Monday, December 9, 2013

How To Get Started In The Real Estate Business

There have been many articles written about the real estate rehab business that tend to be either for or against this industry as a viable business.  This blog, and in essence my message, is created to tell you how to set yourself up for success.  It's not easy and not for everyone, but believe me, if you are dedicated, you can do it!

So if your interested in the real estate market and aren't afraid to get your hands dirty, the real estate rehab business might be a good fit.  What exactly am I talking about?  Well, rehabbing properties, primarily residential, to create value, and therefore equity, is the business model that has been successful for me.  But to create value, you must bring something to the table - it could be construction ability, design sense, market knowledge, or pure labor hours, but it must be something.  Simply buying a property, paying a contractor to rehab it, and selling is most likely going to be a failing model.  The reason this fails is everyone else is creating value and getting paid for it - the real estate agent that found the house for you, the contractor that did the rehab, and the financier that loaned you the money - they are all making money, but you will most likely not see a dime.

As someone who has been successful in this industry, there are a few key things to do to set yourself up for success;

1) Be willing to dedicate a lot of time, especially in the beginning, to grow the business.
For most of us in this business, at least the type of person this blog is meant for, we are starting with very little and hoping to build the business.  To do this, you will inevitably need to dedicate a lot of your personal time.  On my first project, I spent 15 hours a day rehabbing the property and would only go home to sleep.  This is the type of dedication that could be required to get the business started.

2) Find what value you bring, put it to good use, and allow other professionals to fill in the gaps.
If you are a real estate agent and you know the markets well, you should spend your time looking for great deals in areas that you are confident in the resale value.  If you are a contractor, get an agent to help you find the property in the right area and then do the rehab project yourself.  For me, my strength is rehabbing so I have partnered with someone that knows the real estate markets very well and can find good deals.  John Fedro describes some of the things you might want to contract out versus some of the things you might want to do yourself in

3) Be patient and find opportunities that are aligned with your strengths and business plan.
Don't jump at the first property you see.  Make sure you have a solid plan in place to make it profitable for you.  In the beginning, you might want to start small as you learn the business to reduce your risk.  This will allow you to understand what works and what doesn't.  My first project didn't make much money, but was a great building block that allowed me to build the equity I needed to set myself up for the next projects.

So, is this for you?  Do you think you have the skills to create value in the real estate market?  Please respond with questions, comments, or experiences you have in building a real estate business.

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