You are reading the third installment of a series about making the first steps in real estate investing. What follows are interview excerpts from episodes of our REI Marketing Nerds podcast where guests, real estate investors who are active across markets, share how they got into the industry.
In part one of these series we touched upon investing as a career choice, while in part two we featured highlights from interviews.
Here, we will dive into the highlights, too, so let’s get to it.
Eric got his real estate license back in 1996 and has since worked as an agent and broker in the hot real estate market of Phoenix, Arizona. Eric was introduced to real estate investing by a fluke; he bought a HUD house no one really wanted to buy, even though the house was a great deal.
He was inspired by Rich Dad Poor Dad, but he also had an opportunity to shadow a successful mentor until he learned the ropes. Bad experiences taught him a lesson or two as well – he did one live in flip, but he “won’t do [that] again.” Fix (as little as possible) and flip is his favorite investing strategy. The website of his company, Valley Home Buyer, nails social proof marketing through placing motivated seller reviews on the home page. Being a real estate agent, he enjoys another perk – that of being able to sell the rehabbed properties at market price without a middleman.
Eric shared the story of his first real estate investing deal with us:
…the first deal was selling the house that I lived in, taking that money and buying a HUD house that I was going to move into, flip and sell and then keep on going… taking the profit from doing the flip and buying a couple more and then I maxed out cause I was doing everything. I was doing all the renovations, the flooring, bringing in my friends to help and you can only do so many at a time. And I thought well let’s see if I can, hire some guys to actually do the work. You know, because I was the realtor, I was the contractor, I was everything. And just scaled it up to where we could do more than more than one at a time. ..you know, when you start out, you have the funds to do one and you gotta fix it, you got to market it and you got to sell it and then you can do it again…it’s definitely competitive and our costs are high. ..there’s always three or four other investors talking to the seller and sometimes five, six…, but the numbers work, if we stay at it.
Matt has a lot of experience in the industry, and his insights are relevant to newcomers and seasoned investors alike. His background is in sales (medical and pharma), but his wish to be his own boss compelled him to get into real estate. Needless to say, this was a good decision, as he eventually became involved in more than 5000 rehab projects in 17 cities (11 states) over a period of less than five years.
He was off to a slow start by venturing into house flips and creative financing deals:
I got into real estate at the very end of 2012..I was living in Louisville, Ky., at the time, moved to Augusta, Ga. One of my best friends … had a turnkey brokerage [in Augusta], and so the idea was to move to Augusta, learn the game, and then I was going to go back to Louisville, Ky….I took out a loan against my 401(k). My mother gave me a chunk of change out of her 401(k) and, yeah, moved to Augusta. …I was investing in myself from the very beginning, reading a ton. The first event I ever went to was actually Keller Williams Family Reunion, which was kind of life-altering.
Soon, he and his partner started to broker deals for a large fund (buy and hold deals + property management), and that turned out to be a very successful story. However, there is one big lesson he shared with us about learning from your mistakes, or as he calls it “failing forward.” It revolves around the importance of hard work over talent and it goes along the following lines:
Just from a paradigm standpoint or philosophical standpoint, the people that succeed at the highest levels truly are people that stay the course and fail forward. My perspective on that has always kind of remained the same, in that as long as it’s not a catastrophic mistake and as long as you don’t continue to make the same mistakes, that you learn from something and you pivot, then, really, it’s just a learning lesson.
From a business build-out standpoint, from a career standpoint, from even a personal standpoint, that’s what our entire lives are spent doing. It’s just really failing and learning and pivoting, and then trying something else and failing and learning and pivoting.
Most people don’t jump into anything and just start hitting home runs. I mean, it’s just not how it works. It’s hard work. It’s perseverance. Yes, there’s some talent, but you don’t see [the hard work that went into it].
Beau is active in the general Milwakee, Wisconsin area and he is after different types of properties. He does house flips, but he also has a portfolio of rental properties (some of which are long term buy and hold type of deals).
But before he became this versatile real estate investor, he was just a laid off worker who had doubts about his first wholesale deal while house hacking at his primary residence. This is how he described his entry into investing:
I got started in 2008, so right as things were kind of crashing is when I jumped in… I was working a normal job, kind of a crappy job, … working at a university local here, basic tech support and stuff for classrooms, but they decided that they were going to downsize and make some layoffs.
So a little bit before that, I had bought a house and I fixed it up and I was going to try to sell it and buy a nicer house. So I had done the work myself and I did a thing called “How to Sell Your House in 5 Days.” It was a book and the whole concept was you list your house for half of what you think it’s worth and you hope that people will come see it and then they’ll get all excited about it and then they’ll bid each other up over to what it actually is worth….that did not work, but in the process, since I listed my house for so low initially, I met a real estate investor that came to see the house and they kind of showed me how to get started buying a different house..
They actually wholesaled me a house just because, you know, they wanted to make a deal happen too. So it wasn’t the best deal in the world, but it at least got me started. So I bought that house and I was renting it out and I think I bought one other house and then that’s when I got laid off. So I had two houses that I had never actually made any money really, I got a couple of rent checks from the one I did rent out but I hadn’t actually succeeded in any way, shape, or form at that point. But, I just decided to make a go of it and go full-time into real estate.
He also made a point about improving constantly; whether it’s through shadowing someone successful, reading books, or by going through cycles of trial and error that will eventually enable you to outlast the competition. Beau’s website is a perfect example of branding a real estate investing business – visitors can’t miss his welcoming face (and a suitcase full of cash).
Greg is focused on the San Diego market at the moment, though he’s done a lot of deals remotely in New York and Texas as well. He is a former hockey player, an entrepreneur with his own podcast, and a proper marketing buff.
