I became a full-time real estate entrepreneur right after graduating from college. I started from scratch with wholesaling, and then a partner and I progressed to flipping, rentals, notes, master leasing and other niches within real estate.
Today, our main focus is on regular monthly income (we own and manage 61 units), and we continue to buy and resell deals each year for income.
My start was unique. Not many people have the luxury (some see it as a handicap) of starting as a 23-year-old. If I failed, I had no family to worry about, and I would have been satisfied to sleep in the back of my free and clear Toyota Camry — or in a tent. 🙂
So, in this article, I want to tell you a different story.
This story is about what I would have done if I had taken a totally different path, working in a regular, 9 to 5 type of job. I will assume that this imaginary job was paying me $100,000 per year — but after working there for 15 years, I become dissatisfied and want to leave and become a full-time real estate entrepreneur. To replace my income, I plan to build a business fixing and flipping houses.
My make believe story will have the benefit of my real world experience as a full-time entrepreneur and investor since 2003. The goal of my story will be to share how I would generate a new $100,000 per year career within the real estate business.
I hope my “what-if” story will give you some helpful ideas for getting started or for taking your real estate business to the next level.
Here in Part One, I will share Steps 1-3. Next time, in Part Two, I will include Steps 4-7.
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Step #1: Get My Mind Right
I know that my entire 7-step plan will fail if I don’t have the right mindset. So I focus on three strategies to get my mind right before I start.
First, I decide to make a strong commitment to myself to stay the course — no matter what. My path to success will likely be difficult (and even treacherous) at times, so I need every bone in my body to commit, or it will be too easy to simply quit or to stay comfortable.
To cement this commitment, I tell my supportive friends and family about the plan to quit my job in 12 months. This disclosure holds me accountable and puts pressure on me to get moving quickly. I also post the following quote by William Hutchinson Murray in a place I can see it daily:
“Concerning all acts of initiative (and creation), there is one elementary truth that ignorance of which kills countless ideas and splendid plans: that the moment one definitely commits oneself, then Providence moves too… Whatever you can do, or dream you can do, begin it. Boldness has genius, power, and magic in it. Begin it now.”
Second, I think long and hard about my WHY (great YouTube Video on the Power of Why). A “why” is all about emotion, not logic. A strong “why” is a valuable inner resource that you can tap into daily for energy and inspiration.
My “why” is about frustration and fear with my current situation — and about excitement for future possibilities. I’m tired of having someone else control my schedule. I’m frustrated with the negative people and the broken system within which I work. I’m excited about the challenge and the pride of growing my very own business. I’m giddy about the freedom to create a lifestyle business that meets my current and long-term financial needs.
Third, I work on a clear vision of what the future will look like. In other words, I think about what this money-generating business will do for me and my family. As much as I love the idea of entrepreneurship for its own sake, the business is still a vehicle that supports ambitions much bigger than itself.
For me and my family, the vision for my new fix-flip business is to become a well-paying fun and flexible vehicle that I can run as long as needed. In the short-term (1 year), the most important result of this business is to replace my $100,000 per year income from my current job.
In the mid-term (2-3 years), the most important result is to grow my income while decreasing my required time working in the business. This will give me more money and time capital to reinvest in family goals, like long-term trips and in long-term investments, such as rental properties. Over the long-term, the knowledge that I could always create a business and support myself and my family will give me confidence to grow and take risks in other important areas.
With my my mind focused, I now proceed to educate myself about making money buying and selling real estate.
Step #2 – Low Budget, Blitz Education
Like any other career field, I know I must educate myself in real estate before getting started. But I reminded myself that I cannot not learn everything I needed to know from books. This first stage will be my foundation, but most of my learning will be on the job, in the field.
So, the goal is to learn the essentials quickly so that I can get started. I want an education period of no more than three months before I start taking massive action. My education goal is also not to burden myself with unnecessary educational expenses or debt. I’ll focus instead on inexpensive or free education in books, online content and from local resources.
