take a quick break after you meet each goal. Working for 45-minute stretches (give or take) instead of for hours on end will ultimately allow you to clear your mind, grab an occasional snack or meal, and stay energized to meet your goals.

Social Media Distractions

Though it may feel like staying plugged into our social media accounts is a necessary part of our jobs, the constant alerts and updates just drain our time and energy. You will better meet your goals without distraction. Emails, Facebook, and others tend to be digital “rabbit holes,” with one “quick check” turning into more emails, more texts, more updates. Instead of that constant connection, work social media into your 10-minute breaks between chunks of productive “unplugged” time. If this does not quite work, use one of your 45-minute sessions on social media, and then unplug for a while. The important thing is to find the balance that works for you.

Finishing up “Later”

Don’t be fooled: if you start a project or task, you need to see it through. This is not the time for procrastination. If you have something you can wrap up today, do it. Property investing is full of long-term tasks, but you will find you have plenty you can do today, too. Once you start pushing off tasks, it gets easier and easier to keep pushing them off. Out of sight, out of mind. Working smart means not avoiding the things that are within your power to address today.

Multitasking

People love to claim they are master multitaskers. It’s a badge of honor. “Look how much I can do at once!” Unfortunately, people generally are terrible multitaskers. It is easy to have five tasks partially started. It’s very difficult to complete five tasks well and at the same time. Put your focus on one task and see it through to the end. Of course there will be times when you have multiple pulls on your attention. Investing is a complicated process, and not all tasks can be finished quickly. But when you are working on Issue A, work on Issue A. Don’t also attempt to advance the ball in Issues B and C if they can wait a moment. Your productivity will improve with some focus.

Property investing is competitive, and all good investors are willing to work hard. To get ahead of the competition, you must find ways to get more out of your day. By making small changes to your daily routine, you will see positive impacts on your overall productivity.

Make no mistake—when you decide to be a full-time real estate investor, you are starting a new business. The decisions you make at the beginning of your new venture have a major impact on your success. People in the early phases of any startup often find themselves the target of a lot of unsolicited advice. It’s important to learn how to filter out the noise and focus on what will truly help you be successful. Here are four proven ways to boost your business.

Make New Contacts

It’s all about whom you know. The more contacts you make, the easier time you will have in making deals. Don’t lose sight of the importance of building relationships with people in your circles. Relationships lead to deals. Deals lead to success. Property investors meet many facets of the housing industry, including:

• Real estate agents
• Property managers
• Mortgage brokers
• Attorneys
• Accountants
• Contractors
• Home inspectors

You never know where the next lead could come from, so get out and meet as many people as you can. Set goals to make a certain number of business contacts each week. Networking groups are also a great way to gain exposure.

Break through the “Rookie Wall”

This sports metaphor refers to first-year players who suddenly stop having the kind of success they did before they made it to the professional level. In property investing, rookies often think those first deals are going to come easily, and they get frustrated when they do not. Frustration leads to a lack of motivation. To break through this initial struggle, stay positive and rely on that network of contacts you have been building.

Look for Multiple Streams of Income

New investors generally want to be in the rehab world. However, with increased popularity comes increased competition. There are great deals to be had in just about any market, but that doesn’t mean they will fall in your lap. It takes time to identify, and then do your due diligence on, a great deal. While you are working on that angle, consider branching out into wholesale deals. Supplemental income will get you through lean times—and you may discover that you really like working in the wholesale space, too. Another option is to get your real estate license. Not only will this help you learn more about your markets and make contacts, but you can act as your own listing agent on properties you flip.

Keep an Open Mind

Starting a new business is exciting. Often, we go into a new venture with a mental image of how things should go. Do not get so focused on what you expected investing to be like that you miss great opportunities that are maybe a little outside of your expectations. This goes hand-in-hand with looking for multiple income streams. By exploring other avenues, you may find you prefer an avenue you previously never would have considered. Success comes in many arenas. Don’t be afraid to shift gears and explore new options.

Seasoned investors will tell you that one of the best things about this field is there is no set path. You get to decide what works best for you, and what doesn’t. By following these four pieces of advice, you can get your new business off the ground quickly, learn from mistakes, and build on your successes.

Thinking about real estate investing? Well, if you are reading blogs like this, you have probably put a lot of thought into it, and you likely have a lot of questions. So now what? You know you have a lot of work to do before you attempt your first deal, but it can be difficult to know where to start. While this is by no means an exhaustive list, the following questions will help you get started on your new journey.

Do I Need a Partner?

Partnering with someone else can be tricky. A great match can lead to great success, but a bad one can mean the end of your investing career. Whether you need a partner depends on any one of several factors:

• Are you lacking the capital you need to get started?
• Do you struggle with making industry contacts?
• Is there another key skill set in which you feel you are weak?

If you answered “yes” to any of these, a partner may make sense for you. However, remember that you don’t necessarily have to make that decision now. You can try going it alone first and consider a partner down the road if you aren’t sure about partnering right now.

Who do I Want to Work With?

Outside of the partnership question, you still need to decide who is going to be part of your larger team. For example, having a real estate agent you can rely on is important. Agents have leads, and if you have an agent who knows what he or she is doing, you will be well on your way. You will also want to get to know contractors or property managers, depending on what type of properties you plan to invest in—especially if you do not have the personal background to handle these tasks. Another key component in your team is a real estate attorney since there will be many legal contracts in your future.

How Will I Generate Leads?

Thanks to social media and the digital marketing avenues at our fingertips, finding leads has never been easier. But that doesn’t mean properties will fall in your lap. Start with a budget—this will dictate the marketing options available to you as you get started. If your budget allows, consider a direct mailing campaign. If not, start with social media and even Craigslist. Regardless of the channels you decide to use, have a strategy in mind so you don’t waste time or money.

Do I have Reserve Capital?

Even if you landed a great deal tomorrow, it will be several months before you see any income from that deal. Do you have money to live on while you get your feet under you? Nothing sours your outlook faster than lack of funds. Don’t fall into a trap of poor decision-making because you are looking for shortcuts to compensate for a dwindling bank account balance. It’s not uncommon for new investors to maintain their full-time careers until they get their investment business off the ground. Consider doing the same if you are not able to completely devote yourself to investing immediately.

What Do I Want from Real Estate Investing?

Investing is one of those fields that has many facets. If you have a clear vision of what you want your business to look like, you can shape your strategies accordingly. Maybe you want to build a portfolio of rental properties. Perhaps you are leaning more toward rehabbing a property or two per month. Your answers to these questions shape how you look at each potential deal.

What Don’t I Know?

As the saying goes, we don’t know what we don’t know. However, recognizing that there are questions you may not have even thought to ask yet is a step in the right direction. If you have a mentor, talk with them about what they wish they had known before they got into this world. If you don’t have a direct contact, do as much reading as you can. Find articles, blogs, and companies who are doing what you want to do and learn what you can from them.

You may have other questions beyond what is on this list. After all, this is a complex world; it would be foolish to jump in without doing what you can to prepare. But once you have answered the big questions, and the right deal comes along, you will be ready to act. Then, you will become a property investor.