Investing In Real Estate Investors
With the never-ending changes in our Real Estate Markets real estate professionals are starting to pay attention to the sound of new commission streams of income. Some realtors have either shied away or ran-away from such terms as “Cap Rate,” & “Cash-on-Cash Returns.” Terms that only the ‘smart’ and ‘numbers-oriented people use to determine if a Real Estate purchase is a “Good Deal”, or not. A majority of the realtor brethren attended real estate school because they are excited and passionate about the promise of selling real estate and making a fantastic living. That being said “Times are a Changing.” Even if you live in a Hot Market where residential real estate sells in 2-3 days there is an old approach to real estate that is growing faster by the day…..Residential Real Estate Investors.
This deft group of real estate investors is taking real estate and the real estate investment world into a new era! No longer accepting the crazy volatility of the Dow Jones and NASDAQ families. Unwilling to accept the investment practices of their fore-fathers these Investors throw caution to the wind for returns above the traditional 5-6% in their Roth or IRA accounts. These Investors are bold and oftentimes aggressive. Today’s Real Estate Investors are all about the fast fix-n-flip, high appreciation, and rock solid monthly cash-flows. Cutting their teeth on investment in their own home-towns is only the beginning as the Serious Investors turn to points outside their own back-yards to other regions that demonstrate greater promise and higher returns. You may say well how does this older adult view their investment opportunities? For starters the age of these stealth hunters ranges from 28 to 68. From “Rich Dad-Poor Dad” book series to Trumps magical presence on “The Apprentice,” the young real estate entrepreneurs are making their dreams happen to the tune of 3-5 acquisitions a year! Got your attention now? The typical Investor has good to great credit scores. Excellent cash reserves or hidden resources of partners with cash, and a willingness to make the deal happen at nearly any cost. The best kept secret of all is that these investing beasts travel in packs. Where you see one another is very close behind. In other words they know the people that you need to know to grow your investor database even larger. If the real estate professional does a good job the happy clients are likely to refer many of their fellow-investors. Not just investor clients but their regular every-day real estate business. Face it, if you can demonstrate to your clients how adept you are with their largest personal purchase of real estate, then wouldn’t you suppose they will be over their “trusted real estate advisors” opinion on buying a basic home, condo or beach house?
So what if you haven’t been focused in the real estate investment sector. And you are thinking this all sounds pretty good, let’s give it a try. First question to ask yourself is who have your clients been working with or exploring their options of real estate investing with over the past 3-4 months. Statistically 6 out of 10 clients have considered investing in real estate or have already begun doing so before their realtor even has a chance to blink an eye. Got your attention now? How about the fact that in less than one year I increased my annual commissions by 30% by just positioning myself within my primary data-base of clients. All I did was let them know that I was ready, willing and able to begin assisting them with their “Investment Realty” needs. What I learned during the first year was that if I could create an environment for my clients to learn more about real estate investing that they would thank me in a variety of ways….Most importantly they would call me before writing a contract and would make sure that I was involved in every contract that wanted to make a real estate purchase. Before long 30% went up to 45% and further. Even if you aren’t interested in expanding your client database, at least consider protecting the turf you have for so long spent tireless amounts of time and financial resources to maintain their allegiance. On the other hand if you are looking at your real estate career and are wondering how to reposition yourself for market growth certainly to go well into 2025, here are a few known facts about how real estate investors can improve your business.
1. Real Estate Investors are literally everywhere. Successfully tapping into your current database could increase your annual commissions by 20-30%.
2. Real Estate Investors will be loyal to the professional that helps fill the gap of their investment education. Workshops, mentoring groups, finding the “golden deals” in your market makes a huge impact!
3. Investing in Real Estate Investors doesn’t have to mean that you lose your “typical” residential realtor position. Being a real estate investment specialist means you are smarter than the average realtor in the market.
4. Mortgage professionals are struggling to provide real estate investors with property deals, so when you can place an investor into a good deal the referrals will begin to flow even more.
