If you are just starting out in real estate and you ask any successful investor for a tip to help you become successful, I would bet that most of them will tell you to never stop learning. I read many different blogs and articles by people who have been investing for years (even decades) and it never ceases to amaze me that most of them always comment on the latest book they have read or seminar they have attended. To these people, they know that you can never know too much and see education as an integral part of their business.
Another tip that you will often hear as a new investor is to find one niche to concentrate on before exploring others. It is very easy to read success stories from people investing in fix and flips, buy and holds, tax liens, non-performing notes, etc., and to want to try to emulate their success. However, if you try and learn every niche, chances are that you will never become proficient at any of them. It is better to focus on one niche until you start making money in that one and then move on to another niche from there. This will help you keep focused on your goals and avoid the “shiny object” syndrome.
Now that gets us to the point of today’s post. Although as a new investor you want to find the niche that interests you the most and concentrate only on that one, that does not mean that you should limit yourself to reading about nothing but that niche. You may not want to read 100-page books about being a landlord if your focus is on wholesaling, but you may find value in reading real estate articles that do not pertain directly to your niche. Our investing is primarily focused on fix and flips at the moment, but that does not mean that is the only thing that we educate ourselves about. Below are three examples of how reading blog posts about other niches gave us ideas to use in our fix and flip business. We will start with the niche that we feel is most closely related to fix and flips.
Obviously wholesaling a property is different than fixing and flipping that property, but there are definitely some strategies that apply to both niches. Although we don’t consider ourselves wholesalers, we read as much information about wholesaling as we can. The main strategy that most wholesalers need to be good at that can be an asset to fix and flippers is marketing. Especially if you are in a competitive market like Ventura County, finding deals on the MLS are far and few between. In order to be a successful wholesaler, you need a steady stream of great deals to wholesale to your buyers list. A lot of successful wholesalers do not rely on the MLS to provide them deals, so they devise marketing campaigns to find off-market deals. These same marketing techniques that wholesalers use can also be implemented in a fix and flip business model. There is no reason why a fix and flipper cannot do marketing to find their own off-market deals. Another area a wholesaler needs to be good in is negotiating in order to find a win-win situation for both himself and the seller. We love to read blog posts from wholesalers to learn about tips and tricks for our own marketing as well as to improve upon our negotiation skills.
At this time, we do not do much with multifamily properties, but a few weeks ago we read a blog post about multifamily investing that could directly apply to what we are doing. The author of this particular post was writing about ways a new investor can go about obtaining a Proof of Funds (POF) letter to use for submitting offers on multifamily properties. Since the author specializes in multifamily investing, this was the audience he intended his post for, but the strategy he was writing about can apply to single family homes as well. If we would have ignored this post completely just because it had “multifamily” in the title, we would have missed out on a good tactic for obtaining a POF letter.
Mobile Home Investing
Just like the example above, we recently read another blog post about mobile home investing. The particular topic of this post was about pros and cons of letting mobile home sellers stay in their homes after you purchase them. Again, the author of this post is strictly a mobile home investor, so he was writing about what he knows. But the exact same pros and cons applied to single family homes as well. This is another good example because fix and flippers will probably come across a situation or two where a homeowner wants to sell their home but asks to stay in it a month or two after the close of escrow. We actually came across this situation on the very first home that we had under contract. Taking on a tenant carries additional risks above the normal risks of any fix and flip, but the tips in this mobile home article can help you to mitigate the risks as much as possible. We have saved this blog post in our archives to fall back on when we come across this situation again.