All Forum Posts by: Rishit Shah

Blockchain is being heralded as one of the most exciting technologies in years, and there's a good reason for that. The technology provides a way to leverage trust through distributed ledgers in order to create new business models. Blockchain has already been used successfully by startups like ubitquity (https://www.ubitquity.io/about/), which offers an immutable property record system that is backed by blockchain-based smart contracts on the Ethereum network. This post will explore how blockchain could transform real estate transactions and what it means for your future homebuyer and real estate investor.

Here are the 3 ways we think blockchain will transform real estate

1) Tokenization will allow for Real Estate to be traded like stocks

Tokenization will allow homeowners to trade their property the same way one would trade a stock. This opens up many new opportunities for investors and homebuyers by providing liquidity in an asset that was once difficult to get out of. The most important being fractionalized stakes, will make it easier for people with low income or credit scores to invest in properties they can afford, just like they would invest in stocks. While some companies already offer this using traditional systems, it is limited to upscale vacation homes. The ease of operation from tokenization will make the benefits of real estate more accessible to the average citizen and spread it across more asset classes. 

2) Less intermediaries required in real estate transaction

Blockchain will eliminate the need for intermediaries in real estate transactions. This means that there is no longer a third party to collect fees or protect against fraud or miscommunication between parties - eliminating opportunities for corruption and saving buyers thousands of dollars in closing costs. This eliminates complicated paperwork, which can be cumbersome and difficult to coordinate when working with international clients. The benefit here is not only convenience but also much lower administrative and legal costs.

3) Real Estate Fraud will become much less common

Real estate fraud can be difficult to detect when it happens, and blockchain provides a way of making transactions transparent. This is because the ledger system provides an immutable record that cannot be tampered with or changed without affecting other blocks on the chain. In addition to this, once information has been checked by all parties before being recorded in a block, there will no longer be any need for paper documents like deeds - saving time and money for both buyers and sellers. Blockchain's decentralized nature means that records are not stored in one centralized database where they could potentially be compromised through hacking, which makes it virtually impossible for someone to perpetrate real estate fraud undetected. Since information can be verifiable to peers, buyers and sellers can have more confidence in conducting transactions.

Blockchain is truly a revolutionary technology. While implementing this may have some legal hurdles and we are still far away from widespread use, we believe the benefits will outweigh any challenges to adoption. What do you guys think? Would want to use blockchain for your future transactions? 

The real estate market is broken into three broad categories: being a landlord, an absentee landlord and a real estate investor. The first two options require physical presence in the area of your investment property so they are out for most people who want to buy remotely. That leaves us with remote investors - people who invest in real estate across state or national borders without actually living in the area. Buying property remotely can save you the hassle of living in a market with high competition and offer better investment opportunities.

To be successful as a remote investor, you need to understand that buying property remotely has its own challenges. In this article I am going to give you some tips on how to overcome those challenges and start making money from home through investing in properties outside your region or state. Below are the steps I used to buy my first property remotely during the pandemic without ever visiting it.

1) Build a rockstar team

One of the biggest challenges facing any investor is the lack of local knowledge. If you're buying in a state or country where you've never set foot, this is even more important. One common solution investors use to solve that problem is investing alongside an experienced partner who does have local knowledge and can help guide them through the process.

The right team should include at least one of each:

• A qualified real estate agent - someone who knows the property market inside out and has connections with brokers, lenders and similar entities. An agent will also know how to transact deals without getting scammed (or at least minimize your exposure). Furthermore, most states in the US allow only licensed real estate agents to represent sellers.
• A qualified real estate attorney - someone who knows all the ins and outs of property law in the state or region you want to buy. This is important to avoid getting in trouble with a contract that was poorly written causing your deal to go south.
• An accountant - someone qualified to provide financial advice for real estate investments. Accountants are generally more conservative than investors when it comes to their advice because they have professional liability if something goes wrong (rather than, say someone who only has personal liability).
• A banker - someone familiar with local lending practices and willing to help you find the right lending program for your deals.
• A private lender – These guys act as lenders but typically take higher interest rates making them worthwhile only for short-term loans which you can later refinance into a longer term loan or sell the property and repay the loan.
• A Property Manager - someone experienced in property management who can handle find tenants and handle their issues for you.
• A contractor - someone experienced in renovation, repairs and maintenance of the properties you buy. They will be key especially if you are finding distressed properties which you plan on selling later.

