The real estate market is extremely hot right now. There’s so many deals happening that prices have skyrocketed. The reason for this is there’s just so much cash on hand. People have so much money that they’re just driving the prices up because they have to put their money somewhere in order to invest it. If you’re not investing your money, then your money is not going to be generating any return. That’s why there’s so much demand right now. The housing market saw it and that’s pushed people back into renting longer term. The markets are so hot and that’s why real estate is something that is great to invest into.
The Market Is Hot
Even though the markets are hot, you shouldn’t use it as an excuse not to invest into real estate. You should always be looking for deals, underwriting things and putting deals together. Maybe you have to submit more bids right now and your percentages of winning a deal are lower, but at least you’re submitting bids, doing underwriting and putting things in place. That’s the main key to building success in real estate, putting yourself out there, putting offers together, and building relationships. Even getting off market deals that are less competitive is a process that’s going to help you become more successful. If deals are off market, then you’re not going to have the 30-40 bidders you would traditionally see on deals that are brokered and brought to the market publicly.
Finding off market deals is something that is really important. You just have to get into the market, start buying real estate and shopping for deals. That’s how you’re going to learn what the numbers look like. You have to look at all the numbers and see how people are operating the properties, how they’re run and how the numbers work. How much does each expense cost when you look at management, capital expenditures, utilities, and more? There are so many expenses involved in owning multifamily real estate. You just have to get into the market.
As You Grow…
As you grow, you’re going to start building your team, which is going to be important because you can’t do everything yourself. You’ll be able to build a team eventually, but when you first start out, it’s probably just going to be you managing your properties until you build enough scale within your portfolio. It wasn’t until we built up 100 units that we started adding employees to our team. Once you can start building your team, you’re really going to start multiplying your company rapidly.
It’s something we’ve noticed once we started bringing people on. Things started to ramp up quickly. We started getting more deals and getting more financing and equity raised to invest into properties. Things start to multiply once you start building your team because you’re going to get so much more work done. You can do like ten times more than you could by yourself. Your productivity multiplies so much quicker once you have the right team in place. You want to have a team that’s hard working and ambitious and once you have that, you have to retain your people, treat them well, and continue to build.
Investing is going to take you a long way. It’s going to build up a lot of wealth, and once you start growing and building your team, you’re all going to grow together. It’ll a fun process once you get everything together and get all the pieces working. It’s a tremendous amount of work, but you’ll get there. You just have to keep chipping away, showing up everyday, continue looking for deals, manage deals, work with banks, build relationships, manage construction and so on.
If you’re going to buy deals, you should buy deals that have upside potential to them. Then you can renovate the value very quickly. You just have to get in there and start looking at deals. The biggest thing is putting bids in, submitting deals, and submitting offers so you can win deals. That’s going to be the biggest way you can continue growing and building up your skill set. You have to take action.
After Submitting Deals
Once you start submitting deals, you’re going to get questions like how are you going to finance the deal? How are you going to put the money into the deal? I was talking to someone the other day that was looking to get into real estate and he didn’t know the credibility pieces and people were asking him a lot of questions about how he was going to finance the deal. You need to have the financing setup, you have to work with the bank and you have to find equity. You have to figure those pieces out.
If you need equity, you have to search for it. You have to find where you can pull equity from. Is it from your house? Do you have enough principal paid down that you can refinance it and pull capital out of that? Or do you have a friend or family member that can help you raise the capital you need? If you go this route, you can pay them a preferred return or you can partner with them on the deal. You have to do whatever it takes to create that success so you can secure the deal. Once you have a property, you’ll start increasing the value of it and becoming a lot more successful with real estate.
The Biggest Takeaway
The biggest takeaway is you have to take action, you have to find the deals, build relationships with brokers, and start submitting offers, and then you’re going to see you’re winning deals and closing on properties and building up your net worth. So go out there and find some deals.