G’Day mates. How are ya?
I wanted to share with you a trick I learned on how to save two hours of my day when talking to people about my accent and where I’m from. It goes something like this, “Ohh my, I love your accent. Where are you from?”
Me: “Thank you so much. I’m actually visiting from North Carolina.”
And that’s pretty much how the conversation ends. 🙂 (No offense intended to any folks reading from North Carolina.)
Today, I’m going to share with you the top 3 problems that confront many beginner and seasoned investors along their real estate journey. It’s also something that I have come across in the past and still do to this day. Real estate is not only a roller coaster ride, but can also turn into a circus at times. The 3 issues I see many real estate investors come across require a very fine balancing act. Once you are able to streamline all 3 and become a top juggler like the best in the industry, you will see results that you never even dreamed.
“Doing the small things right and consistently will make the big things just fall into place.”
How to Purchase Real Estate With No (or Low) Money!
One of the biggest struggles that many new investors have is in coming up with the money to purchase their first real estate properties. Well, BiggerPockets can help with that too. The Book on Investing in Real Estate with No (and Low) Money Down can give you the tools you need to get started in real estate, even if you don’t have tons of cash lying around.
The Top 3 Obstacles Real Estate Investors Face & How to Overcome Them
1. Finding a Deal But Not Having the Money to Buy it
This is a common problem that I see many investors come across. No matter what the market conditions are dictating — boom or gloom — there will always be good deals out there. I suggest starting off by tapping into your closer circle of family and friends and seeking out joint ventures partnerships. Alternately, you can also go down the same path I did. Work hard for a couple of years and stay frugal. Save every penny you can until you have enough money saved up to do your first deal.
Also, while you’re working hard and saving money for your first deal, make sure to live and breathe real estate and network with everyone. The Midwest offers some great numbers where you can find distressed properties in owner occupied areas that will set you back no more than $40,000 – $50,000 total (purchase and rehab). Keep a journal, take photos and videos of such deals, and use it as a resume for when you start knocking on the doors of hard money lenders. Most hard money lenders want proven track records and an established relationship before they will lend to you. Once you prove yourself, they will start throwing money your way, which in return will lead you to problem #2 below. Never forget that real estate is a numbers game so keep working those numbers daily.
“Network = Net worth”
2. Having the Money But Unable to Find the Deal
I find this issue arising for many folks on the East and West coasts of the US. I feel your pain, as I also had to deal with stupidly high real estate prices back home in Australia with literally ZERO cash flow. If you’re looking at turnkey and follow my blog or forum posts on BiggerPockets, you will find that I always stress to establish trust and relationships first with key people on the ground in a particular area of interest. Make sure to have an end goal in place and a timeframe of achieving that end goal. Every property you are considering to buy should get you a step closer in reaching your end goal. Don’t base your decisions on hope that a property will go up in value.
For everyone else reading who lives in one the of the “deal markets” of the country (mostly the Midwest), check your pockets and let me know if a deal is hiding in there. 😉 As I mentioned above, real estate is a numbers game so keep working the numbers. Send yellow letters, check Craigslist daily, stress your criteria to local bird dogs, wholesalers, and realtors; write articles for your local papers; brand your office, car, t-shirt, and business cards; ask grandma at Walmart if she knows of anyone selling, etc. Leave no stone unturned. Once you commit to the numbers, put in the hard yards and actually perform on these transactions. Before you know it, your inbox will get inundated with deals from everyone and anyone, just like mine does on a daily basis. You’ll find that folks quickly tend to find out who writes the checks and whether you are indeed a CIA in real estate.
3. Having a Buyer But Not Having a Deal to Offer
“Who has the gold makes the rules.”
In my opinion, genuine buyers/investors are the gold. If you don’t believe me, try posting on various LinkedIn groups with “I have 5 awesome 15% net cap deals available” or “I have 5 strictly vetted and genuine cash buyers looking for 15% net cap deals.” You will probably get 20+ replies to the latter post within a couple of hours — and lucky if you get a few to the first one over a 2-3 week period. If you’re not established in a particular area of the Midwest but have a team on the ground that you have great relationship with, make sure that those guys are in it for the long haul before you put your name behind the operation and start offering their properties to your buyers. Remember: “It takes a lifetime to build a reputation and only 5 minutes to lose one.” It’s even better if you personally own property in the area, as you will be more credible and can speak with better conviction. I personally wouldn’t buy from someone if I know they don’t own it themselves.
Same thing goes for everyone who is actually established in an area of your buyers interest. If you don’t have any deals available yourself, you can establish relationships with other investors or companies that work on a larger scale and never have issues with supply or demand. You must make sure that the quality of workmanship on these properties is second to none and you are 100% comfortable putting your name behind the investment. Once a sale has been made, don’t leave your investors hanging. Have a great property manager in place and everything and anything else needed to make the investment a success for your investors. Growing your personal/business brand through word of mouth referrals is the cheapest and most sustainable way in my opinion.
There you have it, my BiggerPockets friends — your favorite Aussie Engelo Rumora sharing his $2 AUD’s worth. 🙂 These are some of the biggest issues that I’ve come across over the last 4 years of my real estate journey, and I know that many of you are experiencing them right now. Stick with it for the long haul and always do the right thing by everyone. Never compromise your integrity, and always, ALWAYS be 100% upfront and honest. Over time the above 3 problems start disappearing as you grow and build more traction. I will leave you with this final quote: “It’s better to be green and growing than ripe and rotting.”
Investors: How have you overcome the above listed struggles? What would you add to my list?
Leave a comment, and let’s talk!