Hit the Ground Running, Get Mentors, Partners, and Incorporate

[Mason Smith]

If you didn’t read my first blog post – 10k to 100k In A Year – you should, it will frame the series and where we are.

This is my story, it’s not the only way to do it, but it’s the way I did. How can I start? How can I indulge in this daunting world that is real estate investing? I had all these great ideas, but my nerves were eating away at me. No one in my family is in real estate or has invested in real estate, so there’s no one to turn to for advice. No one to give that little bit of motivation or encouragement I needed to do that first deal.

Networking

Relationships are very important in this business. Someone once told me that you don’t need connections in the same line of business you work in because they are your competition. That is REALLY BAD ADVICE. There is plenty of business out there for everyone. The more connections I have made, the better my business has become. I think of it as an alliance.

When I got my real estate license, I wasn't just selling a few house and going home. I was online searching for any real estate networking events, local REIA (Real Estate Investment Associations) I could join, and actually making the commitment and time to attend. When I first got into the business at 22, I was told that my young age would be a hindrance to me. It's been quite the opposite. I embraced my youth with enthusiasm and optimism. I went to our local commissioner sale (courthouse auction) for over a year before I actually bought a property. As I studied the workings of the auction, I also studied the people that were buying property. Making connections is about introducing yourself to people you don’t know or haven’t ever met, and that’s what I did. Once I found out who the big players were at the auction, I would go sit next to them after they purchased a property and asked how they did it and what their plans were. Sure, some people will just blow you off and won’t talk to you. Forget them, because you will be amazed at how many awesome people there are out there that are willing to help you and share what they are doing.Remember, PEOPLE LOVE TO TALK ABOUT THEMSELVES. I actually got my first flip this way. And yes, it was profitable; he didn’t rip me off, and he’s a good friend to this day.

Partnering

Most people think of needing a partner for funding. Sure it helps and depending on your partnering situation that may be the case, but from my experience, a partner in business is much more than just an investor. My partners and I work well together because we share the same end goals, we play off each other’s strengths and weaknesses, we push each other to want and achieve more, we share in the cost, and most importantly, I actually like them and enjoy working with them. I met one of my partners through real estate. He was an agent, property manager, and had some property himself. His eagerness to work hard and achieve his goals, which aligned with my goals brought us into a great partnership to this day. Another partner I have moved to Kentucky from Arizona, where he was previously flipping property. He is very entrepreneurial spirited and optimistic about his goals. I knew from the moment we met that we would work well together. A lot of choosing a partner is in your gut, you should know within the first 30 minutes of talking to someone whether or not they have what it takes for them to move on to your “second round of interviews.” Find someone that compliments you well and most importantly, make sure you can add as much value to the relationship as they can. In my case, each of my partners taught me a tremendous amount, and I paid them back by being motivated to get out there and get my hands dirty. You need someone to go pick up rent checks on a Friday at 5, I’m your guy. You need someone to stop by a flip and show it to buyers, I’m your guy. You get the point, do the stuff they don’t want to do to pay them back for teaching you.

Incorporate

We aren’t a recourse for legal advice, this is just how I went about doing it*

Once I had my partner/partners in place, I was ready to incorporate. You know what they say, contracts are for the divorce, always be prepared for that. There are tons and tons of websites that will allow you to set up an LLC online; I'm a pretty sharp guy and still didn't feel comfortable using these. I found a local real estate attorney and set up an appointment for my partners and I to sit down with and set up our LLC. There are a number of documents and papers that we went through, it was helpful being able to fire off questions, to an attorney that works in real estate, that frankly, online sources didn’t explain very well. Most importantly it probably saved us money in the long run (no one wants’s to get sued from a DIY LLC). I now have three LLC/S-corps set up and will never use an online source again. I always consult with my attorney and CPA, which I recommend as well.

Series – The Story of a 22 yr Old and A Real Estate Dream

Part 1 – 10k to 100k In A Year

Part 2 – Hit the Ground Running, Get Mentors, Partners, and Incorporate

Part 3 – Creating a Good Team: agents, loan officers, contractors

Part 4 – The Title Nightmare: My first property and the title issues I came across

Part 5 – Financing a Flip: The types of financing I have used and how I negotiated the deal

Part 6 – Financing a Rental: My first rental and how I financed the deal

Part 7 – First Successful Deal: My first Exit!

Part 8 – Keeping The Pipeline Full: To make flipping a job, I needed multiple projects.

Part 9 – Managing Multiple deals

Part 10 – Where I Am Now