Successful Investing while Holding a Full Time Job – Key #2: Doing Your Homework

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The second article in our series of six keys to successful investing while holding a full time job is the one I get the most push back on.  I don’t understand it, as I believe that it is very simple, yet people are always trying to cut corners or they try to outsmart the system.

If you are going to be successful investing while holding a full time job (and you have support of your significant other, see Key #1) you need to put in “The Work”.  I actually call it “Homework” as it seems easier to digest, after all we all have demanding full time jobs already.

So what do I mean by Homework, how do you complete the Homework and how do you know when you are done with your Homework?

First, what do I mean by Homework?

Because you only have limited time in the day or week given work commitments, about half of the homework can be done at home after hours and on weekends, while the other half of the work needs to be completed in the field in the market you have selected to invest in.

You need to become knowledgeable about your market, meet new people in your market that could be on your team, and you need to see at least 50 properties in your investment market.

50 properties? Why not 10 or 5? “Remember I am smart and I have no time.”

Do what you want, but remember, I said 50 properties.  I think an investor needs to see at least 50 properties before they can isolate a great deal from good deals.  If you see less than 50 properties you wouldn’t be able to collect enough data points, and you will be investing with incomplete information.

I still review at least 20 new properties a month and I have been doing this for 10 Years.

How do you complete the Homework?

Unfortunately, there is no short cut or easy answer.  Time and effort are required to scrutinize the details, call on your contacts, and finally, get on the road and review as many properties as time allows.

Learn the details about your market:  find out the price range of different type/size properties, expected rents for different type/size of properties, vacancy situation, neighborhood, cost of rehab, etc.

Expand and talk to contacts in your market and become an expert on the properties for sale in your market.

How do you know when you are done with your homework?

I think the best measuring stick for being done is the ability to answer the questions with confidence:

Can you go through 10 Properties in a day and rank them from best to worst based on your investment criteria?  
What criteria are you using to rank these properties? 

If you can do this you are well on your way to successful investing in real estate.  If you can’t rank the properties best to worst, I suggest you see more properties.

Another key to being done with your homework is feeling conformable calling a stranger.   Let’s face it, most real estate agents will be strangers the first time you call them, so make it a practice to call at least one new real estate agent a week.

In the end, by securing full support from your significant other and completing the required homework you will set yourself up for successful investing while working full time.

Key #3 is coming next week

Good Investing

Photo: Phil and Pam

About Author

Michael Zuber is an active buy-and-hold real estate investor who still has a full-time job. Michael is not an agent or broker, and simply uses the internet and agent relationships to drive his business. He currently averages at least one deal a month and has developed laser focus on his 5 step process.

10 Comments

  1. Michael,
    I wonder why people give you so much grief over doing homework. I think it’s essential. I move around a lot and it does take time to get an idea on the local real estate in which you live in. I just came from Texas and now live in Louisiana and even though the states border one another, there’s a stark difference in the price, size, and value of the homes.

    Tom

    • Tom

      I don’t know for sure but my guess is people want it to be easier than I make it sound. Because anyone can go out out and find a house and make a deal right. My point to them is go for it but you are a speculator or gambler and not an investor.

      I don’t know how else to do it as I believe you have to know a great deal from a good deal and it is tough unless you put in the work (Homework).

      Good Investing

  2. I drive a different route home each day from work. My different routes include driving up and down streets of my target neighborhood. On the weekends (weather permitting) my wife and I will walk through different neighborhoods. I have seen many houses with yard signs before I see the MLS listing.

    I am bad about talking to new realtors though. I use my buyers agent for that. When you had fewer houses, how did you approach the realtors?

    Jason

    • Jason

      Good News talking to agents is easy. In the begining I found a listing or two that an agent had and then I called them about it. I asked a couple of intelligent questions and then I let them know if I wanted to offer or if the price was too high I asked if they had any other deals that might meet my buying criteria.

      One wrinkle I go through the listing agents 75%+ and only use buying agent when I have to

      Good Investing

  3. Mike, you are spot on about this. I took three day trips to Phoenix, looking at 20+ houses each day, before finally buying one. I could only do so much due diligence on the internet before actually going out there and learning 10x as much. It was eye opening. It’s easy to buy any house, but it is hard to buy right.

    I admire your discipline in looking at so many homes in a month and and speaking with so many agents. It sounds like you are on your way to owning Fresno!

    • Johnson,

      Nice job completeing your homework. Nothing beats being on the ground and seeing lots of properties.

      I keep looking at new properties as the market is always changing. You have to stay engaged in your market or it will pass you by.

      Good Investing

  4. Thanks Michael.

    You are right. There is no shortcut to success.

    To clarify, are you saying to physically visit all 50 as part of the due diligence? I would say most of us novices aren’t experienced enough to just analyze info on paper only.

    Tod

    • Hi Lisa

      Nope I am not an agent or broker. I just build real relationships and I make money for my agents so they are willing to work with me.

      With time you will make them money and they will work with you

      Good Investing

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