Posted by David Alexander on July 27, 2007 at 24:00:45:
We should just figure out some kinda 2 - 3 day thing as an excuse…
I’ll push the wheel chair… 
the only way to really get rich in RE is… - Posted by StevenS(CPA)
Posted by StevenS(CPA) on July 24, 2007 at 21:12:00:
I have been investing in real estate and businesses for more than 10 years now. And I have probably bought more courses and books and tapes than I would care to admit. I am an information junkie when it comes to real estate and financing.
And from my experience the only 100% way to make money in real estate is by (drum roll)…
hard work. don’t laugh
Getting out there first and getting out there often is what I find works better than any magic system or formula.
Especially when you’re new. The only thing that will take you from being a newbie to an experienced investor is experience. You may make ten mistakes and do ten bad deals before you get your first really good deal, but you won’t get anything until you start doing deals.
Next, getting out there first and getting your face out there often is the best way to find deals.
I have met hundreds of investors in my area and most of them are just plain lazy. If making money was easy everyone would be making it.
Here’s 5 tips that have helped me make lots of money over the years.
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Get as close to the source as you can. Many people go to the courthouse to look up forclosure notices (these people are way smarter than those who wait for them to be listed online). But a better source would be a bank manager who can give you tips on people who may be in trouble or behind on their payment (make friends with that person). Even better is to get to the person BEFORE they get behind on their payments. How do you do that? Become friends with local accountants and attorneys. They may have inside tracks on clients who may need your help.
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The seller is far more important than the property. Every property has the potential to make you money. Even if there is no equity in a property you can make a profit. But if the seller is not flexible then even a no-brainer can quickly become no profit. Evaluate the seller before you evaluate the property.
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Make lots and lots of friends. I try to make a new friend everyday. It hard, but it’s not impossible. Go to clubs, meetings, investment group, a great place to meet people is at your local board and zoning meetings. These are the people who know more about your area than you will ever know in most cases. The more people you know and who know you the more deals will come your way. Pretty soon, you will not even have to look for deals because they will be a steady supply coming to you.
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Be trustworthy and likeable - I have never done business with someone I didn’t like and the same is true with most people. Most people will give a mile to someone they like before they giv an inch to someone they don’t like or don’t trust. It’s easy to do deals with people who you like and who like you. Be likeable.
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ALWAYS ALWAYS ALWAYS have a written exit plan. Even if it’s just a few short sentences. Write it down. I can not tell you how many times I have strated writing what I thought my exit plan was going to be but when I put it to paper it was stupid and I had to rethink what I was going to do. Nothing beats getting all the numbers down on paper so you can see what you’re doing and where you’re going with a deal. Get it down on paper.
These are the 5 most important things I have learned from my real estate and other investing. I have made plenty of mistakes (and that’s just life). But it’s not money, or property or how many post cards you can mail out in a month. Its all about people. And people will take care of you if you take care of them.
Hope this helped someone out there.
My rant/rave for the day.
Re: the only way to really get rich in RE is… - Posted by mag237
Posted by mag237 on July 28, 2007 at 12:51:38:
I thought the original post was terrific!
And I thought the thread was one of the most enlightening I’ve ever read.
Thank you Steven.
