You know all those quotes that arbitrarily divide people into two groups?
There are two types of people in the business community: those who produce results and those who give you reasons why they didn’t.-Peter Drucker
There are basically two types of people. People who accomplish things and people who claim to have accomplished things. The first group is less crowded.-Mark Twain
There are two kinds of people in the world. Those who walk into a room and say, ‘there you are’ and those who say, ‘here I am!’-Abigail Van Buren
Well I’m about to create one of my own!
The Rental Mindset Quote
There are two types of real estate investors. Those who own property and those who claim they are waiting for the right deal.-Brian at Rental Mindset [Tweet It!]
There is no perfect deal. Real estate is a messy game.
There are so many different ways you can go about it, from flipping to wholesaling to AirBnb rentals to syndicated apartments to turnkey single family homes.
Too often someone who has done zero deals wants to do it all. They read all about AirBnb rentals and have never missed an episode of Flip That House. But they don’t end up doing either.
Too often they want to go straight to the big leagues, not realizing they have a lot to learn in the minor leagues first.
When you break it down, two thirds of people are pretenders. They have never made it over the first obstacle and made their first deal.
How Do You Go From Pretender to Contender?
I bet everyone on this website, who doesn’t already own a property, hopes to one day. Let’s call it a goal. Perhaps you’ve got your heart set on one of the spectacular properties you’ve seen in the neighborhoods of Cary, NC, listed online. And who can blame you? Many others are jumping on them as investment opportunities and others who might want to consider doing the same should look at this link – https://findnctrianglehomes.com/neighborhoods/cary/preston/.
Just because I already own a property, I am not going to trivialize it and say it is easy. It is a huge jump, going from never doing it before to writing a massive check.
Huge goals are rarely accomplished. Remember how you were going to go to the gym an hour a day? It seemed so daunting you didn’t even go for 10 minutes. You made up some reason why you didn’t have time today.
The people who know the most about goals and habits say to take baby steps. Start with a tiny habit.
If you want to floss daily for 2 minutes and currently don’t floss at all, you are going to fail miserably if you try to rely on willpower at the end of the day.
Set the goal of flossing one tooth gap, which might only take 5 seconds. Feel proud of the accomplishment and keep going if you want, but you don’t have to. Once that is a habit, you can slowly increase towards your original 2 minute goal.
Apply This Thinking to Rental Property Investing
How can you break down the huge goal of rental property investing to something much smaller?
Unfortunately you can’t start with just 5% of a deal to achieve the benefits of learning and habit forming. There are deals broken into increments (REITS, syndication, crowdfunding) but you aren’t really involved, so aren’t really advancing as a real estate investor. If this sounds like something you might want to start off trying out though, you could look into real estate crowdfunding until you can make enough capital to start investing on your own.
Instead, what is the most approachable deal you can do on your own?
This pointed me to turnkey properties, where someone else does the purchase and rehab, then sells the finished product to an investor. Whilst this might be a good method for some people, others might prefer to find a house themselves to do up. Finding a home in poor condition and redecorating it can bring in a profit. Modern homes can sell for a significant amount, which is why many people try to flip houses and sell them on. However, with all the competition, it can be difficult to sell them on. That’s why some investors have started using trade home programmes to sell the house on their behalf whilst they find their next investment project. Some people like doing that, others prefer to rent their property out. It just depends on the investor’s preferences. If you’re someone who’s interested in investing in real estate without managing property, working with seasoned managing partners who have good relationships in the real estate department is important. Firms like ArborCrowd have a long track record of success and this is important when investing in a deal through a crowdfunding platform.
For others who live in an area with good rental income, they come to a different conclusion on the easiest place to start. They purchase a home to live in, with the intention of moving out within a couple years and keeping it as a rental.
Others buy a duplex, live in half and rent out the other half.
What is easiest for you?
Later You Can Up Your Game
Focus for now. Don’t worry that other people are crushing it in various ways investing in real estate. Just worry about step one, but realize someday you’ll be ready for step two.
