Helloooo investor friend!
Being in the trenches as a full-time investor since 2003, I’ve learned a thing or two about growing an investing business. I’ve done a lot of things right… and I’ve made my fair share of mistakes along the way.
So, I’m sharing 11 big, fat, useful lessons I learned along the way in the REI School of Hard Knocks. My gift to you. 🙂
- Do you have multiple exit strategies?
- Does a handshake make a deal?
- Are you in a Mastermind group? Do you even know what it is?
- How do I grill burgers to perfection? (Just kidding on that last one! Hungry now?)
Anyway…
I’ve got answers to all of those Qs (minus the grill), plus 8 more super-important takeaways you need to know and can begin implementing right now.
My list of crucial tips will help you build your business faster and easier and smarter… while avoiding many of the common pitfalls that plague investors.
1) Do What Experienced Investors Tell You to Do
I remember from years ago at the first real estate boot camp I attended, my mentor said:
“The biggest mistake you can make is not doing exactly what I say.”
Fast-forward a few years, I also remember hearing from one of our members — he was sharing some of the struggles he’s having in his business about getting the private funding he needs. After some back and forth about this, here’s where we landed…
It was clear why he wasn’t getting any private money: He wasn’t following the process we teach in my program. He was doing things his way… and had nothing to show for it.
After recommitting to our proven process, he now enjoys millions in private money.
Just make sure that your coach, mentor or REI guru is legit and credible. The best way to find someone is through a referral from someone you trust.
2) Join a Mastermind Group
In Napoleon Hill’s classic, ”Think & Grow Rich,” he defined the Mastermind Principle as:
“Coordination of knowledge and effort, in a spirit of harmony, between two or more people, for the attainment of a definite purpose.”
Basically, a Mastermind group is a circle of like-minded individuals you meet with regularly to brainstorm, share ideas, talk about what’s working and where you’re having issues or need help, etc.
One of the Mastermind Groups I’m in meets quarterly in person. We have 4 members (all biz owners) — a publisher, an attorney, a musician, and myself. We do whatever we can, to help each other move our businesses forward.
If you don’t have a Mastermind group near you, start one. Use Meetup.com to organize a group of people who have a shared interest. JP has had great success starting multiple groups using that very method, as a fulcrum point to gather like-minded people — and some great relationships have resulted as a byproduct of that.
3) Get Everything in Writing
With your business partners, investors, contractors, tenants — everyone you do business with — write down the terms of your agreement!
If there’s someone who you’re doing business with right now on a handshake, I urge you to get it in writing ASAP!
You infinitely improve your chances of building long-term relationships by adhering to this often-ignored nugget of wisdom.
Even if you feel highly certain that you’re working with somebody whom you trust and that there’s clear understanding — it’s in both of your best interests to make sure to have the agreement in writing. Even if it’s just a bunch of bullet points… because once you get down the road, memories fail. What you clearly remember today will be fuzzy next week and can lead to big misunderstandings in relationships that are otherwise incredibly valuable and worth protecting. Ask me how I know that. :/
Look, even working with a close friend or family member, for everyone’s protection, have something in writing that states your understanding of the agreement — it’s an essential piece of the puzzle and a best practice you should always follow.
4) Hire a Good Bookkeeper and/or Accountant
For most entrepreneurs and investors, the “books” often get ignored, procrastinated, even forgotten… until they’re an absolute mess. Don’t let that happen to you!
From my experience, the best way to find a good bookkeeper and/or accountant is by referral. Ask a local investor in your niche who they use. So, if you’re a wholesaler, ask an experienced wholesaler for a referral. This team member is worth their weight in gold.
5) You are NOT the Owner… You Work for the Owner
To put yourself in the best negotiating position with a seller or tenant or contractor, you are not the owner, you simply “work for the owner.”
Why?
Because if you’re the final decision-maker, people will appeal to your emotions in the negotiation… and there’s no room in this business for becoming emotionally involved with a property or person’s situation.
6) Have Multiple Exit Strategies
Do NOT enter a deal if you only have 1 way out!
Why do you think so many of the speculators who bought pre-construction deals before the market crashed lost their investments to foreclosure?
They banked on one thing and one thing only… appreciation! When that exit strategy vanished, so did their investments.
Always have a Plan B in case Plan A goes sideways. I like to have a Plan B and C, which I’ve written about before.
7) Negotiate Seller Financing
Negotiating seller financing can add tremendous value to a deal… especially if you get great terms.
As long as you are working with a motivated seller, this should be your reality in every deal you do. Give a little on price when it makes sense to get the terms you want.
Most investors spend all their time negotiating on price, when the terms of the negotiation can make
all the difference.
8) Get “The Stuff” Thrown In
A friend of mine was negotiating a large package deal recently. The sellers were highly motivated and ready to dump the properties.
After he told me about the deal, I suggested he ask the sellers if they had anything else they wanted to get rid of… furniture, cars, boats — and guess what? My friend got two Harley Roadsters thrown into the deal! True story!
9) Protect Deals While Under Contract
If you’re not protecting your deals while they’re under contract, it’s not a matter of whether or not you will lose a deal to another investor, it’s a matter of when.
So, how do you protect your deals?
Well, check this out…
We put a contract on a property in West Ashley, SC. But, a few days later, the seller wouldn’t call us back. We feared that another investor came along and offered her more… and came to find out, we were right.
But we had filed a “Notice of Purchase and Sale” on public record to protect our interest. And when the other investor tried to snatch the deal out from under us, we popped up on his title search and he couldn’t close.
Boom!
10) Delegate Intelligently
When you delegate tasks in your business (for example with a virtual assistant), whether it’s something that you don’t know how to do yourself or something you just don’t like doing — learn as much as you can about the thing being delegated.
You don’t have to be an expert at it, but know what goes into it, the process, etc.
11) Don’t Quit Your Day Job . . . Yet
Relying on monetizing your real estate deals for your ONLY source of income (especially if you’re new to REI) can be a bit challenging.
Establish a good income outside of real estate
investing first, build up your cash reserves and your experience as an investor… then consider quitting your J. O. B. to play the real estate investing game full time.
And there you go…
The Bottom Line
Follow these 11 REI tips, and you’ll be well on your way to having a successful business without many of the headaches and nightmares I went through. You’re welcome!