-mag237
Yo Steven… - Posted by David Alexander
Posted by David Alexander on July 25, 2007 at 22:57:26:
definitely wasn’t trying to make you feel flamed on my part… was stirring the pot… In fact I stated we all have our own ways… our own plans… and what works for one will not work for another… Guaranteed…
I often talk at semianrs and tell people that often if you are a very good entrepreneur, your probably a lousy investor… and if your a great investor your probably a lousy entrepreneur…
The two skills are very opposite but they create the same thing… both entrepreneurs and investors build and create equity…
Entrepreneurs are usually willing to take what they view as calculated risks… to others it looks like they are letting it all hang out…
Investors… are methodical and plot along building their investments like building blocks…
Both ways get you there… if you have the plan and no the means to the end…
But, also, what I didn’t say is most people don’t know how much time and effort It takes to put into learning your craft well…
I remember when I started I was glued to this very board night and day… devouring all the info I could…
I remember attending every seminar I could… still do…
My library is full chock full of stuff I have read and reread… and listened to over and over… courses, books, tapes, cd’s…
and continues to grow…
I used to take sometimes 3 different invetors to lunch a day to get their viewpoints…
And then I take one or two to dinner…
What I’m acutally saying is the ground work for what and how I do things in just a few hours a week comes from long hours and hours of studying where most would rather sit at home and watch tv…
So, the hours were yes put in…
But, at some point I realized the greatest leverage ever isn’t the leverage of money, time or knowledge…
But, instead… is the leverage of other peoples… Money, time and knowledge…
I contend that Bill Gates is rich because he got that early on and got past the emotional state of I have to do it all… I’m the best…
He leveraged others…
Again… You’d be amazed at what a single minded person can accomplish in 40 hours with a given task or two…
More than you can with all the distractions of investing and business… Because there sole job is to get that thing done…
Keep posting it lead to a good thread…
Re: the only way to really get rich in RE is… - Posted by Penny
Posted by Penny on July 25, 2007 at 20:36:22:
Thanks for your comments. I appreciate reading about others experiences and successes and hope you don’t stop posting.
The bottom line that I took from this thread is that people need to get off the couch and find a niche that fits their skills, knowledge and abilities. Some people have figured out how to work less and still do well. I enjoy reading about that, as well.
OK I’m done being flamed - Posted by StevenS(CPA)
Posted by StevenS(CPA) on July 25, 2007 at 16:08:11:
I didn’t make my post last night to start a fight, insult, flame or upset anyone.
I was just sharing my story about what I have experienced in real estate. As I have already said in every post afterward, this is just my opinion and what I have found works for me.
I was just trying to start a discussion not an arguement.
I wish everyone nothing but the best.
good luck
One minor element only. - Posted by John Behle
Posted by John Behle on July 25, 2007 at 15:57:12:
You can grab a hand trowel and try to dig real hard for gold. You can take a flintlock rifle over to the middle east to chase after terrorists and work 20 hours a day. You can grab a rock and work really hard to drive the nails needed to build a house. You can change a radiator in a car with a little pocket multi-purpose tool.
Hard work helps… but it means little in comparison to being a dealmaker, using the right tools and learning to find bargain property opportunities.
As a kid I was a mechanic and worked on cars and motorcycles. I learned having the right tools is critical.
Hard work means little if someone is going the wrong direction. Running faster doesn’t help. Hard work doesn’t turn a mediocre deal into great profits.
People try hard work yet have no plan, lack the tools, don’t know how to find and recognize deals - and don’t know how to make the deals work.
I do deals on properties hard working wannabes don’t see the opportunity on. I turn profits on deals someone with some basic infomercial course do not even see, find, recognize or even understand what I did. Sometimes they flip me a property or note for a small profit and I make ten to one hundred times the profit on a deal they did not even know was possible.
Success is:
- Knowing how to find and recognize potential deals.
- Having the tools and knowledge to put deals together.
- Learning to be a problem solver.
- Having needed resources like financing, legal counsel, accounting counsel, a title company etc.
- Having the personal training, knowledge and even charisma needed to negotiate the deal.
All those elements are far more important than hard work, though they can be ACCELERATED through hard work.
More important than all of these the inner beliefs and behaviors that lead to success. “Whatever the mind of man can conceive and BELIEVE it can achieve.” If someone is bound by scarcity beliefs or issues of self worth or worthiness, all the hard work in the world will do little. In fact, a part of them may even sabotege a good deal if dropped in their lap.
I actually believe this last factor is about 99% - even 100% of what is required for success. (Try to pick up the pen David).
To clarify, when I talk about the tools to put a deal together, I am not talking about some step by step home study course.
Those are a crutch for people and are geared to play upon people’s fears and inadequacies. Deal making isn’t step by step, form by form - turn to page 27 and fill in the blanks.
Deal making and profiting in real estate is more like a sport. You don’t follow step by step in a soccer game. You get the ball and use all your skills, moving through obstacles towards the goal.
“Cookie cutters” are a marketing ploy.
“He who is good with a hammer thinks everything needs a nail.”
