Doing money right was on my mind all last month. I’ve been working on making smart personal finance decisions long before this blog post, but money for real estate investing is a new beast for me. If you’re a novice investor reading this, welcome, you are not alone!
Has anyone ever told you that how you do one thing is how you do everything? It wasn’t necessarily news to me, more of an overlooked truth lurking in the shadows of my subconscious until it was uttered at the Capital City REIA’s Inner Circle quarterly intensive workshop last month. In the real world, do we really put in equal effort across the board in all aspects of our lives?
It stands to reason that the internal motivation driving you toward excellence in one thing, by default, pushes you to do everything else in similar fashion. We are, after all, creatures rooted in habit. Which leads me to the meat and potatoes of this post; if this theory holds, why can’t I be as good at managing real estate investing as I am at managing my personal finances?
I’ve been budgeting, repairing and monitoring my credit score, leveraging credit cards and taking advantage of cashback deals long enough to consider myself at cruising altitude in matters of personal finance. I struggled through the learning curve but remained committed to my financial goals. Over time, I have made real progress consistently and the rewards can’t be beat. No overdraft fees in YEARS, I never worry about whether I can pay my bills on time or afford an unexpected emergency. I enjoy large credit limits, low interest rates, and a slew of perks without losing sleep over paying back entire balances. Best of all? I have my peace of mind back.
In the investing arena, I am not on solid ground . For starters, since I joined the investor world 6 months ago, I’ve been a professional seminar attendee with nothing to show for all the knowledge acquired and hours spent. I did came close to making my first offer on a quad in DC last month, but the numbers did not make sense and the deal was moving way too fast for my comfort. I felt unprepared (where am I going to get the funding!?) and uncertain (what should I be asking the agent that I’m not?). I ended up walking away from the deal and spent the rest of the week second-guessing my decision (could I have financed with hard money?).
So why does handling my personal finances feel so much easier than building my multi-unit portfolio? For lots of reasons having to do with momentum and one very important principle – mastery.
A few days after I passed on the DC deal and my decision no longer felt so damning, I sat down to analyze the disparity in my money successes. Over a cup of espresso and some morning sunlight, a few things immediately became clear. On one hand, I have been developing a healthy financial life for so long that I’ve mastered the systems and strategies most effective in navigating this aspect of my life. On the other hand, I have just waded into the ocean of investing and the water level is but ankle deep. Frustration led to realization, and awareness is progress in my book.
Having figured out the problem, I got to work brainstorming solutions. Fortunately, I don’t have to start from scratch as I already know to employ a tried and true strategy that helped me become financially savvy. Whether the skill you seek to master is brand new or you need to do some midcourse correction, this simple tip is easy to implement and is very effective at getting the ball rolling!
If, like me, you are stuck in the learning curve and persistence is proving futile, don’t quite yet. Take it back to basics.
Complex things are simpler when you break them down. Why? Because a fundamental understanding of how something works reveals the smoke signals and distinguishes them from the noise. I had no idea where I was spending my money, was months past due on bills and I had no clue how to dig myself out of my messy financial situation. The only thing I knew to do was a basic budget. So that’s where I started. I created an excel a budget and for weeks, tracked expenses daily until I began to understand my thrifty habits. I then tweaked the budget over time, tried the 50/30/20 rule, opened a savings account…you get the point
Deconstructing a skill or goal into smaller, more manageable components and focusing on one at a time helps us avoid over-extension and the resulting burn-out. Learning is, by nature, a frustrating process peppered with obstacles and blind spots, and a sure way to slow down your momentum at anything is to spread yourself too thin.
Now that we know what to do, let’s revisit my DC experience and apply this hack.
One of the main issues complicating my acquisition efforts in this deal was….you guessed it, the funding. In a competitive market against more leveraged investors, my FHA loan option and its accompanying hassles (the appraisals, inspections etc.) is a less appealing option to a seller interested in maximizing profit while entertaining minimum discomfort. If that wasn’t obvious, I need more money for real estate so I can have some real skin in the game.
I need to acquire the skills to get funds for my deals. Without proper strategy, however, money enables costly decisions. It is much more tempting to bet on marginal deals when you have readily available funds. There is more to funding than meets the eye so what are the basics? Getting the money for deals really starts with
1) a top notch education, and
2) the ability to find and structure great deals
Aren’t you glad the ccREIA is your investing home turf? You really are surrounded by a supportive community for your investing success. Where else can you find a vibrant intersection of great deals and great minds? It is when you find the right deals and implement the right strategies that the money options open up.
