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Skills of the Real Estate Investor: Creativity and Negotiation
Creativity
Creativity in real estate is one of those unsung skills that can easily and effectively set you apart from your competition. Note that I’m not referring to creativity in the artistic or ‘left brain vs. right brain’ sense. Creativity in real estate means being willing, able, and committed to out of the box thinking, and bringing that philosophy to every aspect of your business. There are several primary areas of your business where this will benefit you.
First, you have marketing. Marketing is one of the easiest arenas in which you can express yourself creatively and it doesn’t just mean having the most unique appearance to your marketing message or media. It just means having a nice diversified approach to marketing your business and, by doing so, going the extra mile that your competition will not. Second, you have the actual approach to working with clients. Creativity here may mean nothing more than just being a good person and presenting yourself in a way your clients will not be accustomed to. Anything that sets you apart from other investors can be a form of creative expression, and such things will benefit you.
You want to have command of the fundamentals of real estate investing so you objectively are seen as competent. Beyond the basics, a creative or otherwise unique approach to your business will help to demonstrate that you aren’t afraid to march to the beat of your own drum and be comfortable doing so. Peers and clients alike will respect what makes you unique.
Ability to Negotiate
Negotiation is another one of the fundamental skills that all successful real estate investors possess. Why is it so important? The better question might be to ask why would it not be important? Negotiation is involved in establishing a professional team, interacting with clients, and getting your deals tied up and completed. It is an essential part of the business and, whether you educate yourself or get trained in it, or simply learn by getting out there and working deals, this is definitely something you need to work on because none of us are born negotiators.
My important fundamentals of negotiation that you should strive to command are:
- Educate yourself as to what all parties are trying to achieve.
- Ask good questions.
- Listen to what the other party has to say.
- Understand the needs of the other party.
- Have the courage to ask for what you want.
- Don’t always accept no for an answer.
- Be prepared to deal with opposition or objections to what you present.
- Learn to ask the same thing in different ways, multiple times.
- Be able to confidently justify your requests.
- Don’t make decisions based on desperation, impatience, or emotion.
- Be prepared to give if you receive, and vice versa.
- Have the wisdom to know when to walk away.
Focusing on these key areas does not have to be a monumental task. Just be committed to the fundamentals outlined above and remember that most anything is negotiable. Never just take things for granted and presume you have no opportunity to negotiate because few things are truly like that, either in life or in business. A mentor of mine said it best, “what comes out of your mouth goes into your bank account.” The worst thing that people can say to a request you make is no, and if that happens simply ask for something else, or ask it in a different way.
If you take away anything from this
article on negotiation let it be this,
you will never get what you don’t ask for.
Your commitment to being a good negotiator will be apparent to your clients and to your peers. Your goal is not necessarily to be seen as shrewd, but rather as someone who is always open to discussion and willing to find that ideal outcome that benefits everyone involved. This commitment becomes a part of your business philosophy.
I have experienced many success and some failures when utilizing my negotiation skills. However, I am a firm believer in learning form other’s mistakes. That’s why I put together an incredible gift for you to avoid costly real estate investing mistakes. Check it out:
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The Skill Sets of a Real Estate Investor
It’s no surprise that certain skills will benefit you as an investor. That said, it does beg the question, ‘What are the skills necessary to be a successful real estate investor?’ You may have your own ideas on this and I have mine as well. Some of what I present will seem logical and some of it might also surprise you. The idea here is to both confirm some things you may already be aware of as well as enlighten you to additional skills to help you succeed.
For starters, let’s list what I see as the most common skills a real estate investor would need to have to be most successful. I’ll then elaborate on each in time so you see exactly where I’m coming from and why I think these things are important to your accomplishments. Investor skills include (in no particular order of importance):
- Ability to make decisions quickly (take action)
- Creativity
- Ability to negotiate
- Ability to explain complex processes in a clear and understandable fashion
- Ability to eyeball the physical characteristics of a property and use that to determine improvement costs
- Ability to analyze the potential for a particular real estate deal
- Ability to understand exit strategies
- Ability to keep one’s emotions out of a business decision
- Ability to minimize personal risk
- Ability to always do business with integrity (add paragraph about this)
Before I get into the details of these specific skills, I want to point out (as you may have already noticed from the list above) that I did not include things like detailed market knowledge or being handy as essential investor skills. Many investors falsely presume they need to have such skills to be successful in this business and I just don’t agree with that. The skills I just mentioned are useful but also those that can be delegated to your professional team and thus not critical for your success. With that said, let’s look more closely at the skills I do see as more important.
