Anyone who has read any reasonable number of my posts will know that I’m not a huge fan of real estate training programs (paid or unpaid) for brand new investors.
That’s not to say that mentoring, coaching and training doesn’t have its place – I actually think paid and unpaid training is great when used properly. But, in my opinion, the real value of organized training is after an investor has learned the basics of the business and has a set of well-defined goals.
Here are the three big reasons I don’t believe most new/wannabe investors should be working with mentors/coaches:
How to Invest in Real Estate While Working a Full-Time Job
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1. Newbies Typically Don’t Understand The Workload Realistically
First, the simple fact is, most new investors never complete a deal.
While that may be due to lack of knowledge/training, I personally believe that it’s because of something more fundamental – many new investors don’t understand the realities of investing and have painted themselves a more rosy picture than what is reality.
Some are looking for get-rich-quick systems, some are willing to work hard until they realize they don’t have a passion for real estate and some were just looking for something new to do.
Regardless, when there is a very high likelihood that you’ll never do a deal, it’s a waste of money to take paid training and a waste of a mentor’s time to provide you free mentorship. Better to be sure that real estate is for you before you waste any time or money.
2. Newbies Don’t Know Their Specialty
Next, most mentors and coaches specialize in one area of real estate (as do many investors).
If you find a coach or mentor before you know what you want to do in this business, they will very likely push you in a direction that may or may not be suitable to your personality and situation.
For example, let’s say you’re lucky enough to find someone willing to mentor you in buy-and-hold investing. You jump in head-first, thrilled that you found a mentor willing to train you for absolutely free. A couple months in, you realize that you’re not interested in buy-and-hold, or you come to the conclusion that you don’t have the financial resource to purchase rental property.
You’ve now wasted both your and your mentor’s time because you hadn’t done your homework upfront to determine whether buy-and-hold was where you wanted to be; instead, you let yourself get pulled in that direction before you were ready.
3. Newbies Need Time To Process New Information
Lastly, everyone learns at a different rate, especially when it comes to new information.
Learning real estate from the ground up is often compared to “drinking from a fire hose” – the amount of information when you’re just starting out is overwhelming, and can take a good bit of time to fully assimilate and organize in your head.
By starting with a coach or mentor, you’ll likely be pushed to learn the basics at a much faster rate than you can truly learn, and ultimately, you won’t get the level of comprehension and understanding of the basic subject that you probably want.
By starting out on your own, you can learn at your own pace (the basics aren’t very difficult…it’s just time consuming) and you don’t have to worry about getting overwhelmed trying to keep up with someone who you’re paying or who is volunteering their time to you.
So, now that I’ve hopefully convinced you that you shouldn’t be paying for coaching or enlisting a mentor when you’re first starting out, it’s probably reasonable that I suggest a methodology for learning the basics on your own.
The 10 Steps To Get Started In Real Estate Investing
Now, if you’re a wannabe investor, telling you what not to do probably isn’t all that interesting. So, let me tell you exactly what I would do if I were starting out again today, in 10 not-so-easy steps:
1. Take Inventory:
This is something that too few investors ever do.
They decide what type of investor they want to be before they every really think about the resources they have available to carry-out their plan. For example, if you don’t have any cash, note investing is probably not for you.
Likewise, if you have an 80-hour per week job, wholesaling is probably not your best choice of a secondary career. Or, if you’re not highly organized, you should probably stay away from flipping houses.
I recommend starting out by determine what level of FINANCIAL, TIME and PERSONALITY resources you have and don’t have.
In terms of Financial, do you have cash?
Do you have good credit?
Do you have access to friends/family with cash? Are you good at fundraising?
In terms of Time, do you have a job? A family?
Can you visit houses during the day?
Can you at least make/receive phone calls during the day?
If not, what is your night/weekend availability?
In terms of Personality, are you shy or outgoing? Are you a good negotiator?
Are you detail-oriented? Are you good at strategy? Are you a good manager?
These are the things you really need to think about before you even begin to consider a real estate investing career.
2. Learn the Basics:
This is one of the easier steps. I would start by reading The Ultimate Beginner’s Guide to Real Estate Investing to give you an idea of the different types of investing you might want to pursue.
3. Determine a Niche:
Once you have an idea of what you bring to the table and what types of investing strategies are out there, it’s time to think about what investing niche is right for you.
Do you have more cash than you have time and would be happy with reasonable amounts of relatively passive income? If so, buy-and-hold might be right for you.
Do you have access to cash/credit/partners, have a reasonable amount of time to spend working on projects and are organized and good at managing people? Flipping might be a great choice for you.
No cash/credit? Plenty of time? Outgoing and a good negotiator? You could be one of the few who are able to make wholesaling either a business or a stepping stone to other things.