And there you have it. When deconstructed, funding really boils down to investing in my education and building the right relationships. The more I know at this basic level, the stronger my investing foundation and the higher the rate of my success in this business.
Will boosting my savings help? Sure, albeit at a snail’s pace. So while I continue to save, I’ll be educating myself on alternate ways to make more money investing (short sales, wholesaling, private money are all good places to start) and talking to you about the great deals you have and whether we can structure them in ways that benefit all the parties involved.
On that note, what deals do you have to share? Need help finding and funding your deals? Comment below and someone from our team will contact you with help!
PS – To learn more about the power of deconstructing skills for mastery, check out Tim Ferriss’ work on YouTube at https://www.youtube.com/watch?v=DSq9uGs_z0E
3 Tips to My Younger Self
Last month was a very productive month here at the Capital City REIA, wouldn’t you say? We kicked July off with the long anticipated two-day Riches n Niches workshop and what a fantastic turnout we had. Our goal was to impart maximum knowledge in two days, and I dare say, mission accomplished!
On day 1, the insights and questions were fast and free-flowing. From 8:30am to 5:30pm, Tammy shared some of her most successful strategies for investing in multi-units and commercial properties. The heavy dose of knowledge continued into the afternoon as Brian Ginter, an experienced appraiser and member of the Capital City REIA, and Jim Hellman, a commercial lender, each shared their experiences on the funding side of commercial real estate investing. It was an energetic first day, complete with rapid-fire Q&A and a networking session that carried on long after the seminar wrapped up for the day.
How much better can a seminar get? Hands-on better. I’m talking about day 2 of the workshop of course, which we spent out in the field engaging in a mystery-unraveling, phobia-reducing exercise for novice and experienced investors alike. We pulled away from the hotel at 9am in two charter buses and headed to Baltimore to see, touch, and experience multi-unit and assisted living facility projects in the brick. Learning from the owner-inventors how the properties were acquired, financed – with little to no money down! – and are being rehabbed was enlightening to say the least.
There was plenty of learning and networking to be enjoyed by investors of all experience levels. One recurring thought I had throughout this workshop and one that surfaces frequently at events I attend is, “…that’s it? Why didn’t I think of that earlier?” or, “Wait a minute…I knew that! I could be doing that already!”
That’s right, so many innovative money generating ideas that seem so simple and that I never thought to integrate into my own investing agenda sooner. Take short sales for instance. I need some cash to fund my first buy and hold in the capital city (see what I did there), and I’ve known about the short sales strategy for a while. Based on my networking experience, it clearly works, so why haven’t I created short sale opportunities for myself?
We’ve all suffered from this strange “knowing but not implementing” syndrome. There’s many a justification for the habit, ranging from laziness to lack of confidence in following through. Our brains are also constantly acquiring information that needs to brew and incubate before we are compelled to act. It takes time to bring out hidden details and make non-obvious connections between ideas. Think about it, how have you learned some of your most valuable investing lessons to-date? Probably the hard way through trial and error.
Nothing is a waste of time if you use experience wisely. Look back five years and you’ll appreciate the evolution of your investing tactics. Five years ago, I was a weary eyed 25-year old quickly catching on to the drawbacks of working towards someone else’s dream. It seems like just the other day, yet when I reflect on what has changed since, I am humbled by my growth from reckless spender to novice investor. If I could share what I know now with my younger self, here’s is what I would say to help me achieve my goals faster and see results earlier:
#3. Fail fast, and often
You want financial security but you don’t know where to start? How about anywhere that piques your interest. Pick a starting point, immerse yourself in the learning process and do not be frightened by your sense of unease. Somewhere beyond the edges of our comfort zones lie failure and success, and you won’t know whether you’re falling or flying unless you jump off the cliff first.
Failure is more common than anyone likes to admit, especially when the learning curve is steep. Rightly so, failing bruises the ego. Yet it also serves a higher purpose beyond dishing out a slice of humble pie. It also presents a natural opportunity for self-improvement. How else can you develop the strength and endurance of your armor if you don’t test it?
Don’t shy away from failure, fear regret instead. Embrace failure as an opportunity to learn, adapt and adjust to life’s curve balls. The resilience and toughness you develop along the way will serve you well in overcoming more complex and unexpected challenges in the future.
