Could I get some advice on setting REI goals please?

Question

I was wondering if I could get some advice on setting goals. I have been watching youtube videos on goal setting but I'm still needing more help. I've noticed a lot of people set S.M.A.R.T. Goals. I also read through the Ultimate Beginners Guide for an outline on it too. I have never invested in real estate or even purchased my first home. I was wondering what kind of additional criteria to include. Should I create a full out business plan?

Aaron Smith · Answer

@Ethan Schneider What's your long term goal? Retire with the cash-flow from your REI? Buy 1 house in 2017? Have three wholesale deals in the next six months?

What area are you focusing on? THIS should be your first goal. Decide on which area you want to begin your journey. For me, MFH is where I'm going. For others, it's wholesaling. And for some, SFR is where they're headed.

Once you've decided which area truly peaks your interest, start reading. I've read more in the last four months than in the last two years. All of it on MFH. I've started working on my first deals, and hopefully in the next month, I'll finally have a deal in the works.

Go to a couple of REI club meetings in your area. Talk to the people who are doing what you want to be doing. You may even find a mentor out of it!

Coming to BP is a good first step for sure! There are plenty of knowledgeable people here who either 1) know the answer, or 2) know where to find the answers. So ask all the questions you can think of to which you are unable to find the answer yourself.

Good luck on your journey!

Aaron

Tom Cafarella · Answer

Ethan, here are the steps I'd recommend:

Step 1: Determine what type of houses you want to invest in.  This may seem simplistic but you really want to know exactly the types of houses that you want.  For example, what geographic area, style of house, multi unit versus single family, size of the house etc.

Step 2: Once you know what you want to target, that allows you to then build the list.  For example, if you want to buy single family ranges in a particular town, that narrows the search down and then you can move on onto step 3

Step 3: Find contact info for every one of these people: cell phone, home phone, emails, social media profile, home address, etc

Step 4: Put the information into a database: I like using a CRM like Follow Up Boss, but you can use an excel sheet to start

Step 5: Market to these people: call(on a dialer), email, message on social media, door knock, mail, etc. until you get one on one appointments with them

Step 6: Make offers that allow you enough room to make money

Aaron Smith · Answer

@Ethan Schneider SFR carries too much risk for one unit, for me, anyways. If you lose your tenant, and can't fill the house for say, three months, YOU'RE on the hook for the whole mortgage and utilities for those three months. Whereas MFH, if I lose one, I'm usually okay (I better be or else I did my numbers wrong) as the other tenants are still paying the mortgage plus the utilities. Plus, I don't have 10 other people trying to find the same great deal you're looking at when evaluating a SFR.  I prefer to spread my risk over multiple sources rather than just keep it all in one basket.

The second reason is cash flow. I can generally find better cash flow with MFH. I'm looking at B-/C properties, so I know I'm not in the best areas, but that's okay. The more cash flow I have, the quicker I can get to my goals, and the sooner I can retire.

Is there anything wrong with SFR? Absolutely not.

And you're in a major city, I GUARANTEE there is one somewhere nearby. Here's a link to the Lee County Realtors Association (or something like that...) Lee County Realtors. Contact an agent and ask them when the REI club meeting is. They'll ask you what your interests are (figure this out ahead of time by reading/research), when you want to invest, you know, the usual RE agent pitch, but eventually they'll tell you :)

But, first and foremost, figure out WHAT area you want to start in. That will take a bit, as you'll be reading a lot of articles. I THOUGHT I wanted to start in SFR, as I had one in Boise for a while. But then I started reading and realized I wanted to be in MFH. Here's the thing though. You can buy a 4-plex (4 units) and it's considered residential for investing purposes. So, you could house-hack and live in one unit, and rent out the other three.. thereby spreading the risk. There are TONS of ways to invest in RE, you just have to do the research to determine which one TRULY appeals to you.

Merry Christmas,

Aaron

Heidi Feringa · Answer

@Ethan Schneider

Since you are in process to get your real estate license look into a farm report for non-owner occupied properties from your title company.  When my husband was licensed we received those free.  Some title companies also paid for the post cards and the postage.  I know some laws have changed so they may not mail them for you anymore.  Check with a couple of reps you have a relationship with.  If you are doing direct mail look into a bulk permit.  It substantially reduces the cost of mailing and there are companies who will use your list.   Good luck.

Joe Arida · Answer

Goal setting is tricky! I HIGHLY recommend you (and everyone) read The One Thing by Gary Keller and Jay Papasan. It might actually change your entire idea of how to set goals (seriously). As an intro, Brandon Turner does an excellent crash course to the book in AskBP: www.biggerpockets.com/askbp039I feel goals will come with education, it's important to know and feel comfortable with the basics just to find what you want to focus on. The UBG is a great start, so kudos for that!Once you've got the education that gives you the ability to set your goal, and that goal will evolve over time. Once have it and are trying to figure out how to reach it using shorter-term goals, check out The One Thing.

Jeff B. · Answer

S.M.A.R.T Goals - - haven't heard that since business school.  If you understand that, then you're limes ahead of the masses here and elsewhere, but "don't major in the minors" and get distracted with it.

Without ANY background in RE or prior purchases, you need far more basics in buying, selling and contracts 101.  I'm sure you understand "there's no free lunch", so stay away from wholesaling and those No Money Down boys; they'll just lead you into trouble.

Find the type of REI you're interested in and then lookup the "syllabus" for that path; just don't start a marathon without some training.

The analysis of a "good deal" is all about getting "good numbers" and that takes time to learn, but anyone can do that portion.  The fun starts when you close on a deal and then have to live with your choices.

Tom Cafarella · Answer

Hi Ethan, my recommendation would be to not spend a ton of time with goals or a business plan right out of the gate.  Maybe a general outline of your goals, but I think if you are just starting out, it would be tough for you to even know the appropriate steps for a business plan.

For any real estate investor, the name of the game is generating leads for motivated sellers.  That should be your top priority on day 1.  If you can successfully generate seller leads on day 1, everything else will fall into place.

In order to generate leads, you should start putting together a database of motivated sellers(for example: notice of defaults, vacant property, expired listings etc) and then find their contact information and get in touch with them in order to make a cash offer.

If you make enough offers, you will get great deals and that is the name of the game.  Let me know if you have any questions on this.

Ethan S. · Answer

@Rachel Luoto

Hmm.. That's pretty interesting how you came across them! I've mentioned BiggerPockets to a bunch of my friends and not many seem motivated about investing. I've mostly been searching for like-minded people around my age in the area but it's kinda rare. Anyways, thanks for telling me that and I'll spread the word!

Note to self... Next time I'm at a bar on a tropical beach I'll remember that haha

Rachel Luoto · Answer

@Ethan Schneider Some advice from a fellow newbie - just start talking to everyone you meet and know about your goals. I've networked and met a lot of people in REI. However, just by putting word out, I found out that THREE people I already had a connection to were successful investors. These people weren't at the networking events or hanging on BP. They are at the bar or the beach spending their cash flow and enjoying their financial freedom. Spread the word with your current network and you will have access to mentors other newbies can't even find!

Ethan S. · Answer

@Tom Cafarella

Could I get some advice on setting REI goals please?

Most Popular Reply