Last month we were asked to present to 200+ people about real estate investments. This was by far the biggest audience that we have every had for real estate investors. We were very honored to be on, but also humbled by the moment. The hardest part about the presentation was that we only had 1 hour. We started thinking to ourselves, what will bring the most value to the audience? How do we get them excited about real estate and what steps should they take if they were just starting out?
We decided to touch on key steps that preceded someone going out and buying their first property. Basically, a holistic view of the different options available to the investor. We broke out the presentation in the following topics:
Why Real Estate
Commercial vs Residential
We deliberately put strategy in the middle – this was the most important topic of the presentation. In fact, we spent the entire presentation discussing this topic both directly and indirectly. This is the one area that new investors do not spend a lot of time discovering. They see their neighbors, friends, family get into real estate investing, follow the same strategy, only to find out the real estate investing is not for them. It could be that the strategy was not for them, not necessarily real estate investing.
To understand what your strategy should be, we need to align them with your goals. What goals are you trying to achieve? Are you saving for your kids’ education? Are you trying to have some extra disposable income? Is this your retirement plan? These are some of the key questions to ask your self. Throughout this discovery stage you need to reveal the true why behind the investment. Start off by writing some S.M.A.R.T. goals, which stands for Specific Measurable Achievable Realistic and Timely. This will help you identify the timeline, strategy, and exit. As you go through this exercise, you will slowly be able to eliminate some of the strategies simply because they do not align with your goals.
A great example of this would be: “We want to spend more time with our kids” – choosing an active investment strategy like flipping as your first venture would not be ideal. This type of strategy requires experience and a lot of time commitment when you are first starting out. You can see that the goal and strategy is the polar opposite of each other. Going through the discovery stage would help you eliminate “flips” in this example right away. Perhaps a strategy that would align better would be more passive in nature [e.g. buy and hold].
When we went through the presentation – we put our investment portfolio near then end, right after strategy. This was done on purpose to tie into the strategy discussion. We wanted to show our example, and how we decided on our strategy. This helped the audience understand the why? People tend to be more receptive when you explain the reason behind the action. It creates a level of comprehension that would not be there otherwise.
In the last section we decided to touch base on financing options. There were a lot of folks in the audience that were young working professionals and did not know how to fund their deals. In a lot of ways, it reminded us of how we were when we started. The top 5 banks is the only way we knew how to buy real estate 7 years ago. But the truth is, this is only 1 tier, 1 path that an investor can go down. In fact, for us, we hardly go through A-lenders anymore. There is a time and place for it. During the presentation we provided a small list to the audience of what is available:
We did not include every possible financing option, but what we wanted to provide was a small overview of what is out there. Just knowing that there are options will probe the investor to ask questions. Choosing the right financing partner should be part of your strategy as well. Let us go back to the “flips” example. You could borrow private money to finance your renovations, and it is a great way to fund short term projects however for a long term buy and hold, it might not be the best idea. It will just eat into your monthly cash flows, due to the higher interest rate. Why not just keep the rate spread in your pocket?
Overall, this was a great experience, and we want to continue spreading our knowledge that we have gained over the last 7 years. This is one of the main reasons behind why we write monthly blogs and wrote the book “The Novice Investor”. Its all about sharing our experiences so that one day it could benefit someone else. Hopefully, this accelerates some else’s growth just like it has for us once we started getting more educated in this space.
If you are interested in finding out more information on how you can invest with us on our next deal – reach out to us directly at 289-242-6294 or firstname.lastname@example.org
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The information provided in this blog is for entertainment purposes only and is not intended to be a source of advice with respect to the material presented. The information contained in this blog do not represent legal or financial advice and should never be used without first consulting with a financial professional to determine what is in your best interest to meet your individual needs.
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