#2. Get Clear on Your Vision
Your time on earth is limited, making it the most precious of all gifts bestowed on you. Making decisions on how your utilize your time is an investment strategy that starts with identifying the relationships with your champions and in activities that genuinely interest you and expand your horizons. It really is that simple. Trust your intuition and sound judgment and get clear on which opportunities presented enhance your life and which ones detract from your time. Then, make a conscious choice. When you say “yes”, act on it. When you say “no”, stand your ground. And when you make the wrong call, learn the lesson and move on.
My father, a gynecologist and one of my champions, urged me repeatedly to look into real estate when I was 24. My intuition sensed the possibilities in his words, yet I was overwhelmed by the unfamiliarity of the industry and I bulked under the weight of the information I found. I did not realize it at that time, but I quickly gave up, thus saying no to an opportunity that thankfully, found me years later. The second time my interest in real estate was stirred, I jumped on the opportunity to learn, and here I am with my Capital City REIA family.
There’s an old saying that states, “the best time to plant a tree was twenty years ago. The second best time is now.”
Which leads me to my next tip.
#1. There’s no time like now
If investing has taught me anything, it is to strike while the iron is hot. There is a distinction between feeling ready and feeling right. When it comes to moving forward, readiness is very much dictated by our levels of confidence , and confidence is a fickle emotion in the face of uncertainty.
Young me, instead of the condo, go for the duplex and let a tenant pay your mortgage. Use your savings to purchase the next property and keep the momentum going. No practical knowledge? No problem. Invest in some real estate knowledge and seek out like-minded individuals who know what they are doing. Need guidance? Find a mentor. There are wonderful people out there who love to teach what they know. Where do you find a tenant? It’s all about marketing. You’ll learn all about this when you start attending workshops and events on real estate investing.
No amount of preparation and due diligence can guarantee a perfect result because there are always outside forces at play. If you attended Ms. Valarie Scott’s presentation on short sales on July 27th, you will remember she urged us, the audience, to grab the bulls by the horn start doing short sales now. In fact, when I mentioned the topic of this post to Ms. Valarie, she had the following to say to her younger self, “Get a mentor ASAP and start investing right away. Don’t procrastinate! Wasting time is missing out on opportunities and deals. These missed opportunities could positively change your circumstance[s] and life.”
The perfect time to act on new and improved information is now.
And you can do so by diving into a steep but necessary learning curve to understand the new information. Or by learning from past experiences rather than indulging in moments of self-recrimination. You should also consider getting guidance from an expert in the field as the short sales Queen advised. And lucky you, Tammy provides coaching and mentoring exclusively to members of the Capital City REIA’s Inner Circle on successfully navigating multi-unit investing. Why reinvent the wheel when Tammy already created it? If interested, just leave a comment below and someone from our team will reach out to you with details on the latest program that starts August 13th-14th, 2016.
Based on current information, what kind of a conversation would you have with your less-experienced 25-year old self? What investing tips would you urge your younger self to act on immediately? Leave your comments below!
2016 STATE of the MARKET FORECAST for ALL REAL ESTATE PROFESSIONALS…
Are You “Really” Ready for 2016?
Is Your Finger on the Pulse of the Real Estate Markets?
Do You Know Who Your 2016 Buyers & Renter’s Are and
Do You Know What SPECIFICS They Want & Need? Do You Know the “New” LENDING & LOAN Requirements?
DO You Know Today’s BEST MARKETING Strategies to Use?
DO You Know Which MARKETS to INVEST IN?
Do You Know the “DOM” and “SUPPLY” Levels?
The best housing markets forecast for the next five years are composed of 10 cities scattered from Washington State to Florida. Most of the best real estate markets are centrally located to attract a large number of sizeable employers, and are likely to produce better regional economic conditions as a result. A few are exceptions to this rule, including Miami, which tops the list with the highest projected housing inflation.
Rank City Forecast Appreciation
1. Miami, FL 18.7%
2. San Francisco, CA 15.9%
3. Los Altos, CA 15.5%
4. Seattle, WA 14.9%
5. Medford, OR 13.9%
6. Eugene, OR 12.8%
7. Napa, CA 12.7%
8. Naples, FL 12.5%
9. Austin, TX 11.6%
10. Tucson, AZ 10.5%