Ability to Make Decisions Quickly
Quick decision-making and the ability to take action is one of the hallmark skills of a successful real estate investor. Note I’m not suggesting in any way that decisions be rash or careless. What I’m referring to instead is the efficiency and timeliness in which decisions get made. The more knowledgeable you are, coupled with ever increasing levels of experience, the easier it will become to make quick decisions. There are several reasons why this is such a valuable skill.
First, quick decision making puts you in line to capitalize on those great deals that you are exposed to in the course of running your business. Slow decisions and too much analysis lead to great deals being lost and I don’t want to see this happen to you. Too many real estate investors, especially beginners get what is called “paralysis of analysis.” They get stuck analyzing the numbers over and over, and the neighborhood, and the situation, etc only to find out that they’ve analyzed themselves right out of the deal usually before they’ve even made an offer or gotten a property under contract. This is not the way successful investors do business. If this sounds like you then break this habit immediately. Get a property under contract and then do your due diligence, not the other way around.
Then after you’ve done all your due diligence ask yourself, “What’s the worst that can happen?” If you can correct the worst from happening before you close on a property then do it. If you can’t, but still want to proceed, just make sure that your decision won’t keep you awake at night. If it won’t then you should probably do the deal. If it will, then you should probably walk away. Keep in mind that the goal of this discussion is about being efficient with your decisions. It will only happen a couple of times before you really start seeing the value of this skill. Remember, I’m primarily talking about making offers here. You can make a quick decision and still have time for due diligence so don’t think of this as opening you up to greater risk because that isn’t the case.
Second, quick decisions give you valuable experience in thinking on the fly and getting into the habit of acting and responding as if your income depended on it. This will not only benefit your business, but also give you valuable confidence that you can keep up with the pros out there and that you are more than just a newbie. Most people get a feeling about something and then analyze this feeling and then act. I’ve trained my mind to do the opposite. I prefer to make a decision and then deal with the feelings and repercussions of my actions after the fact. Have I made mistakes based on this method of thinking? Absolutely. However my successes have always greatly outweighed my mistakes, and therefore I have no doubt that this learned skill has greatly attributed to the achievements of my business. Lastly, one of the greatest benefits of quick decision-making is the boost it will give to your authority. Clients and peers alike will respect your ability to think and act quickly and will establish you as a force to be reckoned with.
The Attitude of the Real Estate Investor - Continued
Flexibility
A significant and important part of an investor’s attitude has to include flexibility that allows the investor to work with a variety of situations they experience. Flexibility is generally an admired trait, and perhaps better stated, a lack of flexibility is often a negative. Flexibility is not just having an open schedule in which to make appointments. It is an underlying attitude of open-mindedness that naturally welcomes a variety of scenarios and potential outcomes. This is a healthy attitude to have because few deals go exactly according to plan. Be flexible, and you’ll be both more successful and more influential with your clients.
How do you rate yourself, on a flexibility scale of 1-10? It’s OK if you are low or in the middle; the important thing is to be honest with yourself. Many strong personalities have more of a ‘my way or the highway’ approach to life and to business and, if this sounds like you, then flexibility is something you likely need to work on.
Humility
Humility, as a component of attitude, is a nice counterbalance to confidence. Humility has been an admired trait in people for a long time and I think, in moderation, it has its place. What I mean by this is, too often, investors can overdo the humility and, in doing so, be seen as either soft or weak. This can be a disadvantage when working with other investors or more assertive clients.
The proper dose of humility can actually work to your benefit. Humility is essentially an expression of ‘Hey, I’m not that different from you’ or ‘I’m no better than you are’ or “I made a mistake and I’m sorry” and can be an indirect way to establish some basic rapport with a client. It effectively offsets confidence by adding a certain human side to a display of confidence and makes the client less prone to see your confidence as arrogance.
From a basic attitude standpoint, I think it is effective to truly think of yourself as being an equal of most people you encounter. If you truly believe you are better than someone else, then maybe you are arrogant and you will just have to do the best you can with that. Too much humility can make you prone to think you aren’t worthy of the success that you do deserve and can foster self-sabotaging behavior. As is usually the case, a good attitude is somewhat about balance and the right balance of confidence and humility can take you a long way.
Commitment to a Favorable Outcome
Underlying the repertoire of every successful real estate investor I’ve met is a dedicated commitment to a mutually beneficial outcome for every deal they complete. While I’ll talk a little more about how this fits into the skill of negotiation later, I think the spirit behind this commitment is a critical part of a good investor attitude. After all, if you are in this business just for the money and do not care what outcome is achieved for your clients, sooner or later that approach will catch up with you. That is just my opinion and I have seen that greed can go so far but does have a tangible end of the road, and I’d love to see you take a more favorable path.
