Jumping in or sitting and watching?

Question

I'm in a bit of a quandary as to which path to pursue. I have access to about 50k worth of cash to purchase and make a deal happen through a partner that I trust. Granted I'm having a hard time finding deals.  I also have some relationships I could pursue that would give me time in the industry for some experience. The ideal one would be with a realtor who is also a GC and holds about 10 rentals. This would be structured as my time for infomartion and advice.

I see the value of jumping in with a solid plan in place but getting my feet wet and running with it.  I also see the value of learning the industry a bit more from the inside, and then pursuing deals. I do as well have a family and full time job so that certainly effects things.

Any thoughts from the BP crowd as the better course? Or at least thoughts on each path.

Thanks!

Tom Cafarella · Answer

100% jump in right now, but you don't have to do it while taking risk.  What I would recommend doing in the beginning would be to market for and find great deals and wholesale them to other investors until you are 100% ready to close on a deal yourself.  The name of the game as a real estate investor is learning how to market for and get great deals under contract.  The sooner you learn how to master that the better.

I would take the following steps:

1.  Determine what kinds of properties you want to buy.  This may sound simplistic, but you need to get laser focused on exactly what you want so that you can then plan your marketing campaigns.

2.  Build a database of all of these properties in a CRM preferably

3.  Find all of the owners contact information(cell phones, correct mailing addresses, emails, etc)

4.  Market to these people on a consistent basis:

a.  Calling them(either you can do this or you can hire someone to)

b.  Mailing them

c.  Emailing them

d.  Using facebook ads to stay in front of them

e.  Using google adwords to target them.

If you are going to generate all of these leads, you need to properly monetize all of them, meaning that you make sure that you are making as much money on all of them that you can so that you are getting back all of the dollars you are spending and then some.  This means that you are:

1.  Buying the absolute best deals that come from these leads(you cherry pick the best ones)

2.  Wholesale the deals that are just "ok" to other investors who are desperate for deals and are sick of buying on the MLS

3.  Have an agent partner that you are referring the deals to that are not interested in a true investor offer(this will be 80% of your leads)

4.  Have an agent partner who can help you generate and profit from generating buyer leads on all of the listings that you have(there is big money in this if you do it right and it is pretty easy to do)

Regarding the agent partner: when you are marketing for motivated sellers, you are going to end up getting one on one appointments with a lot of sellers.  The reality is that roughly 80% of sellers are not going to want to take an investor offer.

When you meet with a seller that does not want to take an investor offer, almost all of the time, they still want to sell.  The better option for these kinds of people is to refer them to an agent partner of yours to help them get top dollar for their house.  If you are a licensed agent yourself, you can take a referral fee on this.

It is important to make sure you montetize(make money on) every single lead that you get because if you don't you will be throwing marketing dollars out the window.

Daniel J. · Answer

@Tom Cafarella Thanks for the details!

@Jeff Filali Thanks again!

@Rick H. I have decided I want to do buy and hold starting with small Multifamily and building to larger Multifamily long term. I am still trying to determine if it's worth getting a SFH or two just to get my feet wet if that's what I can find or holding out for the MF. Would you consider that as defining what I want, or would you say I need more specifics? Thanks!

Rick H. · Answer

I'll bet that your exact situation is shared by perhaps thousands of others, many who are posters on these BP forums.

When I'm stuck or in a quandary, it's invariably because I have not sufficiently completed the prior step.

In your case, @Daniel Jarvis, I'll lay odds that you haven't done sufficient work to understand exactly what you want.

Marketing and lead generation foes you no good if you haven't identified the target sufficiently.

Once you know exactly what it us that you want, your next action us to make a decision if you will use the services of other to help you find that investment vehicle or if you will pursue directly. Direct marketing has been the route that I've taken for for nearly 40 years however there are many moving parts and expenses (and lessons) along the way.

If you work with others, you must know what makes a deal and motivate professionals to funnel these opportunities your way. This includes a fast and effective way to make decisions and be prepared to close. One thing I know about real estate agents is that every one that I know would rather work with a well-qualified buyer who's easy to work with.

Jeff Filali · Answer

Just jump in!!  The best way to learn is hands on experience.  In my opinion too many people set back for far too long worried about learning every little thing before getting started.  Maybe find a cheap 1st deal and partner on it with someone with a little more experience on your first deal.  Believe me, if you locate a good deal, you won't have a problem finding many people willing to partner on it with you. But just jump in and swim with the sharks!!  What I did starting off was buy a very cheap deal for my first flip, one that wasn't a lot of risk and learned a lot from it while making a decent profit.  Now I'm flipping an average of two properties per month.  But in my opinion, the most I learned was the hands on experience.  Best of Success!!

Tom Cafarella · Answer

When building a list, you have 2 options:

• Option 1: target motivated sellers, regardless of locations.  Examples of lists include(but are not limited to): notice of default lists(behind on mortgage), absentee owner lists, bankruptcy lists, probate lists, etc.
• Option 2: target specific properties that you want to buy and market to all of those people.  For example, if you know that you want to buy only ranch style homes in one specific town, you would build out a database of all of the people in this location.

There are pros and cons to each of these approaches.  For example:

• Option 1: target motivated sellers, regardless of locations: pros to marketing to this list are that you are going to get more motivated individuals and you will have an easier time getting good deals under contract.  The cons to this approach are that these properties may not be in the geographic location that you want or may not the the types of properties that you want(for example, you may not want to buy a multi family house, but that is what may be on this list)
• Option 2: target specific properties that you want to buy and market to all of those people.  The pros of this is that every lead that you generate is going to be a house that you know you are going to want to buy.  The cons here are that it is going to be harder to generate leads(meaning you will have to spend more money, time and energy) to get a seller to meet with you and sell.

Rick H. · Answer

Buy a few houses, serially.

Make money or lose money, you'll learn a lot.

I predict that if you do not, you will be having this conversation in 2018 and beyond.

Action produces more than meditation every time.

Sid Leibowitz · Answer

When I started many years ago I took a 4 hour sales persons course and took the Syaye eam for RE salesperson. I found a sponsor broker. I become a realtor as well and this gave me access to MLS and I was able to better study areas and markets. I was able to do comps and learned the terminology required to better understand the local law as and to mingle with the local real estate people and go to open houses. Later this enabled me to find some cost effective deals and move at my own pace. Like any industry it takes some time to learn your way around. 50k is not a vast amount where I come from to invest with, perhaps in area Texas. Land is a premium in New York. I believe that the best money spent is to take a salespersons course. It takes about 75 hours and get your feet wet with a local broker mentor. The cost for the course should be about 200.00 max. The state exam maybe 50.00 and you will have a license as well to start a career.

Daniel J. · Answer

@Tom Cafarella Do you have a recommended list source? Thanks!

If location helps I'm in the North Houston area, around Conroe/Spring in Texas.

Jumping in or sitting and watching?

Most Popular Reply