5. Real Estate Investors tend to be more conscientious about your personal time away. Investors also like to shop Monday-Friday for their deals before the “Weekend Warrior” investors get out into the competition. This translates into more normal hours and days of operation for you and your business.
6. Real Estate Investors buy-sell cycles are shorter than primary home purchasers resulting in more transactions in shorter time-frames.
9 Mistakes Made by Novice Real Estate Investors
As a real estate investor and advisor, I often see novice investors make the same exact mistakes. As a result, I decided to create the following list to help novices understand what these common mistakes are and how to avoid them. The good news is that all of these mistakes can be easily corrected. The bad news is that any one of these mistakes will seriously limit your potential for success. In my experience, these are the 9 most common mistakes I see novice real estate investors make:
1) Not getting an education
Getting an education is a critical part of becoming a successful real estate investor. It’s much easier and less costly to educate yourself than to make mistakes in the real world. We are lucky to live in a country full of educational opportunities for whichever endeavor we want to pursue. Surprisingly though, not everyone takes the initiative to learn before they take action. This exposes these people to costly (and sometimes career-ending) mistakes that could have easily been avoided. Some misguided people even complain that the books, courses, or seminars promoted by real estate experts are too expensive. I guess that depends on where you stand. To me, they seem cheap compared to what I know can be earned in this business. Perhaps to a novice though, they may seem expensive. But as the saying goes, “If you think education is expensive, try ignorance.” Think about it. Is a $500 course worth it if what you learn only makes you $5,000 on a single wholesale deal? What if it could save you a mere $5,000 on a single rehab? Or what if it helped you create an extra $200 per month cash flow on a single property for just one year? Would it be worth it to you? The value of an education often doesn’t reveal itself until you’ve stepped up to the plate and put yourself in the game.
2) Not getting an education from the right people
The internet is a great tool. But it’s also saturated with too much information – good and bad. Oftentimes, from less than credible sources. So don’t confuse the information you find on the internet as necessarily being quality information. For example, there are a number of real estate investing newsgroups and blogs that have proliferated the internet. Many so called experts on these sites are more than willing to share enough information to get you into trouble. Do you really want to get your information from “rei-man-TX” or “investor-guy75?” Carefully consider whether these are truly reputable sources to be obtaining information from. I can’t believe some of the misinformation I’ve seen posted on these sites. Remember, anyone can post on a newsgroup and anyone can create a blog. But just because someone has a blog, doesn’t mean they necessarily know what they’re talking about. The misinformation you get may be costly…in either lost profits or reputation.
Novice investors may also get misinformation from friends or family members. Perhaps they dabbled in real estate at one point. Now they feel entitled to tell you what little they may know about real estate investing. Be extremely wary of people who have “dabbled” in anything. Dabblers are rarely experts in anything. As the saying goes, “Jack of all trades, master of nothing.”
3) Not taking action
If you’ve managed to get a good education from a good source, the next step is to take some action. Knowledge is only power once you begin to apply it properly. Merely buying a wide array of real estate investing products or attending bootcamps isn’t going to make you any money. Some novices neglect to take action because they’re still searching for that magical secret that is going to make it start raining deals. The real secret is hard work! Others are paralyzed by fear of what might happen if they get one of their offers accepted. Or, they may give up making offers if they don’t experience instant success. Whatever the reason, not taking consistent action is a sure way to fail at anything. Personally, I believe that initial failure is the universe’s way of forcing us to make sure we truly want what we’re pursuing. In the end, persistence is what leads to success. And the more we persist, the closer we get to success.
Many novices regularly attend their local real estate clubs. Clubs and associations are excellent way to network with other like-mided people, learn techniques and strategies, and have fun. Unfortunately, I’ve met countless club goers who have never done a deal before. Instead of using the club as a spring board into taking action, they tend to use the club as a warm blanket because they fear being out on their own. When I meet these people, my advice to them is to stop sitting around with the other novices talking about all the deals they would like to be doing. My advice is simple, go out there and get some deals done. We all need a good education. But that is only one step in the process. There is no substitute for hard work.
