Flipping America 486, Getting Started
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I\\u2019ve been getting a lot of questions about how to get started as a real estate investor. Today I\\u2019m going to talk about how to do that.
There is a wealth of free information available to you if you have internet access. Google \\u201clearn how to flip houses\\u201d or \\u201clearn real estate investing\\u201d and you\\u2019ll get hundreds of thousands of results instantly. You can do the same searches on YouTube and get similar results. Information is not the problem. Helpful, actionable step by step information is a little harder to find. The toughest part about this is how to know what is hype and what is good info. We are going to sort that out for you today.
How to contact us
Follow Starr @realestateislifeatlanta on IG and Facebook
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Call our National Comment Line: 877-55-ROGER (877-557-6437) \\xa0 ext 1. Leave your message or your question.\\xa0
Email your questions to questions@flippingamerica.net. Please always tell us where you are from. We like to know where the show is being heard. And let us know how you found out about us if you don\\u2019t mind.\\xa0
Sponsors
American IRA: www.americanIRA.com
Flipping America Funding : Get the money you need for your business, for your training, for infrastructure, and for your projects. Flipping America Funding is your one-stop shop for all of your business funding needs. FlippingAmericaFunding.com.\\xa0
Real Estate Investing Quick Start.
Announcements:
- The Buyers Club is open for new members for a limited time. I have a new video on our YouTube channel about the Buyers Club. As long as that video is up, we are accepting new members. When we reach capacity we will take it back down. Just go to YouTube and search Flipping America. You will see we are posting content that is both useful and a little bit fun. While you are there please subscribe and hit the notification bell so you will know whenever we upload new content.\\xa0
Questions from Listeners:
Starr\\u2019s Questions from RILA:
- I understand that realtors sell your property...however, what should you look for when picking the right real estate agent?\\xa0
- Hey Roger, I am looking into investing...Is buying a condo a good investment?\\xa0
- I am looking for a management company for my properties...What is the going price for\\xa0 property management and what should I look for when choosing the right one?
- Hey Roger, I am just getting into the investment game...would you advise in using hard money loans for first time investors?
Content:\\xa0
How to spot a fake guru.
- Emphasis on luxurious lifestyle. The B.S. artists feature the imagined lifestyle of the rich in their TV ads, come-on speeches, and \\u201chow-to\\u201d materials. They also accessorize themselves with flash, like ostentatious jewelry and rented limousines or rented private jets.
- Subjective self description. The \\u201cabout-the-authors\\u201d of the gurus I respect are generally written in Jack Webb style: \\u201cJust the facts, Ma\\u2019am.\\u201d\\xa0 B.S. artists tend to have book jacket or ad copy which describes them as the \\u201cleading real estate expert in the United States today\\u201d or the \\u201cNumber One, most-sought-after...\\u201d Their bios are full of baseless, subjective adjectives and nouns, like \\u201cinnovative...... famous, spectacularly successful,\\u201d \\u201cauthority,\\u201d etc. B.S. artists often use photographs or videotape of themselves hanging around executive jets, limos, yachts, mansions, five-star hotels, exotic resorts, or expensive cars to imply that they have achieved great financial success.
- No pitfalls or corrections. There are dangers in everything. But you rarely read about danger in a book by a real estate B.S. artist\\u2014or hear about it in one of his CDs or TV infomercials. Everybody makes mistakes. But you rarely read about a guru\\u2019s mistake or see a correction in a B.S. artist\\u2019s newsletter. The B.S. artists are self-proclaimedly big on being \\u201cpositive.\\u201d And one of the things they\\u2019re positive about is that the dream world they depict will not be marred by unpleasant reality. It\\u2019s better for you to learn from the mistakes of others than to reinvent the wheel and lose your money in the process.
On the other hand, worthwhile gurus are as likely to write about mistakes made (often by the guru himself/herself) and dangers overlooked as about spectacular profits achieved. And all ethical periodicals writers run corrections when they make a mistake.\\xa0
- No bad news. In addition to teaching techniques, real-estate investment gurus have to respond to news like court decisions, legislation, economic trends, and so forth. Of course, some of the news is bad. But the B.S. artists invariably respond to bad news in Pollyanna fashion. They always see \\u201copportunity.\\u201d The closest they come to acknowledging the unhappy truth is to describe a situation as a \\u201cchallenge.\\u201d
B.S. artists don\\u2019t acknowledge bad news is that they simply cannot shut off their slinging mechanism. They are B.S. kinda guys. There\\u2019s nothing wrong with looking for opportunity in ostensibly bad situations. Many of my shows have done just that. You only become a B.S. artist when you look for it, can\\u2019t find it, but claim it\\u2019s there anyway.
- Universally-applicable techniques. The various techniques one can use in real estate investment are like mechanic\\u2019s tools. The one you use depends on the situation and your goal. Just as no tool is appropriate for every mechanical job, neither is any real-estate-investment technique appropriate for every situation. Each has advantages and disadvantages and most are only useful in a narrow range of circumstances. The B.S. artists trot out one obscure technique after another in an effort to impress the customer with all the \\u201cnew\\u201d material they are getting. But rarely is a word spoken about when the technique is appropriate. The reader or listener is left with the impression that the technique is appropriate for any and all acquisitions.
