SMARTERLANDLORDING

ADVICE FROM EXPERIENCE

Buying and Financing Properties

How Long Until You Do Your First Deal?

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So you have discovered real estate investing.  You have given it some serious thought and you think that real estate investing could be the key to a better future.  It is perhaps the answer that you have been searching for.  You just need to get out there and get your first deal and then the sky is the limit.  But how does it take to go from 0 to 60?  How long until you do your first deal?

In my case, it took me almost two years from the time I first learned about the power of real estate investing by watching a show by Robert Kiyosaki and buying my first investment property.  Why so long?  Well, the honest answer is that I was scared.  Real estate costs a lot of money and I was heading into uncharted territory.  While exciting, it was also just plain scary and being cautious by nature I was going to take my time.

Much To Learn And Do

One of the first things I found out after discovering the possibility of real estate investing was that I had a lot to learn.  The learning curve was steep and I know that if I dove in head first without first learning how to swim I would end up in trouble.  Big trouble.

So I took my time and studied.

I studied everything about real estate I could get my hands on.  Back then, the world wide web was still sort of new with limited amounts of information.  So that meant I went to my local library and checked out every book they had.  Surprisingly, there was a lot to be found.

Then I networked.

I went to real estate seminars in the evenings and on the weekends.  Then I discovered that there were groups called real estate investor associations, reia’s for short, in just about every major city across the United States.  I found a local one and started going.  It was at these seminars and reia meetings that I met successful real estate investors and made connections.  I took people to lunch to pick their brains.  I went to visit them as they were working on their properties.  Absorbing as much as I could.  I also found people like attorneys, accountants and contractors, who would help me when I was ready

At the same time I learned about my market.

Real estate investing means understanding the real estate market.  Before starting to invest, one has to know what properties are selling for and the amount of income they will generate.  There is no way to determine if a property will be a good buy without that knowledge.  And since all real estate is local, learning your market takes specialized knowledge, knowledge that is gained only in talking with and studying local sources.

That all took about a year.  After a year of studying, networking, meeting people and looking at real estate, I felt I was ready to find and purchase my first investment property.

I Had To Start Over

Then I moved halfway across the country.

Upon moving, I had to start a lot of things all over again.  I had to find a new reia.  I had to find new team members and I had to learn about a whole new real estate market.  After another six months or so I was again ready and I bought my first investment property.  It is a duplex which I still own to this day.

How long will it take you to buy your first investment property?  Hard to say but I think at least six months of research, learning, networking and looking at properties is about right.   Unless of course you move in the middle of your learning curve like I did.

Only you will know when you are ready.  You are not in a race with anyone else so do not jump before you feel confident.  But once you have a good feel for real estate investing from reading and listening, once you have found people to help and support you and once you have learned your real estate market, you will know when you are ready.

So how long did it take you to go from 0 to 60?  How much time did you spend researching, learning and looking at properties before you bought your first investment property?  Let me know with your comments.

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How Rehab Costs Affect Cashflow

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Accurately estimating the costs of a potential rehab is a vital part of a real estate investor’s job.   Not being able to do so will affect your cashflow and your bottom line.  This is because most real estate investors, myself included, generally need to borrow rehab funds along with those needed to purchase.  Since we have to pay those funds back, the increased payments affect your bottom line for years to come.  An example of how rehab costs affect cashflow will help to demonstrate my point.

Before I get started, I am assuming you know what cashflow is and how it is calculated.  If not or if you need a refresher, I discussed cashflow and how to determine it here.

The Best Deals Need Rehab

Many of the properties that you will purchase as a real estate investor will need significant amounts of rehab.  Yes, every once in a while you may find a cream puff that is in almost perfect condition, but these cream puffs are few and far between.  More often, we investors find properties that are outdated, functionally obsolete or just plain run down.  It is with these types of properties that we often make the best deals

Accurately estimating how much it is going to take to get these properties functional is thus a big part of our job (see here and here for tips on estimating a rehab).  Underestimating the costs will likely lead you to pay too much, while over estimating the costs will cause you to potentially lose out on the deal since another investor will offer the seller a better offer.  Messing up the rehab amounts will either cost you money or cost you potential deals.

How Cashflow Is Affected

You find a listing for a four-plex offered at $200,000.  In our example here, let’s assume each of the four units rent for $650 per month or a total of $2,600.  Let’s further assume that property taxes average $300 per month, while insurance costs $100 per month.  Finally, let’s assume further that 90% of the purchase price can be borrowed at a fixed rate of 6% and aromtized over 30 years (Google “mortgage calculator” to find and play with the payment amount).

