Real Estate: Choosing the Right Assets and Creating a Training System
As you probably know by now, I am a small business consultant. But, for over the past two decades I have also been heavily involved in the real estate world. I help investors decide what the right styles of assets to invest in are for them. When people hire me, we discuss their assets, the amount of cash they have for the venture, or equity that they are going to use. Any of those can be used to buy property, do a joint venture, to give money to a flipper, turn-key provider, or be syndicator in the field, or a fund. I encourage my clients to also think about what kind of portfolio mix they want.
If you are working full time, (40 hrs+) just because you have a lot of equity doesn't mean you should buy ten doors. Within each unit (door) you will usually have anywhere between 2-5 people. That means that on top of your full-time job, you will have to absorb the needs of 20 people.
What if you want to be in real estate but you don’t have any money, what do you do? My recommendation is that you become an operator in the field. Get your real estate license, become a flipper, a wholesaler, a bird dog, or an assistant to anyone already doing the aforementioned jobs.
I had the pleasure of attending a real estate meeting recently and I listened to a woman who is an experienced, single family unit flipper. She finds properties, value adds by cleaning, fixing, and updating, and she puts out ads and signage while she’d doing renovations. She sets up an open house time, calls people back and looks for the best tenant match for her. When she speaks to people who are interested, she inquires about their families and why they’re interested in the property. By doing all of this, she assures that she will be a landlord for a long time. She has created a training system that helps her tenants understand her policies, practices, and know their expectations.
Unlike her, my interest is in multi-units. In multi you’re dealing with a management company. When you have a new management company, I recommend sending them an email every Monday morning. That Monday morning email serves to inform you of what the management company says the problems are with the unit and lets you know what needs to be addressed. Every Monday send, and by Wednesday you should get an email back from them. This system tells them that you want to be kept in the loop.
When you are getting into real estate, do your homework and understand the different assets and investment types available. When you are a property owner, create a system that helps you remain a landlord with good tenants.