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Well, I’ve been learning what it takes to be a wholesaler, something I need more of in order to succeed: guts! If I make an offer, will it be low enough to leave any profit for me when I sell it to a buy-rehab-flip investor? More importantly, will an investor buy it? Will I back out of the closing and make everyone mad? Or will I go ahead and buy it with no buyer in sight, whether that’s a good idea or a terrible one.
The fact that there’s so much less money (in my stock funds) than there used to be is, I think, making me more cautious and timid about investing. The amount of money I have to put into real estate investments is quite finite, and it’s scary.
I’ve been holding off on buying a large multifamily, too, because prices are still dropping here. An even bigger bargain is always tempting.
Chutzpah, balanced with good judgment. I need more chutzpah, I think!
Join the local Real Estate Investors Association. Check. Join the Chamber of Commerce. Check. Talk about what you do. Check. Volunteer for committees, be visible at your association, club, church, and chamber meetings. When? Have you got that kind of time? I would have to be out every evening. Well, almost.
Networking. It’s incredibly effective. I have a huge pile of business cards gleaned from networking meetings at the REIA. I’ve had offers of partnership, suggestions for financing, ideas for hunting down deals, and just plain nice new acquaintances. I’ve already called some of these people with questions, ideas, or proposals.
This is the free marketing, or at least, not very expensive. My local REIA cost under $100 a year’s membership. So did the Chamber. . . until I got the second bill, and realized that $80 was per quarter! I guess I had known that; I probably forgot. I was about to join the Better Business Bureau (not so much for networking as for credibility), but since it cost about what the Chamber did, I have to wait. Funny about the Better Business Bureau; it carries a lot of weight with most consumers but doesn’t really have the kind of stringent entrance requirements one might think. There is a code of conduct you have to sign.
Business cards. Essential for networking. I need to order more soon. They are so cheap online it will astonish you!
I suppose I could be printing up “We Buy Houses” bandit signs and car decals and flyers and newspaper ads. Those bandit signs are sprouting like daffodils in certain neighborhoods and on some corners. It’s not for me, though. You have to go out and set them in the dark of early morning, and try to snatch them back before the authorities take them away. Many investors hire someone to do that – making someone else do the bandit work! Then you’re supposed to have a toll-free number on the sign, with an answering service who are trained not to give your identity to the police. (In case it wasn’t clear, these bandit signs are against city/town/county ordinances almost everyplace.)
Marketing is considered essential in real estate, as in any endeavor that involves selling something. Web 2.0 marketing, such as growing your presence and networking on Facebook, LinkedIn, and the like, has its ups and downs. This poor blogger has had his Facebook identity “borrowed” by someone attempting to swindle others out of money!
In general, though, I think that networking, whether in person or virtually, is a powerful force in marketing. And I discovered I like it! Virtual networking can take up hours; for me, talking with people at various events seems much easier.
I don’t know much about marketing. But I have an idea! I’m going to study the methods of those real estate “gurus” whose marketing materials are so effective on me! More on this later.
There’s retirement advice everywhere. Since the baby boomers are coming of retirement age, retirement advice has proliferated and inhabits books, magazines, newspapers, the internet – oh, it’s all over the internet. The advice from all these sources have always required common sense and discernment. No change now, although it somehow seems that there’s an abundance of tired boilerplate, dire warnings, and get-rich-quick schemes alongside useful advice from sober, knowledgeable advisors.
Kiplingers, Smart Money, Money Magazine, books by Jane Bryant Quinn, Suze Orman, Dave Ramsey, David Bach, The Motley Fool, Choose to Save, and countless other sources offer direction. Even the government offers the standard “good” advice, at my money.gov . Why stray from the received wisdom? The advice that always made the most sense to me involved turning aside from attempts to time the market and pick stocks, using asset allocation with index funds, to remove emotion (and hubris) from investment choices. See these articles about asset allocation: The Index Investor,
Asset Allocation, and the SEC’s advice – Beginner’s Guide to Asset Allocation. Possibly the least sexy approach to investing for the future, it was apparent to me that the strongest approach was probably the one supported by research, not by fees that pay the salaries of stockbrokers or mutual fund directors. Using asset allocation and index funds meant that my money would grow roughly at the same pace as the overall market and the economy. Seemed like a pretty good plan until 2008.
As a homeowner, I couldn’t help but notice that one could really grow the nest egg by buying at the low ebb of the market and selling when it was back up. Or by buying a fixer-upper and investing some sweat equity into remodeling, landscaping, refinishing, and painting. Of course, if you sell your home at the top of the market, you’ll be buying another at similar high prices, unless you want to live in a tent until the next downturn. But what about real estate other than your own house? Wouldn’t this be an investment that offered a little more control, and used a little more of one’s own judgment, than tying your fortunes to the overall economy?
I bought my first investment property during one of the upswings in the market. It took 6 or 7 months to track down my little 2-family REO. (REO means Real Estate Owned, by the bank that foreclosed on it.) This particular REO had frozen pipes and boilers, asbestos, a tired roof, and an attic just crying out to become added bedrooms. It was an awful lot of work, and calling contractors, getting estimates, monitoring their work, advertising, screening tenants – I won’t do it again, but it was worth it. That house pays me a modest sum every month, unless both apartments should be empty at the same time. It’s a good investment. Not the most liquid of investments – I wouldn’t sell it now unless I had no choice – but a good place for money to be kept for the future.
The advice available to those of us who would like to invest in real estate is information hidden inside a jungle of hype, impressive salesmanship, expensive redundant “home study courses” and amazingly pricey “boot camps.” Books are better, but there are plenty of books with garish covers, incredible claims, and large type that have more in common with the snake oil courses than more useful sources of information.
We hear so much about what a mess real estate has become during the recession. And this is so, if you are losing your house to foreclosure, or even if your property values are dropping because your neighbors lost their houses to foreclosure. The increase in foreclosures is a sad testament to the greed of purveyors of sub-prime mortgages, and the ignorance of people who bought houses that their income could not support.
Is there a bright side to real estate in this recession? There is. If you don’t own a house but have some money saved up and a reliable income, now is the time to buy your house. Why? Real estate is on sale! In some areas it’s 25% off, and in some as much as 60% off! The cheaper house you buy may never soar to such an inflated price again, but you know that you are getting a very good price. Even if the market continues to drop, your chances of building equity in this house are excellent if you hold it, and live in it. If you’re trying to make a quick buck, then of course there is risk.
The silver lining to this terribly sad housing situation is buying real estate. If you are in a position to buy, you are in a position to get a very good price!
