So many niches within real estate investing revolve around people. While we are in a real estate business, many of us must — or choose to — deal with people and society every day. While technology has absolutely evolved (for better or worse) there are many more technological tools available to the average real estate investor than there was 15 years ago.
- Technology has greatly changed
- Certain lending/borrowing has drastically changed
- Supply and demand has likely changed in your market
- Human nature has relatively stayed the same
In this post, we’re going to discuss five real estate investing lessons from 2003 that are still relevant today.
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1. You Can’t Help Everyone
As an active real estate investor, it may not be wise (or realistic) to wish to help every seller or buyer in your local marketplace. Many sellers and buyers in your local marketplace may easily be able to purchase or sell a property without your help. In reality, only a limited amount of frustrated sellers and buyers will need the help of a reputable and ethical local real estate investor.
Circa 2003, I was spinning my wheels, wasting a lot of time and mental energy trying to help sellers sell their homes at retail prices. My mentality at the time was incorrect. I thought, “If I can make $500 on this deal, I want to make it.” This thinking led to the over analyzing and over negotiating of average properties with non-motivated sellers. While in hindsight this led to no immediate deals, it certainly was good practice to help me understand where my time was best spent.
Pro Tip: It’s wise to specialize in certain aspects of real estate and real estate investing services. Know what type of sellers and buyers you are looking to help — and which sellers and buyers you will refer to other investors or professionals.
As active real estate investors, it’s our job to be a one-stop shop for sellers or buyers who meet our criteria and need our help. If you are unsure how to solve a seller or buyer’s problem, it may be an opportunity to learn more while helping a client who others may have abandoned.
Circa 2003, I did not yet understand the power of persistence. However, knew I was not going to give up a deal without giving it an honest try. Prior to purchasing a group of mobile homes inside a pre-existing mobile-home park, I ended up making more than 20 calls to various state and local titling agencies. I needed to understand the process of moving forward with a complicated and clouded title issue. This particular two-deal package had already been looked at, and passed on, by another local investor who gave up on helping this seller. This particular seller who I was working with had significant title issues due to a death in the family and a pre-existing bank lien that he claimed had already been satisfied. The two homes were eventually purchased by my company. These homes turned out to be profitable. They also provided a great lesson with regards to solving problems and going the extra mile.
Pro Tip: Go the extra mile that other real estate investors are afraid of. Advertise more, be more vocal, don’t be afraid to solve problems when other investors get scared, and make your intentions well known to both sellers and buyers.
3. Saying No
Your time and mental energy are limited. For every opportunity you say yes to, you say no to almost everything else. Every time you agree to spend time and energy in one area, you take away time and energy from other areas of your business, your family, or other opportunities.
Circa 2003, I had a big problem saying no to people in general. I simply did not want to disappoint anyone by saying I could not help them. This attitude led to me overextending myself across multiple deals, some quite good and some very skinny. After analyzing the pros and cons of every deal I quickly began to understand the investing criteria I would say yes or no to moving forward.
Pro Tip: If you are very new to real estate investing, then by all means try to be an educational sponge. Soak up all the education you can. Ask as many questions as possible. Learn as much as you can. However, when it comes to your resources, be very selective in who you choose to help and which opportunities you pursue.
All of us are guilty of telling white lies, omitting details, and exaggerating the truth at some point. While this may be benign in normal every day conversation, these small lies and missed details can be extremely costly and frustrating when it comes to our real estate investing businesses.
Circa 2003, saving money and making money were some of the biggest things on my mind. This shortsightedness of focusing on money helped motivate me to work with some fairly sketchy handymen, buyers, and sellers. Since I was so money focused, I missed signs and skipped proper due diligence when screening or preparing contracts with handymen, sellers, and buyers. These mistakes — being too trusting and not taking the time to protect myself — caused so many costly trial-and-error type mistakes.
Pro Tip: Assume almost everyone is lying to you until you confirm what they say is true. Aim to have trusted and experienced mentors or other investors whom you may ask questions to on a regular basis.
5. Going Against the Crowd
As human beings, we typically want to do what is already working. Many of us do not want to reinvent the wheel, but would rather follow in the footsteps of those who have already made success for themselves. When it comes to real estate investing, there are dozens of strategies and niches to specialize in and know about. In reality, many of the strategies and niches may be profitable depending on your local market, supply and demand, available capital, available time, exit strategies, goals, etc.
In the first three months of my real estate investing career, I made over 100 offers without one being accepted. I quickly learned I was a very small fish in a very big pond, looking for the same types of single-family properties everyone else was looking for. At every real estate investing club I went to, I found myself repeating the same SFR criteria that everyone else was looking for. Not until I started specifically purchasing mobile homes did my business flourish.
Pro Tip: Take an objective bird’s-eye view look at your business to see if things should continue as usual or if something should be changed to make an improvement. Next, aim to talk with trusted mentors or seasoned real estate investors to understand different possibilities or improvements you could make in your business. Before truly evaluating your business, it is important to understand your desires, available capital, credit, what makes you happy, available time, and goals.
In conclusion, there are so many things that have changed in the past 15 years for real estate and society in general. However, as long as real estate investors deal directly with buyers and sellers, we can expect many of the same human nature traits to exist and persist. Not only is it wise to take a logical approach while working with local real estate properties, professionals, buyers, and sellers. However, it is important to understand what makes you happy as an investor. Oftentimes, the easiest person to fool is ourselves. Aim to move forward with clarity, and continue helping local buyers and sellers in and around your area.
What lessons have you learned that have stuck with you? Share them in the comments below!