One or more of these people will have a lot to do with your success as a real estate investor so make sure to find the best ones before diving into this business. Note that not everyone has access to such resources locally so it may be necessary for some remote investors to outsource certain roles (see below). Then again, if there is no one somewhere near you with the right kind of experience, why would you invest there? If you're going out of state or country then you should also agree on what types of problems require contacting your partners and how urgent they need to be solved.

2) Use the Internet to understand the market

A lot of people are reluctant to buy property remotely because they feel it's too risky. However, the internet has made this risk a lot smaller than it used to be.

• Use the MLS for local market research. If you're considering an investment outside your region or state then use websites like www.zillow.com and www.trulia.com to find out what is for sale locally in the area where you want to do business (I am using these two sites only for example; there are several other similar sites). The key here is not just seeing what is on the market but knowing how much such properties typically sell for . This can differ significantly from one geographical area to another and sometimes the difference is block by block so make sure to check with your agent for that local knowledge. Although some people use the MLS to buy property directly, it's usually best to do your own research first and then go directly to a broker with an offer (or at least an idea of what you want). This gives you more negotiating power and lets you see responses from multiple sellers so you can get better deals.
• Use online forums for local market knowledge. There are also plenty of online communities where prospective buyers and investors talk about real estate. The one I've found most useful is www.biggerpockets.com but there are others as well such as meetup.com where you can network with local investor groups to stay up to date with the market.

3) Use video tour websites

After you've found a suitable property in the local market, I highly recommend doing a video tour of the property to get a better feel for it. There are websites like www.craigslist.com that allow you to hire someone to take a video of the property for you so you can take a look at the property virtually. However, you must be careful about who you hire. You can also ask your real estate agent to do this for you but make sure you are not wasting their time. Send the video to your contractor for a gut check. They can often spot problems that may not be that obvious to you, especially in the beginning.

4) Always have backup team members in case one becomes unavailable for whatever reason.

Having developed my own local resources in the past, I have learned to have backup for every team member, especially the contractors so if they become unavailable in the middle of your project for any reason, you are not stuck in limbo.

If you're just starting out, tagging along with an expert may be another way to go. No matter whether you partner with someone or do it yourself, the most important thing though, is not letting yourself become stuck in analysis paralysis. With real estate investing, you need to make quick decisions or you will very easily get frustrated with the overwhelming thoughts and overthinking. If it's not working out at first, then change your strategy but don't quit!

Finally, remember that some of even the best investors have gotten stuck in dead-end deals early in their career (and went under from there) so do not get too discouraged if things are rough at first. If you meet lots of people, focus on educating yourself and build the right systems, real estate is going to be a sure shot path to success.

In a Rush? Don't need TLDR I kept this one short ;). 

We're more than halfway past 2021(Can you believe it?) and the real estate market has been red hot. Houses are still being snagged up over asking price and bidding wars are becoming the new norm. While there are some news about the market softening a bit, the market doesn't show any signs of prices lowering any time soon. Guess which sector of real estate investing becomes the most lucrative, especially for early stage investors in such times? if you said flipping you were spot on. But doesn't a hot market make it equally difficult to secure deals because the inventory is so low? This was the question I kept getting from a lot of people when I started talking about flipping. So let's address this question today. How do you keep finding deals in a hot market? The answer is simple. Look where nobody else is. Here are 2 methods I use to find deals significantly under market value regardless of the existing market conditions.

1) Old listing on the MLS. 