Let’s put all of that together and look at the initial cash flow numbers.

 

Monthly Income                                                  $2,600

Monthly Expenses

Principal and Interest Payment                       $1,079

Property Taxes                                                     $300

Insurance                                                              $100

Repairs and Maintenance                                  $260

Vacancy Credit                                                     $260

Reserves                                                                $260

Total Monthly Expenses                                   $2,259

Monthly Cash Flow                                            $341

 

Not a bad but not a great cashflow either.  There is a potential deal here with a bit of negotiation.  However, this example assumes that there is no rehab needed and no rehab costs are included.  While such a scenario is possible, the more likely scenario is that there is a significant amount of rehab needed.  In fact, it is often the case that some of the units may be vacant due to lack of repairs.

Adding In Rehab Costs

So let’s re-examine our example and assume there is $50,000 in rehab needed.  $50,000 you say!  That seems like a lot.  Well, it is not really.  Sprucing up kitchens and bathrooms, painting walls and installing new flooring does not come cheap.  It is easy to spend $10,000 to $15,000 when rehabbing a dwelling unit (I have not even gotten into systems like HVAC and electrical).   These numbers are entirely plausible.  So let’s add these rehab costs to the amount you need to borrow.  You will note that the principal and interest payment has increased.

 

Monthly Income                                                 $2,600

Monthly Expenses

Principal and Interest Payment                       $1,349

Property Taxes                                                     $300

Insurance                                                              $100

Repairs and Maintenance                                 $260

Vacancy Credit                                                    $260

Reserves                                                               $260

Total Monthly Expenses                                   $2,529

Monthly Cash Flow                                            $71

 

There is still positive cash flow, but it significantly reduced due to the increased amount financed.  To me, the cashflow is just not enough to take on the deal.  There has to be more cashflow as the margin is just too tight.

Reduce The Price

The best way to increase the amount of cashflow is to reduce the principle and interest payment.  There are a number of ways to do that, including seller financing or putting more money down.  But, the logical step however is to negotiate with the seller and reduce the price you pay.  A $20,000 reduction in price and the amount financed will increase the cashflow over $100 per month.

New real estate investors have to learn how to calculate cashflow and estimate rehab costs.  This example demonstrates why it is so important to do so.  It all directly affects our bottom line.

 

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Estimating A Rehab – Four More Pieces Of The Puzzle

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My previous post examined how to quickly estimate three major rehab components.  To further help you when estimating a rehab, in this post I will discuss how to quickly estimate four more basic rehab components – flooring, paint, bathroom tile and kitchens.

The components described in this post, while perhaps not as big as those in the previous one, are no less important.  Being able to quickly and accurately evaluate all parts of a potential rehab will put you ahead in the game.  The discussion below examines estimates for a basic interior rehab of a rental property.

Basic Flooring

Basic flooring generally refers to installing new flooring materials.  It includes carpet, laminate and ceramic tile, but it can also refer to refinishing hardwood.  A basic rule is to budget about $2 to $3 per square foot of flooring needed.  This price includes both material and labor.  Of course the materials you choose for your flooring will matter.  But many types of flooring are pretty inexpensive.  For example, I just bought some ceramic floor tile at one of those big box home stores for less than 40 cents a square foot.  So be sure to shop around

Paint

A gallon of paint will cover approximately 300 to 400 square feet.  You can use this standard to estimate how much paint you will need for a particular job.  On a 10’ x 10’ room with standard 8’ ceilings (320 square feet total, less doors and windows) a gallon may do it.  The actual paint is fairly inexpensive.  $20 a gallon or so will get you a decent quality product.  But it is not the materials that are the expense here, it is the labor.  A decent paint crew will cost you about about $2 per square foot.

Bathroom Tile

New bathroom tile can really make your rental property pop to perspective tenants.  Nothing grabs a potential tenant’s eye more that a fresh, clean bathroom.    Bathrooms however can be a bit more intricate and thus take more time to do.  Both the walls and floors often utilize materials that are more unique.  Wall tile for example use bullnose (rounded edge) and other specialty tile types.  Floor tiles may be small and hexagonal in shape.  Expect to pay about $3 to $4 per square foot of new tile installation in a bath, depending on the materials you choose.  I like standard, old style black and white tiles but square foot ceramic tiles can look quite good as well.