I don’t know what step two is yet for me and I already have two rental properties. That is ok. For now I’m going to keep going with my current way of doing things, but slowly research the next thing.
I am getting to know the creators of rental property websites like OB at Out of State Investor. He sources and oversees the rehabs for his deals to save big on the purchase price compared to me.
Alex at Cash Flow Diaries started with turnkey, but just moved to Indianapolis which will allow him to become a more hands on investor.
Dave Miller saves by self-managing his properties from afar with an on-call maintenance company (more details).
Eric Bowlin is a young full-time investor and did things like become a licensed contractor to learn the business inside and out.
Check out what they are doing, and if it resonates with you, set it as a long-term goal. Same with me – if you look at me and think I’m crushing it and you’ll never be where I am, use it as motivation.
Remember to start small. You can always take on more work later.
What tiny step can you take in the next week?
I really enjoyed the read. I think paralysis by analysis is all too common with wannabe real estate investors. They don’t want to make a mistake on their very first property so they wait so long that they never take a chance at all. Sometimes you have to trust your gut and just go for it.
Mistakes can definitely be costly in real estate investing, but there are ways to limit every risk. You can get as many inspections and contractors to take a look as you want for example, you don’t have to trust the first opinion who says it is ok.
I agree – sometimes you just have to go for it!
Nice! “What is the most approachable deal you can do on your own?” Not everyone’s game is the same, so you just need to find a way to work with what you’ve got, and just move it forward one step at a time.
My biggest fear when starting out was how to manage the property myself. I started looking at the state Civil Code sections applicable to rentals, and printed out a big binder of all of those sections that applied. I quickly got overwhelmed. Then I switched gears and bought the NOLO guide for my state, and it was a lot more approachable. With that, I felt like I had enough confidence to get started without getting myself into too much trouble.
If I wasn’t managing myself, the biggest hurdle for me would be screening an off-site management company. But the approach is the same: do a little homework and then move forward.
Just realizing that was your biggest fear was a huge step. Only then were you able to think ‘maybe there is another resource that makes this easier’. Smart move!
It’s true, there are a lot of investors out there, but there are way more people who want to invest but never do. I think most people just don’t know where to start.
Hopefully we can take some of the fear out of it by sharing our journeys. I have met a ton of investors who have 0 rentals, but would one day like to be in your position, able to live off cash flow and still adding more properties.
Amen. I like to set up both Achievable goals that are more like baby steps for me to accomplish and Stretch goals where I’m getting out of my comfort zone. While a lot of folks may have goals such as financial freedom, our starting points are very different. This post was a great reminder to consider where we’re starting from and not compare ourselves to what others are doing. Sometimes just focusing on our own goals and moving forward with our heads down is all that we need to do.
Absolutely! It is the whole ‘Most people overestimate what they can do in one day / year and underestimate what they can do in ten years’. Even though my daily progress isn’t that impressive, if I can keep at it, who knows where I’ll be in 10 years! Definitely important to define stretch goals though so you keep marching in that direction.
Hey Brian! How was fincon bud? Hope you had a good time. Thanks for mentioning me in your article. I think there are many successful ways to invest in real estate and being able to adapt to what cards youre dealt are huge.
I finally bought my first fixer upper in Indy. Pretty excited about it. Its actually already rented out which is cool so there is nothing to fix for awhile and when I do fix it, I am going to turn it into an airbnb. Cant wait!!
Fincon was a blast, met a lot of good people. Learned a lot and came out really motivated to take my site to the next level!
Wow, that is cool! Some people are killing it with Airbnb rentals. So whenever the tenants move out you will do some rehab and furnish it? Are you planning to be active in the management too?
I love the quotes and the intro! So true. It’s really hard to motivate yourself to do something sometimes when life is so good in America. It’s when your back is against the wall where change really happens.
The real estate market is finally fading. I expect a lot more deals to be had in winter of 2017 and in 2018.
Ya I’m interested to see where things go in the short term. Coincidence things look like they are going drop again when switching presidents?
I also wonder if anyone is going to want to read about rental property investing as the market is going down, but I guess we will find out eventually!
