Often people ask me ‘How do I get started in real estate?” I struggle with this because
there are so many different ways. Typically the asker has very little money, is in a dead
end job they don’t like, their life position is not fulfilling and they’re looking for an easy
Real estate is the perceived way to riches – but in reality its just 1q. Maybe the
person is making $20,0000-30,000 a year and they read about people making $40k on a
single wholesale deal and say to themselves, “this is for me.”
The truth is real estate is hard. Very hard and competitive. Any low hanging fruit that can
make you $40k quickly is going to get picked. Then we’re reaching higher on branches,
climbing ladders to reach more fruit and eventually we’re all in the tree tops fighting over
half rotted deals.
Real estate is not easy. If often takes years of learning and continued efforts to succeed.
I’m a slow learner and it took me about 2 years before I made my first dollar. Since then
I’ve had amazing successes – my first real deal made me $128,000 in around sixty days.
I do not consider myself rich. My business is growing and I work non-stop typically 7am
to around 8pm. Last night I got home at 10pm. My mind is constantly working deals and
searching for new niches in the market.
How do you get started? You get started now by learning knowing it may take years of
efforts before there is any headway. In my mind it is a war of attrition. For every 100
people that start within 3 months the attrition rate is perhaps 70%. Within a year it is over
90%. Just be the last man standing and never give up.
1. Become a Deal Maker.
Find someone looking for a deal and then feed them a
below market deal – and stay in it. For new construction ask for a back end profit
share (perhaps 10%) or if it is a rental get a piece of the monthly rents. TIP: all
investors can look on the MLS – you have to produce a discounted property not
on the MLS.
This is finding a below market value deal and selling it to investors
for a fee. Many people see this as an easy way of making money – which it is not
– and to me it is not true investing – it is a job. Don’t get me wrong – I’ve
wholesaled quite a bit. I don’t think many truly get rich wholesaling so if you learn
it use it as a tool to learn your market and then move on to other avenues. The
advantages of real estate are lending, borrowing, note pay down, appreciation –
none of which you get in wholesaling (or flipping houses for that matter).
3. Volunteering/Interning for a successful person.
This is the cheapest way in and you’ll have access to a successful business model.
4. Becoming a realtor.
I can’t speak to this because I am not one – but it will put you in an arena with deals and money.
The fear is that you will get trapped in the world of realtors. A surprising few actually own rental properties and take their own advise and invest.
A quick note about Rehabbing. I know it is on TV and it seems so sexy to take a beat up
house and make it gorgeous again. I do not think this is a good option for
beginners. And like wholesaling – it is a job. If you stop working the income stops.
A crucial part of this discussion is that real estate is financing and banking. The sticks
and bricks get in the way. Understanding how banks lend, the market value of properties
and controlling emotions in a game where mistakes can cost $10-50,000.