One of my favorite responsibilities as President of NWREIA & PAROA is mentoring real estate investors. Roughly 90% of my new clients are either people that I have helped for free in the past or people they refer.
I have helped hundreds of investors over the years and find new investors share similar questions or problems. There are three main hurdles that all investors must get over and in my experience the majority struggle with at least one of them. In my opinion, these hurdles are also the three most important skills of every real estate investor.
First is the ability to have a conversation and be likeable. An investor’s net worth is directly related to their network. Growing up I was an introvert. I was the kid who was friends with everyone in school but never outgoing, stood on the sidelines during dances, and was ultimately happiest alone with my thoughts. It was simply what made me feel comfortable. When I got into sales about ten years ago I realized that I had a problem. My natural state in a room full of professionals that I don’t know is to be quiet and just get through it. To be successful, though, I needed to learn how to “work a room” and have a pleasant conversation with complete strangers.
At first I took to reading a few books on how to be personable. Many of those books are very good reads and worth the investment. It finally “clicked” in my brain when I realized that the key is to relax, focus on the other person and listen. Without getting personal you ask about their work, their family, their goals, etc. Then sit back and truly listen to what they are saying. Fight the urge to interrupt and respond thoughtfully. The only thing that you should have running in the background of your mind during the conversation is trying to figure out how you could help them. Then it just comes down to the basics, being respectful and remembering your manners.
The second hurdle that new investors struggle with is simply getting started. Let’s face it, committing to your first deal is nerve wracking. You could lose all your money. You could go into massive debt. You could get sued or taken advantage of. At some point, you must take an educated leap into that first deal. Most people that talk about getting into real estate investing continue talking about it their whole life. The first question to ask yourself is, what happens if you never even try? Maybe you’re financially safe, but how many life goals will you be giving up on? How many years will you be adding to your retirement age? To me these thoughts are much more terrifying than the thought of failure or debt.
Remember that I said take an “educated” leap. Real estate investing is a risky business and much can go wrong. Do not skip your research and due diligence prior to committing to a deal. There will be a point, though, where you must take that leap. Trust in your analysis, education, and the advice that you received from your mentors.
The third hurdle is what I contend is the only major difference between the 5% who make a sizable living and those who struggle. That is the realization that this is not a hobby! Here’s a little tough love for you: either fully commit to making this happen or move on. When you are an investor you must treat it like a real job. The dream is of course to be able to work 10-20 hours a week on your portfolio, but that typically only happens after years of hard work. In the beginning, you need to commit as much free time as possible. The amount of time obviously varies for each person. but whether it’s five or 80 hours a week, keep moving forward. Eliminate time-wasting activities and fill that time with self-education, attending networking events, real estate investing classes, and searching for or analyzing your next potential deal.
If you feel ready to tackle these three hurdles the next step is deciding what your first investment will be. Typically, your financial situation will determine this. If you have some money to invest then you of course have more options. I suggest picking something that you are interested in and focus on that as your first. If money is tight or non-existent then you may want to consider starting with something like lease option deals, which don’t require a cash investment and won’t rely on your credit. There really is a first deal for every level of investor, which means there’s no excuse to hold back.
Get out there and get started! What are you waiting for?
If you need help finding or analyzing your next deal, let’s schedule a meeting.
President of IRC Real Estate & Property Management