Cookie cutter courses give people hammers and send them out looking for nails. I do NOT find that to be an element of success in anyone I can think of that is successful. Successful people have a toolbox full of varying tools for different situations, markets, properties and opportunities.
I rarely know what a deal is going to look like when I start. I find an opportunity and use my tools to make a profit by fixing a problem. I may make money from buying a property, selling, financing, making a hard money loan, buying a note or even a consulting fee. Sometimes a series of fees from different tools I bring.
Example.
Property is in foreclosure, owner is stressed, risking death from the stress and poor health, family is stressed, marriage is stressed, etc.
Made a quick hard money loan to bring it out of foreclosure (profited from points and the rate).
Put on a new second later to get rid of the existing second that wanted the property back and was not at good terms. Made a fee for the loan.
Had a credit repair specialist help repair their credit (there are legitimate ones out there). Made a referal fee.
After six months credit had been improved and they were able to get a new, more attractive, lower rate first to take out the existing first and second. Made a loan brokerage fee.
That may seem like a complicated example and is more in the realm or a note broker, but shows multiple fees from solving a problem. There is no cookie cutter course going through those steps. It’s a toolbox full of techniques to solve problems.
Yes, you have to start somewhere, but education goes on and on and on. Too many people just run around with their hammers and think that if they hammer hard, it will work.
Everyday there are deals. The greatest ones are the ones that few people know how to put together. Too many hammer people walk past deals that would be simple if they knew what a screwdriver or even a torque wrench was. In every market there are problems to solve and problem sellers are far more lucrative than problem properties.
So yes, work hard… but it will do little if you do not have these other tools, resources and abilities.
NEVER say Never, Always or Only - Posted by Jimmy
Posted by Jimmy on July 25, 2007 at 13:10:49:
a few thoughts:
-
I don’t give a rat’s tail if people like me. I step on people’s toes all the time. I considered it a fringe benefit of my law practice, which carried over nicely into landlording. What does matter is that people respect me, and that people understand that I live up to my commitments and responsibilities.
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Flexibility, adaptability and nimbleness are critical attributes of successful people. The willingness and capabilty to re-tool every now and then is a huge asset. I have shifted gears 5 times in 25 years. The world does not stand still.
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I don’t need a written exit plan. I am quite content knowing that I have at least two profitable exits from any property I acquire. Which one I choose is partly design, partly chance. In my particular biz, I buy-major rehab-rent-refi-hold indefinitely. When done properly, I have a positive cash flow asset in which I have no net cash, plus I have an asset I could turn right away for a nice profit. I usually don’t sell stuff, but sometimes I can’t resist. Every time I update my personal financial statement, my exit plan is staring at me.
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I like to have at least 2 different sources of income working for me. Multiple streams is not a new concept. In my case, the streams are rent collection and note collection. Not much into flipping, but I would not exclude it as an option.
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Imagination is a nice quality. Being able to imagine what a huge killer deal might look like, and then actually recognizing it when you stumble onto it.
-
Here are the 4 P’s of Poker, which are absolutely critical to REI, too.
PATIENCE
POSITION
PERCENTAGES
MORE PATIENCE
my favorite P is positioning. control of personal spending. accumulating cash. being able to take advantage of opportunities when they present themselves. How many hundreds of postings do we read from newbies who found great deals but can’t make the DP and have poor credit…
there’s so much more…
Not necessarily - Posted by gerald(tx)
Posted by gerald(tx) on July 25, 2007 at 11:13:00:
I used to think this. Then I realized that the people making the most money tend to work the least.
The only avenues in RE that require a lot of time-consuming hard work are (1) rehabbing and (2)landlording. There are literally hundreds of other ways of making money in real estate. Most of these require comparitively little time.
I’ve done the ‘fix em up and rent em out’ thing early on and was only meagerly successful -the frustration and effort seemed hardly worth it. I now understand how to buy directly from the lenders and how to obtain top dollar retail. I make a healthy six figure income with an average workweek of around 4-5 hours.
No wrestling with hammers, planting ‘me too’ bandit signs, eviction hassles, etc. Look around your community at the RE multi-millionaires, the people who make the real money in RE. You won’t find them at your local real estate club or posting on these little boards.