There could be a variety of reasons a property just sits on the market without selling, but the most common ones that I see are either exceptionally high prices (even for a sellers market these prices make no sense), the property needs some work or a combination of both. What I look for is the last kind of properties. Why look at the overpriced AND distressed ones? Because they are the least likely to sell. These properties tend to sit on the market for the longest times until the sellers realize their prices are way too high and start considering being more reasonable with their pricing. The problem? they usually wait too long before reality hits them. Their realization often comes at a time when the ship has sailed and most people interested in the deal have either found another property or have removed it from their watch list. At this point, selling gets much more difficult due to an already low interest in the property. Moreover, most buyers assume there are definitely hidden issues with properties sitting on the market for really long time. After all, if there weren't any problems, why hasn't anyone bought it yet? This drives away most buyers. This is when I often make a lowball offer and if the seller is motivated enough, they take it. Now, this is no secret and many other investors use this technique. However, competition is significantly lower at this stage and sellers are much more willing to negotiate, creating the perfect conditions for an under market value purchase. However, given the current market conditions, these have become increasingly hard to find, but not impossible. I found my primary residence during the end of 2020 using this exact method. Bottom line, there are fewer of these at the time of writing this article but they still exist. If your timing is right, you may end up securing a great deal.  

2) Bank REOs

(Note: There are several pitfalls that must be considered when dealing with foreclosures so make sure you study the entire process thoroughly and speak with your lawyers before proceeding).
These are foreclosure properties that weren't sold at any stage of the foreclosure process. Foreclosure processes can be long depending on state laws and usually, the information about a property's foreclosure becomes available early on when the notice of lis pendens or notice of default is filed. This is when the first stage of investors rush to buy the property. These are cash buyers who have systematic direct to seller marketing systems. They flood the homeowners with direct mails and cold calls in the hope to work out a deal with the homeowner and lender to settle the mortgage and buy the house in cash before it goes completely through the foreclosure process. There are some stellar deals to be found in this phase but the competition is tough. The better your systems for outreach and follow up, the more homeowners you can reach and more deals you can close. 

If nothing works out in the lis pendens phase, the next step is foreclosure auctions. This is when the lender has taken possession of the property and is trying to sell it off by auctioning it to the highest bidder. The catch? you don't always get to see the inside of the property. So what you are left is your own judgement of the rehab required based on the property's age, location, previous condition/ownership status and many other factors (the list goes on). As a result, it is very easy to end up in a pickle if you don't know what you are doing, which is why I recommend getting some experience, preferably with someone who is already doing this before even considering going in this direction. 

If the property does not sell in the auctions, it is then added to the bank's REO list, which is basically bank owned properties that they would make a final attempt to sell through REO agents. For me, this the best phase to buy. Why? At this point the banks are much more flexible with prices because they have exhausted all their options to recover their money. But why would I buy something that nobody wants? there must be something significantly wrong with the property right? May be. But that is the least of my concerns. In most cases, a fix is always possible. The problem? the cost of the fix. If the rehab is too large and the cost of purchase + rehab is close to or exceeds market value of the property, the purchase would not make sense. This is where good REO agents come in. REO is similar to MLS sale in certain aspects. The most important one is you get to tour the property. Once you/your contractor figure out the estimated rehab costs of the property after touring it, REO agents will work with the bank to negotiate a price with the banks for you in a way that the deal is a win-win for both parties. Now, these agents are hard to find. Bank REO sales are a pure relationship game and the better the relationship of the broker with these institutions, the higher are the chances of negotiating a win-win deal. So if you want to buy properties in this phase, make sure you network, network and network until you find a rockstar agent!

There you go. These are the 2 ways I have been sourcing deals for flipping even in a red hot sellers market. Do you feel ready to dive in head first and flipping homes after this information? What other ways have you considered for finding deals? Let me know in the comments below. 

 Agreed! It will be interesting to see how or if we can ever solve it. With more material used to build luxury and upscale housing it gets more and more difficult to profit from building affordable housing due to rising material costs. I think companies like Boxable have a chance to solve this by bringing a new kind of housing. 

Want to know how to benefit from these trends? Head down to the "How do I benefit from this section"

1) Built-to-rent communities are poised to be the hottest investments in the next decade

COVID-19 has officially reversed the decade long movement of people to urbanized areas. People are now doing the exact opposite. They are moving back to the suburbs. As suburbs come back in fashion, so does the demand for single family housing, but with a twist. As more people choose to rent instead of buying a house, they are now seeking the benefits of a single family residence with the amenities of an apartment community. They want a bigger backyard and more space but also desire a pool, play areas and dog parks. Built to rent single family communities stand at the center stage of best of both worlds. 