It is more than just a negotiation strategy. It becomes an underlying part of your attitude and could even be more effectively described as a sort of philosophy for your business. When a real estate investment business has such a philosophy, it carries over to most every aspect of how you communicate. The commitment to that ideal outcome will appear in your marketing message, it will be reflected in how you talk to clients, and will be more apparent than you think.
Before you know it, this type of philosophical commitment will actually start resulting in more deals. Why? It will be because this component of your attitude has permeated every part of your business. You will be seen as more sincere because people will enjoy talking to you and will be more responsive to your business proposals. I’ve seen this attitude-based evolution in many an investor and it is always a fun thing to watch unfold. It can happen for you too, so make the commitment to yourself and to how you will do business, and it will just be a matter of time.
It is natural that the formation of a good attitude may be something that you need to work on a little bit. I like to believe that many of us are naturally positive people, but as you’ve seen, there’s more to a good real estate investor attitude than just that. It’s what goes into a good attitude that will also contribute the most to your success and growth. Why do these things need to be built or worked on?
Well, the basic components of who you are as a person will still shine through in your attitude as a real estate investor. If you’re naturally friendly, this will reflect in your attitude. The components like empathy, confidence, and commitment to a favorable outcome may take a little time to develop as you get comfortable in your business and learn more about how things work. For example, it’s real easy for someone to say ‘Just be confident’ but, if you are just learning the business, this may be easier said than done and the confidence will come as you get more experienced and absorb more education.
The bottom line is this. Who you are does shape your overall attitude. What you learn and add to your vault of experiences will mold and refine your attitude and your business.
Continue to refine the components of a successful investor. I’m still offering the tools that will help, check it out here: www.freemakemoneygift.com/Invitation.html
The Attitude of a Real Estate Investor
How important is attitude in the world of real estate investing? It is extremely important, so important in fact, that it can make a huge difference in the overall profitability of your organization.
The typical reference to attitude that you’ll hear is heavily laden with emphasis on how it always needs to be positive. ‘Stay positive!’ or ‘Be positive!’ are the two calling cries of this approach and I can’t say that I disagree with this at all. I just happen to think there’s a little more to it than that. A good attitude has two critical components: what you feel inside and what you convey to the outside world. Today, I’d like to explore three components of a positive attitude friendliness, empathy and confidence.
Note that I’m not highlighting ‘raw exuberance’ or any reference to the classic ’smile and nod’ approach to pleasing clients, or in some cases, people very close to us. In short, a good attitude is not about exuding energy or being constantly agreeable. There’s just superficiality to that approach that I believe many clients can see right through.
Friendliness
This first component of a good attitude is also perhaps one of the most obvious. Naturally, an investor who comes across as being a bit of a jerk (and unfortunately I’ve met some like this) is not going to be seen as favorably but those that fit this category probably have their reasons. For example, the jerk might say ‘Hey, this is a business and I just treat it and everyone I’m around as if it is a business.’ Sure, treating a business like a business is important but I think a comment like that is just a euphemism for ‘I’m a jerk; deal with it.’ The bottom line is that some people just aren’t nice and probably never will be.
You can look at this and shake your head or you can look at it as a golden opportunity. The jerks of the world are going to bring their bad attitudes to the clients and colleagues they meet and that will only make those of us who are friendly look that much better. Just being professional, cordial, polite, and courteous are elements of the friendly investor’s approach. The integrity comes not from investment expertise in this case, but rather from just being a decent human being and the value of that alone should never be underestimated. You are in a people business and being likable can go a long way towards your ultimate success.
Empathy
Empathy is simply defined as seeking to understand a situation or the needs of another person. It is sometimes confused with the similar term sympathy and there is a significant difference between the two. Sympathy is to actually feel bad for someone and, in doing so, absorb the emotional impact of someone’s situation. Empathy is no less sensitive but involves less of the emotional side of a situation, making it much more objective which is a good thing for us as real estate investors.
The way that empathy manifests itself is to simply be interested in someone’s situation, ask questions, and legitimately want to understand what is going on. When you can convey this to your clients, it can give you a tremendous amount of respect because you actually are interested in what is going on with the client. Empathy is not just asking questions, though. It is a part of your attitude and will show in both your tonality of how you speak and body language so your empathy must be sincere in order for it to show to a client.
In the world of real estate investing, it is common to work with clients who are in distressed situations. Empathy is an extremely valuable tool to have in your attitude arsenal because clients want to be understood more than they want someone to feel bad for them. Your empathetic attitude keeps a level of business professionalism around your approach but also shows that you care, which can be a very potent and effective combination.
