Do you want to know the true “nuts and bolts” it takes for anyone to build an investing business?
And yes, I can say anyone because I am no real estate guru myself, but I managed to build my own multi-million dollar empire. If you don’t mind me “tooting my own horn”, I can tell you exactly how to do it…
THE BASIC BOLTS: THE 3 MAIN TYPES OF INVESTMENTS
There are 3 main types of investments that new real estate investors can focus on building:
Raw Land is a piece of property in its natural state prior to construction
improvements, such as sewers, streets, and lighting. Although it can be
financially rewarding, it has a couple of drawbacks:
You can't typically generate income during the hold time and it may take a
while to see any profit.
Expertise needed for such heavy due diligence usually takes years to develop.
Commercial Real Estate is property used solely for business purposes. There
is definitely a lot of money to be made, but experts will tell you it takes a lot
Time and effort to research, evaluate and identify the right market
Focus on due diligence because of the risks associated with expensive
Residential Property is a type of property that derives more than 80% of its
revenue from dwelling units. As a new investor, you should focus here
because it is the easiest way to learn how to:
Create acquisition and disposition systems.
Make some damn money.
Identify opportunities within your market.
MY HANDY TOOL: THE FOUR SQUARE STRATEGY MATRIX
Now every single type of residential real estate transaction you will ever do is going to fit into one of these four strategy categories:
Fixing and flipping
Creative real estate investing
In one of my previous blogs, I created what I call my Four Square Strategy Matrix. Each one of these categories has a different combination of capital needed and cash flow returned, so in order to simplify things I made this handy matrix:
How do you learn which category you fit into? Let’s go over some resources that will help you learn your local market…
Five Resources that Connect you to Your Local Market (The Nuts)
Now, let's talk about how you can quickly get some help learning your local market using these 5 resources:
Local real estate agents can help you quickly find the hot spots of a market.
Find an investor friendly real estate agent that specializes in working with
Networking events such as your local real estate investor association
or MeetUp.com... is a great way to network and learn what other investors in
your area are doing to make a quick buck.
Educational mastermindevents like the ones I host a couple of times a year.
You're going to meet investors coming from all across the country that may be
willing to help your business grow by partnering on deals with you, sharing
investing secrets or even lending you private money.
Tip: One of the best places to network, where you're going to find people
with lots and lots of money is at an IRA custodian's lunch and learn
event. These are being held all over the country by companies like
Entrust, PENSCO, or Equity Trust Company.
Get off your ass and go drive the neighborhoods that you're looking to
invest in. Take any online research that you have done or that your investor
friendly real estate agent has compiled for you and then go drive around. Take
a pad of paper and a pen or a voice recorder with you when you do, so you can
Pay close attention to the businesses surrounding the neighborhoodsthat
in which you are interested. Do you see graffiti? Abandoned commercial
buildings? Would you be scared to get out of your car at night? If so, you're
probably in a war zone
So to continue talking about how to learn your local market, let me ask you a quick question…
Have you ever heard of the golden rule of real estate, which is, location, location, location?
I bet you have.
Well, what if I was to tell you that I personally make most of my quick cash and cash flow from flipping houses or owning rentals in lower income areas where location does not play a huge factor? Let’s learn…
LOCAL MARKET ZONING
The local market can be broken down into four different categories:
Low Income Zone
Typically 50-70% below the average home sales price for a given zip code.
The prices are low enough that cash buyers can quickly pull the trigger if they
uncover a good deal.
The rent is still high enough that a buy and hold investor looking to pick up a
good rental can still produce enough cash flow to go ahead and do the deal.
Middle Income Zone
Typically 70-130% of the average home sales price for a given zip code.
Pretty much the same as low income, but now you're dealing with nicer
properties that cost a little more, so your risk goes up.
Every investing strategy works in middle income neighborhood. With a couple
of deals under your belt, I would suggest focusing on these types of properties,
especially if you're going to hold any rentals.
MY SECRET KEY TO IT ALL
So what's my secret to how I built a multi-million dollar real estate investing empire with no real estate knowledge??
It's the systemization of my entire investing business. From business setup, lead generation and marketing, follow up deal analyzation, and structuring and funding processes to the systems I use to hire virtual assistants or employees.
I created and perfected systems that allow me to fire myself as often as I can, slowly removing myself from the day to day processes that make investing feel like hard work.
YOUR REAL ESTATE POWER TEAM
So now that you know my secret, one of the first things I would tell you to do if we were best friends is to go out and start to put together a solid power team.
Now, what do I mean by power team? I'm talking about the individuals that are going to help bring you deals, provide you money, help you fix up properties, close and get paid:
Real Estate Investors are the first team mates you want to sign-up for your dream team. Go online and research local real estate agents that specialize in working with real estate investors.
Set up appointments with a couple of agents and interview these agents. Leverage their relationships by asking them to put you in touch with good title agents, mortgage brokers, hard money lenders, contractors and real estate attorneys.
