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The Story of A 22 yr old and A Real Estate Dream – Part 3 (Creating My Team)

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.

Having my real estate license was the gateway to developing my team and becoming the investor I am today. When I started, I was a realtor working for investors. Buying properties for other people enabled me to meet people I otherwise would not have and learn about the process. Most investors thought they knew contractors, but most of the time I ended up managing their contractors, an invaluable learning experience nonetheless. Costs estimates were often off, and the timelines were ballpark at best. Budgeting correctly seemed to be another pain point, with some investors overlooking something as considerable as forgetting to budget the 6% in closing costs once they sold the property. To help my clients succeed and aid in my own confidence as an investor, I needed to “have a guy” for everything.

Finding A Bank

As a Realtor, I worked with a number of traditional lenders writing conventional, VA, and FHA loans for clients, so I had a basic understanding of the inner workings of the loan process. What I didn't get is why they wouldn't fund a flip or rental property for me. I always got the same answer, "Fannie Mae and their compliances won't allow us to lend on a flip." Also, I was self-employed, which if you're self-employed you know what I'm talking about (it's near impossible to get a traditional loan). So I made it my mission to find a commercial bank or lender to help me and those around me get deals done. After countless emails and calls, I finally found a local bank and lender that offered exactly what I needed to start my career as a real estate investor. The first meeting I had with this bank, I may not have had a ton of income or assets to show, but it was obvious I had my ducks in a row. I knew the property I was presenting to them for financing was a great deal, but it was my job to convince them. I gave the bank countless pages of comparable properties, explained my plan for the property, ARV (after repair value), and gave them a time frame. I was ready for any question they had for me. After I had presented them all the information they wanted and answered all their questions, I got a simple "We'll take a look at it, but it doesn't seem to be a problem. When are you wanting to close on this property?". Needless to say, I was beyond excited but kept my poker face on so I didn't make them second guess their decision.

Real Estate Attorney

Due to me being a Realtor, my journey of finding a good real estate attorney came pretty easy. I had worked with many different closing attorneys thus far, and each one had their pros and cons. In Louisville, I have yet to meet a closing attorney or title company that has not been amazing to work with. Without giving any recommendations (sorry I’m not allowed to), I chose a closing attorney and title company that aligned with my goals. Not every title company or closing attorney wants to deal with messy titles or to assist you with complicated titles from the commissioner’s sale. Mostly through trial and error, I found the perfect fit for my team.

Contractors

The most arduous task I have run into and still struggle with is finding qualified contractors. It was not only a struggle to find qualified contractors that weren’t crazy expensive, but it was also difficult to find contractors that would show up on time or even come to the appointments that were planned. I leveraged being an agent and asked as many of my fellow agents for referrals, I called property management companies, and I looked on Angie’s List, Yelp, and Thumbtack. I also tried hiring employees to do the work (nightmare). This became an endless battle. I thought to myself “How are these guys I’m reading about flipping 10 houses at a time?”. The light bulb went off in my head. From that point on, anytime I saw a house under construction or being flipped, I would stop and get the contractors card and contact info. I now have a Rolodex of business cards and contractors. In my market, a good contractor doesn’t have time for a fancy website or time to advertise; they get all their work through word of mouth. Their time is spent working, not advertising.

When I bought my first property, I didn’t have the correct team in place. It was still profitable and a great learning experience, but I had to create a better system and team. Through trial and error, I have found my team, and it has been amazing to work with people who understand what I am trying to accomplish.

If you enjoyed this article, make sure to check out the other articles in this series.

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 My Team

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

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

"$10K-$100K in 12 Months"

I graduated college with the entrepreneurial bug as many of us do. What to do? How to indulge in the success of those that we idolize the most? Real estate was the word that seemed to come from the mouths of successful people in all settings and stages of my life. What in particular was it about real estate? Here is a brief snapshot of how I started and where I am today. Over the next few weeks, I will post in-depth articles about my path navigating the real estate market. I am not wealthy and don’t drive that Audi R8 of my dreams, but I am a regular guy on his way. I want to share with you the early stages of my real estate journey and how it has changed my life.

After graduating college with a finance degree, I went to every real estate seminar I could find; I read countless real estate books, and then got my real estate license to really understand how this industry works. As a Realtor, I attracted real estate investors as clients. With my passion for investments and real estate investing, my young age didn’t matter. Real estate investors wanted to work with me because I understood the numbers and how to make them money, and that’s what I did. After a year of learning and gaining experience as a Realtor and working with real estate investors, a light bulb went off in my head. It was time for me to take action and do the exact same thing I was doing for other people: Buy and rehab the property, sell the flipped property, and collect a check 3 to 4 times that of my real estate commission check.

We have all heard “no money” or “low money down.” That seems to be the theme of most the books I read and seminars I attended. I am not a fan of most of those programs. I started with some capital, and I have now gotten to the point with any deal I do, if I choose to, I can make it happen using other people’s money.

My real estate investing career started with $10,000. With the help of other people’s money and partnering when needed, I turned that into $100,000, and that was only within the first 12 months of my journey. I was still working as a Realtor and running a property management business, so don’t use the time excuse with me.

Real estate has changed my journey in life and is bettering my family heritage. What I have done can be done by anyone, any age, and any market. Analysis paralysis can paralyze a new real estate investor. Do your homework, read, and study what you’re doing, but at the end of the day, the only way you’re going to make some money is to get out and do a deal. The fastest way to get rich is to get rich slow, so start now.

I will be in attendance.