Confidence
What exactly is confidence? This state of mind is often misconstrued and I think unfairly so. Often times, the confident individual who gets a bad rap is seen as arrogant or, in the case of more laid back demeanors, smug. Is this fair? In many cases, no, but that is how it is and I would like to offer my opinion here on how to convey confidence without overdoing it.
To best illustrate this, let me offer my definitions for arrogance. Smugness, or at least the perception of it, is just quiet arrogance so the same definition will apply to both. Arrogance is a display of confidence that (a) cannot be backed up by real knowledge or experience, (b) is used to demean or patronize another, or (c) both. Arrogance is of course a little more flamboyant and is more noticeable but smugness can be equally detrimental. Many people who themselves are not confident will see any display of confidence, quiet or exuberant, as smugness or arrogance, even if the label is unwarranted. As you develop more confidence in your business, you must work to make it an effective part of your attitude but also be aware that it can be seen the wrong way. Confidence mixed with the right infusion of humility and simple expression of knowledge may well serve you in avoiding being unfairly tagged as arrogant or smug.
The bottom line here is that confidence can be effectively demonstrated through having good knowledge in a particular area without coming across as a know-it-all. In short, when you educate yourself as an investor, that knowledge will show up at some point in the form of confidence. That first meeting you have with a client where you feel sure of yourself and are able to convey that to the client can be a breakthrough confidence builder. When you can consistently convey knowledge-based confidence, the impact on your local reputation will be significant and can mean great things for your business.
Learning how to avoid costly arrogant mistakes will help build your knowledge-based confidence. It is part of my Free gift to you.
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Story Time – “My First Mentor in the Business”
When my retail coffee shop business failed, I knew that I needed to pick a direction to go from there. My choices were, (1) pursue the passion that I had acquired for real estate from my books, or (2) go find a 9 to 5. Well, since I wasn’t married, didn’t have children, didn’t have money, I decided that I didn’t have much to lose, so you guessed it, I went after my passion for real estate investing.
Upon doing some networking in my area, it turned out that one of my business relationship friends knew someone who was active in real estate investing. The problem was, he lived in Louisville, KY and I lived in Lexington, KY. I asked my friend to introduce me to this guy. Little did the investor guy know at the time, that I was a man on a mission and I was going to work for him whether he liked it or not.
With time, I professionally pursued the new relationship and became an “apprentice” if you will, to this investor. It really was a win-win relationship. I would drive an hour to Louisville every day to work for this guy, willing to do whatever it took to give me more knowledge about the business. Overall it was about a six month period where I wasn’t making a penny, but I was getting an invaluable education about how to make money as a real estate investor.
Eventually, the time came where I was either going to move to Louisville and work for this guy full time, or stay in Lexington and start my own real estate investing business based on the knowledge that I had acquired. At the time, it was the scariest thing that I ever did, but I decided to make a go of it on my own. I was extremely fortunate to have been able to experience the business from someone already in it. This mentor, mentee relationship was invaluable to helping me gain confidence and get started as a real estate investor. I wouldn’t wish for it any other way.
This method of learning was so beneficial to me in my early days that I have made it a personal commitment of mine to reciprocate and give back to other aspiring real estate investors looking to achieve great success in this business.
You must constantly invest in your education as a real estate investor if you want to achieve great success and longevity.
That said, businesses also don’t succeed on pure drive and determination, although it could be argued that these things are ultimately what helps keep businesses afloat through growing pains and other challenges. In short, your vision and courage are most admirable but they aren’t a substitute for properly educating yourself on the nuances of your business. In this case, you still need to be able to understand the numbers, prepare paperwork, evaluate market conditions, interact with people, negotiate effectively, and ultimately determine the profitability of the real estate deals you pursue.
The adage ‘Do your homework’ has multiple applications in the world of real estate investing. Sure, it can refer to proper evaluation of deals, adequate due diligence, or even timely reliance upon your professional team. I’ll discuss these things in future articles. In the here and the now, the idea of doing your homework also means getting yourself properly educated in the business and, if you haven’t done enough to this point, there’s never been a better time than now. Now, make a commitment to education and treat this part of the process just like you would any other aspect of your business and success will soon be at your doorstep.
I will suggest a great first step - I am willing to provide you with a Free gift to really explore your potential in real estate investing. If you are serious about educating yourself and learning all you can about this business, you must take a look and decide for yourself how far you want to go.