The techniques peddled in most beginner courses are great for establishing a basic education, even if the field is over-crowded with newbies all doing the same thing, seeking the same properties.
But bigger rewards are to be found once one broadens his horizons. There are so many avenues in RE. And they require less effort.
gerald
Re: the only way to really get rich in RE is… - Posted by acw
Posted by acw on July 25, 2007 at 08:22:38:
Great Post…thanks!
I’ll be the… - Posted by David Alexander
Posted by David Alexander on July 24, 2007 at 22:33:10:
contrarian…
-
Get better at your marketing and hire someone to do that thing that brings you leads over and over… for you… if that’s getting closer to the source then ok… but, it’s awful hard to track results of something like what you have laid out… So, I gotta say I disagree
-
Motivated Sellers Rock… that’s the key to all deals… and is what makes a deal maker a deal maker… in 85% of the deals… the ability to find motivated sellers… (so, that means, reread #1)
With a motiaved seller… you don’t need negotiation techniques or anything like that… just sign up the deal and go. So, I’ll Agree with you on that one. -
Sure… but, again that’s one dimensional… and it requires you… and when you stop doing that… your funnel ceases to be full… Again, refer to #1 except this time instead of them getting to know you they should be getting to know your company… if the people that market for you get tired you hire another one… Again, I disagree
-
Dead on… True
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Yes… always know your exit, not just for your deals but, for your whole plan… often peoples only exit is to make 20k on that next deal and alot of times since we are taught “You make money when you buy” it’s taken too literally and they buy a property and make 20k into equity and never convert that back to cash.
Their alsom has to be some thought as to how it will fit into the overall game plan…
ie… buying rentals and becoming long term holders when they haven’t met todays cash needs.
And be willing to change directions and make modifications to the plan… as murphy’s law and the economy is always in action…
So, I agree with this one… but, it needed to be beefed up a bit…
David Alexander
Re: the only way to really get rich in RE is… - Posted by Gene
Posted by Gene on July 24, 2007 at 21:36:54:
Dead on.
Good post.
flamed? - Posted by Kristine-CA
Posted by Kristine-CA on July 25, 2007 at 21:38:40:
If you think you’ve been flamed on this thread, you don’t know flaming.
I agree with John B.–it’s a great thread with different points of view
about a great topic: money vs. work. Thanks for starting it.
I’ve looked at all the posts and no one has flamed you. Some people
disagree with the “only” statement. I was curious why you said you
wanted to learn how to make six figures in a few hours a week? Then
you said that wasn’t good enough, that you didn’t just want to pay the
bills. Me? I try to keep those bills under 300K year so there is some
left over. 
It’s a great discussion, the one that looks at what it takes to get
anything in REI done. Kristine
Re: OK I’m done being flamed - Posted by John Behle
Posted by John Behle on July 25, 2007 at 16:26:20:
I hope my post didn’t come across that way. I think you started a great conversation and brought out some interesting observations from people. Though I don’t view hard work as the be all end all to success, way too many are basically lazy.
Hard work for some people is getting off the couch. They want to believe the promises of the informercial saying “make 10k a month working a few hours a week at your kitchen table in your pajamas.” That’s BS and your post addresses that end of the population.
I think others - those already off the couch - realize there are more steps than that. But I think your hard work has paid off for you and that’s a great point.
I think there are different categories of real estate investors.
-
There’s a large percentage that buy some course and do nothing or give up too easily. Some fill there garages with courses they never read or never try. That particular group will go nowhere unless they learn to work harder.
-
The lost souls. There’s a part of the population that try a little. Maybe they buy a Sheet’s course or something and get caught up in the paralysis of analysis. The lack of knowledge and the fears rule them. Maybe some of them do work hard, but have little direction or few tools to work with.
-
I think some of your answers come from a third group that have gone into action, continued learning and along with hard work have developed skills and resources needed for good profits. Personally I think you can work very hard on marginal deals for minor profits or you can learn how to find bigger deals. Like a couple pointed out, you don’t need as many of those and to work all that hard to pull them off.