If you don’t fit nicely into any of those buckets, there’s always Lease-Options, Sub-2, Note Investing, Apartments, Commercial, Self Storage and dozens of other strategies and niches you can choose from.
4. Start Reading All the Free Stuff:
Once you have a decent idea of the one or two niches that might be right for you, start reading everything free that you can get your hands on about that strategy.
There is no shortcut here. Certainly, you could have a coach or mentor walk you through the process, but as we discussed earlier, there is so much to be learned that there is no substitute for taking the time to read, read, read.
More importantly, this part of the learning process should be somewhat serendipitous. Pick something you want to learn about, do a search on BP, start reading, and then find 10 more topics that you realize you need to learn about.
Write those down and keep reading. Every tend things you read about will lead to 100 more things you decide you need to research.
The goal at this point isn’t to learn an end-to-end process – it’s to get a general overview of investing so that you can start putting the pieces together to form a picture of how the industry (and specific niches within the industry) work.
5. Purchase Books/Low-Cost Materials:
Once you feel like you have a reasonable grasp of the niche you’re interested in (you don’t need to have all the answers yet) and you’re reasonably confident that strategy is something you could be excited about and successful doing, you should feel comfortable spending a little money.
Pick up a couple good books on the topic or if you find some reasonably priced training course, go for it. While everyone’s threshold for investment into education is different, I think it’s reasonable to spend $200-500 at this point on various books materials that will help you put together the remaining pieces of the puzzle that you might still be lacking.
6. Join Your Local REIA:
This is a step you could have taken earlier, but again, until you’ve learned enough to be relatively confident that real estate is something you want to devote considerable time to, there’s nothing wrong with saving your money.
But, once you’ve chosen a niche and have a reasonable idea of how this real estate stuff works, it’s time to get out there and start networking with like-minded individuals.
One thing to keep in mind – many REIAs are filled with “sharks.” These are folks who are less interested in helping you make money than they are in separating you from your money.
I’m sure there are plenty of REIA people who are completely on the up-and-up, but in every group, there will be some who are less than reputable…and I find this to be more common in real estate than in the general population. So, be skeptical if something sounds too good to be true.
7. Attend REIA Sub-Groups:
Being a member of your local REIA is valuable, but I truly believe that the real value is in the Sub-Groups – these are smaller groups from the REIA that have separate meetings geared towards specific needs or niches.
This is where you’re most likely to meet other investors who are doing what you want to do, which is obviously the people you’re looking for. This is your opportunity to NETWORK.
8. Do Lunch(es):
Hopefully you’re networking throughout this process, and between online communities and local investing groups, you’ve met a few people who have been successful at doing what it is you want to do.
Assuming so, invite these folks to lunch…on you! Be honest – let them know that you’d like to pick their brain, but that you’d also like to build a relationship so that you can eventually give back to them.
Too many wannabe investors are so focused on what they want/need that they forget that others have limited time and resources and need something out of the relationship as well.
Even if all you have to offer is a promise of repaying the effort the in future, by acknowledging that you recognize the other person’s time is valuable, you’ll go a long way in setting yourself apart from all the wannabe investors whose every other word is ME.
9. Do Some Volunteer Work:
At some point during these lunches or coffee meetings, you’re going to hit it off with one of these investors.
You’re going to find that s/he’s doing exactly what you want to be doing, they the investor has a similar personality or a similar background or similar goals. When that happens, it’s time to focus on how you can help HIM (and in return, help yourself).
Once you feel like you have a reasonable connection with that other investor, ask if you can volunteer your time in exchange for being on the jobsite and learning the basics of the investor’s business.
Hopefully during that preliminary meetings you were asking questions that gave you an idea of where the investor was short-staffed or having difficulties – these are the areas where you want to be offering to volunteer. I promise you, if you offer to help solve the investor’s problems, he is going to let you try…
10. Get Promoted to Partner:
After a few months, hopefully you’ll start to feel like you have a better understanding of how the investor’s business actually works, and hopefully it’s a business that you’ve decided that you’d eventually like to replicate.
More importantly, hopefully you’ve proven to the investor that you are a valuable team member than continue to help him grow his business.
If the investor is a reasonable person, she’ll recognize that you’re not going to work for free forever. Also by this time, you should have a good understanding of what you can bring to the investor’s business, and if you’ve proven yourself invaluable to the investor, it should be easy to convince the investor that instead of losing you altogether, a partnership in some capacity would be in ideal next step.
Do these steps, and before you know it, you’re now leverage another investor’s business to generate income and/or cash flow. When the time comes, branch out on your own, or who knows, you may decide that continuing the partnership is the best long-term alternative.
Regardless, following this plan will get you to the point where you’re doing deals and have a firm grasp of how the business and the industry works.
It’s at that point where you might want to start considering finding a mentor or coach who can help take your business from the ground-level to the top floor…
Would you add any steps to the list?
Be sure to leave your comments below!