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R.E.I. How-To (Unit 1) | By: Chris Hake

This installment is part of a multi-unit primer to get you started in real estate investing.  We can't address everything you need here in these short tomes, but you will get a flavor for this stuff to help you make a decision to move forward with more aggressive training or coaching.
Welcome!  Class is now in session.  In this multi-unit primer, we drill down into the hows and whys of Real Estate Investing specific to South Central Wisconsin and, even more specifically, what's happening right now.  Because markets shift so quickly, some of this information may not be totally accurate 6 months from now, but it will surely be enough to give you a solid footing.
What this is about.  At the Madison REIA, we provide people with critical information pertinent to doing this work in our area of the country.  We go deeply in-depth with our 7-session live and recorded training, but let's first focus on the foundational stuff in these training articles; more on the formal training later.
The Texts.  We'll be using three textbooks in this work; you can purchase them on Amazon or sometimes find them at Half-Price Books or other outlets.  The three books are:
•  The Millionaire Real Estate Investor, by Gary Keller and Dave Jenks.
   (Amazon Link)
•  FLIP: How to Find, Fix, and Sell Houses for Profit, by Rick Villani and Clay Davis.
   (Amazon Link)
•  HOLD: How to Find, Buy, and Rent Houses for Wealth, by Steve Chader and Jennice Doty.
   (Amazon Link)
(Note - if you are registering for an upcoming live multi-week evening course The REI Blueprint - Rehabs to Rentals, A to Z then DO NOT buy these books - they will be provided to you.)

Unit 1 - Mindset
There is a moment, what we might call a DUH moment, when successful people get one concept.  It's a DUH moment because they have spent a lifetime resisting it, and not believing that it makes a difference, and that concept was best summarized eloquently by Henry Ford, the automaker pioneer, when he said:
If you think you can do a thing or think you can't do a thing, you're right.
Yeah, it's simple to say and you're probably nodding your head in agreement and thinking "sure, no problem".  And then, if you're honest with yourself, you see that you're in the camp that thinks you can't do it.  Why is that?
The Four Resources
The first, somewhat obvious thing is resource #1 - FEAR (yes, fear is a resource and you'll see why later).  You've not done this before, or you've not done it very well, and it's a little frightening.  Understandably so.  Anything that can net you from 15 to 30 thousand every time you do it, well - that must really TAKE something.  Yes, it does, and we're going to tell you everything that it takes.
The first thing it takes is knowledge.  Oh, and look - here you are starting to GET that knowledge.  Good job, keep reading.
Before we acknowledge the fear resource and put it aside, let's look at it.  Heck, let's stare it down.  The best explanation for what causes fear is summarized as an acronym, and it is this:
False Expectations Appearing Real.  In your head, you think that you've cobbled together a reasonable outcome for a situation, and it ain't pretty.  And this scares the poopalicious out of you so you stop like a deer in the headlights of a Dane County backroad with a single letter for a name.
(Head: a scary neighborhood to stay out of.)
We're not going to do anything about that except to acknowledge it.  So just do that now.  Hello, F.E.A.R., how's things?  Seriously, acknowledgement is a first HUGE step in disappearing this kind of stuff, so just 'fess up that you're riddled with fear.  OK, maybe only sometimes.
Here's secret #23,561 (resource #2): Knowledge is NOT understanding.  You could memorize all of the pages of the 3 books in this training and have a whole boatload of knowledge, and be able to cough it right up on demand.  What does it all mean?  How do you tie it all together?  How are these things inter-woven to create the kind of real understanding that has you dreaming about it while lounging on the beach in a hammock on Bora-Bora, and LIKING that dream?
THAT's the understanding we're talking about.  Really "getting it" at a level that makes it FUN.  When you've hit that point, you have a grin on your face like Usain Bolt in the last stretch of the men's 400 meter when the #2 runner was seconds behind him.  Do you think he was working hard beyond belief?  Do you believe he was LOVING it?  Yeah, it's like that, and YOU could have that same thing.
