Erik is a hometown guy, a professional engineer with a full time job, a successful rehabber, and today he is going to dive into my 5 questions. Erik is someone that I was definitely interested in having contribute to this series, because he is part of a small group investors that have been successful at part-time REI while holding a demanding full time job.
**Here is an update: Since doing this original article Erik is now full time.
The 5 Questions
Here are the 5 questions each of these successful investors answered:
- What are the top 3-4 things a brand new investor should focus on initially?
- What is the best marketing advice you can give someone just starting out?
- What factors do you attribute your success to?
- Is there something you wish you had done sooner or done differently when you first started your business?
- Do you have any tips for newbies for managing their mindset during those inevitable “ups and downs”?
My friend and fellow Louisville-based real estate investor Sharon Vornholt asked me to write a blog post detailing my past mistakes in order to help new investors. After a few days, I sent her a 27-page draft covering the first few years and asked if it would be sufficient. That afternoon, I learned Sharon is not only a great wholesaler, but also she is a speed-reader. Within 7 minutes of my submittal, she responded “Why don’t you just answer the following 5 questions?” While I’m pretty sure I covered most of this in the first version, here’s a somewhat abridged version…
(I didn't really say that to Erik BTW….)
1. What are the top 3-4 things a brand new investor should focus on initially?
- Wow, trick question right out of the gate! The only thing a new investor should focus on is STAYING FOCUSED.
- Too often, people start out 1) as wholesalers because someone said it’s an easy way to make quick cash or 2) as rehabbers because it looks cool on HGTV or 3) as buy and hold investors because they love tenants. (Ok, no one ever actually does #3 for that reason). They then jump to some other concept because their initial choice didn’t quickly produce mass wealth. After 2-3 attempts chasing new methods, they burn-out and blame bad markets, bad systems, bad mentors, etc. for their failures. In truth, the real problem was bad planning and a lack of focus.
- Those destined for success will 1) determine their reasons for investing and their goals, 2) understand the resources they have available to them and those that are limited, 3) select an investing strategy that can achieve #1 within the constraints of #2 and 4) work tirelessly to be the absolute best at that strategy. The oft-overlooked first step is critical, because investing will be hard at times. You need a reason other than ‘to make money’ to keep you focused. Likewise, the second step prevents you from choosing an option that is unrealistic. It’s hard to be a wholesaler if your job prevents you from being able to call people back in a timely manner. Finally, and most importantly, being good at 4 things won’t make you as rich as being GREAT at one. Focus exclusively your selected strategy and success will come.
2. What is the best marketing advice you can give someone just starting out?
- While limiting yourself to one overall investing strategy is good, the proper approach to marketing is diversification. Deals can come from bandit signs, direct mail, auctions, HUD, the MLS, wholesalers, internet leads and so on. However, there is no rhyme or reason to the ebbs and flows of leads coming in from any one strategy. If you want consistent leads (and you should), have a diversified marketing plan.
- That being said, the best advice I can give is to tell everyone you know and meet that you are a real estate investor. Almost every one of my best deals came from a wholesaler, acquaintance or random contact.
3. What factors do you attribute your success to?
Other than getting focused, there are 3 specific mindset changes that made all the difference in my investing career.
- Overcoming the Technician Mindset – Like many other beginning investors, I thought that because I could do something (install cabinets, paint, address letters…) I should. Unless you are doing this for a hobby, the goal is to be an Investor/Entrepreneur. Investors think “How do I do make my money work for me?” not “How do I save money?” When you start focusing on increasing revenue instead of saving a few dollars here and there, you will realize that low-value activities MUST be done by someone else.
- Finding Mentors – Everyone says education is important, yet few new investors (myself included) recognize that educating yourself by reading or making mistakes is not only a low-value, but also a potentially devastating approach. People have been investing in real estate for a long time. Thousands of people are currently doing what you want to do. Many of them are willing to teach you exactly what, when, and how to do it successfully. Yes, you may have to pay them. However, this is far less expensive in terms of time and money than learning from easily avoidable mistakes. It’s easy to make 4-5 digit mistakes. If you do that at the beginning of your career, it’s hard to recover.
- Being confident in yourself – Investors (especially those just starting out) need to have an uncanny ability to ignore the advice of family, friends, and well-meaning individuals in the grocery store who say they are crazy or rattle off 238 reasons they will fail. It’s important to find a REIA, a Mastermind Group, or just a couple other people who are trying to do the same thing. These like-minded people will help you celebrate your successes and provide support in the tougher moments in a way that outsiders simply can’t do.
4. Is there something you wish you had done sooner or done differently when you first started your business?
- Yes – almost everything I wrote in answer to questions 1-3 (as well as in the 27-page draft that I’m starting to think Sharon didn’t read). I didn’t have goals, fell victim to Shiny Object Syndrome, invested in deals I shouldn’t have with people I shouldn’t have, tried D-I-Y, and on and on. Most of all, I wish I had invested in education/mentors sooner. Not only has the ROI been phenomenal, but I’d probably have washed out if I hadn’t made that investment.
5. Do you have any tips for newbies for managing their mindset during those inevitable “ups and downs”?
- Living in Kentucky, I am definitely biased towards bourbon. I really like 18-year old Elijah Craig, but Woodford Reserve is a great alternative.
If you missed Erik's video/podcast interview you can catch that by CLICKING HERE….
My Thanks to Erik
My thanks to Erik Hitzelberger for participating in this series, “Success Stories in Real Estate Investing “. Erik is an engineer who has a full time job, yet has manged to build a very successful rehabbing business. Erik has been a real estate investor since 2007. While learning the ropes in the market down-cycle, he now teaches others how to use his systems and leverage other people’s expertise to achieve their own goals. He is also the author of the blog “Part-Time REI”.
Resources Mentioned Today
Be sure to stop by Erik's blog “Part-Time-REI” for tips on investing part-time and so much more.
If you are still struggling to get your business of rehabbing houses off the ground, I highly recommend Erik's course called the“Lunch-Time Profits System” where he teaches you how to build a profitable fix and flip business part time. This system was created by someone that has actually built a successful business using these same systems. Let him know you saw this article too.
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