One of the best parts of our job is hearing from our amazing audience … and in this week’s episode we have more great questions from all of you.
That’s right, it’s Ask The Guys!
We’re talking about getting started in real estate investing, analyzing deals, understanding how economic cycles affect real estate investing … and more.
Remember, we are not legal or tax professionals. We don’t give advice … just ideas. Join our quest to answer your questions!
In this episode of The Real Estate Guys™ show, hear from:
- Your book-smart host, Robert Helms
- His street-smart co-host, Russell Gray
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Getting started in real estate investing
Our first question comes from Daryl in Boonville, Missouri.
Daryl wants to know the best ways to get started investing in real estate.
Lots of folks find themselves interested in real estate investing … but they don’t really know where to start.
There are so many books, blogs, podcasts, and seminars on the subject. It can be a little overwhelming … yet the basics of real estate are pretty simple.
What’s the best way to get started? Well, it depends on what you have to start with, where you want to go, and what you want to do.
But generally speaking, real estate is done with debt.
The first place to start is to take an assessment of where you’re at in terms of debt. Begin work on preparing yourself to be an efficient, effective borrower.
Go meet with a mortgage professional. Find out what your credit score is as far as real estate is concerned, what your documentable income is, and what types of loan programs you would qualify for.
Figure out what you need to invest.
Typically you need credit, a down payment, and technical advisors … like a football coach, you need to build your team.
Next, think about what you’re trying to accomplish. Most people want to grow … so it really starts with education and understanding your borrowing power.
Education doesn’t have to cost you a lot of money … but it will take your time.
Set aside and budget your time to be serious about investing. Go to a seminar or class. Join a local real estate investment club. Read books about the type of real estate that you’re interested in.
A great way to get started if you don’t have a lot of capital is to offer to help someone who is busy doing the thing that YOU want to be doing.
A lot of folks who are successful in real estate investing have more money than time … you might have more time than money.
The opportunity to lend a hand in exchange for learning can be huge.
You might even consider your first deal as a partnership in some way. One of our favorite ways to partner is through real estate syndication.
Syndication simply means a lot of people putting their money and their time together to do something.
Make sure that the person … or people … you are partnering with honestly know what they are doing.
Analyzing and understanding deals
Chris in Sun Valley, California, wants to know how to better analyze and understand deals.
First of all, there’s no such thing as a bad question … except the one you don’t ask.
Everybody who is at the front of the line was once at the back of the line … everybody who owns real estate today started with their first property.
It’s true that analyzing deals is one of investing’s critical skill sets.
If you’re analyzing deals for income, you need to understand an income statement for a piece of property.
One way to do this is to look at other deals. They’ll come with pro formas. You’ll be able to look at the financials … and then go out and look at other real world deals.
You’ll learn by doing that research … and once you feel like you’ve got the fundamentals down and understand the basics of financial analysis, you can take things to the next level.
The other side of the coin is actually analyzing the market, analyzing the physical construction of the property, and analyzing the condition of the neighborhood.
Like so many things in real estate investing, if you can find somebody who is active in the space and learn by helping them … you’ll pick up a lot.
You can’t get really good at analyzing deals by reading textbooks and taking classes … you will also need hands on experience.
So, start with basic education … and then, find a mentor.
Learning about the economic cycle
Laura in Austin, Texas, is looking to learn more about how real estate plays into the economic cycle … and how it’s affected by ebbs and flows. She wants to know what resources and topics we can recommend.
First up is a book by our dear friend Peter Schiff called How an Economy Grows and Why It Crashes.
It’s a simple book that is done in a way that makes the economy easy for everyone to understand … but it is also super, super powerful.
It has taken us years to wrap our minds around this stuff. The reason we cover broader picture economics and not just real estate is that every real estate investor is first and foremost an investor.
We all swim in the economic sea of the financial system that we are blessed … or cursed … with. So, it is imperative that we understand it.
There is definitely a lot you can learn by listening to people who have different opinions.
The Summit at Sea™ is a great place to do that. We get people who come in with so many different backgrounds and from many different niches and markets all over the world.
We also recommend studying the Federal Reserve and the bond markets … because that is where interest rates derive from.
Study demographics … because that dictates where the people are.
Then, understand the way CEOs think about business … and where they want to be and don’t want to be.
Taxes are another area you’ll want to learn about.
In the United States, we’ve now made real estate arguably the most tax advantaged investment anyone can make … which should attract even more money into real estate going forward.
Like any ecosystem, there are lots and lots of components … and you’re not going to master them all. But if you can understand the relationships between them, then you can get into conversations with the masters in each area.
There are lots of great books, podcasts, and conferences to expand your knowledge. Be sure to check out the resources available on our website. We particularly recommend a video series we did called “The Future of Money and Wealth.”
Brian Tracy says that if you read an hour a day in whatever area of interest you have, in 10 years you’ll become a nationally known expert.
We believe that’s true. It happened to us.
More Ask The Guys
Listen to the full episode for more questions and answers.
Have a real estate investing question? Let us know! Your question could be featured in our next Ask The Guys episode.
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