67 Things I Learned From My First Year In Real Estate

One year ago, I set three real estate goals for myself. Unfortunately, I only hit one of those goals.  However, I did gain a lot of experience in real estate. I successfully bought, sold, renovated, listed, and leased property this year. Now, I’m sharing the things I learned from my first year in real estate.

I didn’t plan to make real estate my full time business, but I’m soo thankful that’s where I am today.

Similar to the “January Rush” at the gym, I expect there will be a lot of people making the decision to build wealth through real estate this year.

I wrote this to help those people. These are the best lessons I learned in my first year as an agent and investor. Hopefully you can learn from my experience, and hit all your real estate goals this year!

Networking – How And Why

1. REIA’s and Meet-up groups are a great starting point – I’ve met some fantastic people at these events over the last year. Here’s why going to these groups is important.
2. You’ve got to take it further – It’s hard to build the real relationships you need for investing success in just one meeting per month. I’ve really benefited from meeting other investors for lunch or coffee. Everyone loves to show off their renovation projects too!
3. Social media matters – At the beginning of last year, I wasn’t on Facebook. Now, I’m on every social media site I can find. It’s not because I like social media. Social media is a great way to meet people and build relationships. It’s huge for connecting with other investors.
4. BiggerPockets is amazing! – BiggerPockets is Facebook for real estate investors. I’ve met so many investors, both in-state and out-of-state, on BiggerPockets. You can learn a lot from reading the forums, but it’s important to participate. Ask questions, up-vote other users responses, and message people. If you sign up, be sure to say hi!
5. Find ways to provide value – Don’t be scared to work for free or cheap. Use whatever skills you have. I’ve done it, and I’ve had people do it for me. It’s a great way to bond and build trust.
6. You’re the average of the five people around you – I love a good cliché. This one is soo true. Put it to the test this year!
7. Make calls to find the people you need – Calling strangers is not fun. However, if you can make yourself do it, I believe it’s a huge advantage in business.
8. When people call you, answer your phone – I answer every call I can. Even if I know it’s a probably a telemarketer. If you ever want to talk real estate give me a call.
9. People are the beginning, middle, and end of this business – I’ve learned that real estate is about people, way more than it’s about anything else. The best investors I’ve met have great people skills.

 

Flipping and Construction

10. Construction costs more than you think it will – If you’re not familiar with construction, pricing can be a huge shock.
11. Your money is made in kitchens and baths – If you’re going to overspend, do it here.
12. Learn about your talents – At one point, this Summer, I thought I would do a lot of construction work by hand. I learned I’m just way slower than professionals. It’s just not one of my talents.
13. The “Construction Tri-lema” – “Cheap, fast, or high quality. You can pick 2 out of 3.” An investor told me this about construction. This may not always be true, but it’s something to think about.
14. Picking up the phone is the best way to find contractors – It’s surprisingly difficult, but surprisingly effective.
15. Youtube is your best friend! – Even if you don’t do the work yourself, It’s important to know how it should be done.
16. A good set of handymen are really valuable – They will usually be able to do work that more specialized professionals would charge double or triple for. They’re especially valuable for light plumbing and electrical.
17. It’s very easy to let your ‘scope of work’ creep up – I was always tempted to replace more and more materials in my flip this summer.
18. ‘Daisy chaining’ contractors – I found some great contractors by asking the people who were already working for me. (My tile guy sent me the flooring guy, etc.)
19. The construction industry is ripe for theft – Luckily, I didn’t experience this first hand. However, some of the laborers who worked for me told me horror stories about GC’s they had worked for. It’s a good idea to make sure whoever you work with can’t just disappear in the night.
20. Angie’s list and HomeAdvisor were great, free, resources to find contractors
21. You make your money when you buy – Contrary to how it looks on HGTV, remodeling is usually a break-even ROI. You have to get a discount when you buy. The exception to this is at the high end, where homes are selling $250/sqft and up.
22. Sometimes the market will help you out – My live-in-flip is worth about 20k more than I thought it would be. The comps changed from when I bought it to when I had it reappraised.

Marketing – The Art and Science

23. It’s essential – Many real estate agents and investors will tell you that their entire business is based on marketing.
24. It’s a numbers game – Like batting averages in baseball. If you only strike out 7 times out of ten, you’ll be a hall-of-famer. You have to have a long term perspective, and not get to caught up in any individual outcome.
25. Content marketing is a thing – Blogging, making videos, and podcasting are all examples of content marketing. The key is to entertain, educate, or inspire your audience. I never knew what this was, but it’s been huge for me as a realtor and investor.
26. It’s very powerful – Marketing sticks with people. Sometimes years after the initial impression. I recently received a call from someone wanting to sell a house, 6 months after I mailed them a letter.
27. It’s sustainable – For me, sales and prospecting is hard. As an introvert, it takes a lot of energy. Marketing is much more sustainable. It’s scalable. I’ve learned there is a lot of leverage in marketing.
28. It’s strategic – It’s possible to target very specific niche customers with marketing. I’ve found Facebook ad’s are really incredible for this. You may have even found this article from a Facebook ad.
29. It’s adaptive – The marketing strategies you use for one area, or business, can often be implemented in other areas. Once you learn the fundamentals, they can be applied in many ways.
30. Mail Chimp is amazing – I use this service to send out my research newsletter. It’s incredible! And free, up to 2000 emails!