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The Education of the Real Estate Investor - Final Comments
Personal Coaching/Mentoring
One of the single most valuable pieces of education you can get as an investor is to work one-on-one with someone who is more experienced than you. Someone who has been there, done that. This can often be arranged for a fee. However, do not expect this to be inexpensive, remember, you are paying for someone’s time and years of experience. Either way, you can get the following benefits:
- Education from someone who has had both successes and failures
- Education in a one on one environment
- A chance to voice your own goals and interests
- A way to get all of your questions answered
- A way to learn at your own pace
Naturally, a coach or a mentor needs to be qualified to give you the most benefit so you need to choose carefully. The confidence that a coach or mentor gives you can be tremendous, because as you grow your business, you have a sort of partner (at least in mind or spirit) who can guide you through your early development. Some seminar programs offer these types of mentors and others can be found through networking locally. I highly recommend this tool and have met many successful investors who have benefited from it so please take my advice to heart, because this one piece of advice could potentially shorten your learning curve and enhance your initial chances for success as a real estate investor better than any other training tool available.
Experience (aka the School of Hard Knocks)
Some investors adamantly argue that this form of education is second to none but I don’t think it’s a prerequisite to quickly becoming your local real estate investing guru. I’ll be the first to admit that experience is a necessary part of an investor’s so-called curriculum. After all, what good is the rest of an educational package if it is not put to use in the real world? Experience based education is certainly valuable in its own right and can be a mixture of both good and bad experiences such as the following:
- Facing litigation
- Having to go to court to evict a tenant
- Having tenants trash a property before they move out
- Losing an escrow deposit
- Taking a loss on a property that ended up being a money pit
I could go on and on and I think you get the idea here. Experience can make us wise to what happens down the road and, in the absence of some background education, can also be quite painful and expensive. Experience can and should be considered a beneficial supplement to some other forms of training, the type of training that can help you avoid certain key pitfalls in the first place. Using a well-rounded mix of education is perhaps the most valuable thing you can do and it perhaps will keep you from blindly accepting what comes your way as ‘just a part of the learning process.’
Experience is something that all investors gain over time and I’ve always found it helpful to gain from the experiences of others before embarking on something new myself. Teachers who are willing to share both their knowledge and their past experiences (good and bad) are abundant in the world of real estate so why not take advantage of this before having to experience all the ups and downs yourself like you were the first person who ever tried it. Take my word for it; there is no substitute for experience in this business. You just don’t have to experience all the possible mistakes and poor decisions yourself to learn from them. We’ve all made mistakes and we’ve all made bad decisions, and anyone who has been in this business for a while, as I have will certainly attest to that. Learn from this, learn from the experiences of others, and your own educational journey will be a smoother path to success in real estate investing.
The bottom line is this. Education is not just a hot topic for the news media and for politicians. It is an essential part of being successful in any kind of business. Just to remind you, you don’t need a traditional education (be it a business degree, MBA, etc.) to be a success in this business. Numerous studies have shown that traditional education, despite what benefits it offers and value it may have, is anything but a solid indicator of future financial success.
I am dedicated to helping others learn real estate investing. You just can’t beat working one on one with someone who can take you through a deal step by step, guiding and assisting you the whole way. That type of learning is invaluable and will be an investment for ALL your future deals. If you would like to learn more about my mentoring groups, please go to:
http://www.ultimaterealestateinvestors.com/membershipsignup/membership-levels/
Huge opportunities await you!
The Education of the Real Estate Investor - Continued
Attending Meetings at a Local REIA
One of the easiest and most cost effective ways to educate yourself as a real estate investor is to attend local meetings with groups organized just for you. REIAs (Real Estate Investor Associations) are very popular, are widespread, and can provide valuable information to you at a reasonable cost. The low cost and convenience of REIAs are two clear upsides. The downside is that the organizers dictate the topics that are presented and who does the presenting. You have little control over what you learn and when because you’re not making that call. My suggestion is to use this as a component of your educational process and, especially if you want to get on the fast track to success, this should only be one of the many areas of learning for you.
Membership in a REIA gives you credibility, and not just from the education you will receive. You’ll also have the wonderful opportunity to network with other investors and get your name circulating around. These investor peers are people you may likely do business with in the foreseeable future. Wouldn’t it be nice if they were already familiar with you?
Seminars
It seems like the real estate seminar concept has been just beaten to death at times but be that as it may, it is still an educational outlet that produces countless successful investors each and every year. There must be something to it, beyond the cynics who claim it is ‘gimmicky’ or a good way to part otherwise decent people from their hard earned money.
I’ve been around this business long enough to be at least familiar with most of the top seminar speakers out there and I’ve compiled a brief checklist of things to consider when evaluating seminars as an educational option. First, expect to pay more for seminar education. It will be more expensive than other types of education so be aware of that up front and don’t be one of those investors who expects something for nothing and walks away grumbling about the cost of the education, citing it as some sort of rip off. Yes, some programs are better than others but they will educate you and will usually do so in a shorter time frame than many of the other options you have.