Mentors are vital for your learning and development. My real estate mentor, Lyle, taught me that there are five things to look for when choosing a mentor. Find someone who has:
The lifestyle you want to live.
Honesty and integrity in their work ethic.
Mastered market timing.
Solid business systems in place that are easily to duplicate.
This is great advice and I highly recommend you follow those five tips when choosing a real estate investing mentor.
GET TO KNOW YOUR REAL ESTATE INVESTING PAPERWORK
Now let's take a quick second to talk about paperwork. I know it seems scary, but it isn't, really. As a professional real estate investor you should become completely knowledgeable with your paperwork.
I can't tell you how many times I was able to make extra money in a deal just by knowing how to manipulate the terms of a contract. But when I first started investing, it was the monster under my bed. This is completely normal.
So where do you find the right paperwork?
Easy. You just contact your local real estate attorney and tell them what type of investing you plan on doing and have them create your documents for you. After they create them for you, you know, have them show you how to fill out everything and then go home and practice, practice, practice…
The one thing I don't recommend is just downloading some free documents that you find online and just using them right out of the gate. Take those documents to a local real estate attorney to have them reviewed.
Now, if you're making offers on properties found on the Multiple Listing System, or MLS for short, you can have your investor friendly real estate agent create all your paperwork for you.
That's the benefit of relying on your power team members and it's the key to making your business grow and being successful. That's why I stress finding the right team members to help your business grow.
5 TAKE AWAYS THAT YOU SHOULD START ON NOW
Begin building your power team. The two members I would focus on first
is finding an investor friendly real estate agent and an investor friendly closing
agent. The closing agent can be an attorney or an escrow officer, but it's really,
really important that they are experienced when it comes to working with
Hang out down at the local foreclosure auction. This could be at a
particular property, down with a sheriff, or it could be actually at the
courthouse steps. There you are going to find tons of cash buyers, new and
experienced real estate investors, and even some money lenders down at the
auctions. It's a great place to network.
Network and socialize with other likeminded people. This is the life blood
of your investing business. A good place to find other like-minded people is at
want. This could be somebody in your local market that's willing to show you
the ropes, or somebody national like me, or the people that you're going to find
at my mastermind events, but it's really important that you find a mentor.
Begin segmenting your local market into war zones, low income, middle
income, and upper income areas. Mark out your target area that you're
going to focus all of your marketing in and do whatever it takes to own that
market segment. And I mean – OWN YOUR MARKET. The more you know
about your target market, the more successful you will be in this business.
Author:Emma Lefkowitz and Brian Tague Phone: 619-647-1739 Dated: January 16th 2019 Views: 185 About Emma Lefkowitz and: The Barron Team is a small and powerful team of professionals, led by Emma Barron Lefkowitz and supp...
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The Barron Team is a small and powerful team of professionals, led by Emma Barron Lefkowitz and supported by her Director of Operations, Brian Tague. They are ranked in the top 1% of all Realtors in San Diego County with over 150 transactions per year exceeding $100M in sales. The Barron Team has unique strategies and cutting edge proven systems in place that allow them to navigate the entire San Diego real estate market successfully!! Known for their hundreds of 5 Star reviews revolving around customer service, The Barron Team utilizes their 30+ years of combined experience, data-driven research, technology and real-time market knowledge to educate and assist both Sellers & Buyers. The Barron Team works tirelessly to ensure clients have the best possible experience, with a seamless process from beginning to end, saving their clients time, money and stress during the often complex and co mplicated real estate transaction.
San Diego is the land of surf and sun and its laidback attitude, the m
"Emma, Brian and their Team are 100% amazing! As an owner of both investment properties and a handful of primary residences over the decades, we know the value and importance of using high performing teams - and this is one of them!
They were referred to us by multiple friends, colleagues and working professionals (including our Tax guy). Not only are they high-performing, they are super cool people! Their knowledge, experience, friendliness, professionalism, expediency, know-how, and one of the biggest traits - "neighborhood specialist" were instrumental in the recent sell of our Penasquitos home and purchase of our new Scripps Ranch home. We ended up selling for well over asking (and over our goal). The preparation and selling process were smooth and successful.
Emma and Brian then spent months with us viewing homes that were fairly limited due to our 'requirements' and a limited supply of homes in the areas we were looking in. They always seemed available whenever something came up that we wanted more info on or to go see. Their neighborhood experience and expertise was evident by knowing what streets to see and what streets avoid. Makes sense since they both live in and have bought/sold their own residences in Scripps. Then, Emma was able to get us into see a home in an exclusive neighborhood PRE-Listing, for which we submitted an offer that was accepted before it even listed.
Barron Real Estate exceeded our expectations by far - call us raving fans! If you’re looking for anything real estate related in the North County Inland San Diego area, this is your team!"