Held an interview today for recruiting someone to take charge of the marketing at Commercial Real Estate Association, went pretty well. Then I went to Shasta and took out all the construction guys for a sushi lunch. The guys look like they are going to have a late night.
Then I went over to two properties that an agent needed to get offers for. One was on a hilltop in Chula Vista with an asking price of $175,000. After looking at it as it was really chopped up, messy, no garage, had building violations and even had a $9,000 fine that the seller wanted the buyer to pay I felt $100,000 was a more likely figure.
However when one doesnâ€™t have any information on the property before going to look at it, it can be tricky to give a realistic estimate. So there really should be a qualifying system so that while agents will always choose you to call first when they have a property, you arenâ€™t running all day wasting time looking at properties. As you make it easier for agents to call you this system becomes all the more important once you start getting 5 -10 property review request each day. Eventually one can also train others to look at the propertiesâ€¦ I might pick up one of the guys working on the construction job at Shasta.
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How do most people start investing in real estate? They save money, they borrow from friends & family and they risk taking credit. Or they try sophisticated techniques like no money down deals which even the experienced real estate investor often has difficulty in succeeding with.
Therefore, they start investing with friends and families money without experience and are not going to be rewarded for their time and efforts until their first deal closes to buy then sells for a profit. Or they may try to bird dog, which is finding and tieing a property with their own money many times, then trying to flip it to another investor. This, technically, could need a real estate license anyway if not done correctly and on the other hand, if the investor doesn’t buy the property you are stuck.
Whereas if you had a real estate license you could enjoy the following benefits:-
Lock the property, not your money.
Instead of using your money to make a down payment and lock the property, use your license and lock the property by getting a listing on it. That way you can tie up any number of properties and will never be limited by the amount of funds that are at your disposal. You can use the listings to sell to anyone who may be suited for that investment. Also, your listings are generally 6-12 months that means you have 6-12 months to sell the thing and are not pushed to sell for undue consideration.
Gain wisdom, not knowledge.
You may have read dozens of books in investing in real estate. You may have even attended a couple of courses and now you think you are ready to part with your precious money? Think again. Just as you wouldn’t run off to Las Vegas and marry someone after a few email exchanged but would date them for some time, similarly you shouldn’t invest in real estate without some live experience either. If you have a license you will typically wok through five to thirty deals a year. You will gain practical and live experience of the mechanics of negotiating and the purchase of a property. You will have access to MLS and will also start building relationships with other real estate brokers and agents. The only aspect you will not be directly exposed to is the actual operations and management of the property. However, you can gain insight in that too if you want just by asking your buyers how their properties are doing, if there is something you can help them with etc. That way not only do you build your relationships, but you also gain valuable insight without having to have paid for it through your own mistakes.
Build a network of assets, not buy a chain of properties.
If you have a real estate license you can gain access to innumerable people. You can start developing and maintaining relationships with all of them. If you nurture them then each of these contacts can become an invaluable asset. Some will bring leads of properties, others of buyers. Some will help you save money while others will allow you to make money. All these assets can be created without any significant monetary investment. While on the other hand, to build a chain of properties requires a significant amount of funds to be invested, and while we may wish otherwise, that’s often not possible.
Learn from the Masters, but maintain more accurate information than they do!
With your real estate license you will have the opportunity to work with and learn from the most sophisticated investors. These are the best type of people to work with as they know exactly what they want, therefore you will learn to look for what they have learnt to look for. However, you will be the one on the phone calling sellers and buyers every day and you will actually be helping others make deals. Therefore you will have a better handle on the price and other metrics of the properties that you specialize in than they do, even if they are a full time real estate investor. This way you can actually gain the best of both worlds.
Follow your interests, not your burdens.
It is common knowledge that one will do something much better if they are passionate about it. Similarly with a real estate license you can select and start working in any niche that interests you. So if you feel retail is right for you, then work on brokering retail property. If you feel multi family is the way to go, then go ahead! Start talking to appropriate buyers and sellers and understand the advantages and disadvantages of working in that segment. You will also start being introduced to other specialists who work in your niche so you will come across appraisers, contractors, lawyers and a wide assortment of other professionals who are knowledgeable about your niche. These are people who you can immediately choose to work with when you decide to invest in your own properties.
On the other hand when you started out in real estate, you may have bought an industrial property. However it is possible that you quickly find that the industrial segment isn’t for you so now you have to wait the process of disposing of that property and again finding another property that is in the segment that you wish to work in. This not only makes you lose time, but also lose interest, and therefore eventually, lose the opportunities. Also after all it is better to lose a commission than to lose your credit.
Choose how far you want to go, not how far you can go.
Real estate is such a vast market that irrespective of the niche that you decide to work in, the opportunities within that niche are so many and deep, that if you are persistent and systematic, you will certainly build wealth beyond your expectations. Of course it is important that you do set specific goals and these may be specified in terms of an annual amount of positive cash flow say $100,000, or in the value of wealth built at the end of a period, say $30 million in assets.
Get started when you want, not have to wait to build resources.
If you are trying to enter the real estate business then you will need to wait to build a certain amount of capital before you can get started. Whereas if you take the real estate brokerage route, there is nothing you need to wait for.
What! you’re still here reading? Shouldn’t you be at the Department of Real Estate?
For a copy of the actual article that was featured in the San Diego Daily Transcript click here to go to the download page and download the article.
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