Join an established community of Real Estate Investors. There’s nothing more difficult than trying to figure everything out on your own. In today’s world you are not limited to people locally around you, although that can be extremely helpful. But you can also develop relationships online with investors around the country. I’ve been to various seminars and workshops all over the place and have developed relationships that have provided me with both resources and knowledge.
All that being said, it is important to have a valuable local team of people who can support you in your investing activities. You’ll need a Real Estate attorney, title company, realtor, CPA, bookkeeper, contractors, bankers, lenders, insurance agents and more. When you interview these people to see if they are a good fit for your team, there are two magic questions to ask them. Number one. Are you a real estate investor? It’s so important to know if they have ever experienced what you’re doing. If so, they are much more likely to know how to help you. Number two. Do you work with other investors? For me this one is a deal breaker. If they don’t work with other investors, and aren’t an investor themselves, move on to someone else. You want to know that at least this person has worked with other people like you in the past.
As you get started and start talking to people, don’t underestimate what people don’t know. Many people are well meaning, but instead of risking looking stupid when asked a question, many people will just make stuff up. Don’t allow yourself to fall victim to this. Always test and verify everything people tell you. Maybe the seller doesn’t know something about their house. That’s to be expected, most people only buy and sell a few times in their entire life. Maybe the real estate agent doesn’t know the answer to something but because they are supposed to be the professional, they make something up.
When you’ve reached the point of looking at houses to buy, and you’re about to make an offer, it’s important to understand the thought processes of the seller. As an investor, you know that you can’t pay full price for a house and still hope to make money. In fact, you can’t even buy at a 10% discount and hope to make anything. You typically have to buy at a steep discount because of all your costs involved. But to an uneducated seller, if their house is worth $250k and you offer them $150k, in their mind, that means you’re making $100k!! Far from it. To combat this, actually show the seller your math. Show them comps, then show them what repairs are going to cost, and what your holding costs are, and selling costs. Then ask them a magic question. “What do you think I should make on this?” If they give you an answer, be confident in knowing that you just bought that house. If the answer they give you is less than what the realtor would make, you can push back by saying that the realtor is gonna make more than that, don’t you think I should make more than the realtor since I’m taking all the risk?
This is a great introduction on How To Get Started Investing In Real Estate. This is such a huge topic and I highly recommend getting formal education, just like you would for any other career such as being a pilot or a doctor.