My plan is to replace my job income with real estate income, so my initial niche will be to buy and resell houses for cash.
Here are my initial sources of education:
- State Real Estate Licensing Course and Licensing Exam
- Focus: To learn about legal basics, contracts, and transactions
- Time: 30+ hours
- Cost: $500
- Bonus: Joining the right local broker will also give me extra resources, mentoring and potential income from referrals or commissions.
- BiggerPockets Guides, Books, Forums:
- The Ultimate Beginner’s Guide to Real Estate Investing by Joshua Dorkin and Brandon Turner (Free)
- Flipping Houses: The Ultimate Step by Step Guide by Brandon Turner (Free)
- Fix and Flip Analysis & Reporting Tool (Free)
- Subscribe to certain BiggerPockets.com Forums (Free):
- Join My Local Real Estate Group (~$150)
- Local Market Crash Course
- Study the big picture and local demographics of my target market (census.gov)
- Jobs growing? Incomes growing? Population growing?
- Make a Google Map of my market; highlight best locations and commercial/job centers
- Pay for time of successful, local Realtor ($500?)
- Ride shotgun with him/her to explain best neighborhoods
- Ask the Realtor about the most desirable house features that buyers want
- Review his/her process for valuing a house
- Pay for time of local flipper/rehabber ($500?)
- Ride shotgun to see hot local rehab areas and to notice the style, layout, and finishes of his/her houses
- Ask questions, especially regarding biggest mistakes to avoid
- Visit (in-person) 50 houses for sale; take notes and learn
- Visit (in-person) 50 sold houses; take notes and learn
- Study the big picture and local demographics of my target market (census.gov)
When all is said and done, I spend under $2,000 during my 3-month crash education course. Most of that money goes to local professionals and to the real estate licensing course.
During and immediately after my education, I create a business plan.
Step #3 – Create a Customized Business Plan
For me, the business plan is like a blueprint created by an architect to build a house. I’m the business architect, as well as the builder/contractor. My blueprint work will guide my day to day actions as I got my work boots on and build my business.
It’s critical that education comes before this stage because I plan to use my mentors from online, book, and real-life sources as the models for my plan. Particularly J Scott’s The Book on Flipping Houses and his detailed posts will be my primary guide for the meat of the fix and flip business model, and then I plan to supplement and tweak this with information from other sources.
It’s also important to remind myself that this plan is doomed to be flawed — despite my best preparation and education. My situation and market will be unique, so at the front of my business plan, I’ll cut and paste this quote from former president and general Dwight D Eisenhower:
“In preparing for battle, I have always found that plans are useless, but planning is indispensable.”
My plan, then, should be my working, flexible blueprint. I’ll use it to take quick action and to get feedback from mentors and experts. I’ll continuously adapt and update it as I move forward.
My business plan attempts to answer each of the following key questions:
- What is the purpose and the model for my business?
- How will I raise capital for operations and for acquisitions?
- What is a good deal? What objective deal criteria will I stick to?
- Who is my target end user? What do they really want? Where do they live?
- How will I find prospective deals? How will I convert them to purchases?
Too many beginners, I notice, are always looking for answers before they even ask the right questions. So, I like phrasing the major cornerstones of my business plan as questions because naturally I will try to answer them. When I don’t have good answers, I go back to my education sources or local professionals to help me find good answers.
Preparations Complete and Ready For Action
After approximately three months of preparation, I’m ready to start taking some real steps forward in my business. In my next article, I will continue sharing the hypothetical steps I would take to leave my job and replace my $100,000 per year job income with a full-time real estate business.
The next steps I will cover are:
Step #4 – Build My Team & Network
Step #5 – Create a Profile For Good Deals
Step #6 – Create a Marketing Plan to Find Deals
Step #7 – Take MASSIVE Action, Get Feedback, Take Action Again
Would you take (or have you taken) any different steps? What did you like (or not like) about my first three steps?
I’d love to read your comments below.