Kitchens

Kitchens can be as expensive as you want them to be.  You can easily spend five figures on a higher end kitchen.  In a rental property however, there is generally no need for that type of expense.  Cabinets and countertops make up the largest part of your budget here, but they do not have to be super expensive.   Unfinished wood cabinets will cost about $30 per linear foot.  Finished cabinets can be more than double at around $70 per square foot.  Of course if you go unfinished you have to think about the cost to finish them and the recurring costs of keeping them looking good as tenants move in and move out.

The choice of counter tops these days are wide ranging.  Laminate can run about $20 a linear foot.  Granite, which is very trendy these days is generally a lot higher but can be sometimes found at a decent price at some building discount stores.  Be aware with stone countertops of the added costs of cutting and installation.  Cutting granite is no easy task and may not always come very cheap.

Using the basic guidelines outlined above and in my previous post will help you get started with the estimation of any basic rehab project.  In future posts I will discuss other rehab costs that you need to account for and begin to put all of these various rehab components together.

The SmarterLandlording Podcast – The Deal Architect, with Pablo Pereyra

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“Creating a win/win is outdated.  Today it is all about structure.”

Download the MP3  Or, check out the SmarterLandlording Channel on iTunes

Materials we discussed.

Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant

Gary Kasparov:  How Life Imitates Chess: Making the Right Moves, from the Board to the Boardroom

Michael Porter:  On Competition

Smarterlandlording.com’s 21 Tenant Screening Red Flags.

Want To Contact Us?

Connect with Pablo at

Pa***@90*.realtors











You can find me at my blog, Smarterlandlording.com

And you can like my Facebook page too

Like the Intro Music?  Check out my good friends in the band Kitchens and Bathrooms (Kind of fits right!).  They write and play some awesome, original music from right here in Memphis, TN.

Seeing Clear Through The First Deal Fog Of Excitement

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The first real estate deal is exciting but that excitement is also a hazard. The rush first deal excitement creates, creates situations that cost newbies money and leave a very bad taste for real estate. To avoid that, here are five things newbies should do to get through the first deal fog of excitement.

  1. Use A Written Contract – Do not do your first deal on a handshake. In fact, do not make any real estate deal on a handshake.  It is fine to negotiate through to a handshake, but be sure to finalize everything in writing.  If you do not, your deal and possibly some of your money may slip away.  Remember that without a written contract, there is no proof of your interest in the property.  There is nothing to stop the seller from shopping your deal around for a better offer.  It may be your word against theirs if some earnest money disappears and things can otherwise get very messy very quick.  Always use a basic written contract.
  2. Never Give The Seller The Earnest Money Deposit – Never, ever give the seller the earnest money deposit on a property. Instead your best is to use a qualified third party such as a mutually agreed upon closing attorney as an escrow agent to hold all of these sorts of funds.  Doing so will help to ensure that your money is returned to you if the deal is never finalized, which happens more often that you think.
  3. Do Not Make Any Repairs Before You Close – Making a repair or two may seem like a good idea. After all, you are just trying to not spend even more money on more repairs later on.  While this may sound good I do not advise it.  You just never know if the deal will truly close.  If it does not, you will likely have lost those funds.  I have seen this happen.  Do not make any repairs unless your lender requires it in order for you to get the loan.  Even then, it still worries me.
  4. Do Not Pay For Anything Until The Deal Is Finalized – There really is no reason to pay for anything prior to closing. This includes back taxes, liens and any other issue that may be associated with the property.   Every issue I have ever encountered was able to be handled at the closing table by my closing attorney.  Putting you money into a property before it closes is like throwing it in the toilet and not flushing.  You might be able to get it out, but it will not be fun.  Plus it is just too easy to slip, hit the handle and flush it away.
  5. Do Not Close Until You Get A Title Search – A title search is perhaps the most important thing you can do before purchasing a property. If you only do one thing, do a title search.  Imagine buying a property and fixing it up only to have a long, lost relative of the seller show up to claim ownership.  It does happen and it can happen to you.  Take the time and do it.

Get Through To Do It Again

Newbies often do not realize just how much they do not know.  They have also not been in the business long enough to develop that thick skin us more experienced investors have.  They are too trusting and thus easily taken advantage of, especially in the fog of excitement over their first deal.

By following the five items I have outlined above, the newbie real estate investor can go a long way towards protecting themselves and their hard earned funds.  Be careful and you will be successful.  If you get lost in the fog and lose money, you may never come out to try another deal again.

Is Now A Good Time To Buy?

