Newbie To Seasoned Vet in One Year? Not Quite... But Almost.

Anniversaries, am I right? Actually, I don't even know if that's a question. Well, hypothetical, if anything, but I digress. Either way, anniversaries provide a natural moment to reflect upon another year gone by. Accomplishments. Failures. Adventures. Lessons learned. They all add up to continued growth and development in our personal and professional lives... hopefully. 

For real estate investors, that first year in the business is not unlike the first year on Earth for a new born baby. Much like a baby learns more in her first year of life than the rest of her life combined, a rookie investor won't learn more in his entire investing career than he will in his first year in the game. March 15th is quickly approaching, and that will mark exactly one year since my partner and I closed on our first multi-family property. So in keeping with the tradition of anniversaries, I'd like reflect on the past 365 days and highlight a few of the lessons I've learned in my first year as a real estate investor.

Know Thyself

Wow! That's a really good saying! Glad I came up with it. Just now. From the top of my head. Don't look it up. But seriously, if I've learned anything in this first year, it's how important it is to know exactly who you are. By that I mean, know your strengths and weaknesses, especially your weaknesses. And if you have big, glaring weaknesses, don't sweat it! Take three deep, meditative breaths, and move on. It's critical that you don't let those weaknesses overshadow the things you're really good at, which I'm sure are plentiful. Humans have the tendency to dwell on the negative, often to the point where it prohibits action. This is probably what keeps the majority of "wantrepreneurs" from becoming entrepreneurs. And here is where a partner can be absolutely invaluable. I learned very quickly that I am no bueno at bookkeeping. But my partner, having owned businesses before, is quite proficient at it. So, despite my desperate need be involved in every single aspect of our business, I accepted my weakness and instead focused on my strength, finding and analyzing potential deals. Since we delineated those duties, we've become much more efficient.  

It's also equally important to know exactly how much risk you are comfortable with. Critically, and honestly, evaluate your financial situation, and know exactly how much you could afford to lose if absolute catastrophe were to strike. Hopefully, you've read every single blog and forum post BiggerPockets has to offer (maybe impossible?), and you know how to avoid the potential landmines lurking out there. But understand that in real estate, as with any investment vehicle, there are inherent risks. Don't put yourself or your family in a position to lose it all, but also don't swing for singles if you can afford to risk the home run swing and strike out once in a while. The point is, know your personal risk tolerance. 

Never Stop Learning

In my past life, I wanted to be a high school social studies teacher, so I went back to college and got my Master's degree in secondary education. That's just what you do when you want that reliable, 9-to-5, white collar job, or lucrative career in the trades. Unfortunately, there's no such formal schooling for those of us who want to become "real estate investors." But the good news is that there is just as much college-level information out there, and most of it is free, or very low cost. 

Just by visiting BiggerPockets (and hopefully creating an account, AND BECOMING A PRO MEMBER!) you've demonstrated that you are serious about learning the skills necessary to become a successful investor. Read blogs, browse the forums, including the ever-valuable comment sections, digest the information in the Guides available in the Education section. And don't ever stop. No matter which niche (boom, still got it!) or investment strategy you're interested in, there is a limitless volume of information literally in your purse or pocket at all times. Take advantage of that.

The first book I read, and that ultimately got me interested in investing, was "Hold: How To Find, Buy, and Rent Houses For Wealth," by Chader, Doty, McKissack, and McKissack." I've also recently read "Tips & Traps for Negotiating Real Estate," by Robert Irwin, and "Investing in Fixer-Uppers: A Complete Guide to Buying LOW, Fixing SMART, Adding VALUE, and Selling (or Renting) HIGH," by Jay P. DeCima. Each one of these books has sharpened my investing blade, and added tools that I've used LITERALLY JUST A FEW HOURS AGO. Seriously. 

And for those of you (us) that find reading a long, hard, inexorable chore, try podcasts and audiobooks. They are easy to listen to on your commute to/from work, driving the kids around to the seemingly endless evening extracurriculars, or before bed at night. Trust me, the information you retain by just having it on in the background will surprise you. 

Ask, Ask, ASK!

Remember that annoying kid in middle school that asked every single random question that popped into his brain. And everyone was, like, "Jesse, geeeeezzzzz, stop with all the questions! Let the teacher finish" And I was like, "Hey, shut up, it's my education, too!" Whoops, flashback city! Anyway, be that kid. When you read blog or forum posts, ask questions. Better yet, post your own questions to the forum. I can't tell you how beneficial my forum posts have been to me in this first year. Any time I've had a question or needed advice on a deal I was working on, I've taken it to the forum, and I've seriously incorporated tips from other members every single day. People are out there doing it, and at an incredibly high level. And they usually like to show off their knowledge a little bit. It's human nature. So benefit from that egotism. Or altruism. Two sides of the same coin. 

However, don't limit your queries to this one small corner of the Internet. There are people making ludicrous sums of money right now investing in real estate in your town. Find them. Pick their brain. PRO TIP: Instead of hounding your local investing expert for free advice over "a cup of coffee," find a deal and offer to spilt it with them in return for teaching you some of the ins and outs of the process. That way you bring value to the relationship immediately. In the grand scheme, the money you have to split with them will be minute compared to the knowledge you will gain, and in all likelihood, the relationship you will forge. (Disclosure: I learned this from BP Podcast 159 guest Nathan Brooks. Great Tip!)

Be Nike

Just Do It. For real. Take that leap. Make that first offer. Play a little hardball. Negotiate for better terms. Get a deal to close. Post your first Craigslist rental ad. Fix that fixer-upper. "Then what?" you ask? Then take what you've just learned, modify your plan, and do it over and over again. The point is, there is absolutely no substitute for taking that first heart-pounding step. Believe me, you already know how to do this. You're capable of great things. You just might not know it yet. Sure, you might stumble. Scrape up your knees a little. But it won't kill you. And chances are you'll do great if you just trust yourself and your process.

It's easy to get bogged down in the minutia. Analysis Paralysis has claimed the careers of many a would-be investor. The good news is, that's one fewer competing bid for that diamond in the rough you just found in that killer, up-and-coming neighborhood! Go get it!

Year In Review

My first year in real estate investing has been amazing, and rewarding beyond anything I could have imagined just 366 days ago. We closed on our first property in March, 2015. And our second multi-family in June, 2015. And we're close to completing a deal on our first rehab/resell (I refuse to call it flipping, where's the soul in that?). Yet somehow, none of it seemed like a conscious effort. It's like it all just happened. That's the funny thing about anniversaries; when you look back, you might not remember every single micro step you took along the way. But you took them. And you accumulated knowledge. You've become an actual real estate investor. And you can use that knowledge to do it again and again. My goal for year two is to think of myself as one. Live like one. Act like one. Negotiate like one. You get the point. I guess the great late-twentieth century poet Alanis Morrisette said it best, "You live, you learn." You sure do, Alanis. You sure do.