His first real estate investing deals were practically wholesale deals in New York, but once he had a taste of the competitive market he was on the lookout for a blue ocean market. He managed to find one, and described his journey on our podcast:
I’ve gotten into real estate five years ago, almost five years ago next month, which is crazy how time flies. I was 20 at the time, just starting college actually because I played hockey. So, I got into the business. I didn’t know what I didn’t know. I was living with my parents. I wanted to be a real estate investor. I didn’t know what I wanted. That was my career path. I was going to either do this or fail trying… I struggled tremendously, especially up in the northeast. New York State, in general, is a different market when it comes to how real estate goes down there… ended up reaching out to some local mentors in the area, and they took me under their wing. Worked for them for a little bit, learned the ropes of the business, and then I eventually went out on my own. Started wholesaling properties in the New York area and was doing a deal every few months, not any life changing income, but it was definitely some proof of concept for my parents whose basement I was living in, so I was showing them it was working.
This gave him the confidence to leave the New York market and try elsewhere:
I was like New York is a pain in the butt because of these attorneys. Let me try this in a different area, and this was back before cold calling was a big thing and there was no one doing it. I went into Dallas, Texas, and started cold calling vacant houses with no competition. I kid you not, within 90 days of that, three to five properties a month, no competition. It was, honestly, too easy. I had no idea what was going on because it was so easy, because it was like a blue ocean at the time and just started buying, flipping and doing all these deals in Texas. The business just blew up… That was all virtual…, I was doing this all remotely. I found someone down there who I could work with, who was boots on the ground.
Now, Greg is into wholesales, whole tails, flips, and rentals. His podcast (Pave The Way) packs a lot of content that is useful for real estate investors. Greg is set to become a master direct response marketer and considers marketing to be the distinctive skill for real estate investor, or as he put it:
Get good at direct response, and then if you can get good at that, you most likely will probably not have to worry about money again, because you’ll always be able to go out and get customers because you understand how to do it. It’s not like just this high-level theory. It’s like, no, you won’t be able to worry about money because how to get the money because how to make the offer. So, that’s pretty much it.
He and Dan covered a lot of ground regarding marketing (including old school authors like Perry Marshall, Dan Kennedy, Frank Kern) when he was a guest on our show. In essence, if you have the right list (nail the audience), your offer is good and you present all of that through a decent copy, you will make it.
Dave’s primary market is Columbus, Ohio. His ideal investing strategy is buy and hold, especially rental properties that provide steady cash flow over time. But he wasn’t always as careful. He got into real estate before the ‘08 crash and he learned his lessons the hard way.
He never went to college, however, his ability to sell over the phone (doing telemarketing by night) allowed him to leave the first job he got at construction sites within Phoenix’s new developments back in 2001. Dave was attracted to real estate investing through “grow rich” books. Loans were easy to get, and this got him into trouble.
… I quit the telemarketing and got full-time into real estate, driving in neighborhoods, finding junkers, tracking down the owners and I started wholesaling. In my very first fiscal year in business, Dan, I made 180 gees, and you give 180 gees to this egomaniac with no financial literacy, it’s a ticking time bomb waiting to happen. So, by the time ’07 and ’08 came, I was already out of business. I was done, bankrupt, belly up.
Eventually, a couple of years later, after I went broke, I put my tail between my legs and made my way back to the good old Buckeye State of Ohio because I wanted to start buying rentals. I realized it was like, Hey, I don’t want to be a speculator. Things are not always going to just keep going up in value. I want consistent cash flow and I’d better learn that business really quickly or I’m going to be telemarketing.
As you can see, Dave is happy to share the mistakes he made, particularly if this helps others not to repeat them. He wants to make investors aware about the pitfalls of the industry. Most real estate investors leave their 9 to 5 job to find financial freedom, but if you stick to house flips exclusively, you’ve only switched one job for another, because as soon as you stop flipping, the business comes to a grinding halt.
Dave’s perspective is that low interest, long term debt is the best way to build a rental portfolio. And he has many other tips since he had it all, he lost it, and now he’s built it once again.
A lot of investors (and entrepreneurs in general) will relate to Ryan’s story. He runs a real estate investing business in Seattle, he has a full-time job as an engineer, and his family (a wife and two young kids) need him at home. And he’s doing all of this successfully, although his idea is to retire early and drop the job as soon as possible.
How does one do all of this? Well, it entails responding to motivated sellers during a lunch break, reading while commuting to work, or following up with sellers in the evening while toddlers try to get your attention.
Ryan keeps the properties that he wants to flip and wholesales those with bad numbers or those not in his area. The goal is to move the business to their home market of Minnesota as soon as possible.
He was introduced to real estate investing during a business trip:
I have a full-time job. I work for Boeing as an engineer. A couple years ago, my wife and I, and our two-month-old went on a business trip to Japan for four months. It was kind of at the beginning of the trip while we were there that I was thinking, I don’t know if I really want to do engineering, sit behind a desk for forty more years and then retire. And so, I thought, What can I do that I can work for myself I guess?
I did some research online, found a couple of different options, but one of the main things that caught my eye was flipping houses, so that was where I got into it. I did a bunch of research. I had a train ride into work every day in Japan, and so I was reading books both ways and took in a lot of information.
Then, we got back to Seattle. Seattle is a pretty expensive market. Houses are pretty expensive around here. I’m originally from Minnesota. My wife and I actually are. We thought, Let’s move back to Minnesota and then we can get started there where things are a little cheaper. But things weren’t working out to get back to Minnesota, so I decided to jump in here, and that’s how I got started.
When we talked with him at the beginning of 2020, he was trying to figure out a way to maintain a presence in both Seattle and Minnesota. He also gave us input about the marketing channels that work best for him.
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