What’s with all this thinking that real estate is dead!!! Sure the easy days are not around for the moment -for most. We all must remember that real estate valuations cycle. For the near term it will be a challenge to fund wholesale, rehab, and landlord real estate investments until financing opens up. Does this mean that real estate investing is dead? Certainly not!!! What it means to a contrarian investor is that this is the time to buy. The key is the mechanism that makes it all work -that is the money, merchandise and/or financing that is provided in order to make the real estate transaction take place. I’m often reminded of the words of a local real estate investing vetern that states that he is a “real estate tranactioneer”….
What exactly does that mean?
Good question. What do you think it means. As a generalization, I’d say it means that a real estate investor who believes that they’ve identified a good real estate investment will find the true needs/wants of the seller to create a way to consummate the transaction no matter what obstacles must be overcome. The greatest obstacle today is the money to do the deal.
As a hard money lender in Charlotte, NC, I’ve got to tell you that its a problem. Money is scarce. Do you know why? Real estate investors whether their lenders, wholesalers, rehabbers, and/or landlords have taken some hits -more than likely. These same investors have seen their own credit lines shrink and cash reserves dry up as losses are absorbed, the housing maintenance drumbeat marches on, and the deflationary challenges of lower housing prices and/or rent inflows shrink. Not to mention the pyscological effects of all the press reports on the news-wires!!! Don’t ignore fact though, as its a reality that one needs to adjust with.
If your looking for funds to wholesale, rehab to resell, and/or purchase new rental properties, you will find your best opportunities from:
- Owner Financing
- Private Money from family, friends, and fellow real estate investors
- Hard Money Lenders
- Self Directed IRA’s
- Subject to
- Option techniques
For my first few years of investing I had a preconceived notion that ‘asking an owner for owner financing’ was a sign of weakness. That I could overcome my competition by offering the ability to pay all cash (even though I technically would borrow the funds). What I discovered over the years was that I didn’t always listen to what the seller wanted. You see if a seller receives a big pot of gold from selling you his property, he/she is then burdened with what to do with the funds. Those of right mind realize that they must reinvest those funds in order to make them grow: both to cover living expense and retirement. If that seller has a comfort with the real estate they are selling you, then simply by providing comfort in your ability to successfully manage the real estate investment -one may have the opportunity for seller financing. Thus creating the funds to purchase the real estate investment for the buyer and a secured income stream (investment) for the seller.
Family, friends, and fellow real estate investors are no different than a seller. Leading by example and successfully demonstrating that one has both the capacity and capability of handling a real estate investment let alone one’s personal obligations in life is the key to opening up doors to capital. I have an investor that watched me for over six years before investing his hard earned capital into my real estate operation. Think about that for a moment.
The same goes for Hard money lenders, folks with self-directed IRA’s, and even sellers that would allow a Subject to or sign an option contract.
If you thought I was going to teach the mechanics of all these techniques to purchasing real estate in one article, you missed the mark.
You see when it comes right down to it despite our acknowledgment that it is money or financing that is hindering our ability -it is really all about people.
This is about the ability for two people to create a relationship built on trust. One in which the needs and wants of both parties are both openly communicated with a common ground met. The whole reason that a real estate transaction is made is based on two parties (a buyer and a seller) mutually agreeing to the terms and conditions of the deal.
So what should one be working on? No, not the greatest latest real estate guru technique or get rich quick “system” that will cure all failures. I am talking about working on yourself! That means being real and being true to thyself. It can be hard -true. If your looking for true growth, I contest that this is the only way you’ll consistently achieve what it is you seek. I find that as I work on myself and become a better person. That I personally grow and gain strength. As I become personally enriched, I gain strength to grow externally too. This doesn’t always mean that instant riches occur; however, it means that the journey is enjoyed as life is meant to be.
One of the greatest techniques I learned in starting my career in commercial credit was as a cold-calling credit reporting analyst. My job consisted of contacting small business operators, bookkeepers, CFO’s, Treasurer’s, and even Presidents of both private and publicly held corporations. You see I started at a little known credit reporting agency out of school. One that most did not know existed. Here I was a 22 year old calling from out of the blue asking for the business life history, confidential banking, and financial information. Was it easy to hit roadblocks were one simply refused to provide anymore information? Absolutely. Every time I hung up the phone, I ran through the conversation to replay were it was that the conversation became uncomfortable. I worked on techniques to improve my professionalism in the art of communication. I also learned how to listen and realized it was more than simply extracting that which I wanted and quickly moving onto the next report (such as the next real estate deal). It was about the people and developing relationships. Anyone remember the author -Harvey Mackey? Probably wouldn’t hurt to read a book or two of his.
My point is that we as individuals need to consistently remember it is not about us. If we are there to help find a solution for someone else, then we may find solutions for ourselves too. Building (true) relationships only compound the growth both personally and financially.
So what are some issues to focus on:
- Did I say Listen.
- Seek problems.
- Find solutions.
- Focus on the persons needs/wants -not your own.
- Consistently meet commitments and obligations.
- Seek constructive criticism and feedback
There is a lot behind those words above. It could take a whole book (or three) to truly cover. I just want you to realize that its not about the money or even real estate. You see if real estate is dead -we must be too.