I stepped onto the 6th floor of the Denver high-rise. It was my first day of my first real job fresh out of college. I sat down in my cool cubicle on my swively chair, dressed to the nines and ready to start my career. I had arrived… As the weeks rolled by it dawned on me that my goal through these years would be to work hard enough to get into the small office located directly behind me. The four walls and the window.
The extra 2 weeks vacation and another zero on my paycheck. There’s actually nothing wrong with this goal, if you enjoy your job and don’t mind the 9 to 5. But I wasn’t passionate about my work, and I wanted to have more control over my life. That day I became an entrepreneur… and the dream was born…
It would take more than ten years to bring me to where I am today. Some of that time was absolutely necessary and brought invaluable insight, experience, education and maturity. I was also learning to combat the voices in my head that said, “you have to work like everyone else, because there’s no other responsible way to earn a living” and “if you don’t want to work like everyone else it’s because you’re lazy and ungrateful”. Along the way, I met my equally entrepreneurial husband, Aaron, who also happens to be really wonderful.
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Your Birth Story
So are those same rude voices holding you back? Here’s some things that have been really helpful to keep us going along the way.
1.) Address your Fears
Most of us have some amount of fear about this business: losing money, leaving a “stable” job and steady income, entering a career viewed by others as risky, etc. It is vitally important to address your fears. Seriously… if you don’t, they will affect your business and cloud your decision-making until you do. Oh, and by the way, your “stable” job might not be as stable as you think. My last job was working with people that felt like family and I was still dropped like a bad habit.
2.) Be Decisive
Do your homework, make your decision, and follow through. Find a different way to move forward if you are still stuck. Ask for advice on BiggerPockets, do further research, and if necessary, shift gears so that you are able to make the decision.
I would now like to introduce our amazing “Whiteboard”. You’ve probably never heard of it. Ours is white and really big. You write on it with a marker that wipes right off. Amazing, right? Ok, seriously though, this thing has been life changing for us. Usually it’s a pros/cons session: pick one question that you are struggling to answer like “Should I pursue real estate fix and flip investing?” Write it at the top of the board and list your pros and cons. Rank each pro and con 1 to 5 in order of importance, 5 being the highest and tally the scores. I know it seems silly and we’ve all heard of pros/cons lists, but give it a shot. It has been a HUGE help in getting the thoughts out of our head and in front of us in an organized way.
3.) Balance Risk with Caution and Wisdom
The majority of us pursuing this career are willing to take a risk. But are you also cautious and wise in making your decisions? If you aren’t, you risk losing a ton of money because it’s really easy to fudge the numbers to make a deal happen. Take a little off the rehab budget, add a little to the resale value, shave a little off your profit margin. Not a big deal, right? Yea, maybe not when you’re closing the sale, but a big heaping deal when you sell it.
Learn to be cautious or find a partner who is. If you’re on your own, make sure to check and recheck your numbers. Don’t let your emotions sway your decisions. In my marriage, I’m more of the risk taker and my husband is more cautious. Thankfully, I’m not running this business on my own; I would have already bought half the houses we were interested in… well, only one, because I would have lost all my money, freaked out and stuck with the 9 to 5.
4.) Don’t Be Intimidated by Experienced Investors
You know the type – big condescending words, an elitist air, a tone that says, “you silly new investor, so ignorant and impressionable, how will you ever learn?” Just one such investor can make you think you are so different than a career investor and you don’t have what it takes. I’ve got news for you – IT’S NOT TRUE.
They were “newbies” once, too, and they are no different than you. What HAS set them apart from investors that don’t make it is hard work, perseverance and creative, wise decision-making. That’s it, learn those tactics and you/I have a good chance at being successful, too. AND, luckily, the vast majority of experienced investors on BiggerPockets are not that type. They are genuine, humble and REALLY helpful. They are willing to give their time, unpaid, and lend their expertise to us; what an amazing resource!
The Crazy Plan
I currently live in beautiful Santa Cruz, CA where the weather is eternally perfect and every beach is a toss up between the most beautiful and the most surf-able. Aaron is a corporate pilot and I’m a stay at home mom. We split time on the investing business when Aaron’s home. And our kids… well, they’re just really cute… and extremely energetic.
Santa Cruz has a high cost of living and we are blessed that Aaron’s job pays our living expenses. However, the past two years have basically been HELL. We don’t have parents in the area and my husband travels ALL.THE.TIME. Our daughter started asking a year ago “when is daddy coming home”, “why is daddy always gone” and through tears “I just wish daddy could be here”. IT SUCKS.