Second, look for a company that has some diversity of training programs. Many seminar speakers like to hone in on the hot topic of the day (e.g. auctions) and fail to educate their attendees on some of the more basic fundamentals. Last, be ready to learn. Adults learn more slowly than young adults and need more repetition for things to stick. Therefore the learning process can be tiring, especially if you still have a traditional job. Real estate doesn’t have to be a full-time venture at first but, if seminars are your choice of education, be ready to spend some time at the training events and be ready to do what they tell you to do.
In almost all cases where seminar attendees are dissatisfied with the education they received, it comes down to whether or not they did what they were taught to do. When and if you decide to invest your money in seminars, boot camps, books, tapes, CD’s, DVD’s, etc. always keep in mind that you are paying a premium for this information because it is information that could make you a lot of money. However, it will always be up to you to take the information you invested in and put it into action. Your investment in this information is worth nothing unless you act on it. Therefore, if you really don’t have the time for this intensive style of education, that’s fine. Choose something that fits your schedule and be OK with learning and growing your business more methodically. That’s perfectly fine and especially if that’s what best fits your current obligations and lifestyle.
Seminars are often comprehensive, giving you a crash course or ‘boot camp’ of sorts for real estate investing, and thereby accelerating your educational progress and quickly preparing you in the lingo you need to be familiar with. An investor attending a comprehensive seminar may pay more up front for their education but it is usually highly focused and gives them the ability to almost instantly go out and start working the business like someone with more real time experience. For the passionate beginner who wants to learn and learn fast, this may be a great way to go to both get educated and, by doing so, give you more confidence to immediately go out and start making things happen.
Seminars also put you in contact with a variety of potential peers that have goals similar to you. Take advantage of this by exchanging business cards and making contacts for future reference and support.
Coming next, my personal favorite, mentoring and coaching. So, be sure to check out that post in a couple days. In the meantime, consider accepting this Free gift from me to you. Go here: www.freemakemoneygift.com/Invitation.html
The Education of a Real Estate Investor
What do you think of when you hear the word education? Do you think of the fundamentals, like the ABC’s? Do images of the hallowed halls of your alma mater come to mind? What about practical education? Did you need a certain degree or even certification for your current profession? Any or all of these things are reasonable interpretations of what it means to be educated in today’s society. That said, how does education apply to real estate?
Real estate investing, for as valuable commodity as the product is, is a profession that doesn’t require a degree to get started. Sure, policy makers when it comes to real estate interest rates and such have a finance background. Sure, some of your team members have a solid educational background (CPA’s and attorneys come to mind) but most were not trained in real estate specific areas. What about realtors and mortgage brokers? Basically, it works like this. You take a training course over a few weekends, pass a test, and you can be licensed to either broker real estate or issue mortgages. Not exactly the pinnacle of educational scrutiny, now is it?
Don’t get me wrong here. I’m not scoffing at the training certifications for these professions because you, as a real estate investor, need even less formal education to do what you do. There is no requisite certificate or degree that stipulates you are able to invest in real estate. All you need is the desire, right? Oh, I wish it were just that simple. If you think about it, part of the animosity faced by real estate investors from other professionals in the field may be due to just that. We’re out there making offers, working deals (at least if we’re doing what we’re supposed to) without any sort of training. From the standpoint of the critics, it’s just a step shy of real estate anarchy! I of course don’t see it that way and yet I find it useful to see things from an alternative perspective from time to time.
Although informal and absent professional credentials or certificates, education for the professional real estate investor is available and can take any number of forms. Many investors to their credit and benefit take advantage of several of the education options available to them. Some of the most common forms of real estate investor education include:
- Books and/or audio materials
- Attending meetings at a local Real Estate Investor Association (REIA)
- Seminars
- Personal coaching/mentoring
- Experience (aka the School of Hard Knocks)
Let’s take a moment to explore books/audio material. In posts to follow, we will go through each of the forms I listed previously. Again, while no one educational outlet can ever promise to deliver everything you need to be successful, every little bit helps and can help build your arsenal of knowledge.
Books and/or Audio Materials
Never underestimate the power of a good read. I heard someone say that once and I have no doubt there is truth to the statement. As an investor, however, you must look at books (or their audio equivalents) as resources, rather than your primary source of education. Just to rehash, books can provide you with the following: Basic real estate knowledge, inspiration, a financial vocabulary, an overview of real estate techniques and examples of how to interact with clients.
The list could be longer but my point here is that books are a basic type of resource, giving you so-called ‘literacy’ in your craft. They may also be your source of inspiration. Perhaps it was a book that first gave you the idea to become a real estate investor and, if so, that’s great, because for me it was a book that originally sparked my intrigue with this business. What books do not and cannot give you however, are real world experience and they should never be a substitute for going out, interacting with other investors, building a professional team, and simply working the business.
