Getting Ready to Start Getting Ready

[Don Konipol]

These are actual instances of people not understanding what entrepreneurship is about

1. A good friend of mine told me he started a company to purchase and manage surgical centers.  He had no capital to contribute, no particular expertise in the area, and was looking for financing.  He told be that he had “already” purchased a $92,000 company car and spent $4,500 setting up a company defined benefit pension plan. 

2. I received a financing request for $10 million.  It was accompanied by a 35 page business plan that had been put together by a consultant that charged the entrepreneur $7,500, a glossy brochure generically talking about commercial real estate, and a resume of the principal.  Virtual assistants followed up with calls to me to qualify my interest.  When I mentioned we would be happy to look at financing request for individual property, the principal told me that he was “going a different route”.  

3. I was contacted by an individual asking if I would be open to giving him investing advice.  He told me he had started his real estate investing “journey” 6 months ago, but hadn’t purchased any property yet.  I asked him in what ways was he educating himself in real estate.  He told me he hadn’t.  I asked what he had been doing for 6 months. He said it had take a lot of time lining up his “team” - an attorney for each of the 10 states he was going to invest in, accountant, real estate agents for each of 10 states, title companies for each state, and insurance agents.  I asked him how much money he was intending to invest.  He said that was dependent on how much I was willing to lend…

4. I met an “investor” back 20 years ago at the RICH Club (Realty Investment Club of Houston).  He told me he had been a Rich Club member for 17 years and never missed a monthly meeting.  He also told me that he had not found a property worth buying yet. 

5. Back in the Middle Ages, when I was a commercial broker, there was a guy named Minh Ho who made three or four offers on properties per WEEK.  However, all his offers were so outrageously low that they had absolutely no chance of being accepted, or even countered.  So, he acquired the nickname “Low Ball Ho”.  One day miraculously an offer of his was accepted.  He immediately rescinded the offer telling us that if someone accepted an offer of his there must be something very wrong with the property. 

[Jay Hinrichs]

I do believe that folks do spend to much time trying to build a core 4 when they need to build a core of cash so they can actually transact.. 

As well as most folks are far to paranoid about litigation and liability when they are starting out. 
owning a SFR rental with proper insurance is about as safe as it gets with regard to liability as long as your not being a slumlord. So spending thousands on a complex set up is a waste of money until you actually have something of substance.

The thing I see with many who contact me looking for us to fund deals for them is their basic inability to do simple math.. You know napkin math and they want to use these calculators etc. When in fact most of what they want to buy is just very basic and should be done in their head or on a napkin to at least get started.  I dont get the calculator stuff because you cant control the inputs and outputs. And in a highly competitive business that distressed RE is the inventory moves to fast one needs to be able to look at a deal and in 5 minutes decide.. at least to make and offer