4) Not having realistic expectations
Most novice real estate investors have unrealistic expectations. It may be about the amount of repairs a property needs, the time it takes to complete a project, or the profit they should get from a deal. They’re expectations are either too high or too low. If they’re wholesaling properties, they may get too greedy and try to charge the rehabber too much. If they’re rehabbing properties, they may underestimate the repairs required. If they’re landlording, they may underestimate the amount of maintenance a property will require or forget to factor in vacancies. While getting an education plays a large role in these mistakes, another reason is that they did not leave enough room for error. They assumed everything would go as planned. Real estate deals rarely go exactly as planned. Experienced investors understand the importance of planning for the unexpected. This way, when things don’t go as planned it’s not the end of the world.
5) Not treating real estate investing as a business
Contrary to popular belief, real estate investing is not like the stock market. It is not a passive investment. It is an active investment. Whether a novice investor’s intentions are to flip or to own rentals, they sometimes think owning real estate is going to be a lot easier than it is. While the profit potential in real estate is usually much greater than owning a stock, it inherently requires more effort than most passive types of investments. Whether you’re wholesaling, rehabbing, or landlording, real estate requires your time and constant attention. In this way, it’s more like a business than an investment. For example, you must be disciplined about your business. You need to set a schedule for yourself and stick to it. You need to set policies and procedures and adhere to them. You need to set goals and do whatever you can to achieve them. Not everyone has that level of discipline without a boss telling them what to do. When you run your own business, you are the boss. You must be willing to make sacrifices to succeed. For you this might mean that you need to turn off the television and read your home-study courses. It might mean that instead of spending money on new clothes, you invest that money in your business. Or it might mean that instead of going to the park on Saturday you search the MLS, look at properties, and familiarize yourself with your target neighborhoods.
6) Not being patient
It can take awhile for novice investors to see positive results when starting out. You can’t expect to immediately find deals and make money. It may take several months to get your first deal. As a comparison, new real estate agents are often told by their brokers that it may take up to six months to close their first transaction. Similarly, real estate investors should expect to wait a few months to close their first transaction. Furthermore, it can take years for your real estate investing business to become a thriving venture. There aren’t too many businesses that become profitable immediately – no matter the type of business. It often takes several years for most businesses to get to a point where they make steady and reliable profits. Running your own business can be fun and extremely rewarding. But rest assured, the early years can be unpredictable. As a result, you need to have a lot of patience for things to take off.
7) Not concentrating on quality deals
This is one of the biggest mistakes I see novice investors make, especially after they have done a few deals. After they have some success, they begin to focus too much on quantity instead of doing quality deals. This mindset leads them to do less profitable deals. And once an investor begins to do thinner deals for the sake of doing more deals and outdoing their competition, they eventually find themselves in trouble. For example, I know many wholesalers and rehabbers who became too confident before the housing downturn of 2006 and loaded up on properties. When the market went south, these investors were left holding a lot of worthless inventory. Most of these investors went bankrupt and lost all of their properties. Unfortunately, this is a lesson that most investors learn the hard way. For some reason, avoiding the temptation to focus on quantity is a principle that most investors have a hard time accepting. Their natural inclination is to do more. They might feel the pressure to tell their friends what new project they’re working on. They might feel bored unless they’re working on something new. Or they might feel guilty about not “staying busy.” Whatever the reason, novices must learn that investing is an activity in which “staying busy” is not always smart. Sometimes, the best deals are the ones you don’t do. When an investor learns to concentrate on a small number of quality deals, they enjoy not only better profits, but also a better lifestyle since they’re not running around managing a huge portfolio of properties. For most people, the whole point of getting into real estate investing in the first place is to live a better quality of life, not to work longer and harder.