I’ve seen many an investor who had an impressive real estate “library”, full of books, home study courses, and even audio and video materials. Sure, it looks impressive, but the real validation of a real estate investor comes from actually doing deals. I’m in no way discouraging you from acquiring reading materials, as these will all help you educate yourself in some way and build the confidence in your ability to step out of your comfort zone to succeed.
What you want to avoid is the tendency to keep acquiring more books, looking for that proverbial ‘golden nugget,’ when your fear of taking action is what is actually holding you back. This may not apply to you, but if it does, take a more rounded approach to your education, get out there and start physically working the business, and it will be easier to cross that hurdle into success.
And while I’m on the subject of good books that may trigger your go button, I have one you should consider. Check it out here:
www.freemakemoneygift.com/Invitation.html
On, Wednesday I’ll continue to outline resources for educating yourself as a real estate investor.
Professional Real Estate Support Team – Final Installment
Team Member 12- Hard Money Lender
A hard money lender is a type of financier who specializes in properties that traditional lenders would often avoid, usually due to the condition of the property. The presence of a hard money lender on your team validates you as a serious player in your market because it allows you to pursue deals that other investors might walk away from and therefore allows you to reach more potential clients. In addition to allowing you to produce more revenue for your business, hard money lenders also help refine your evaluation of potential deals. These financiers will only fund a certain percentage of the property’s value so it also helps establish you as a better negotiator.
Team Member 13- Private Mortgage Lenders
This Team member is a big difference from the Hard Money Lender described above. Maybe you’re one of the fortunate few who has plenty of your own capital to invest in your own business but many investors (including myself when I got started) are lacking in this area and need to work to raise capital as part of their business development. Private mortgage lenders are vital to credibility for two key reasons.
First, if you can sell the concept of your investments and your business model to those who might provide you with funding, you can certainly sell it to your clients. Pursuit of private money gets you thinking differently about the upsides of your business and this will make you more effective as both a salesperson and as a negotiator. Second, the ability to immediately produce capital to fund a particular deal gives you tremendous leverage, and this value cannot be overstated.
Team Component 14- Assistant (Live or Virtual)
When businesses get busy, some sort of day-to-day help is inevitable and the process of bringing on an assistant can be critical to the business’s ongoing success. When you think about it, this is all about maximizing the time you can spend earning. Let’s discuss both factors. First, there’s the basic element of business productivity. You can only do so much yourself, and if the need to hire an assistant becomes real for you, then it probably is an indicator that things are going well enough to justify doing so. Believe me, you’ll thank yourself in the end for doing it. There are various kinds of help you can utilize. There is of course the person who comes to the office and helps with phone calls, filing, and knocking out things on the so-called ‘to do list’. There are also virtual assistants, who handle things from afar and can be great for taking incoming calls, responding to emails, monitoring web activity, etc.
At some point, your time will become too valuable to be doing the things an assistant can help with and having a perceived ’staff’ will also bring valuable respect to your business by offering the appearance of a larger organization than may actually be the case. You don’t have to create the image; people will perceive what they will and, if that gives you a boost, so be it. My suggestion is to look at this team member as a time saver and revenue builder first and foremost. If and when you do take the leap to bring on additional help, you’ll wonder how you ever got by without it.
Team Component 15- Support Network
Your support network is your friends and family who support what it is you are doing as an investor. They are also professional colleagues who are following similar paths to success and who equally appreciate the challenges and hurdles encountered along the way. It is vital to have some sort of support network and also important to recognize that it may not be principally composed of those closest to you. I’ve met many an investor who have told me that unfortunately those closest to them are the ones that challenge or question why they were pursuing real estate. In the absence of a good professional support network, this kind of input can be, at a minimum, demoralizing and, in more extreme cases, prone to drive otherwise motivated investors right out of the business.
The importance of a support network is not just to get pumped up and stay motivated. You should be able to fuel your own fire, at least to a certain extent, because that is just a part of being in business for yourself. Consider this, professional athletes make the big bucks because they are the best at what they do and because they are self motivated people. You need to strive to be the same way. That said, recognizing that external support is important is a critical part of being successful in business, you must get that support wherever you can find it. Maybe it is on the home front and, if so, then you’re fortunate to have it. Maybe it’s from a professional mentor, someone who chooses to take you under their wing to help you grow in your own business pursuits. Maybe it’s a mastermind group of like-minded businesspeople who meet with some regularity to challenge each other and help fuel each member’s own success.