2) Transformation of retail

With COVID changing consumer habits forcing people to stay at home, e-commerce grew by nearly 60% in 2020. However, retail is not set to go away completely. As we go through this transformation, retail is not set to die completely. People still shop in stores and retail will not only survive but thrive after a few painful adjustments. As e-commerce booms and they grab a larger share of the market sales, more and more larger malls will being converted into distribution centers and self storage facilities. Along with that, we will also see return of smaller neighborhood markets and residential shopping areas with mix use of space for living, restaurants and retail sector. The primary driver for this will be the resilient nature of such facilities. The residential areas provide a recession proof investment while driving business for small local businesses which will be easily accessible to the people For example, checkout projects in north Austin in the resources section (2) 

3) Staycations are back in fashion, causing a boom in short term rentals demand.

With increased flexibility from freedom to work from anywhere, extended trips will become the norm. Along with that, the pandemic also made people fall back in love with staycations which we think will drive the demand for short term rentals. The increase in home prices will prevent new inventory from getting on the market due to diminishing returns. As a result, the supply will not be able to keep up with the demand. Checkout the data from AirDNA(3) in resources section. It shows that available listings may not recover to 2019 levels until as late as 2023.

4) Mass exodus of people from some cities will continue 

This ties partly into the first point. As mass exodus of people will continue from cities, most single family residences in suburbs will continue to rise in value. The biggest beneficiaries of this trend are the rougher neighborhoods closer to the city. With high home prices pricing people out of the established neighborhoods, people will move to the less attractive parts of the town leading to rapid gentrification. 

5) 15 minute cities are going to bring about a new kind of urban transformation

These cities will lay emphasis on creating new kind of cities where most amenities are accessible to people within a 15 minute distance. This will change the way people think about urban living. This trend will especially be more prominent in cities like Portland, NYC, Austin and Seattle due to the political scenario. For example, checkout the link to one such projects in the resources section(5). 

6) Big data analytics will transform the infrastructure

With big data assisted tools like dealCheck, AirDNA and Enodo, real estate underwriting, lending and market analysis will be transformed by making the data far more accessible to people. With subscriptions running as low as $50 per month, the information about future trends and how to profit from them will no longer be limited in the hands of those with bigger pockets (pun intended). In our opinion, this trend will create a set of winners and losers, just like the pandemic did for a lot of industries. Those who jump on the digital bandwagon will benefit significantly whereas the reluctant ones will have to suffer. Checkout links for these in the resources section (6)

7) Augmented Reality will transform the purchasing process

Augmented reality doesn't just mean requirement to wear bulky, cumbersome equipment on your face with limited functionality. Augmented reality also includes anything that overlays a digital layer on top of the real world. Guess what, your snapchat filters are Augmented reality too! With increasing computing power of the smart phones and tablets combined with incredible new technology like the Apple glass, technology could redefine the way we purchase homes. Virtual staging and virtual home tours from the comfort of your home could become the norm, reducing the need for in person showing through agents. As more people become comfortable with online home purchases, the number of real estate agents could reduce. The ones that do survive, will be able to provide far more services with the time consuming aspect of in person showing automated. Checkout links the source section (7) 

8) Bitcoin's technology applied to real estate could make real estate the next stock market

While explanation is of the underlying principles is beyond the scope of this article, the fundamental concepts behind backing this transformation will be blockchain, smart contracts and tokenization. Although currently limited by government policies, companies like RealBlocks, propy and BrickBlocks, with the ongoing efforts to ease securities laws for real estate, could make real estate investing accessible to everyone, just like Robinhood made stock market investing accessible to everyone. Checkout links in the resources section below (8)

How to benefit from each of these trends

Since the first 2 trends are focused on large scale projects where only option is to invest with companies doing these deals, we will start with the third point to see how rest of us can benefit from these trends

3) Purchase short term rentals in your local market or learn how to get your own Airbnb listing without owning a property. 

4) Look around in neighborhoods that you previously thought had no hope. You may end up with a gold mine of fix and flips.

