Real estate investing is a team sport. This is why I write these articles and why the REIA of Macomb exists. Without a strong team around you it’s very difficult to become and stay successful in REI (real estate investing). Every month we decide on a subject to tackle and look at it from many angles. This article with focus specifically on how to get started investing in Michigan real estate even if you’ve never bought a house.
As a 15 year veteran I’ve bought and sold hundreds of properties and consulted many investors. I’ve seen the business at it’s best and during the foreclosure boom watched it at it’s worst. Throughout all my years I’ve learned the 3 rock solid pillars successful investors never stray from. Today you’ll learn what they are and how to implement them into your business to hopefully help you achieve and maintain success.
Investment Approach – What form of REI makes the most sense for you? REI can take many forms; wholesaling, landlord, fix and flip, note buying, private lending…the list goes on. Almost every successful investor I know and have watched over the years is pretty focused on one type. It’s true that once you know what you’re doing you may be a wholesaler who also buys and hold rentals while fixing and flipping when it makes sense – but for most of you keeping it simple will be your shortest road to success. It’s extremely important that you pick a style of investing that best suits your personality and business strengths.
Farm Area – Yes the term “Farm Area” is used mostly by Realtors or real estate agents but they did not invent it – farmers did! Often at REIA events I’ll meet new budding real estate superstars who are literally all over the place. They are looking at properties from the far end of one county to another. They’ll quietly explain to me that they are confused when they receive a call from marketing they may be sending out or bandit signs they stuck in the ground because they don’t know the values of the homes they are receiving the call on. This in turn makes them apprehensive to speak with sellers or even agents right away thus they lose out on opportunities. When you are starting out it’s much easier if you pick one or two areas to learn. I like to think of them as quadrants. If you are marketing directly or working with agents and specifically work one area it’ll be much easier for you to become knowledgeable enough to answer yes or no on opportunities quickly. Let’s face it, most investors are part-time especially when starting out. So if your background isn’t in real estate you have to learn your neighborhoods. The best way to do this is to systematically pick a quadrant or two at a time and look at all the listed and sold homes within a certain period of time. This will give you your “End” number fro which you’ll need to back out all of your costs for you to know your maximum purchase price.
Power Team – I can’t really say that one of these three pillars is more important than the other because if you are missing or weak on any of them it’ll be tough to be successful. My confession – without my Power Team I’d be in huge trouble. Here’s an example of how my Power Team comes into play on a typical REI deal.
I receive a call from a private seller as they were referred to me by my CPA. They recently became an heir to a home which their great aunt owned. The aunt never updated the house and was a bit of a hoarder. They called me as they were told I can help them out because the house is in such poor shape your average Realtor can’t easily sell it on the market so they need a cash buyer.
That scenario above happens all of time to investors. Once your name is out there and you’re known to be able to handle situations like this for folks swiftly and professionally you’ll become their go-to investor. Once we struck a deal and seller agreed to my purchase price he fun would begin. I’ll go through exactly what I would do and you’ll see how my personal Power Team comes into action.
My first step would be to connect the heir (seller) with an attorney to get them through probate. How many average people have an attorney on speed dial that they can trust who’ll work fast for a fair fee? Next I’d send the file to my title company, which happens to be Chirco Title, who would get started preparing the closing docs while the attorney is settling the estate. Even before that I’d meet with a private lender to secure funding for the deal which runs through the title company…see how the term team applies. As a aside note, many of the folk at the title company know my private lenders from years of dong business with me. This makes transactions easier as they get the feeling that we are a team. Then I’d have my contractors walk through to assess how long and the cost of everything I want done. Obviously I know darn near every number before they step into the house but there will be things I missed and unforeseen speed bumps. Finally once I close I need to have my property insurance lined up, another Power Team member. Then I close at the title company and the fun begins. Once the rehab or cleanup is done I call my professional photographer. The better the house looks the more money you’ll make right? Finally I list the house or you’ll call your real estate agent, another important team member. Sometimes I sell my houses myself and another agent isn’t involved in which case I have an amazing mortgage company I work with for my buyers. Team member after team member for each part of the process.
Hopefully that paints the picture for you why you need your own Power Team. I do not have to babysit any of them. This allows me to find more deals – plain and simple.
As a member of the REIA of Macomb you’ll always receive meat and potatoes real estate investing knowledge. There will never be a pitchman flying in from California or Florida trying to sell you a $3000 course or bootcamp. You won’t learn how to flip houses on Facebook without ever having to leave you house or using a penny of your own money. You will learn what it takes to actually invest in Michigan real estate from investors who are here doing it in your backyard. This REIA was founded by active real estate investors for real estate investors over a decade ago. You’re always welcome at our events with a smile and a handshake. No Big Shots judging you, just real estate investors willing to share their knowledge.