Your team is important to the long-term success of your business. If you don’t already, you should view yourself not as a CEO, but rather a CLO, Chief Leverage Officer. Your professional team is depending on you to leverage their skills, which in turn creates a win-win relationship. First, a team expands your effective level of experience. Many investors find that a lack of experience is a drawback, especially when a client asks ‘How long have you been doing this?’ With a solid professional team, you as an investor can cite that your ‘team’ has _____ years of experience and boost your own credibility without having to emphasize your own lack of experience.
Second, a professional team establishes an overall level of reliability by demonstrating that you have ready to go resources available to you. It adds a definite level of professionalism to suggest that paperwork will be reviewed by an attorney, properties will be managed by a company dedicated to doing so, and that closings will be handled and managed by a licensed title company or closing attorney. Clients love the feeling that the situation is handled at all phases and I feel it looks better to have team members involved, rather than presenting yourself as a one stop shop.
Like it or not, your clients (buyers or sellers) are your customers and they need to have trust in what you do and must want to do business with you. An investor who is able to delegate many parts of the purchase and sales process to their team has the time to do what they do best, which is to focus on the human side of the real estate business. Trust me, your clients will notice this level of attention to their needs, will see it as a validation of your reputation, and this will translate into more deals and more consistency for your business.
Interested in learning more and how to utilize all your support team members? You need to check out my real estate investing tools. Go here:
www.freemakemoneygift.com/Invitation.html
Professional Real Estate Support Team - Part 3
Team Member 9- Financial Planner
Now that you are in business or are at least considering it, do you think it will change your financial outlook? You certainly hope that it will and it behooves you to be prepared for the changes that are coming. A good financial planner is just an essential part of modern money management and you may want to have such a professional behind the scenes to help streamline and optimize your financial growth. Are financial planners critical to negotiating deals on properties? No. Are they critical to you feeling comfortable that you are operating within a defined plan that actually has a chart and a course? Absolutely. When you have confidence in the big picture of what your business is doing, you will be more confident and that will show in how you handle yourself and as you meet new people.
As a spin off to this topic, you may also want to look into adding a self directed Roth IRA into your plan for retirement. Imagine buying and selling a property and the proceeds from that sale going directly into your self directed Roth IRA, which means you’ll never have to pay tax on that money (when you follow the rules). This may sound too good to be true, but trust me it’s not. If you haven’t already, you should look into setting up a traditional Roth IRA now while the government still allows you to and then converting it to a self directed Roth IRA down the road when you are ready. A qualified financial planner who has experience in self directed Roth IRA’s should be able to help you with this, but do your own due diligence as well.
Team Member 10- Property Inspector
A dedicated property inspector is not necessarily one of the foundational team members you will need for your real estate business but is important all the same, especially as you start purchasing properties that you intend to keep for a while in order to produce monthly income. The presence of an inspector on your team helps you both avoid problem properties (aka the money pits out there) and also demonstrates to others that you are serious about your purchases and are ready to perform all necessary due diligence before ever completing a transaction.
The best way to find a good inspector is through a referral. Try to find an inspector that can also provide you with, or knows someone that can provide you with a certified termite inspection and a mold inspection. These two little hidden demons can cause you serious problems down the road if you don’t take the appropriate precautions up front. Take it from me, I have the scars to prove it.
Team Member 11- Property Management Company
I learned a long time ago that property management is not a profession for the weak. Maybe many of you are very compassionate people at heart or tend to generally trust people you meet. These are redeeming qualities but will make you a poor property manager. Managing tenants may not seem to be that big of a deal but, if you believe this, you’ve likely never had to coordinate a difficult eviction or deal with a ‘professional’ tenant who likes nothing better than living rent free. In short, if you’re serious about owning rental property, I believe property management is an essential part of your professional team. Pay someone else to deal with these problems while you utilize your time to invest in more deals.
Personally, I don’t do straight rentals, but rather lease options or seller financing because I want my tenants to feel like homeowners. I want them having the feeling of home ownership in the property and maintaining or fixing up the place rather than trashing it. I find that if they have a vested interest in the home it results in fewer problems. When problems do arise, the existence of property management in your world of real estate investing will save you countless hours, reduce stress, and also boost your credibility by showing the world that you are running a business like a business and, in doing so, that you recognize your own limitations. Forget the investors you talk to who insist that managing your own properties is the only way to go. Most I’ve met who feel this way look like the business has aged them 15 years and I don’t think it’s just a coincidence. Sometimes the best thing you can do is to admit you need help with something and this is a great example of that point.
In my next post, I will discuss the last members of your real estate support team. I appreciate the comments that are shared about any of my articles and encourage you to continue sharing your thoughts. If you haven’t already, be sure to check out some of the material I am giving away for only shipping and handling costs.
Go to: www.freemakemoneygift.com/Inviation.html
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