Getting into the business
Ioften get asked a question around this time of the year. I’m not sure why it normally happens as the new year approaches, but maybe it has to do with people evaluating the previous 12 months and setting goals for the year to come.
The questions is in reference to real estate investing, and it usually goes like this: “What do I have to do to get into the business?”
Now, that question may seem straightforward, but it’s actually multifaceted, and I’m never sure how to answer. You see, there are lots of things you need to do to become a real estate investor.
And if you’re like Ashley and me — we burned the boats of our income sources and went all in on real estate investing to either prevail or perish — you need to do the “lots of things” simultaneously.
So, today, I want to tell you the things I think are important and why. Now, you may be surprised to find out that applying for a loan and forming an LLC are not on my list of to dos to get started. The reason is until you actually have a deal, you don’t need money.
And you don’t need an LLC for asset protection if you have no houses. And contrary to popular belief, having an LLC does not make you more credible in the eyes of a seller. So don’t waste time trying to start there.
Instead, there are three things you need to focus on: identify what type of investing you are going to pursue, get good training and, most importantly, go meet with sellers. Let’s talk about the first thing.
I am reminded of a scene in the Alice in Wonderland cartoon I watched as a kid where Alice walks up to a tree with lots of road signs on it. It is then the Cheshire Cat appears. Alice politely asks him which way she ought to go, and the cat responds with, “Well, that depends on where you want to get to.”
Alice says it doesn’t really matter and begins to expound on something, but the cat interrupts her and says, “Then it really doesn’t matter which way you go.” The Cheshire cat was right. You first have to decide where you want to go in real estate investing before you can decide what to do next. And to decide this, you will need to do some research and see what type of real estate investing fits your needs and gets you excited. After that, you need training.
So where should you look to find training? The first place is at your local Real Estate Investor Association, or REIA. There, you will meet real people who are actively doing deals in a market close to you. This is a great resource, especially if you have no idea where to start. You can go there and interview people who are doing different types of deals, where they learned to do it, and if you haven’t already decided on an investing path, this information can help you. The closest ones to our area are North Metro REIA in Marietta, and Chattanooga REIA. (You will need to search them out to see when they meet.)
Another cool thing about REIAs is that they bring teachers to town to promote seminars. Those teachers will give great information in a presentation during the meeting, and you can decide if you want to take their course. (Private money lenders also frequent REIAs as well, so, these are places where you can find funds to do a deal.)
But don’t get caught in the quicksand with this. I have met people who became professional investing seminar takers who, had gobs of information, but never put their training into practice. Essential, they went to class after class, but never did a deal.
With that in mind, the most important thing you can do to get into real estate investing is to go meet with a seller and make a written offer. All the stuff I mentioned above does not get you into real estate investing. Doing a deal is what gets you there.
So, go meet with a seller. Ask lots of questions like Peter Fortunato’s famous question: “Why are you selling such a nice house as this?” and then make them a written offer. And this is what you’ve got to do to get into the business.