 

Real Estate Agents and Wholesalers

31. Real estate agents are like a club – Agents go through a series of initiations to join. They pay dues. I definitely feel a sense of solidarity with other agents I meet.
32. We are generally cooperative – Negotiations can be difficult. They involve large amounts of money and emotions. Two agents representing both sides, but working together allows for many more deals to get done.
33. We help take the emotion out of real estate transactions – Selling your home, or buying a new one is always an emotional process. Involving a 3rd party helps to remove the effect of those emotions.
34. 90%+ of transactions involve agents – Now that I am one I know why.
35. Wholesaling is a tremendously valuable skill – If you can find real estate at attractive prices, every other strategy becomes available to you.
36. Wholesaling teaches a number of important skills – It teaches marketing, networking, negotiation, and estimating construction costs. Mastering these skills can take you a long way in real estate.
37. Wholesaling works better in some area’s than others – It works better in area’s that agents won’t work because prices are too low.

 

Financing Real Estate

38. There are dozens of ways to finance real estate transactions – Traditional mortgages are only one method. There are many local private lenders, small banks, and hard money lenders that will lend on real estate deals.
39. Portfolio lenders are great for investors with over 10 properties – traditional mortgages are capped at 10. As noted above, small banks are a great place to look for additional financing.
40. Financing seems like a big hurdle before your first deal – After you do a few, and see how everything works, it’s less of an obstacle.
41. After you do one or two deals, financing starts to find you – I’ve never asked anyone to invest in a deal, but in the last few months of 2017 I had at least four people offer to invest with me.
42. Everyone wants to lend to people who don’t need to borrow, Less people want to lend to those who need to borrow – This is an old cliché, but I’ve found it to be true in real estate.
43. The system is flush with cash – Almost a decade of money printing has left the financial system with tons of cash, and few opportunities for returns. Many national hard money lenders are desperate for deals to lend on.

 

Birmingham, Alabama

44. Birmingham is an extremely attractive market for rental properties – We have a high rent to value ratio, low taxes, and a developing city.
45. People around the world want to invest in rental property here – I’ve personally given tours to a handful of out-of-town investors. Probably a dozen more have emailed or called me. Most of them hail from expensive coastal markets.
46. There are a number of hedge funds who are buying homes here – They’re focused heavily in Centerpoint and Hueytown. I broke down exactly where they are buying in my research newsletter.
47. Our market is hot, but nowhere near overheated – In some major cities, listings are regularly receiving multiple offers over asking price. We aren’t there yet.
48. We’re on the map as a culinary destination – We’ve all known that our city has great food. Now, we’re being recognized for it nationally. (#24 on Zagat’s list)
49. The urban center is rapidly being rebuilt – This is happening in metro’s all over the country. Once abandoned downtowns, are being revitalized. Birmingham seems to be building full steam ahead.

Contracts and Negotiating

50. Price isn’t the only thing that matters – I recently bought a house 40% below the list price. How? Because I was an easy buyer. They knew I was paying cash, with minimal contingencies.
51. Cash is king – If you’re able to pay cash for houses, you can negotiate better discounts.
52. It takes work – Negotiating good deals takes a lot of back and forth. Often times investors will make offers on several homes before they find a seller willing to negotiate with them.
53. It takes empathy – I’ve learned that truly connecting with sellers, and agents is the best way to negotiate successfully. It makes everyone more comfortable with the “give and take” that’s required for good negotiations. You want a “win-win.”
54. Read every word of your contracts – I’m a big believer in really understanding how your contracts work. I actually learned this one a few years ago. I learned it the ‘hard way’ so it’s stuck with me.
55. Convoluted contracts got that way through years of litigation – In my real estate agent classes, I learned that the “standard MLS contract” we use is the result of 50 years of lawsuits and litigation. It’s evolved over the years to protect all parties more thoroughly.
56. Contracts aren’t a substitution for people skills – Just because someone is ‘contractually obligated’ doesn’t mean they’ll perform. Real communication is the best way to secure an understanding. I’ve really worked to improve my communication skills over the last year.

 

Mentors and Strategy

57. Mentors can help you avoid beginners mistakes – I think ‘modeling’ mentors is the best way to learn anything. I was blessed to find some great mentors this year.
58. They can also line up the domino’s for you to knock down – Good mentors, can speed up your learning curve by telling you what the next step is.
59. There are hundreds of strategies to make money in real estate.
60. “Shiny object syndrome” is very real – This year, I dabbled in a couple different strategies, and learned about many more. There was always something new and exciting to learn about. As amazing as the BiggerPockets podcast is, this is one of the downsides of listening to it. Every new guest sounds like they have it all figured out, and as a newbie you want to jump on their strategy. It’s hard to resist.
61. It’s hard to pick one strategy – My main goal right now is to pick one and focus on it for the next year. Not as easy as it sounds.

 

Rentals and Property Management

62. Tenants don’t always pay, you need reserves – This is pretty much a guarantee. Eventually a tenant will stop paying rent. Your job is to be prepared for it. It happened to me this year. My property manager did a terrible job of handling it. Luckily, I had reserves to pay the mortgage.
63. If you use an outside property manager, make sure someone is accountable – I made the mistake of trusting a company that had good marketing. There was no single person for me to call with problems or questions. This company was a total mess, and no one was accountable for their actions.
64. No one will care about your property like you will – If you have the time or inclination to manage your rentals yourself, I would recommend it. Even the best manager’s won’t do as good of a job as you will.
65. Property management is a necessary evil – I’ve had at least three highly successful investors tell me this recently. It’s not a great business, but someone has to do it. If you’re going to own rentals, it’s incredibly important.
66. Rental properties are a great way to build long term wealth in real estate – I would highly recommend the millionaire real estate investor for a great explanation of why this is. It definitely takes patience.
67. Rentals aren’t the only way – I’ve met some highly successful flippers this year, who would argue that flips are a better route to long term wealth.

Thanks for reading! Good luck with all your real estate endeavors this year! Hit me up on Facebook, Instagram, or LinkedIn if you want to connect.