8) Not moving on from bad deals fast enough
Since novice real investors usually don’t have a steady stream of leads coming in and don’t know what a truly profitable deal looks like, they tend to overanalyze bad deals far too long. They get anxious and want to get deals done. And even when they put the numbers of the deal into their spreadsheet and see the deal clearly doesn’t work, they still find a reason to justify it. They logically know that a deal should be avoided, but they try to justify it anyway. While I believe everyone needs to start somewhere, the ideal place for a novice real estate investor to start is in a good deal not a bad one. What novices eventually learn is that not too long after taking on a marginal deal, a greatdeal is not far behind. But because they’ve tied up their resources with the marginal deal, they can’t pursue the great deal.
9) Not writing down goals
Don’t try to run your business without a clear plan. Clarify your goals by committing them to writing. Then, revisit them once a week until they become reality. Something magical happens when you write down your goals on paper. They begin to take root. When you focus on them repeatedly, you nurture them and they begin to grow. It’s important to write down your purpose, strategies, and goals. Begin by asking yourself the following questions:
- What strategy am I pursuing?
- What will I do with the properties I will buy?
- How many deals per year will I do?
- How much profit will I earn per deal?
- How many offers do I make to make this happen?
- What kind of life do I want to live outside of the office?
When you’re clear about your goals, you have a much easier time accomplishing them. And if your goals are unrealistic you should change them as necessary. Don’t get stuck in an unrealistic set of goals that will only produce frustration. At the same time, you shouldn’t change your goals too often either. It’s hard to hit a moving target. You want to strike a good balance between having reasonable, achieveable goals and also setting goals that will force you to get outside your comfort zone.
8 Characteristics of Successful Real Estate Investors
The age-old question in the world of real estate is: What does it take to make an investor successful? A person who knows what he wants personally and financially, a go-getter, a risk taker. Success can never be predicted with college degrees and PHD’s, but there are a few ways you can secure your investment on the path to a successful real estate investor.
Joint ventures, wholesaling and property management are just a few of the ways investors can profit from real estate, but it takes a little savvy intellect to become successful in this competitive arena. While certain universities do offer coursework and programs that specifically benefit real estate investors, a degree is not necessarily a prerequisite to profitable investing. Here are a few characteristics that successful investors have in common.
1. Planning ahead.
Real estate investors must approach their activities as a business in order to establish and achieve short- and long-term goals. A business plan also allows investors to visualize the big picture, which helps maintain focus on the goals rather than on any minor setbacks. Real estate investing can be complicated and demanding, and a solid plan can keep investors organized and on task.
2. Knowing the market.
Effective investors acquire an in-depth knowledge of their selected market. Keeping abreast of current trends, including any changes in consumer spending habits, mortgage rates and the unemployment rate, to name a few, enables real estate investors to acknowledge current conditions, and plan for the future. This enables investors to predict when trends may change, creating potential opportunities for the prepared investor.
3. Developing a niche.
It is important for investors to develop a focus in order to gain the depth of knowledge essential to becoming successful. Taking the time to develop this level of understanding is integral to the long-term success of the investor. Once a particular market is mastered, the investor can move on to additional areas using the same in-depth approach.
4. Abiding to a code of ethics.
Real estate investors are usually not obligated to uphold a particular degree of ethics. Although it would be easy to take advantage of this situation, most successful investors maintain high ethical standards. Since investing in real estate involves people, an investor’s reputation is likely to be far-reaching. Effective investors know it is better to be fair, rather than seeing what they can get away with.
5. Encouraging referrals.
Referrals generate a sizable portion of a real estate investor’s business, so it is critical that investors treat others with respect. This includes business partners, associates, clients, renters and anyone with whom the investor has a business relationship. Effective investors pay attention to detail, listen and respond to complaints and concerns, and represent their business in a positive and professional manner.
6. Staying educated.
As with any business, it is imperative to stay up to date with the laws, regulations, terminology and trends that form the basis of the real estate investor’s business. Investors who fall behind risk not only losing momentum in their businesses, but also legal ramifications if laws are ignored or broken. Successful investors stay educated and adapt to any regulatory changes or economic trends.
