With the warnings of a market slowdown in the air, you might feel concerned about your ability to continue to keep your head above water. The good news is, there’s no better time than now to put the market knowledge, network and expertise you’ve developed to work building your long-term financial strength through real estate investment.
What motivated you to get your real estate license? If you’re like many agents and brokers, you probably had visions of million dollar listings and the resulting financial success. And if you’re like many agents and brokers, you’ve probably found the financial reality falling short of those visions.
Many real estate agents work from commission to commission, with little left over to expand, market or save for long-term financial goals. Now, with the warnings of a market slowdown in the air, you might feel concerned about your ability to continue to keep your head above water.
The good news? There’s no better time than now to put the market knowledge, network and expertise you’ve developed to work building your long-term financial strength through real estate investment.
Networking for investment
One of the most important things you can do to begin — and succeed — as a real estate investor is to tap into your professional network and use your skills and background to expand into investor networks in your local market.
Just as you are looking for opportunities and expertise from the investors you meet there, they are looking for real estate pros with your skillset as well.
Finding events and groups
The first step in making good connections in the investment space is to look around your own brokerage. You’re bound to find at least one agent who works with investors or is an investor.
Take that agent to lunch and pick his or her brain, then ask for some introductions or suggestions.
Remember, there’s enough pie for everybody: Your investor friend can’t work every project out there, so they will probably be happy to help you find your own piece of the pie.
Meetup.com is an app that allows you to find or start a local group for virtually any interest you might have.
Join the platform, and see what real estate investor groups are already operating in your area, or if you don’t find any, start your own. Invite friends and colleagues from throughout the real estate sector — financial, development, title and legal — and put your heads together.
The National Real Estate Investor Association has chapters all over the country; you’re sure to find one near you.
You’ll find a variety of participants with varying experience levels, all interested in the various aspects of real estate investment. The more you attend, the more opportunities you’ll find.
Facebook groups, Quora and other online platforms can be a great way to connect with investors and affiliated pros. Try a networking app like RealClozer to meet investors across town or around the world.
Attend workshops and learning events, like Think Realty’s conferences and expos. You’ll learn, generate ideas, then connect with the people who can help you make those ideas a reality.
Create your team
You know a lot, but you need people to fill in the blanks in your knowledge and experience, especially when you’re first starting out in real estate investment.
Build a team to help and advise you every step of the way.
Whether you already know an experienced investor or work with a coach or consultant, you’ll need mentors who can help you with guidance and advice. Don’t try to reinvent the wheel — find a great role model, and let him or her help you throughout your career.
Real estate investments run on fast, affordable access to money. Although you might be able to do some deals with a traditional lender, you’ll often need to draw on private financing to help you meet your timelines. Find reliable sources of funding so you’re never caught short.
For repairs, refurbishments, renovations and advice, you’ll need a smart, reliable, honest contractor to help you properly price and complete the work.
If you choose a long-term investment strategy with ongoing property management, you’ll need reliable help for ongoing repairs as well.
Time is money in real estate investing, so a title company that can help you close fast will reduce carrying costs and help you stay profitable. In addition, you need a reliable title company that can ensure you don’t face unexpected financial setbacks from liens or other clouds on the title.
From contracts to contingencies to corporate structure, a great attorney can help you save money at every point in the purchase, development, management and sale of your property portfolio.
Think an attorney is expensive? Try a breach of contract lawsuit.
Finding a great deal will be a test of both your research skills and your negotiating skills. Tap into your network and sphere, then implement good, long-term lead generation strategies to keep an eye out for potential investment properties.
Circle prospecting is all about drilling down in a particular neighborhood or other micro-market and consistently marketing to that area. With the right combination of online, direct mail and good old-fashioned door-knocking, you’re bound to generate consistent leads.
Craigslist, Facebook and even the classic bandit signs are all marketing that are tried-and-true investor strategies.
Or create a content marketing strategy aimed at the populations that often need help from investors — divorcing couples, inheritors, absentee owners, financially struggling homeowners — along with lead capture to help bring opportunities into your sales funnel.
Don’t have an extra $100,000 lying around to go out and buy a property? Never fear. You really can start with nothing and build an exceptional real estate portfolio. It just takes time and the market knowledge you’ve already developed as an agent.
If you’re just starting out and trying to build a nest egg, wholesaling is the way to go.
Find deals, negotiate a price, and then assign the purchase contract to a more monied investor who wants to develop the investment for a few thousand dollars above the price you negotiated.
Slowly but surely, you can put together some savings in order to develop your first project.
With minimal time commitment and carrying costs, you can parlay your wholesaling savings into a fix-and-flip short-term investment.
This requires a good sense of what improvements and upgrades pay dividends on the resale and a reliable contractor to get those improvements done on time and on budget.
It also requires the ability to get the property sold quickly, so that you minimize carrying costs.
Take some of the fix-and-flip profits, and begin building a portfolio of long-term, buy-and-hold properties. Negotiate a bargain purchase, get them up-and-running quickly, and then get renters settled in.
Smart management and plowing your monthly profits into paying down the mortgage can help you create the leverage you need to buy the next (and the next) and lather, rinse, repeat.
Duplexes, triplexes and quads ($$$)
Once you’ve generated some profits and some equity in your buy-and-hold properties, use them to move into multiunit properties that pay even bigger dividends. Multiply your profits while minimizing carrying costs, taxes and maintenance bills.
As with your client work, you should operate with the highest level of integrity in your role as an investor. It’s not just good business — it’s essential for keeping your real estate license and reputation in good standing.
Here are some things to consider:
- Do not misrepresent local market conditions in order to scare sellers into taking your offer. Let the strength of your offer and the wisdom of your choice of property help you get the deal done, without using your position to mislead or victimize homeowners.
- Be careful of any appearance of impropriety when working with buyers or sellers. Ensure that you are making the required disclosures and that you do not represent clients with whom you might end up having a conflict of interest based on your investment in the property.
- If you work with other investors in your role as an agent or broker, ensure that you are not using your position to give you an advantage when competing with them for an individual property or for market share.
When you come at it with curiosity, respect and integrity, a move into real estate investment can pay tremendous dividends in both your personal financial life and in your professional reputation and reach. If you haven’t already, commit to making investment part of your 2019 growth strategy.