5) Look at trends 15 minute neighborhood/city planning by large metros and strategically place your investments closer to these areas. These may require more patience but done right, the returns could be stellar

6, 7 and 8) I had to combine these since not much is known about these technologies and policies surrounding them at the moment. That being said, we think these are poised to be the game changers in real estate in the next decade. Keep an eye out and stay up to date on the latest tech news. Now might be a good time to renew your TechCrunch subscription. 

Resources

1) https://www.forbes.com/sites/forbesrealestatecouncil/2021/02/26/build-to-rent-btr-detached-housing-and-the-future-of-multifamily/?sh=73b5224414d1

2) https://www.texasnationaltitle...

3) https://www.airdna.co/blog/202...

4)

5) https://www.15minutecity.com/a..., https://www.portlandonline.com...

6) https://www.enodoinc.com/, https://dealcheck.io/, https://www.airdna.co/

7) https://www.tomsguide.com/news..., https://better.com/content/mos...

8) https://www.realblocks.com/abo..., https://www.brickblock.io/, https://propy.com/browse/

In a rush? Checkout TLDR below.

I recently came across this article where I read about California's proposed subsidy for housing purchase. https://www.businessinsider.com/california-dream-for-all-program-senate-democrats-new-home-costs-2021-6. The reasoning goes that this is going to help low income families afford a home in a market that is getting ever expensive. But is it actually going to work? Let's take a closer look.

First, we are going to understand what has led to the boom in some of California's most expensive housing markets in the first place. For example, let's consider San Francisco v/s another metro like Chicago. At the time of writing this post, there are roughly 531 homes for sale in San Francisco. The population is roughly 880,000. Simply put, there is 1 home for every 1657 people. On the other hand, let's look at another market like Chicago, IL where prices are more stable. At the time of writing this post, there are a little under 11500 homes for sale v/s a population of 2.71 million people. That is 1 home for 235 people. San Francisco is short of homes by a factor 7 when compared to more stable markets. So essentially, home prices in San Francisco have skyrocketed because of a lack of housing supply.

Now here's where things get interesting. Let's look at how subsidies work in a market like this. Let's consider a $250K studio apartment, the cheapest house I could find at the time of writing this post (check link in reference section). Let's say Joe , Matt and David are 3 people looking to buy a house in the bay area. Joe can afford the mortgage on the $250k, Matt can only afford the mortgage for $200K and David can afford the mortgage for $175k home. The government promises to subsidize 45 percent or $112500. This means the actual cost of housing is now only $137,000. This means now, along with Joe, even David and Matt can afford the house. Great news right? Not so fast. Let us zoom out a little. remember the shortage of supply we just discussed? For all 3 of them, there is still only one house on the market! So what happens now? armed with the new money from the government, Joe Matt and David enter a bidding war. Since Joe can afford the mortgage on $250,000, he still has the higher purchasing power to out bid Matt and David. Since they genuinely want the house and they were looking to spend the relevant affordable amount anyway, they keep bidding until their affordability is reached. Offering and counter offering, David exhausts his bid at $287.5K ($175K he could previously afford + 112500 from government subsidy), Matt at $312,500 and Joe at a whopping $362,500. Clearly, Joe wins the bidding war gets the house. But look what just happened here. Matt and David still don't have a house, and Joe payed $112500 over the asking price, just because he could afford to do so. Looking at this, other are going to realize that they can fetch higher prices on their properties too! So they will all raise the prices of their studios as well, which will eventually bring the asking price to the max affordable price of David and Matt combined with the government subsidy. In the end, the market prices simply went up bu 45% and David and Matt are still left without a home. So who benefit in this? The seller of the house at this moment? For sure. How about Joe? He got the house spending only what he would have spent before out of pocket anyway right? Let's see in the next paragraph how Joe, despite of being in a seemingly neutral position, is actually worst off than he would have been without the subsidy.