7. Protecting your assets.
Taxes comprise a significant portion of an investor’s yearly expense. Understanding current tax laws can be complicated and take time away from the business at hand. Sharp investors retain the services of a qualified, reputable accountant to handle the business logs. The costs associated with the accountant can be negligible when compared to the savings a professional can bring to the business.
8. Building a network.
A network can provide important support and create opportunities for a new or experienced real estate investor. This group should comprise of a well-chosen mentor, business partners, clients, or members of a non-profit organization, allowing investors to challenge and support one another. Because much of real estate investing relies on experiential based learning, savvy investors understand the importance of building a network.
Despite abundant promotions claiming that investing in real estate is an easy way to wealth, it is in fact a challenging business requiring expertise, planning and focus. In addition, because the business revolves around people, investors benefit in the long run by operating with integrity and by showing respect to associates and clients. Though it may be relatively simple to enjoy short-lived profits, developing a long-term investing business requires skill, effort, and these 8 important habits.
Real Estate Investors in Sydney and NSW
Sydney and NSW Real Estate Investing have hit many obstacles in the past 24 months. The latest obstacle has changed the ‘way the real estate investor does business.’ Petrol prices are at an all time high in NSW and travelling in Sydney has never looked so expensive! Real Estate suicide is found in prospecting for properties the old fashioned way. The savvy Real Estate Investor would have noted the more intensified utilization of the internet to obtain properties.
Real Estate sites such as realestate.com.au and domain.com.au have become house hold names amongst every day Australians. Sure, it’s nice to go to your traditional Real Estate shop front and obtain brochures etc. However, most of these shop fronts have their own websites and many Real Estate companies/agents no longer have shop fronts. Many Real Estate agents run their business and promote their properties totally online.
The Real Estate Investor therefore has that option to stay home and search for their properties online. Utilizing RP Data tools and others, research can also be conducted online. Though for a small cost, the real estate investor can have detailed information concerning a particular property without have had to step foot outside or fill up their car with petrol!
But let’s take this concept a step further. What has been detailed above is perfectly fine for the average house buyer and the unlearned Real Estate Investor. However, the true Real Estate Investors in Sydney and throughout NSW will not only need to access the real estate agents websites but they will also need to obtain GREAT deals online.
This is where the average Real Estate Investor gets into a pickle. Typically, when a website is run by a real estate agent, the prices will be set at a value that realistically is too high for the investor. The investor is looking for “The Deal”, which is normally made through negotiations with the seller and not the seller’s representative. Why so? Well, Real Estate agents want their commissions and ANY creative investment or purchase strategy that the Real Estate Investor proposes – is often frowned upon by the real estate agent.
Lease options, Property options, wholesale deals, rent to buy etc. are just not looked upon favorably by the real estate agent as it poses a possible reduction from their commissions … or simply they do not understand the ‘creative ‘ side of real estate investing!
Sydney lacks a strong Real Estate Investor community. To be quite honest, it’s very weak. NSW is also run by Real Estate agents or investors entering the ‘coaching’ field. Many will charge for their knowledge, which is understandable … but not really offering a network in which the real estate investor is able to obtain exclusive deals from. Knowledge is power, and I don’t dispute that fact – however there is no denying that an investor needs the great low deal. Sadly the internet will show a lack of Real Estate Networks in Sydney and surrounding NSW.
That is where the author has offered his services to the Real Estate Investing community of NSW and Sydney. A very simple concept really. The author is able to distribute great wholesale deals for the Sydney / NSW Real Estate Investor and build a strong Investing community. The best part of this concept is that there is absolutely no cost to any one involved.
The aim and goal for the author is to be able to unite Sydney and NSW Real Estate Investors where they have an exclusive place to receive wholesale property deals. These properties will range from a home needing to be renovated (ugly house), nice average house, vacant land for development, etc.
Sydney Real Estate Investors will now be able to get a great wholesale deal, see the house or property on their computers, utilize on line tools to check its market value – all from the comforts of home. No more leaving home for the Real Estate Investor.
Wow, the rain has hit Sydney and still NSW Real Estate Investors are able to make fantastic deals!