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Sitting here in late 2018 the real estate market seems a bit overheated.  Prices have been steadily increasing, the supply of properties to purchase seems to have been decreasing and the numbers of people chasing after those properties seem to get more and more frenzied. The exuberance is definitely there.  Understanding this the question then becomes is now a good time to buy? Should we wait until this exuberance passes?

I say buy now if you can, but on one condition.

What is that condition?  The condition is to buy now only if the numbers make sense.  If after looking at a property the numbers make sense even in today’s exuberant market then pull the trigger and make the deal.  I just bought a property and the deal should turn out well.

The Problem In Today’s Market

The problem with an exuberated market like ours is that it can become difficult to understand exactly what the numbers should be.  The numbers just keep going up, up, up.  Rents, it is assumed, will continuously rise and therefore prices will follow.  Unfortunately, some of us tend to forget that what goes up must at some point come down.  The numbers can become misleading thus tricking us into thinking something is there when it is not.

Those of us who have been around a while have seen it before.  We saw it in 2008 when anything that came on the market was bought sight unseen within hours.  We heard then that real estate prices always go up, that this time was different, etc, etc.  Some folks out there learned a very hard lesson.

Rents Are The Key

In order not to repeat learning that lesson, we landlords need to keep focused on the fundamental thing that drives renal property value.  Rents.  Always look at a deal by working backwards from the rent.  Stay focused on rental income and attuned to what it will likely do in the future.  If rents are going to keep rising as they have over the past few years then prices of properties will likely keep rising also.

Rents are affects by many different things.  Supply and demand is perhaps the most important factor.  And supply and demand is often driven by jobs.  If there are increasing numbers of jobs, there will be increasing demand for works to fill those jobs.  Those workers will need a place to live and they will drive up demand for rentals.  Eventually however, entrepreneurs respond to increased demand and build new units to meet that demand.  Those units take time to get on the market but once they do, demand can lessen and push rents down.

The flow of money is another important factor.  The money that has been pumped into the system by the Federal Reserve through QE has flooded the market.  That money is now drying up and interest rates are on the rise.  That means a slowdown is in our future for sure.  When?  Who knows.  But when it happens rents will be impacted.

What Numbers To Use?

The best bet today is to be conservative or even perhaps a bit negative.  In other words, be cautious.  When the downturn comes, jobs will be impacted.  That will impact rents and property values as will rising interest rates.  Do not bet on the ability to increase rents in the future at this time unless you are in a rapidly expanding market.  Do not fudge your numbers and pay too much now thinking you will receive increased income in the future.  You may not and timing the market can be very difficult.  By being conservative now, you can withstand a bit of a downturn in the market when it comes along.

Remember, the numbers do not lie, but operator error when imputing them can affect your outcome.  Try to contain your exuberance.  Let the other guy bet on rent and price appreciation right now.   Be conservative so you can remain standing when the buying opportunities present themselves.  Trust me, they will.

When Writing A Purchase Contract, Do I Need A Lawyer?

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Blogger’s Note – The son of a good friend of mine is looking to get started in real estate investing.  He would like to become a landlord and find properties that offer positive cashflow to replace his current income.  His goal is to ultimately become a full time real estate investor.  I have been giving him some advice as he tries to liftoff his real estate investing and I thought it would be interesting to share some of his questions and my answers on this blog as I’m sure there are others out there who have the same questions.  I hope to publish more questions and answers in the future.  Click here to see the previous question and answer:  How Do You Know You Picked The Right Tenant?

Question:  When writing a purchase contract do I need a lawyer?  Is there a template I can use to keep me safe?

Answer:  You do not necessarily need a lawyer every time you make an offer, but you should at a minimum have a you contract reviewed by a local attorney who specializes in real estate law before you first use it.  After that first time, you have your template ready to go.

Real estate purchase contracts can come in all shapes and sizes.  They can run for dozens of pages and contain so many fancy words and legalese that they are basically incomprehensible to the average person.  Is such a complicated contract needed for the average real estate sale and purchase?

No, it is not at all.

The purchase contract that I use runs about a page, two at the most.  In my opinion, all of that other stuff found in most contracts just mucks up the works.

To begin explaining my answer, I first need to describe what exactly a contract is.  A contract is a document outlining something that two or more people agree to do, in this case sell and purchase real estate.  A contract does not have to be very formal and can even be drawn up on the back of a cocktail napkin if an agreement is reached while sitting at a bar.  Once signed by each party, a cocktail napkin contract could be legally enforceable and similar documents have been enforced by the courts in the past.  But I think you might want something a bit more formalized.