Bill Gates doesn’t work a million times harder than the postman down the street. He’s made billions off of one $50,000 deal. A man in Seattle ( I can’t remember his name at the moment) worked hard to develop MSDOS. Gates bought it and brokered it for hundreds of times that amount and then has made deal after deal after that. But, he doesn’t work ten thousand hours a week. My understanding is he works very hard, but there are probably many here that work just as hard. Actually, like his first big profits, most of his profits have come from the hard work of others. Knowledge and other tools have made his profits, not just hard work.
Sorry you feel or were flamed. Personally it has probably been the best thread with good information in recent times. That’s a valuable contribution. As the saying goes, you never learn anything from someone you agree with.
Re: NEVER say Never, Always or Only - Posted by StevenS(CPA)
Posted by StevenS(CPA) on July 25, 2007 at 14:19:51:
Even though I don’t agree with anything you said except for maybe #5 I admire your passion.
There are lots of different investors out there just like there are a lot of different buyers, sellers and renters
Re: Not necessarily - Posted by StevenS(CPA)
Posted by StevenS(CPA) on July 25, 2007 at 11:37:43:
Well, if you make six figures and don’t work very hard we need to talk privately to compare notes because I’m doing something wrong.
I don’t do fixers either. I mostly buy commerical properties and businesses that need to be turned around.
I rarely post on RE boards, but I do know at least 3 people who post on this board who I would say is in the million dollar level, so I disagree with that statement. And in CA most people who go to the club meetings and own more than 2 properties are likely to be millionaires because the median price is $540k in most areas. So I don’t agree with that statement either, but maybe it’s different at the meeting you go too.
So, once again, if you really make six figures and only work a few hours a week, please email me and I will gladly fly out to where ever you are to watch you work, because I have been doing this all wrong for years.
Re: I’ll be the… - Posted by StevenS(CPA)
Posted by StevenS(CPA) on July 25, 2007 at 11:01:14:
David,
Good post and you are free to disagree. I do not claim to hold the God all truth on everything real estate. I just know what has worked from my experience.
But on to your points…
- “Get better at your marketing and hire someone to do that thing that brings you leads over and over…”
Here’s the thing about hiring people. I have never found anyone who works longer or harder for me than me. I have always been by far my best employee. And I am sure that’s the case with you.
I currently have 5 people working for me as apprentice. We split the deals 60/40 (60 my way). It still leaves them enough profit potential where they should be motivated to go out there and get deals done. However, three of them don’t work at all (and they still wonder why they’re not making money) and the other two are pretty good but not nearly as productive as I am.
Now I’m a firm believer in delegating, multiplying my network and reach and using apprentice, bird dogs and paying finderâ??s fees, but even that requires work and a constant dedication to staying on top of people and resources.
I guess what Iâ??m trying to say is that this is not an absentee business where you can just turn a key and forget it.
On marketing, with bandit signs, post cards, ect. I know it works, but itâ??s not my thing. With bandit signs and post cards you have to mail out 500 or more to maybe get 20 people to call and out of those 20 you may get 3 who are truly motivated and have a deal and out of those 3 you may make an offer on 1 if youâ??re really good with your postcards and signs. But hereâ??s the other downside to marketing with post cards and badit signs, ect when client calls you on the phone they do not know you from adam. Your creditability and trust is pretty much at zero and usually if a motivated seller will not do business with you itâ??s because they do not trust you or what you are saying. So youâ??re constantly trying to sell yourself as well as the deal.
When a person calls me they already have a built in reservoir of trust in me because their accountant, attorney, grandmother or coworker recommended me to them. I usually donâ??t have to prove anything to anyone; all I have to do is make the deal work for both of us.
- â??Sure… but, again that’s one dimensional… and it requires you… and when you stop doing that… your funnel ceases to be full…â??
Once again, who can sell you and your company better than you? Plus because of the type of investments I do generally require 6 months to a year of work to come to completion and during that time I do not need a ton of people calling me asking me about my service. When I need a few deals I pick up the phone and make a few phone calls to my contacts of banker friends, accountant friends or attorney friends. I can usually pick up a good lead with no more than 3 phone calls. Especially now with a lot of people coming more behind on their payments. This way, I have much more control over my deal flow and what comes on my desk. If a deal is too good to pass up I give it to one of my apprentice, but other than that I like to have control over the process.