Once you've got that understanding and find yourself with x-ray vision on projects, and you know just what to do, and you execute, and you make your first 20 thousand on a rehab, and you stand on the front porch and take a selfie and post it on Facebook, we could say that you have acquired the 3rd resource: confidence.  It's as simple as telling yourself:  "Self, you have done this thing once, so you can do it again".   And so you do.
Now all of this sounds straightforward, and you already know that the devil's in the details, so to speak.  Always - that's where things are cleverly hidden; right there in the details.  The only way that we know how to ferret out the little devils is a simple thing called support.
Support means having people around you that you can ask questions of, that you can find out where to get a painter, whether or not your ARV makes sense, and what your options are for properties that don't meet the 70% rule.  Whoops - we're getting ahead of ourselves (we'll cover the 70% thing in a later unit), but just sit with the notion that resource #4 is support.
Truth be told, it is these four things that, when any are missing, cause F.E.A.R. to come bursting onto the scene, guns-a-blazing.  This is the crux of what has most people stopped before they ever start, and then they say some stoopid thing like "yeah, I don't think I can do this."
If you think you can do a thing or think you can't do a thing, you're right. -Hank
Have you ever done something that was really really hard, but you knew what reward would be there when you successfully completed it?  And you really really wanted that thing on the other side of the effort?  New visual: Money Lives on the Other Side of F.E.A.R..
One last word about F.E.A.R.  Don't confuse Attentive Caution with fear.  Attentive caution means that you're aware of everything around you and you're proceeding cautiously, using your knowledge, your confidence, and your mentor.  Don't throw caution to the wind and proceed with reckless abandon.  That's all we're saying about that.
BE a Real Estate Investor
Let's sidebar for a moment here.  Some of you know that Randy is a cycling coach.  He gets his credentials from USA Cycling, which is an affiliate of the U.S. Olympic Committee.  Years ago, Randy was a cycling coach for the U.S. National Youth Triathlon Team in Geneva, Illinois.  One of his young charges was Ben Kanute, a promising 17-year-old youngster that really "took the coaching" from the entire coaching staff.
Fast forward to the 2016 Rio Olympics, where a 25-year old Ben Kanute was one of 3 men representing the United States for Triathlon.  Just how did he get here?  Sure it was hard work.  The thing is, he really believed that he could.  Randy taught Ben to "BE", as in right now what he wanted to be.  Not something in the future, but right now.
The first thing that Ben did was to "BE a National Champion", and then he was.  Next, he decided to "BE a World Champion", and then he was that, too.  Last week he pulled out the stops to "BE an Olympic Champion" and, while he did not medal, he is clearly an Olympian.  And there were times during the bike portion of the contest when the TV coverage showed Ben sitting in 1st place for the event.  In a word, Holy Crap!  OK, that's two words.
He blew up on the run.  What he said about that was that he "saw fireworks" and did everything he could to just finish.  And finish he did - in 29th place with a grin so big it was stretching his cap.  Guess what Ben will be working on over the next four years?
Where we fall down as real estate investors is that we think that if we learn all this stuff, and come to meetings, and hang out with the right people, and dabble here and there that eventually maybe someday perhaps we'll BE a real estate investor.
While some of that helps, it just doesn't get the job done.  When you're in a space where someday, maybe I'll be a real estate investor then, well, you never are because your conversation is "someday, maybe".
Are you willing to try something on?  OK, then try this - right here, right now, BE a Real Estate Investor.  OK, so what the heck does that mean, really?  How do you just "be" something that you're clearly not yet, at least in the eyes of the world?  Can I just "be" a brain surgeon and =poof=, I'm in the O.R.?  Well, of course not.  Thank GOD this real estate investing stuff is not brain surgery.
Well, we're at a point where we have to introduce two (2) critical concepts.  If you get these two concepts, like really get these concepts, then nothing will stop you from achieving your dreams.  Nothing.  Promise.  And this works everywhere.  See story about Ben Kanute above.
