Why beginners should focus on networking more than anything else

[Rishit Shah]

(In a rush? Checkout the TLDR section below for a synopsis in under 30 seconds)

Networking in real estate is often the key to success. Most investors, despite what asset class they invest in or business model they follow, will partly attribute their success to their network. But why does this industry put so much emphasis on networking? Why is it so important to network? Let's find out.

1) Having the right team can literally make or break the deal

As an individual investor, your time and capital are limited. At the risk of sounding like a broken record, I am going to reiterate the advice every investor in this industry will give you at some point, having the right team can jump start your real estate career but having wrong team can have devastating consequences. Why is that? The answer lies in the way the market for real estate is segmented. What most people don't realize is that real estate companies are split into two kinds. One that works with regular home owners and buyers, and the other who specialize in working with investors. The reason is that regular homeowners often prefer simpler, more personalized services. Whether it is buying a home, fixing problems in it, selling it or simply anything in between, they look for a company that can provide a hassle free service catered to their individual needs. Investors, on the other hand deal with many more moving parts. Be it buying, fixing, renting it out, managing the rental, selling, refinancing or anything else, investors look for systems that can help them optimize their costs across multiple operations. Companies that specialize with investors often focus on getting things done most efficiently. They focus on standardization rather than personalization. For example, homeowners hiring a contractor to remodel the kitchen would prefer a someone who can give them personalized options to pick and choose from to build a kitchen of their dreams. In the same situation, an investor would be more concerned with designing the kitchen to cater to a broader market of buyers with minimal time and capital investment. The investor would prefer a contractor who understands the local market, has the ability to purchase materials in bulk at optimal price and execute the project in the shortest possible time.

2) Many of the best players will not show up on top of Google search results

Why? The answer lies in the way search engines work. Primarily, search engines are designed to favor websites that match closely with the searched keywords (SEO) or those who can pay hefty fees for advertisement. In today's digital world, we are so used to simply searching the internet and picking something from the first few results of search, that we often joke around in the tech community that the best place to hide a crime evidence would be the second page of google search. For a second, take a step back and think what does this mean to you as an investor. Companies showing up on the top of search results are there because they have spent large amounts of their marketing budgets to simply get in front of you. Guess who are they going to pass on the costs to? You guessed it. You, the investor. As an investor, your goal is to minimize your operation costs so you can maximize returns on investments. The smaller companies that serve investors realize this and often keep their prices low by spending little to none of their budget on marketing. They get paid for their efficiency and competitive pricing, not for being on top of the search result. They often generate so much business from word of mouth itself that they struggle to meet the demand, let alone expand by marketing on the internet. Besides, real estate investors, make up a small fraction of the larger population. It simply wouldn't be justified for these companies to spend large amounts of money to get known by everyone when their business comes from a small niche of the entire community. Bottom line, the best way to find rockstar , investor focused companies is through other investors. When I fixed my first property, which also is now my primary residence, I was blown away by the price difference between well known companies and my contractor who was referred by one of my fellow investors. To this day, she barely has any internet presence but is one of the most well known contractors in our circle.

Now, this does not apply to large investment companies offering investment opportunities where you can invest passively in large commercial properties. That is remarkable the world of syndication, which beyond the scope of this article. This pertains to individual investors and small to mid sized companies such as those of general contractors, property managers, accountants etc. who specialize in helping individual investors achieve their goals at different stages of the investment.

3) There's so much more to real estate than what most people know

When I first thought of investing real estate, I started out like most others by splitting my options between flipping a single family home v/s buying and holding a rental. It was through networking that I came across many other models like syndications, subTo, build to rent, self storage, commercial multi family investing and much more. The problem lies in the fact that most beginners, just like me in the early days, don't know what they don't know. While reading books is an amazing way to start, they won't answer every question to make you a successful investor. To encompass the complexity of investing in real estate into books would be equivalent of trying to fit the vastness of an ocean into a standard bottle of water. It simply cannot be done. With an ever changing markets, vastly varied regional government policies and shifting public demand, networking is the only way to perpetually educate yourself and truly understand the niche that wish to invest in.

4) Final thoughts

Real estate may seem daunting, especially at the beginning, and there is nothing wrong with it. There is a lot to figure out and combined with the fear of losing money, it is not uncommon to feel overwhelmed when trying to find your first deal. But this is precisely why real estate has evolved to become the team sport that it is today. Companies and investors alike have specialized in their own niches and together, they make investments a success. So if you are even partially serious about real estate, go out there and get networking right away! Want to network with us? Head on to the contact us section and drop a message. I look forward to hearing from you!

5) TLDR

Here's why it is important to network in real estate:

a) Having the right team can literally make or break the deal

Real estate companies either specialize in serving homeowners or investors. The ones that serve investors often optimize the system to provide best results at lowest cost rather than a personalized experience. For

b) Many of the best players will not show up on top google search list

Smaller, investor focused companies often keep their costs low by not spending on marketing. They get a lot of business through word of mouth so they don't really focus on getting more clients via other channels. As a result, the best way to find them is through other investors

c) There's so much more to real estate what most people know

Most of us don't know what we don't know. Mingling with other investors can expose you to an ocean of new opportunities and business models in real estate (syndications, subTo, build to rent, self storage, commercial multi family investing to name a few).

d) Final thoughts

Your network is your net worth.