For any contract to be valid, including real estate contracts, they need to contain only two things.  The first is terms that all parties to the contract agree to.  The second is what is called consideration, or something of value that is exchanged.  That is it.  The complexity in contracts come come into play with the terms that all parties agree to.  Those can be as simple or as complicated as you want them to be.

What Should Be In Your Purchase Contract?

I like to keep things simple, and I think you should as well.  This is because it is much easier to get to yes during negotiations if things are simple and easy to understand.  Legalese and complicated clauses confuse, and a confused mind often says no.  That said, there are several clauses that need to be in your purchase contract.  To get started, here are some items I would consider placing in your real estate purchase contract.

  • The date of the contract.
  • The names of buyer and seller.
  • The address and/or legal description of the property.
  • The purchase price
  • A clause requiring the seller to satisfy any liens (loans or otherwise) they may have on the property.
  • Wording on how you want the property to be transferred (usually by warranty deed).
  • A clause requiring the property title to be free of defects and able to be transferred to you.
  • Wording that allows you to inspect all areas of the property, even if there are tenants living in the property, within a reasonable time frame.
  • A clause dealing with the transfer of appliances and fixtures. Sometimes people will take all of the plumbing and light fixtures unless you say they stay.  The legal term to use is appurtenances.
  • A clause requiring you to obtain “adequate” financing.
  • A clause giving you an out if you need it. You do not want to be 100% tied to anything.  Give yourself a way out if you need it.  This is often referred to as a weasel clause for obvious reasons.  Never use this clause except for very good reasons.
  • A time frame for the completion of the contract.
  • A form of consideration which is usually some form of an earnest money down payment.

That is it.

There may of course be special conditions or clauses with each purchase.  Each property and each seller offers unique circumstances that may necessitate further agreement.  For example, a seller may want to keep a certain light fixture or you may need to get prorated rents and deposits from existing tenants.  You may (and should) also want get the written leases for existing tenants.  You might also want to discuss who will pay closing costs and transfer taxes just to name a few.

But all in all the above clauses, along with a place for you and the seller to sign and date, should make for a pretty sturdy contract.

Developing Your Purchase Contract

There is no standard purchase contract that will work in all areas of the country, so a general template is not a good idea.  A good place to start formulating a template purchase contract for you to use is by doing a Google search for real estate purchase contracts in your state.  Look at a few and then cobble them together.  Or, ask around at your local real estate investor’s club.  Many people will be happy to share or at least share a source.  You might actually want to have several different types of contracts on hand as the terms needed for a property with and without tenants can be quite different.

Whatever you do, remember that I am not an attorney and I cannot give legal advice.  I am just a real estate investor who will tell you that it is wise to have whatever you are doing reviewed by a competent professional.  Clauses and traditions will vary from state to state and even from county to county.  Find out what people are familiar with in your area by talking with a local real estate attorney.  This may cost you a few hundred bucks on the front end, but it will be well worth it.  Plus you need to build up a relationship with a good real estate attorney anyway and a review of a purchase contract is a good place to start.

What does your purchase contract look like?  Are there any particular clauses you like to use?  Please share with your comments.

Inspecting Properties Before You Even Leave Your Car

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Adding properties to your portfolio is an obvious goal of real estate investing.  Adding those properties however means due diligence on the part of the investor and part of that due diligence is often a property inspection.  Property inspections can be very basic or very thorough and each investor will have their own inspection style.  For me, I at least visually inspect every property I plan to buy.  That begins when I drive up to the property.  You can easily begin inspecting properties before you even leave your car.

When you drive up to your next potential deal, stop, look around and take note of the following items.

The Adjacent Properties –Taking a look at around a property’s surroundings is important for three reasons.  These reasons are the three most important factors affecting the value of any piece of real estate.  They are location, location, location.  What is the setting of the property?  Are the adjacent properties similar?  Do you notice problems with adjacent properties such as disrepair, trash, junked vehicles, people hanging out, etc?  These are potential issues that can and will also affect your property.   Plus, they are not issues that can be easily fixed by you so you want to notice them before you buy.  Take a good look around and see what the location, location, location of the property is.

The Front Yard – Here where I invest, most sewer and water lines run from the property towards the street.  Those systems can be very expansive to repair and replace so I always look at the front yard for tell tale signs of problems.  Are there puddles when it should be dry?  Is there water running into the street?  Do you see any depressions in the yard or freshly dug dirt?  These could all be signs of trouble that you should check further.

