Ep 278. The Boring Path to Real Estate Success w Charles Roberts

[Mindy Jensen]

Real estate is sexy… most of the time. But is that really what makes it profitable? On today’s show, we sit down with Charles Roberts, an investor and agent from the Denver market. He explains that the secret to success is far more boring than we like to admit. In this episode, we explore Charles’s story and the lessons he’s learned over his 20+ year career, including how his first deal failed miserably, how he helped another investor retire through rentals in just five years, and his strong belief that the deal isn’t as important as most investors think — plus so much more! Charles is incredibly wise, and he has years of experience — so this is one episode that you’ll come back to time and time again.

Listen here or on your favorite podcast app.

[Charles Roberts]

@Mary White Glad you enjoyed it! What you're saying about your approach is what I preach all the time. It's about finding the right strategy for each person. I sleep very well at night with 0% leverage!

@Andrew Syrios thank you!

@Eric James I was an investor for years before becoming an agent. Perhaps there is some subconscious bias on my part since I'm an agent, but it's small part of why I say that. In my hundreds of transactions, I've worked with investors all across the spectrum. The average, part-time investor is usually better off buying a good deal off the MLS. Now, I'm not saying go buy the first thing you see. Absolutely not! Hunt around, and find a good deal. Part time and beginner investors don't have the knowledge, time, or resources to door knock, start direct mail campaigns, look up absentee owners, etc. Working with wholesalers is intimidating for many since many require a 5 to 10k non-refundable earnest money, with a quick close (usually cash.)

I've seen many people spend months to years trying to find the perfect deal. The time that they spent on the sideline has opportunity cost (rents, loan pay down, appreciation, etc) compared to if they just bought something off the MLS.

I won't work with investors who have an investment horizon less than 7 years. I'm very much a buy and hold guy. So are my clients.  In all my years, with that approach in mind, the people that bought (even the ones that paid full retail) have made money. Would they have made more money if they bought the house at a discount, of course. But for everyone that would have bought, how many would have missed out on buying anything because they were hunting for a "great" deal?

Here's an example:

In 2008, I showed a property to an investor client of mine who was looking to buy his first rental. It was a pretty beat up property in a tough neighborhood in the depths of the downturn. The bank was asking $79,900 for it (at the height of the market in 2006 it would’ve sold for about $140k). They wanted an as-is offer with cash or a 30 day close.

We wrote an aggressive offer at $66k, close in 30 days with a strong local lender and sent it in. A couple of days later we got a Counter Offer from the bank at $68k. My client told me,you always make your money on the buy and said he would not go a penny over $66k. He felt that $66k is what it was worth and was happy to play chicken with the bank.

He didn't close on it. With his permission, I took it to another investor. 

I explained the entire situation to investor #2 and he had me write up an offer for $66k.The bank reviewed it and Countered at $68,800. My buyer accepted it with no hesitation and we got it under contract. After closing, it rented for $800.

In 2017 he wanted to sell the property.  He put 10k into it to fix it up, listed it at 225k. We went under contract at 228k the next day.

9 years later, who gives a damn if they paid 68k or 66k in this scenario? Not only did he make money on the appreciate, but years of rent and loan pay down.

@Dave White If you want to grab coffee or can make it to a class, please reach out!

@Ahmed Iqbal - thank you! Yes, teaching is a passion of mine. That's how I've built my business. Educate people!

@John Gooch - A lot of real estate is done during non-business hours. Most people buying a home for their primary residence view homes in the evenings and the weekends. I'm out almost every weekend showing properties. If a good property comes on the market and my client can't make it (either because they are out of Denver or busy), I'll take a video and email it over or facetime. I realize that everyone is busy in life, but I've found that people make time if they want do something.

@Ryan Proffit. Thanks! It's been fun emailing back and forth.

@Mark Hughes Well said!