Excellent article Brian! Great perspective too. I was that person you were talking about. I kept “talking” about investing in real estate, but never pulling the trigger. Until now!
I just signed a contract on a property in Memphis 3 weeks ago. Looking to close on it this month. Like you, I started with a Turn-Key deal I found working with Sara over at Platinum Properties.
Wow, that is great to hear, congrats on making the jump! Cool you went the same route as me to make it as easy as possible to start. That first check can definitely be shocking right?
Also, what is that website you are linking? I thought it would be a blog about your plans, but all it has is a scammy video.
I think this divide applies to almost everything: those talking about doing something, and those actually doing it. I don’t count myself as a real estate investor even though we own one rental, but we also don’t talk about it. Ha. But it’s so easy to load up on knowledge and watch from the sidelines — so much harder to take action and actually put yourself out there. I love that you’re sharing knowledge but also giving people the little nudge to take actual action.
True. In other words, I arbitrarily grouped people into 2 groups within an arbitrary focus.
People on the internet love knowledge. I do too. Hopefully websites like yours and mine encourage them to take a little action too.
It took us a long time to get started with real estate too. We rented out old home when we moved in 2007. It’s scary to carry 2 mortgages, but I still had a good job back then and cash flow wasn’t a problem. If I didn’t start in 2007, I probably would not have done it at all. Now that I’m semi-retired, I don’t have the same comfortable cash flow.
My friend started in the late 90s when he started working. He got a 4 bedroom house and got 3 roommates. I thought that was an awesome plan. He owns more properties now and they are working well for him. You gotta take that first step.
That first step is the hardest. It is a shockingly high percentage of real estate investors who get into it by renting out an old home. The other common way what your buddy did – roommates or a duplex. I’m hoping to show people in high priced markets the option of investing on the other side of the country!
Brian, I sat on the fence way too long. Even then, I fell flat on my face with a property I couldn’t even rent out. But, it taught me a ton and I was able to purchase a property across the street (which was rentable) and has been kicking ass. As our friends over at Nike say, “Just Do It”.
For those on the fence, this doesn’t mean purchasing a property per se (things seem a bit too high currently), but take the action to educate yourself – know your numbers for a “good deal” and execute quickly when you find one that meets the criteria! 🙂
Ya I can certainly understand waiting to purchase, but a lot can also be learned by putting $18k down for a property in a low cost area. For someone with no experience who is serious about getting into it, purchasing in a very linear market is definitely ok at this point. Then in a few years they would have some experience to take advantage of deals in markets like Las Vegas.
Do you think you could have learned a lot of those lessons in a low cost property even farther away?
“what is the most approachable deal you can do on your own?”
This is such a good question, Brian. And you pointed out that the most approachable deal might be different for everyone. That’s what makes real estate and really any business so interesting to me. It’s like a puzzle with a lot of moving pieces, and your puzzle is one of a kind.
When I first started the most approachable deal for me was birddogging (for non-country people, that means sniffing out deals for others … lol). I was fresh out of college, and I had no money but a lot of time, energy, and drive. So I hustled to find deals for others who had the money and experience.
In every market there are investors buying deals. So if you can find a couple of them that you trust and if you have time and energy, you can spend time finding leads and following up on them. You learn a lot in the process, and with a real estate license, you can then get paid for that work if the investor buys a deal.
But for those with money but little time, there are all of these other approaches that Brian and others discuss. There are so many possibilities. It’s just a matter of focusing and doing it!
Thanks for the motivator, Brian.
That is great! I love that you got started with no money, but once you earned some, you invested it right into your own deals. Where you took action, thousands of others complained that they don’t have the money or connections.
Nice write-up. I was on the sidelines for awhile and then decided to jump in. I have learned a lot along the way. The best way to learn is to experience it firsthand. It is not easy, but it can be rewarding and profitable down the road.
That’s great to hear you jumped in! I think real estate investing is one of those areas where book learning doesn’t get you too far. You have to just get started for the real learning to begin. Hopefully you can limit the downside though while you are still figuring everything out!