Life as a real estate investors means making choices between the many options available.
In this episode of Ask The Guys, we take on a pile of listener questions that have to do with choosing.
Making the choice to be in the studio for this decidedly interesting episode:
- Your choosy host, Robert Helms
- His cheesy co-host, Russell Gray
- The prime choice for wisdom, The Godfather of Real Estate, Bob Helms
- Special guest contributor, Danny Kalenov
We kick off the show with a Happy Birthday greeting to the Godfather, who just celebrated his 80th! We’re guessing he’s learned a thing or two about investing over that time.
Then we take on a question from a young guy on the other end of the age spectrum. He’s just getting started and wants to know how to build up his credit and credibility.
Since a credit score is really a reflection of how one handles credit, the somewhat obvious answer is to start handling credit responsibly.
It starts with simple accounts like cell phones, utilities and small credit cards. Then you can graduate up to installment loans like a computer, car or personal loan.
The goal isn’t to go into debt…at least not yet. It’s simply to demonstrate a consistent history of timely payments. And the sooner you get started, the better.
But while you’re doing that, you can still go do deals. It means you have to find partners who have what you lack and need what you have.
For a young person, you usually need everything, but you can offer hustle, specialized knowledge, relationships and deal flow. For older, busier folks, those things are hard to come by.
And just like credit, you build credibility over time when you behave correctly. Dress right, keep your promises, show evidence of success and responsibility, associate with credible people, and do your homework! People can tell if you know what you’re talking about…and they’ll judge you by your knowledge and your ability to articulate it.
Another question came up about how to find prospective investors. The GREAT NEWS is that a recent law is opening up more options for real estate entrepreneurs to promote their offerings without running afoul of securities law.
Technology brought peer-to-peer lending into the marketplace several years ago. Now, the new law opens up this crowd funding concept to equity investing. And there are many crowd funding platforms (on line marketplaces) created…with more coming.
But you don’t have to wait.
You still have the choice of to raise money the old-fashioned way: networking.
So building your brand (credibility) and your network (connections) can still be done by attending events, building relationship, getting referrals and telling your story.
And while you can just make it up as you go along, a better choice is to be prepared. Anyone who’s a serious investor will expect to see a business plan. Hopefully a good one.
How do you learn to write a good business plan? Start by reading a lot of business plans. You’ll quickly recognize good from bad, and you’ll pick up ideas about how to explain your offering with enthusiasm and credibility.
Of course, this is the natural place to promote our most popular seminar, The Secrets of Successful Syndication. We created it because we get so many questions from people who want to go big, but don’t have enough resources to do it on their own.
And while “No Money Down” books, recordings and seminars are easily sold, the real secret is to raise money from investors.
Of course, this is another choice. Do you want to go it alone or would you like to have investors? They both have pros and cons.
So how do you decide? And how do you learn?
Real estate investor development usually starts with knowledge, which you can get from books and classes.
But to really understand what life is like in any profession and what it takes to be successful, finding a mentor is arguably the best choice.
Some mentors charge a fee. Others will take a portion of the profits. A few will even do it simply for the reward of sharing their knowledge (rare, but great to find!)
Which is better?
It depends. If the mentor has what you want, and what you have to pay to get it makes good business sense to you, then whatever arrangement you make is right.
Our caveat is to avoid long term commitments (in anything, not just investment mentoring) until you’re certain the value is really there and you’ll be happy with it over the long term.
Also remember, that 100% of nothing is still nothing. So if you need help to get your business going, then giving something away is probably a good investment.
And if your resources are light at the beginning, but a mentor believes in you and your plan, then revenue sharing puts more of the risk on the mentor. In this case, it’s only fair they have a shot at a bigger reward.
If you can afford to pay a flat fee, and are confident in your ability and opportunities, then you may want to take more risk in order to retain more of the reward.
Whatever you choose, be sure to establish a positive, equitable relationship with your mentor. Don’t treat him or her like a vendor and penny-pinch them. You want to be generous so they are inclined to be generous as well.
At the end of the episode, we ask special guest contributor Danny Kalenov to help a listener with choice about a resort property investment.
Danny is a successful resort property developer/owner/operator and is very qualified to help answer a question about how to approach the decision to buy a resort property. Is it primarily an investment or is it a lifestyle expense?
Of course, the answer is…it depends.
If you want it to make a profit, then your personal use may have to take a back seat to customer demand. That is, you can enjoy the property, but the odds are you’ll be doing so during unpopular times of the year. Effectively, you get leftovers.
But if you want to enjoy the property as a consumer, your profitability will probably suffer. Worse, if your property isn’t available during peak times, your customers may give up and look elsewhere.
Of course, if all you’re looking for is a little income to offset your personal expense, this can be okay.
Obviously, in this…and all the questions we take in this episode…it’s your choice.
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