By Brent Roberts
Being a successful real estate investor isnt easy. It requires experience, mentorship, and a little luck. I was fortunate to have been mentored by some of the best in the business, including well-known real estate investor Floyd Wickman, the legendary Zig Ziglar, and REINs own Don Campbell. The wisdom and guidance I received from them over the years has been invaluable. Still, Ive made my share of mistakes, including some missed opportunities. But whats important is that I learned from my mistakes, which has helped me make better, more strategic decisions ever since.
In this article, I share some fundamental strategies for achieving real estate success. I also share some real estate challenges Ive witnessed and experienced in my career to date and Ill explain how, as a coach and mentor, I help others work through them. Maybe youll recognize some of these challenges and benefit from knowing that theyre part of the business and can be overcome. All you need is the right information and the right strategies to followand having a good coach and mentor also helps.
Start by Setting Goals
This sounds obvious, but its surprising how many real estate investors havent sat down to consider, Why am I doing this? Whats my end goal? Of course you want to make money, thats a given. Setting goals helps you get there more quickly.
Real estate is a big, often complex, industry with a lot of different areas and moving parts. Where do you fit in? What do you want to do? Are you investing as a full-time business, or to supplement your income, or so that you can retire? Do you want to buy residential or commercial real estate, or are you open to both? Will you invest in one city or one province only? How about outside of Canada? If you figure out what your investing goals are first, the decisions you make will be a lot easier. For instance, if your goal is to invest only in commercial real estate in the Lower Mainland of British Columbia, perhaps because its close to where you live, then you can sharpen your investment strategy and be more successful.
Your goals can and probably will change. When they do, stay strategic. This means figuring out what actions you want to take, why you want to take them, and how they will help you reach your goals. Setting goals also means figuring out your comfort zone in certain scenarios, including when the market goes down, or how you feel about taking on partners or involving friends and family in deals. When the going gets tough (and it will), how comfortable will you be with the risk? Author and motivational speaker Raymond Aaron uses the term the hang-on twinsyou need to be able to hang on financially and emotionally. If you cant, you might need to let go. How do your actions fit with your goals?
Know What Is within Reach
I once coached a guy who was looking to start investing in properties so his wife could retire. That was his goal. He wanted to borrow $100,000 to get going, but he was having trouble getting a mortgage because of an easement on his property. When I asked him about the easement, he said it was for his farm. His farm? I had no idea he owned a farm, which could be used as leverage. I encouraged him to get a bank loan, and he was able to borrow up to $1.5 million at 4 percent. Hes been making investment deals ever since and lately is thinking of retiring tooand hes getting close to being able to. Whats the moral of the story? Some people dont realize what resources they have and where they stand financially. Speaking to those within your network or your personal life or to coaches like myself can help you figure out a way to reach your goal.
Another real estate investor I know was in partnership on a property, and his partner wanted out. Instead of both of them selling, I convinced my friend to buy out his partner and come up with an alternative arrangement to make it work. He decided to lease-option the other half (also known in the business as rent to own). More than a year later, he got an offer on the property and made $130,000 more than he would have if he had sold when his original partner wanted out.
Make It Happen
A lot of investors are losing properties due to multiple offers. This happens in a hot housing market or when a property is considered good value. Instead of trying to outbid the competition, I have advised many investors to approach people who dont yet know theyre selling. What do I mean by this? Look for people in your target area who may want to sell their property to you. Sometimes people who say they arent interested in selling reconsider when they hear how much they might get for their property. You see it sometimes in the movies, and it happens a lot in real life, too. Use flyers. Knock on doors. Try to find sellers who may be willing to sell to you instead of going through the formal real estate process. The seller will save on real estate commissions, and you will avoid a bidding war.
But dont hesitate. A potential seller might tell you theyre interested in doing a deal, but youre busy with other properties and cant see them until the next day or after the weekend. Make it happennow. (Ive been to peoples house at midnight to look at buying property.) I know one guy who lost a deal because he didnt go to see his seller on a Friday night, thinking he would go by on Saturday instead. By Saturday afternoon, that property had an agents sign on its lawn. He lost the deal.
You need to take action. Dont wait around. Its just like when you were a kid at the school dance. You cant sit on the sidelines waiting to get asked. You have to be the one who approaches the young woman or man and proposes a spin across the dance floor. You can have all of the right information and know just the right thing to say to a potential dance partner, but if you dont take action, youll miss out. Dont be the guy or girl who didnt have the guts to just ask.
Get a Coach, and Make Use of Him or Her
I once got a call from a realtor asking if I wanted to sell a piece of property I owned. (She wasnt afraid to ask if I wanted to dance). I said No, thank you. Thats generally my answer as Im a long-term investor. Out of curiosity though, I wanted to know what kind of money she was talking about. It was a lot more than I expecteda few hundred thousand more. When I got off the phone I told my assistant, I just lost a couple million dollars. Why? I used to own the neighbouring two properties. I sold them during the last global financial crisis. Financially, I couldnt hang on. Or so I thought at the time. Now those two properties were worth substantially more money. I shouldve hung on (both financially and emotionally). I told this story to someone I was coaching and they said, Too bad you didnt have a coach. The truth is though, I did have a coach. It was Don Campbell. The mistake I made was that I didnt talk to Don about it at the time!
You can imagine what a discussion would have meant. I couldve lease-optioned the properties or found a partner to alleviate some of the cash flow issues I was having at the time. As Warren Buffett once said, Be fearful when others are greedy, and be greedy when others are fearful. I learned from that mistake. I shouldve asked Don or, at the very least, channelled a little Warren Buffett. A coach can help you see the forest from the trees.
Its easy to look back at decisions you made in life and say I couldve done this. I shouldve done that. Theres no use in reflecting on mistakes of the past, but we can and we should learn from them. We can also try to avoid making mistakes or missing opportunities by relying on each other, across the REIN network.
What I like most about being in REIN is that every member is there to improve their financial position and to support each other in that journey. Were in this boat together and, as the saying goes, a rising tide lifts all boats. Or, as Zig Ziglar once wisely said, You can have everything in life you want, if you will just help other people get what they want. Its the truth.
Im grateful to be able to share my knowledge and experience as a coach and mentor to other real estate investors through REIN. The way I see it, the better we are as a group, the stronger REIN and our industry will be.
Brent Roberts has been investing in real estate for more than 35 years and has been involved in REIN since its inception. He is proud to have been trained and coached and to have learned so much in over 22 years with the REIN team.