The Secret to Investing in Real Estate
Becoming a successful real estate investor begins with making sure your business starts off with strong framework, and then inventory to follow.
You’ll need to be on the lookout for the right people and place to build your business first, before purchasing a property.
I’m going to share with you the number one secret to investing in real estate—and it’s something investors won’t tell you!
#1 Secret in Real Estate Investing Is To Build the Business First
This is THE way to make sure you make money, and not lose it. Building your real estate business first is the big key into ensuring that you’re doing this business well, and so much so that sooner or later, it’ll become automatic.
You’ll have other people in the real estate industry try to tell you that the way to invest in real estate is as simple as finding a property, analyzing the deal to make sure it’ll make you money and passive income, and then buy it in order to get someone renting it out as soon as possible.
That is the worst advice you’ll ever hear. Don’t do that.
Today, I’m going to be teaching you the main secret to success when buying property after property and turning that into an automatic business that runs on its own.
Nobody else is talking this because most are gatekeeping this method given how successful it’s proven itself. I, however, am going to be breaking down the pro-kept secret to real estate investment the right way so you can see that success for yourself.
I literally work thirty minutes a month—not just a day, or a week—thirty minutes A MONTH on all of my 30+ properties and I still make thousands every single month in passive income.
The Secret to Success In Real Estate Is A Step-by-Step Process
What I don’t want is for you to become like any of the investors I buy properties off of.
Why is that? Because when people who are just getting into real estate investment follow the directions of other gurus—usually something along the lines of that advice that I mentioned previously was the worst advice to follow.
By following that advice, newbie investors go all in way too fast. They’ll buy the property with the wrong approach and without fail start losing money instantly.
In some instances, these new investors get bad tenants or have property managers taking advantage of them, and suddenly they realize that they’re in way over their heads.
By the time I step in, usually a couple years later, to see if they might be interest in selling their property, you would think I’ve done them an act of service. Because in a sense, I am.
They’re so sick and tired of dealing with this chaotic investment experience that they can’t wait for it to be off their hands. But little did they know that terrible experience they had was entirely preventable if they had just built their business first.
A specific example of one these scenarios occurred once with a house that was worth around $200,000 but I put in an offer for it for $125,000, and then owners decided to meet me in the middle at $130,000 or so simply because they were so fed up with managing the property.
I saved $70,000 on that house, which is now worth around $300,000 to date.
Building Your Business: Step-by-Step
1. Find An Area of the Country to Invest In
The first step you’re going to want to take in building your real estate investment business is to find the area of the country to invest. Like I said, I invest in areas nationwide including Texas, Ohio, Arizona, and California.
Some of my students have invested in properties from Tennessee, North Carolina, South Carolina, and Florida up to Idaho and other northern states.
And you can too! All it takes to invest in one or more of these places is by following a step-by-step process to build your business first.
When I first got started in buying properties in 2006 or 2007, the internet was far less developed, so I was literally flying to locations across the United States to scope out properties.
Thanks to modern day technology, now I don’t fly anywhere to see the properties I’m investing in and neither do my hundreds of students.
In fact, my students don’t usually even see the property before buying it. All we have to do is hop online to do the preliminary research.
Out of the 30+ properties I own, I’ve quite literally only two of them in person. These properties are merely the inventory of my business.
2. The Convenience Store Metaphor
Imagine that you have a convenience store. This convenience store is a bare bones establishment—there’s nothing in inside but a vacant space.
Say your business goal to get this empty building up and running into a functional convenience store. So, you take a box of candy bars and you put it on the floor in the center of the vacant room (mind you there’s nothing else set up.)
If you’re expecting to run a booming business with that single box of candy bars alone, you are going to fail. No question about it.
A single box of candy bars in a vacant building is not a convenience store.
But think about how different the convenience store would be if you decide to build the business first.
By building the business first in this scenario, you would invest in the convenience store necessities—shelving units for those candy bars, proper countertops, cold storage, fountains machines, cash registers, employees, etc.
In order to run a successful convenience store, you’re going to need to prioritize the core elements of a logistical store before the inventory.
Every box of candy bars is inventory, just like house is a piece of inventory.
The right perspective to have when investing in real estate is to view each house a singular piece of inventory in your business. Do not think of your entire business as one house that you've purchased. The properties you purchase are just inventory within the larger picture.
Now, back to location. As for finding that inventory in the right place, I recommend trying out Zillow. I have some videos on my YouTube channel specifically about utilizing Zillow to find the best areas of the country to invest in based on current market trends.
3. Build Your Team
Now that we’ve covered the importance of location and maintaining an inventory-second perspective, the next step to building your business is to build your team.
Your employees and your contractors are who make up your business. But the number one, single-handedly most important person to have on your team is your property manager.
Let’s say you’re going to start investing in Columbia, South Carolina.
You’ve picked Columbia because you found a wide selection of great inventory there and see that there’s a good chance that you’ll make a lot of money by investing there. So, how do you move forward from here?
Interview 6 Different Property Managers
The first thing you need to do after pinpointing your investment location is to get in touch with six different property managers, so you know exactly what you’re getting.
You want to be able to weigh your options by finding the best local property managers and asking them the right questions that will lead you to the areas of the city with prime properties to be investing in.
If you can’t find a good property manager in an area that you’re interested in investing in, it’s probably a better idea to pull back on that area and refocus your investment initiatives somewhere else.
I myself have actually been in this situation when trying to find properties in Springfield, Illinois.
After flying all the way out there, I simply couldn’t track down a viable property manager. And even though there were plenty of good deals on properties in Springfield, I wouldn’t have had anyone to actually manage the property.
So, I stepped away from investing in Illinois at the time. Now I find property managers first before even looking into any deals.
Find Property Managers First
Having learned from my mistakes, I don’t care about property deals until I’ve found a reliable property manager. After you’ve hired a property manager, it’s time to get more people into your business, including realtors, wholesalers, handymen, inspectors, roofers, plumbers, contractors, etc.
Once you’ve properly vetted all of these potential employees and you feel good about your selection, go ahead and invite them onboard. These people are the core of your business. They’ll be doing the work for you.
4. Start Looking for Properties
As you’ve been building your business, you’ve probably already been looking at different properties. But here’s a pro-tip…
PRO TIP #1: Make sure the property manager approves of this property—your property manager needs to fully agree to the property they’re overseeing.
I once had a student who found a property that appeared to be a solid investment choice and he was set to go through with purchasing the home.
Before he hit the green button and purchased the place, he ran it by his property manager to get their input on details like potential rent rates and renovation fees.
He learned soon thereafter that his property manager didn’t even manage homes in that area because of its reputation as a bad area.
Had my student not checked in with his property manager, he would’ve spent all his money on a property in an area that his property manager didn’t even cover.
You don’t have a business if you don’t have a business built.
PRO TIP #2: Run Through Everything with Experts
As you’re building your business, it is so vital that you run all of your transactional decisions by experts.
I’m based in Arizona, but my students are investing in states nationwide. And while coaching people on how to invest in real estate all over the country is what I do, when it comes to location-specific investment guidance, I’m not the expert.
For example, if a student comes to me and asks me what I think about investment opportunities in Columbia, South Carolina, I’ll be honest with them and tell them that isn’t my area of expertise. Because it’s not!
The experts are the ones living and working in the area that you’re looking to invest in. So, the experts in this instance are people directly involved in Columbia, South Carolina real estate.
I’m here to teach you how to find, connect, and utilize the experts so that you’ll have the knowledge with each and every property you invest in. Because they’re the ones that are going to be keeping your business on track and you expand and grow your inventory over time.
And that in itself is the secret: building your business first.
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