Today I'm going to talk about getting started, choosing an investing strategy and more.
I am asked from time to time about my real estate business, how I got started as a real estate investor, and how went about choosing an investing strategy. I became interested in investing in real estate about a dozen years ago. A realtor friend of mine took me to my first REIA meeting as her guest, and I was completely hooked!
Investing Part Time – Choosing an Investing Strategy
I started out part-time for about a decade. I had another business. I owned and operated a home inspection company from 1991 until 2008. It was during that time that I began to “dabble” in real estate. It took me a couple of years to buy my first property which was a rental. In the next 7-8 years I bought several more rentals and did some rehabbing. There wasn't much thought that went into choosing an investing strategy for my business. I just knew what I wanted to do, but that won't be the case for everyone. Choosing an investing strategy is a process for most folks.
Even though I started rehabbing and as a buy and hold landlord, wholesaling was still pretty much a mystery to me at that time. It took me a long time to really wrap my brain around that strategy. Throughout the years, I always attended the monthly REIA meetings, attended seminars, boot camps etc. I have always been passionate about learning the business of real estate investing.
Going Full Time
When I made the leap to full time investor in 2008, I needed to replace the income from my previous business. I already had a pretty good idea of which strategy that I wanted to pursue. Even though I had rental property, I really didn’t like being a landlord and that didn’t take care of my need for a paycheck. I loved rehabbing houses and the process of turning “ugly houses” into a home someone could be proud of, but houses were sitting on the market for long periods of time before being sold. So, I decided against the strategy of fixing up houses and then reselling them. But there were a lot of real estate investors that were still active rehabbers in my area, so I knew that what I would put my focus on was wholesaling.
Wholesaling is a strategy where you can earn large chunks of cash using very little of your own money in a relatively short period of time. In my opinion, it is one of the safest strategies you can pursue when you are starting out. Whatever strategy you ultimately decide to focus on, wholesaling should always be part of your business. If you are a landlord, wholesaling can provide you with cash to pay down the mortgages on your houses. Rehabbers can wholesale some of their unwanted houses to build up a cash reserves for the projects they are working on.
I Have a Deal; Now What?
There are two questions that always come up for anyone new to real estate investing. How do I find deals and what do I do with them once I have found them? I have always been a marketer so finding deals was something that I understood. I knew that I would have to develop a marketing plan and work the plan. All of those books, tapes and seminars had prepared me for the many ways to find houses. But I was absolutely terrified that I would find a house, put it under contract and not be able to sell it. This is a huge concern for most folks getting started in real estate investing.
Building a Buyer's List
The best place you can start to build a buyers list is at your local REIA club. My club is one of the largest in the country with hundreds of members. Once a month we meet for dinner, and we always have a speaker. Our club is committed to educating its members, and we are very lucky that they bring in national speakers in addition to our local experts. Members also have the opportunity each month to put materials out on a table before the meeting. They can put out information about a property for sale or for services that they can provide to the members. Any member that has a property to sell can go up before the group and do a “property pitch”.
I have bought and sold a lot of properties within that group. You have a ready made “buyers list”. As an added bonus, we have a directory of all of the member’s contact information. So each time I have a property to sell, I can shoot out an email to the groups’ members. If you are just starting to build your buyers list,
I have also had some luck adding folks to my buyers list through Craig's List. When I put a property on Craig's List even if I don’t find a buyer for that particular property, I always end up adding at least a couple of investors to my list. I always ask what their source of cash is before wasting time with “lookers”.
Finding buyers and keeping a good buyers list is an ongoing process, but it’s not too difficult once you get the hang of it. You only need 4 or 5 top notch rehabbers and landlords on your list at most. You don't need dozens so focus on quality rather than quantity when it comes to building a buyer's list.
Ultimately, everyone has a different way of choosing their primary strategy for their real estate investing business. Some folks know from the get go that their primary focus is to buy and hold properties and that is all they do. Other people love the rehabbing process, but don’t like being a landlord. I have done just about everything since I started investing in real estate. There is no denying that buy and hold is the way to build long term wealth. Whatever your strategy, I would encourage you to add wholesaling to your investing business. Think of those “chunks of cash” you get from wholesaling properties as a way to fund your business and put extra cash in your pocket.
If you want to schedule a 1 on 1 call with me to talk about probate investing, specific strategies for building your brand or creating more effective marketing for your business, you can do that here by clicking this link.
If you're not already subscribed to the blog be sure to do that today so you don’t miss any of the business building tips I have coming your way. I want this year to be your best year ever! And if you enjoyed this article, please share it.
Good Morning Sharon,
Thank you, for sending out this email this morning. It really inspired us, to really pursue REI. My wife and I are newbies, and are just getting started around 3 weeks ago. We been researching almost everywhere, and I stumble on your podcast on bigger pockets number 12. It was like the heavens opened up through your voice. “Probates” I have listen to your podcast for the last 4 hours straight, I took a break, because I did’nt want an overload. I’m a truck driver and I was sleep waiting for my load and soon I woke up I seen your email. I was like “WOW” don’t want to sound spooky, but in my mind, that meant continue on. It didn’t matter how long it took for us to see results, we just wanted to find our niche. Thank you again, and just know you are really helping people, find their lives. We have subscribe to your podcast and look forward to learning even more from you and other investors.
Michael & Beronica Kidd
Thanks so much for letting me know. There is so much to learn. Just keep plugging away and you will get there.
I never thought of other investors being potential customers, that’s really a thought!
They can be for sure.
Mrs. Vornholt, I’m a newbie investor that just graduated from here the Unv.of Louisville trying to wholesale houses. I first seen your post to bigger pockets, which was awesome about double closing. Now I have subscribed to your blog an watched several of your YouTube videos. I need some advice or mentoring. My just tried of the rat race an real estate offers the best opportunity to succeed. Questions.. Why do you use a Trust an not a LLC? What real estate club would you recommend? Lastly, why real estate lawyer rather than title companies? Sorry, but would better to ask.. Thanks for all the information you already offer.
God bless you..
My business is in an LLC, but you buy property in a trust. That just means you don’t sign your name on the contract. Instead of Lonnie Williams being the buyer, the 123 Main St. Land Trust will be the buyer ( you use the property address).
We have one here. You can look it up at http://KREIA.com. The next regular meeting will be on the 4th Thursday of January. They are always on the 4th Thursday except Nov. and Dec which is a combined meeting because of the holidays.
We just use closing attorneys here rather than title companies to close. It varies by area.
Great article, very informative thanks!!
Thanks for stopping by.