The first concept is to be coachable.  This means, when working with your mentor or coach, you trust what's being said and just do it.  Not your way, but the way that it's designed.  The way that your coach tells you to do it.  It's almost blind faith where you don't second-guess your coach, and you give it 110% of your effort when you do it.
If coach says "drink milk", I drink milk.  Wackily simple.
The second concept is to trust in the process.  In other words, to really truly believe with all your heart that this is the way that works and that you will be successful if you do it this way.  Reminder from Mr. Ford...
If you think you can do a thing or think you can't do a thing, you're right.
Now that you've totally embraced those two concepts, you can now BE a real estate investor.  The first step is to make that declaration, so say it out loud:  "I, (your name) AM a real estate investor."
Very good.  Now just stand in that place of being a real estate investor, and do what a real estate investor does.  So once you begin to learn each of the things to do, you just start doing those things because, well, as someone who IS a real estate investor, you just do what real estate investors do.
Now, since you are a real estate investor, when you come up against something that you don't know or don't understand, what are you going to do?  Ding! Ding! That is correct, you are going to ASK your mentor because, well, that's what real estate investors DO.  You're catching on to this stuff.
WAIT!  Get out of the scary neighborhood!  Did you go back there?  Did you get into your head and start rationalizing that what we said in those last few paragraphs is all hooey?  Too much woo-woo for your liking?  Is it right, is it wrong?  Is it good, is it bad?  Cut it out.  NOW.
With practice, belief, and daily meditation, you will just get yourself into that space where you're doing exactly what you need to do as a real estate investor because, after all, you ARE a real estate investor.  Isn't that right?
The 3 Areas of Focus
Now that who you are being is a real estate investor, let's look at the 3 areas of technical focus that you have to undertake.  These are (1) Criteria, (2) Terms, and (3) Network.  What are these 3 things?
1) Criteria - What you buy.  These are the immutable facts about the property; for example, single-family, ranch, 2-story, Cape Cod, bungalow, brick, wood siding, with basement, 2-car garage... you get the idea.
2) Terms - How you buy it.  The negotiable aspects of your acquisition, such as offer price, earnest payment, interest rate, occupancy, closing costs, and funding sources.  Your money is made on the acquisition going in and not on the sale going out.
3) Network - Who helps you.  This is a contact sport, and if you have no contacts, you have no sport.  This group includes your mentors and coaches, REALTORs, title agents, contractors, suppliers, property managers, attorneys, and government contacts such as building inspectors.
These 3 areas define your success.  As you grow and expand in these areas, your knowledge, confidence, and support increase, and your F.E.A.R. decreases.
The 7 Ways Millionaire Real Estate Investors Think
When Gary Keller interviewed over 100 of the nation's TOP real estate investors for his book, he came up with seven ways of thinking that millionaire real estate investors all possessed.  Are you ready for it?  Here they are...
1.  Think powered by a BIG "Why".
2.  Think BIG goals, BIG models, and BIG habits.
3.  Think money matters.
4.  Think net worth.
5.  Think real estate.
6.  Think value, opportunity, and deals.
7.  Think action.
These are seeds for you.  We can't really drill down deep here into how all of these work, but you can either read this in Gary's Millionaire Real Estate Investor book that we cited above, or participate in the Madison REI Blueprint Training.
Your mindset is everything.  You can learn all the book knowledge, and at the end of the day all of that knowledge does no good until you get out of the scary neighborhood and get into action,  We will leave you with this quote...
Without knowledge action is useless and knowledge without action is futile.  - Abu Bakr
You know what we're getting at here, don't you?  Yeah, it's that "stepping off the curb" part.  It's the "turn off HGTV" thing.  It's the "BE a real estate investor NOW and get your gluteus maximus into action.  That thing.
You ready for it?  Stay tuned for the next installment of Unit #2.
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