So, fast-forward to 3 months ago. We decided TO GO COLD TURKEY.
We have NEVER actually flipped a house, but we are moving our family to Colorado where I’m from and are not pursuing an income other than real estate investing. Wait… what?! We are launching a massive marketing campaign to motivated absentee owners and we’re just. going. to. make. it. happen. Not a slow easing in sort of transition. COLD TURKEY.
You’re crazy, you say.
You’ve lost your mind.
Irresponsible, foolish, careless, stupid…
Nothing I haven’t heard or seen in the reaction on people’s faces. But the thing is… I DON’T CARE. We only get one life and it isn’t very long. I am totally burned out with my current situation and I’d rather be the idiot who chased after my dream and failed than the person who stays in a job that is sucking the life out of them. As Willie (Duck Dynasty) says, “The only investments guaranteed not to pay off are the ones you never make.”
Ok, that was my brave speech, how did it go?? Here’s the other side: I’m FREAKING terrified, I’ve got 2 small kids, I’m moving back in with my parents, and I must be totally crazy!!! Ok, done…
So, now it’s your turn… jump on board, quit your job and GO FOR IT with us!!! Real estate investing is easy and you’ll make money really fast… Before you know it you’ll be backpacking in the Andes while your rental income magically deposits tons of cash into your account every month. Wait just a second. It might appear that we’re just “going for it” without experience, education or a plan, but we’re not. So before you put in your resignation and move into my parents’ basement with us, allow me to elaborate.
My husband has been a real estate broker for several years and can estimate the value of a house with the best of them. My background is in architecture and construction management. I have managed several million dollar commercial rehab projects with 3-month time constraints. We’ve been in and out of escrow a few times as we’ve tried to jumpstart our investing career using the MLS in this area. We’ve learned a ton from our mistakes and experiences. Most importantly, we have set aside eight months of living expenses and my husband has a strong pilot resume if needed (and hopefully it won’t be).
But don’t despair; you’re not going to need years of experience and education if you don’t already have them. Just work really hard, gain a firm understanding of what you’re doing and build your business over time while you still have a job. Then set another timeline: the “When I Have Replaced my Income” timeline.
Your “Hopefully Not as Crazy” Plan
1.) Set a Realistic Education Timeline
Not too short, not too long, depending on your time availability. If you don’t set a timeline, you will be in perpetual education mode. So set a goal… or just be really desperate to get out of your current situation, like us, and then you don’t even need a timeline. You’ll just cram every piece of information into your brain as quickly as you possibly can.
2.) Don’t Forget to Research the Back End of the Process
If you’re planning to use marketing for your business and only research that part and dive in, you’re gonna end up in trouble. Once you do get a lead, the process moves really fast. If you don’t understand how to estimate the after repair value, rehab costs, and offer price you will end up paying too much for the house, overspending on the rehab, selling the house for less than you expected and losing your shirt or (even worse) someone else’s in the process. Not good… make sure you have a good sense of what you’re doing before you start and use the investment calculators on BiggerPockets to help you.
3.) Study Experts in Your Specific Business
Stalk the experts (not felony-style) on BP, read their blogs, look up their forum posts, study their websites, read their books. Learn as much as you can from them. Get a comprehensive book that is specific to your business; if you’re a rehabber get the book “FLIP: How to Find, Flip and Sell Houses for Profit” by Clay Davis and Rick Villani or “The Book on Flipping Houses” by J Scott (here on BP).
4.) Don’t Worry About the Money
If you don’t already have it, don’t be scared about raising capital. Aaron’s parents happen to be our main money partners, but you’d be surprised how many potential money partners we’ve met along the way. Start attending your REIA meetings and network with people on BP who are in your area. If your money partners don’t have enough capital to do the entire deal, line up a hard money lender. In our case, finding and setting up the hard money lender was really easy. Hard money can be a good way to get your foot in the door but not necessarily for the long-term.
Follow the Journey
You know when you pass a car wreck and you can’t stop looking? Let our mistakes be your car wreck as you continue to follow our journey. Wouldn’t it be cool if you didn’t make the same mistakes when it’s your money on the line? Follow us as we detail our decisions and what we are learning. It’s an entirely thrilling adventure, this life, isn’t it?
Comments? Suggestions? Where are you at in your journey? What is holding you back at this point? Leave your answers in the comment section.