Getting started in real estate investing is easier than you think. I should know, I sort of did it accidentally. I always knew I would be an entrepreneur. It’s in my blood, and it was just a matter of time before my need to branch out on my own overcame the desire for a regular paycheck.
Because I knew that entrepreneurship was my true passion, my plan was to purchase rental properties to increase my income so I could save more money before going out on my own. In 2013, around the time I was planning to ramp up my plan and leave my lucrative financial services job, I went to a real estate course and learned about house wholesaling. It sparked my interest and eventually became the primary focus of my investing endeavors.
Becoming a successful real estate investor definitely requires some hard work, but with the right approach—and the right tools—you can do it. The problem when I started was that there were no good tools available.
First, I didn’t have easy access to data. If I wanted to find out about a particular property, I had to go to the county clerk’s office to do a search or buy the information from somebody else. Performing adequate due diligence on a vacant house to determine current ownership, title issues, and the contact information for the responsible party was very time consuming. Field work was particularly tedious because there were no mobile tools to help jumpstart the research process outside of the office.
The other major challenge I faced was lead generation. The competition was sending direct mail and starting to advertise online. During my time in the financial services industry, I had spent a lot of time on the phone, but instead of cold calling, we used a technology called ringless voicemail to leave hundreds—or thousands—of messages for potential prospects. This approach was extremely effective, and the calls were flooding in from potential sellers, but I had a major problem.
When I answered the phone, I didn’t know who was on the other end of the line or what property they were calling about. This led to some very awkward conversations—and awkwardness is a sure way to kill a deal before it even starts.
You’d think that the lack of data, difficulty doing research, and countless awkward conversations would have been enough to kill my entrepreneurial spirit, but it did just the opposite. I took every challenge as a stepping stone, including pulling in my friend, business partner, and data scientist Justin Winthers to develop tools to run my REI business the way I envisioned.
Fortunately, Justin was able to develop the tools I needed to run my real estate investing business the way I envisioned. He created small applets to help solve the problems I was encountering, and we eventually developed the whole system into a single platform that not only drops ringless voicemails, but also provides instant information about the caller, their property, and details from hundreds of public and private databases.
You’ll inevitably absorb a lot as you start on your own path to becoming a real estate investor, but learning from my experience can give you a head start.
Lesson number one: Always be learning. If I hadn’t gone to that real estate course, I wouldn’t have learned about the market niche that would eventually become my bread and butter.
Lesson number two: Recognize opportunities when they arise. I initially wanted to launch a media company. REI was supposed to just be a safety net to generate income while I pursued that other endeavor. But you know what they say about how God feels about you and your plans… That desire to create some passive income ultimately sparked a software platform that is changing the way REI professionals do business. If I had stayed stuck on my initial vision, who knows where I would be now.
Lesson number three: The final piece of advice I have to offer is about taking concrete actions to get started with real estate investing. The first few steps are often the most intimidating, especially if you’ve never done anything like REI before. Creating a 90 day plan that starts with a strategy and ends with execution is a smart way to get the wheels turning so you can build momentum and eventually take off on a rewarding adventure.
Month One: Research and Analysis
There are many paths to take in the real estate investing business—wholesaling, rental properties, and flipping houses are just a few. Research all of the possibilities and decide which one is right for your lifestyle, risk profile, and financial goals.
Take Action
Research your options online, go to real estate investing seminars, and conduct interviews with people in the business to learn more about what could be in store for you as an investor. Build a simple REI matrix that looks at factors including:
- Pros of a particular strategy
- Cons of a particular strategy
- Minimum investment required
- Time required
Determine which option aligns best with your priorities and dig deeper into that path.
Month Two: Choose Your Tools
Ensure your technology stack is up to par and in alignment with your goals. For example, if you are going to go the investment/rental property route, you’ll want a top-tier tool like Mashvisor. The online platform offers investment tools like a property finder and an Airbnb calculator that makes it easier to get started on a rental property business.
If you are going the wholesaling route, consider a premium REI lead generation machine such as REIRail. I can tell you from experience that this is an area where you shouldn’t skimp. When you’re trying to make deals, time is money and the more time you can spend talking to leads, the more deals you’re going to close.
Take Action
Build a simple technology matrix that identifies:
- Features
- Up-front investment
- Recurring investment
- Learning curve
- Potential ROI
If the platform has a demo or free trial option, you should take advantage and try it for yourself.
Month Three: Make Your First Deal
After you’ve identified your area of focus and determined the best tools to help you find and close deals, it’s time to give REI a shot. As you move through the process, take diligent notes using Google Docs, Evernote, or any note-taking tool that has search functionality. You can certainly invest in a project management system, but at this stage of the game, I recommend keeping it pretty simple. Search is important because—if a similar investment situation arises in the future—you can easily look back on lessons learned with a quick keyword search.
Take Action
Commit to making a certain number of calls per day and take notes on all of your interactions. File away each note and document in a folder that is named for that specific property. It’s your first step toward building your own mini project management system.
You may or may not close your first deal in 90 days, but even if you don’t, you’ll be set up for success. The more prospects you talk to, the more deals you’ll get, so aim high and use your tools to their fullest potential.
This article has been contributed by our friends at REIRail.