Why Real Estate?
Passive income. Equity. Monthly rents. Tax breaks. These are some of the benefits that come with investing in real estate.
Well, thinking about investing in Real Estate? there are countless advantages that you can have when you engage in the Real Estate Industry. Choosing the right assets, as an investor you can enjoy predictable cash flow, excellent returns, tax advantages, and diversification – and it’s possible to leverage real estate to build wealth.
REAL QUESTION: How do I get started in Real Estate Investing
Real estate investing is all about buying properties at discounts so you can then turn those discounts and use leverage and turn those into assetsDavid Dodge, Real Estate Investor & Vlogger with over 15 years of experience
Often we get lost not knowing when to start, I get asked this question a lot, “How do you really get started in Real Estate Investing?” My advice is always start in learning how to Market direct to sellers so you can buy deals at discounts.
Reason being, you make your money when you buy, you get paid when you sell so how do you make your money when you buy, what does that mean? If you try or found a discounted property in MLS it’s not easy as it seems to be. You can find a discounted property in MLS but it is not going to be easy.
I ‘m in Real Estate Investing for more than 15 years now. Simply put, I wanted to earn more money.
We probably buy less than 5% of the houses that we buy in our business on the MLS, 95% of the deals we make come direct from the seller that is the reason why it is IMPORTANT to learn how to market to direct sellers because we do a LOT of marketing to individuals that own properties (distress or not) to let them know “Hey! We are the easy button, we would love you buy your house, pay in cash, close fast and even if it needs tons of repairs it does not matter” this is where it comes in because it is important to say that we are not paying a retail price.
Here’s the thing, it also depends on what kind of Real Estate Investing you want to do but it will always circle back on marketing direct to sellers.
1. Learn from investors who have gone before you
We all want to earn more money, right? But how is that achieved?
To this day whether investor or not it is important to understand the lessons that you read or might soon read from Rich Dad, Poor dad of Robert Kiyosaki. If you haven’t read it yet, I highly recommend it. It helped by framing my mindset around money and wealth and how both are created. In case you have no intention of ever reading it, here are the main takeaways:
- Buy assets, i.e. real estate.
- Do not subscribe to typical consumerism, i.e. don’t allow lifestyle creep to eat away at your income.
- Do not buy liabilities.
- Unless it puts money in your pocket every month, it is not an asset.
- Poor people work for their money; rich people make their money work for them.
- Poor people work IN businesses, rich people start and work ON businesses.
I am hoping that even in the smallest chance for you to read it so that I can share some of that with you all today and you can benefit from all of the information I’ve absorbed throughout my ongoing education process.
2. Start setting money aside to invest
Many people think that you need hundreds of thousands or even millions to invest in real estate. Spoiler Alert: you don’t. While it does take some money to get started, it may not take as much as you may think. Know how to manage your budget well and set side money for the future Real Estate capital.
3. Choose a real estate market and investing style to pursue
Now that you’ve started to save money to put towards a real estate investment, it’s time to pick a market (or several) and a style of investing to pursue.
The five main styles of real estate investing include:
- Sole proprietorship – you own the home alone
- Partnership – you own the home with others
- Syndication – Your money goes into a pool with other investors to purchase a building/property. You are likely a passive investor, i.e. you are not making decisions.
- REITs (Real Estate Investment Trust) – this is like a stock or an ETF which owns multiple properties and sells shares that investors can buy into.
- Crowdfunding – You invest in an online platform which is like a syndication.
BUT what I mostly focus on is Wholesaling as you can do this with little to none of your own money! and my partner specializes in Landlording! Knowing what market you want to enter is important and it will be easier that way to find your niche in Real Estate Investing
4. Analyze deals
Once you’ve identified a target market, you’ll want to start doing deal analysis in that market.
What does “deal analysis” actually mean? It’s a fancy term that investors use meaning to run the numbers. When you run the number, you’re looking for a few things:
- Does the cash flow? i.e. Is there money left over at the end of each month from the rental income after you’ve paid all of the expenses, including a mortgage (if you have one).
- What do the expenses look like and is there a way to improve/reduce them?
- Is this an area with a strong rental demand and is this a property you would consider investing in?
5. Start to build your team/network
If you’re investing start getting to know the people who will help with and be involved in the transaction. These people include the following:
- Real estate agent/broker
- Property manager
- Insurance agent
- Real estate attorney
You will likely interface with all of these people directly. Remember, real estate is a people-based, relationship business. It’s nearly impossible to be a successful investor on your own. Networking and getting to know some of your key team members will help you grow as a real estate investor.
You’ll get a laundry list of people who claim to be “the best” in that market, so the next step is to actually pick up the phone and start calling people.
I’ve found that calling is the most effective form of communication when forming and developing a new relationship. Attitude, tone, and emotion are much easier to convey over the phone, as opposed to through text or email.
Also, many people remember those with whom they’ve spoken over the phone. It’s much easier to forget someone who has only sent you an email. You want to be the person that agent thinks about when they come across a listing.
They may also be able to recommend some other team members. However, just because someone comes highly recommended from another member of your team doesn’t mean that you don’t need to do your own due diligence.
It’s critical to remember that it’s still your job to vet and draft a great team. Recommendations are helpful, but there is no substitute for a live interview.
6. Make offers and close on deals
One of the biggest lessons I’ve learned in real estate is that it’s free to make offers. Why not shoot for the moon and land on the stars? When I first got started in real estate investing, I would spend weeks doing due diligence on a rental property before I ever made an offer.
I realized I needed to start honing my skills and learning what a good deal looked like. If I saw something that looked like a potential good deal, I would make an offer on it. Once I had it under contract, I could get into the weeds and find out if it was truly a good deal. That’s what the due diligence period is for … I was just previously doing things out of order.
Once you can analyze deals, start making offers. Again, take input and advice from your team, but you are the ultimate decision maker about whether something is a good deal or not.
It takes time!
This does not happen overnight, it takes a lot o learning and mistake for one to be better at what they do. Take your time with each of these steps and don’t be afraid to ask for help along the way. There are so many resources, both paid and free, available to help educate people. Don’t feel like you’re on this journey alone.
There are podcast, books, forums, meetups, seminars, and training programs (like Free Real Estate Wholesaling Course) that are readily available. Any and all of the above are great places to start. Find what works best for you and absorb as much knowledge as you can.
HERE ARE SOME FREE RESOURCES:
Join the Discount Property Investor Community (Podcast, Books, Courses, Resources) https://discountpropertyinvestor.com/
Free Real Estate Wholesaling Course: https://www.freewholesalecourse.com/
Use David Dodge’s Tools! https://discountpropertyinvestor.com/toolkit/
Book A Call – Here to Help! https://discountpropertyinvestor.com/coaching/