The Roof – The roof of any property is usually best seen from afar.  You cannot really tell anything about it if you are up too close and below.  Because of this, when driving up to a property the roof is often one of the first things I look at.  Do you see missing shingles?  What about depressions?  Depressions can mean a lot of rotten wood.  Look closely.  In fact, carrying a pair of binoculars is not a bad idea for a quick inspection when you cannot get up close.

The Property Itself – Take a broad, whole look at the property itself, this simple act can alert you a lot of deeper issues.  Does the property look clean and well kept?  Is there trash or accumulated clutter everywhere?  Are the needed repairs obvious and many?  Do things seem out of line and out of place?  Can you see haphazard repairs made over the years?  If you see of lot of the above, you can expect more of the same on the inside and in paces you may not get to see.  Plus, these items can tell you a little bit about who may be living in the property and the accompanying issues you may have to deal with if you take this property on.

Property inspections are a necessary part of purchasing any investment.  They can be as detailed as you want or need them to be.  You can always tell a lot about a property by just looking through your car window.   Be sure to keep that in mind as you pull up to your next potential deal.

Things I Wish I Knew Before I Bought My First Rental Property

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It is hard for me to believe that it has been almost 15 years since I bought my first rental property.  Since then I have become much wiser (and older), but looking back I am still glad I got into real estate.  Real estate has provided me with everything I need and more.

It is always kind of fun though to look back and think what you would have done had you had the knowledge you have now.  Hindsight is of course 20/20, but what would I change if I could go back in time?  What do I wish I knew then that I know now?

I Was Paying Too Much

Almost every real estate investor I have met has said they paid too much for their first investment property.  I guess we simply did not fully know what we were doing.  My first property was not a bad investment, but I did pay close to a retail price for it.  I also wanted to live in one of the units and was moving from out of state so I was looking for something decent in a decent area and that can sort of blind you.

Looking back, I simply had a lack of knowledge, experience and other investors to bounce ideas off of.  I really had no good way to know.  Local REIA’s were the way to go back then and I had not really invested the time in that group I needed to yet.  Today I think things are a bit easier with all of the information, blogs and forums out there on the internet.   All of that was just getting started back them

I still own the property today even though I do not live there anymore. It performs well.  But it could have been much better.  The lessons learned were to no rush into a decision and to get to know your market better.

I Needed Help

Back then I thought I would (and could) do everything myself.  This included cutting the grass, making repairs and keeping the books.  I should have let all of that go and focused more on my business rather than the little stuff in my business.  I should have hired people to do more of those things because if I had had more time then I could have focused more on my business.  Looking back one of my main regrets is that I did not hire more people more quickly to help me grow my business.

The lesson here is to hire more help.  You are not saving money by doing things yourself.  It is actually costing you money because you are not growing your business.

Real Estate Investing Is A Business

This aspect of real estate investing had just had not sunk in yet.  I thought I was just going to be a landlord and the materials I was studying were all about landlording.  But I needed to also be studying and learning about business.  Because by buying rental properties I was not only becoming a landlord, I was starting a business.  Unfortunately I did not really think of my rental properties as a business until sometime later.  If I had thought of my rental properties as a business and worked harder on my business I would have been able to do a lot more.

I Should Buy More!

Even though we here in Memphis are not in a high price appreciation market, real estate was cheaper back then and there was a lot less competition around.  If I had been smarter, I would have bought and bought and bought.  Once I had gotten my feet wet and gotten a feel for what I was doing I should have expanded a bit more.  I did eventually but I guess I had to live and learn.  The lesson here is that the old adage “don’t wait to buy real estate, buy real estate and wait” really is true.

The Takeaway

Get into real estate today.  Do it while hiring people to help you and do not try to do it all yourself.  Think of things as a business from the get go.  Looking back fifteen years from now, you will be glad you did.

What do you wish you knew then that you know now?  Please share with your comments.

The Pump and Dump Scam

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Below is a short clip from Episode 11 of The Smarterlandlording Podcast – Buying, Rehabbing and Managing Class D Properties.   In the clip, Erik Nowacki and I discuss the “pump and dump” real estate scam.

Some deals look great on paper, but the reality is that you are being scammed and really just buying a pile of trash.  You do not want to get caught up in a pump and dump scheme, so give the clip a watch to find out what it is.  Listen to the full podcast episode of my interview with Erik and find out how to protect yourself when buying these types of properties.   You can listen to or download every episode of The Smarterlandlording Podcast here.