Let's say Joe wins the bid at $362,500 and starts living the house. Let's introduce a fourth character seller Jane to our story. Jane just made a whopping $112,500 extra on the house she just sold. Let's say Jane moves in with her partner and does not buy a new house with this money. She choses to invest large parts of her cash (after taxes of course) but because she has so much extra cash on hand, she decides to splurge a little. Let's for the sake of simplicity, say the only thing she can splurge on is restaurants in the town. She starts eating out at restaurants more often to enjoy her money. Just like Jane, many sellers who cashed out on the frenzy have extra cash and decide to splurge on the restaurants. As a result, the lines outside restaurants grow bigger than ever, which causes the prices to rise in face of this new demand. But what about Joe? He has no more money on hand than he would have without the subsidy. But, the price of consumer goods (in our case restaurants) just went up, so Joe can now consume less of it and has a lower standard of living. So if could have afforded to eat out at restaurants earlier once every week, he can no longer do so because of the increased prices. He now has to do it once in 2 weeks. But the restaurant owners got richer because of the demand right? Wrong.

The government just decided to subsidize 45% of a $1.3 trillion market (check the reference section. This is an old link I found but serves well for our example) Let's assume that at any point, 10 percent of this inventory is for sale (no data found on this but any number should work). So, the government would have to spend $130 billion(10 percent of 1.3 trillion) in subsidies for the total transactions in a given year. Since we simplified our economy to have only restaurants, we are going to bring down the spending by a factor of 1000 so the numbers don't look completely absurd. so after this adjustment, the spending is at $130 million. Where is this money going to come from? They certainly can't raise real estate taxes. If they do, now they would even push Joe out of the affordability and worsen the problem. The data will soon show what a huge mistake the subsidy program was. So they decide to start taxing the restaurants. So despite of increased revenue from higher prices, restaurants are no better off than before simply because of higher taxes.

A lot of assumptions were made for simplicity in this article, but the general idea can be simply expanded and applied to a section or entire commodities market. Markets behave in a weird convoluted way in response to intervention so predicting the exact outcome in terms of which commodity will be impacted in what way taxes a more complex analysis. However, the fundamental impacts on each class of people would be the same. The asset owners would end up richer, some of the businesses who are now paying higher taxes would be slightly or not at all better off, and the average person with no assets will end up worst off. In my opinion interventions that act against the basic concepts of supply and demand would in the long run cause more harm than good. What do you think? I would love to know. Post it in the comments below.

TLDR

1) California's housing market is unaffordable for a lot of people because of a lack of housing supply, not because of less money in people's pockets.

2) If the government subsidizes the housing by lets' say 45%, that means there would be more people able to afford the same house. But the supply hasn't gone up. This would result in an all out bidding war. The person who has higher resources (excluding government subsidy) would still be able to out bid the newer buyers who now entered the market. Seeing this, others raise the prices. Eventually, the housing market just went up by 45% and the ones without the house are still left without it. Thus the real estate owners get richer while others are left worst off

3) The money to subsidize this has to come from tax dollars which means higher taxes on local individuals and businesses, leaving them with less capital to invest elsewhere or spend on other consumer goods. In the longer run, a handful benefit while everyone else is left either same or worst off.

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $150,000
Cash invested: $240,000

Bought it as an HUD property. ARV $275K

For the most part you could use the following methods

1) Look for an internet presence: If you find a good internet presence, it means this person has taken the time and effort to create a reputation online, which means they are more likely to be genuine than others.

2) Know what you are doing and ask lots of questions: Before jumping into any kind of investments, I often read several books to educate myself. I then go and talk to different people and ask questions I already know answers to. If I learn something new, I come back and verify it online. This in a way helps me verify their claims to a certain extent. 

3) Ask for references: This partly ties into the second point mentioned here. When I speak to references, I ask them a lot of questions too. After that I try to fully understand how they have worked with this person together and how their experience has been. 

4) Do a background check: Some people may be completely fine with it while some may feel offended by this. If you are going this route, it is best to put it on the table in the first few meetings. The later you do it, the more awkward it gets. Strangers asking for a background check is much more acceptable rather than someone you have an established relationship with

5) Have a bullet proof operating agreement: This is the most important which is why it is also the last on my list. If you don't get a chance to do any of the above, you should probably take a step back and think if you are being too hasty. However, even if you have done some or all of them, make sure you have a reputable and knowledgable lawyer on your team. They should be able to educate you about all the worst case scenarios and ways things could go wrong. 

I really loved your question. I will be expanding on some of these points, especially point 5, in my upcoming articles and instagram posts. Click the follow button here and on instagram to stay updated with these!

Good point. Would definitely recommend starting there 

(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.