Hereâ??s the difference, if I used bandit signs and post cards and stopped for six months to a year, my business would dry up to nothing. If I went on vacation for 6 months and came back and drop my friends an email asking if they had anything on their desk, I would get some leads. Plus, besides the occasional birthday and holiday cards, I send out I have very little marketing cost. Over the long run which do you think is more profitable and more sustainable? - â??So, I agree with this one… but, it needed to be beefed up a bit…â??
Thanks so hereâ??s the beef. If you do not have a well written, strong business plan about what you are going to do and how you are going to do it then you are basically running your business on a wing and a prayer. I tell people all the time, running a business is like taking a road trip. You wouldnâ??t ever think about driving from California to New York City without first looking at a map and planning your route to get there. Most people do not understand investing in real estate is the same thing. You have to have a written plan on what you want and how you PLAN to get there. The more detailed your real estate investing map the better and more likely you will be to get there.
OK so this was a lot.
Good post David
Thanks
Re: OK I’m done being flamed - Posted by StevenS(CPA)
Posted by StevenS(CPA) on July 25, 2007 at 18:23:57:
John,
No, it wasn’t your post at all. Matter of fact I have agreed with a lot of what you have said over the years (including your last post).
Like I said, I was just posting my feelings and thoughts about REI. Mostly to help new investors with what a little insight on what has helped me over the years.
When I post, I don’t try to argue with anyone and I try to help as much as I can because when I first came to this board years ago it helped me a whole lot.
If I posted something that offended someone I apologize, it wasn’t my intention. But I do not have the time or desire to argue with complete strangers.
I don’t mind debating or hashing out different ideas, but a few people who were posting were attacking me for what I posted, even after I posted that it was just my opinion, there are plenty of ways to make money, I don’t mean to say my way is the only way, still the attacks kept coming.
So, I’m done. It’s not worth it.
I really do appreciate your comments though,
thanks for your post and your contribution to this site.
Steven
Re: Not necessarily - Posted by Kristine-CA
Posted by Kristine-CA on July 25, 2007 at 13:30:44:
Gerald has a very valid point and it’s my experience as well. It’s not
working hard or long hours that produces income. Getting an
education and or learning a business might require time–depends on
the individual.
I’m in Santa Barbara and I was a project assistant for a couple of very
successful REIs. No rehabbing, to be sure. No development, no new
construction. They were (and are) problem solvers of the finest order.
They bought stuff, big stuff, that had been on the market for years,
sometimes decades. They knew how to find money and investment
partners. But most importantly they were creative. They knew how to
find the very best help: legal, financial, engineering, consultants. They
knew how to work with the county like nobody’s business.
When you can buy for 9M and flip for 18M, it’s not working hard, it’s
working smart. When you can do it several times in a row, IMO you are
working genius.
BTW I make six figures and work about 10 hours a week. There is
nothing to watch (unless you want to watch me talk on the phone and
do online research). Kristine
Re: Not necessarily - Posted by gerald(tx)
Posted by gerald(tx) on July 25, 2007 at 13:11:23:
Steven,
Listening to your responses sounds like you are more interested in arguing and being right, rather than learning. Therefore, I don’t think it’s necessary to mentor you in my particular method. Besides, I’m such a small player at my level of success.
But here are a few local examples:
- A friend of mine got out of the ‘toilets and tenants’ business, used his proceeds to buy a title co. Now lives in a mansion and spends most of his time on the golf course. Title insurance is a goldmine in this state.
-Another acquaintance went from rehabbing frustration, made the right contacts, and now operates as a middleman in private lending. This guy rarely works and makes close to $1M/yr.
Most people come into REI with courses that are geared to simple things wannabees can understand: namely, rehabbing and landlording. Paradoxically, these are the most time intensive. And sadly, too many go for years thinking this is the only way to make money in RE.
Truth is, there are dozens, maybe hundreds of more profitable methods. It’s a big world out there.
gerald