We are contacted almost every week by someone who’s looking to get started in real estate investing. The true answer to this question is an easy one, but the process that goes along with the answer can be a bit painful.
You really have to want to be a real estate investor pretty badly to make it work. It’s really not just about fixing up houses. Or at least it’s not just about fixing up houses in THIS market.
What most people want to do
Most people that I meet with want to be the “rehabber”. This means they want to buy a house, decided how to make it look pretty, by either hiring someone to make it look pretty, or do the work themselves, then sell the house, and make a large profit.
This can be a great strategy if you can consistently find houses that you can buy at a discounted enough price to make the strategy work.
What most people have to do to be successful
Unfortunately the hard part in this market (Portland real estate) is finding the houses at a discounted price. It’s not that it can’t be done, it’s just that it’s not as easy as finding a real estate agent, and asking them to find you a house to fix up and resell.
That’s not to say that wasn’t possible a few years back. In a down market you can find lots of houses to fix up. But this market is different.
Because this market is currently rising, and in this kind of limbo state, we all have to work harder to find good real estate deals. This is where marketing comes in…
Most people don’t know how, and don’t want to do marketing
And to win at real estate investing in this market you must be doing marketing. A realtor could be doing this marketing for you, and it would even be benefiting them, but I have never met a realtor that has used this strategy.
So, you need to be doing the marketing for yourself if you really want to be successful.
How to start marketing to find real estate deals
I believe that the easiest way to get some marketing going is to buy, or obtain a list of potential home sellers, and mail them a letter or postcard. We use a site called www.PropertyRadar.com.
PropertyRadar.com costs $40-$60 a month (there is a free trial).
Once you are in PropertyRadar.com you can pull any number of different type of lists. We like the out of state owners list, or the mortgage free and clear list. But you can really trying mailing to just about anything. We’ve even mailed to houses in a zip code of where we want to buy (no condos).
After finding your list go to YellowLetters.com, upload your list, create a letter or postcard, and send it off. We use YellowLetters.com for all of our mailings.
Once you are marketing there’s really no silver bullet. You simply need to mail, then repeat, and keep repeating until you figure out how to make it work.
How to make your marketing work.
You really just need to do it, and then measure the response. Then do it again, and measure the response.
I would say that over time you need to spend about $1000 to find a good deal with marketing. And then over time you can get that number down by tweeting your marketing messages.
Other marketing ideas
If you don’t like the idea of sending letters to people you could also try putting up “We Buy Houses” signs, which we have had work, but you can get in trouble with the sign police.
Or online advertising is getting more popular. We are currently spending some money on this, but can’t say that we’ve found the “secret sauce”.
Next up is talking
Yep, that’s right, talking. When someone calls you to sell their house you really need to be able to connect with them on the phone (and in person). You need to find out what kind of repairs the house needs, and how low of a price they can sell it for.
Getting people to like you will make this business WAY easier for you. It really will.
After they like you and want to sell you their house…
… you need to be good at analyzing what the house is actually worth, how many repairs the house needs, and what it will be worth after you make the repairs.
This comes by getting good at knowing your local market. Go to open houses, see what sells and for how much. Follow your market daily. Talk to other investors who are buying, fixing, and selling houses in the area. At first, getting to know this business will be a full time job. But it’s all worth it in the end. Hopefully you enjoy it. And if you do, you’ll be very successful.
It’s not a bad idea to intern
This is actually the best idea if you can find someone that can make your time worthwhile. Go to local real estate events, and try to find cool people that are running successful businesses. Then ask if you can help them on a commission basses.
Be truthful. Tell them that you’d like to learn the business, and help them along the way. Maybe you’ll intern for them for a year. That can be the best learning year of your career. And if you can make 10-30% in the process it’s a complete “win-win” for everyone.
You will need a team to get this done
If you find yourself a good house to fix, and flip… you’ll need a good contractor to do the physical work. You could do it yourself, but I wouldn’t recommend it. This will take far too long in most cases.
I would recommend interviewing at least 10 contractors, and going with the one that will give you good prices, and that you can trust. This will make your life much easier.
Most real estate investors that are just getting started will hire the first contractor that they meet with, and often it blows up in their face. I’m telling you this based on experience. Early in our business we had contractors blow up our jobs several times. It’s no fun.
Next on your team you’ll need a Realtor to list your completed job OR you can get your Realtors license and save yourself some money. This I actually recommend doing. If you did a good job with the rehab you should have an easy time selling the property, and it shouldn’t be a ton of work. You can even hire an assistant Realtor to do the work for you, and split the commission (or better).
That’s about it, now just refine your process
We all want to get better. Make sure that you’re constantly learning, and making systems for what you’re doing. Always ask if you could hire someone to do the job that you’re doing. You should always be able to answer, yes. If you cannot, you need to change your process.
You never want to give yourself a job. You want to be creating a business that you run, but YOU don’t have to be there for it to run.
We are always down to talk and help people out, so if you enjoyed reading this, and have questions shoot us an email or comment below.