- Emphasis on motivational material. Every successful person I know has benefited from motivational books like The Power of Positive Thinking. Many of us have had life experiences like emotional high-school football pep talks which gave dramatic evidence of the power of focused motivation. I would not diminish the role of motivation in success in real estate or any other field. However, motivational material ought to be packaged as such.
When books or CDs are described as containing how-to information on real-estate investment, they ought to contain little or no motivational material. The protest that the customer \\u201cneeds\\u201d to be motivated is beside the point. It is dishonest to promise how-to information, then deliver a bunch of \\u201cYou-can-do-it\\u201d platitudes instead. The motivational business, like patriotism in Samuel Johnson\\u2019s memorable phrase, is one of the last refuges of scoundrels. Although there are many who approach the field of motivation with rigorous scientific discipline, there are more for whom the motivation business is merely a con \\u2014a chance to sell yet another cure-all \\u201celixir\\u201d without having to get FDA approval.\\xa0
- Claim to do lots of deals. Virtually all the B.S. artists say, \\u201cI don\\u2019t just teach these techniques. I use them every day in my own investment program.\\u201d Baloney. There aren\\u2019t enough hours in the day.
Gurus get the same 24-hour days as you. Being an expert takes time. We have to read many trade journals, loose-leaf services, and books to keep up to date. We have to spend hours on the phone interviewing sources for articles and books \\u2014and hours in the library researching legal cases and other relevant facts. As experts, gurus get interviewed by the media on the phone and in radio and TV studios and they make speeches to investors. Finally, we have to manage the guru business itself. That means designing brochures, responding to customer-service problems, checking proofs from the printer, indexing books, negotiating with printers and recording studios, going over the income and expenses of the guru business, and so forth.
Obviously, we do not, after all that, have as much time as non-gurus do for investing. But in the financial guru business, the question, \\u201cAre you using these techniques yourself or just teaching them?\\u201d is ubiquitous. And any answer but, \\u201cOh, yes,\\u201d seems devastating to the credibility of the guru. In fact, real-estate gurus (other than those who just dabble in guruing) who do a deal a month or more are extremely rare. Or they are buying garbage properties by the dozen\\u2014with little or no analysis or due diligence\\u2014mainly so that they can claim they do lots of deals and be technically accurate.
- High prices. Legit real estate books cost about $20 to $80 depending on whether they sell in book stores or only by mail. Mail-only books cost more because fewer are sold, press runs are shorter, and printing and handling costs per unit are higher. Legit real-estate seminars cost up to $500 per day. B.S. artists charge hundreds for their books and thousands for their \\u201cboot camps,\\u201d \\u201ctraining,\\u201d and \\u201cmentoring\\u201d services.\\xa0
The Top Ten Ways to Know Your Real Estate Seminar is Actually a Con:
- The \\u201cnationally known\\u201d guru is not in attendance.\\xa0
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- Whose experience is being taught?\\xa0
- Who has the experience to be able to credibly answer audience questions?
- What is the actual experience of the presenter and can it be verified?
- Where is their headquarters?
- Who is the person or persons behind this company? Someone did the work to gain the experience to teach.
- This can be taught from a curriculum and a powerpoint, but the most polished professional who is also inexperienced cannot truly serve a real estate audience.\\xa0
- The name of the company behind the event is vague, not mentioned, or purposely mis-leading.\\xa0
- Does he or she provide addresses of actual properties flipped?
- The Presenter\\u2019s real estate credentials cannot be easily verified.\\xa0
- The Presenter does this presentation more than once a month. If they travel and do this presentation more than once a month there is NO possible way they are actively fixing and flipping houses.\\xa0
- Early in the presentation (usually within the first two hours), they will have you fill out a worksheet with all of your assets as possible funding sources. Available credit card spending, 401k balance, cash value of insurance policies, etc. Later they will use this information to prove to you that you actually can afford their 20-50k in training.\\xa0
- They take time to teach you how to call your credit card providers and ask for an increase in your limit. The really sneaky ones will put you in a group, challenge everyone to do it, bring you back and see if you collectively came up with an amount that would buy a house.\\xa0
- Results - lifestyle.
- Financial freedom
- Education of children - college
- Legacy\\xa0
- They make lots of promises to you. And they will seem great!
- They have an emotional story of their own financial distress and real estate saved the day.
- They will not let you take photos of the screens or record the event.\\xa0
- They want to sell you another more expensive course. Free - Low Cost - High Cost - Upgrade.
Ways to check ahead of time:
- Check the name of the company. Look at their website. See what they emphasize.\\xa0
- Google the name of the company followed by the word \\u201creviews.\\u201d This may not be helpful, but it can be. One company I researched had over 1000 hits on a website called \\u201cRipoff Report.\\u201d Anyone can say anything there and not all of it should be believed. But 1000 reports?
- Ask in online forums - Bigger Pockets, Connected Investors, Facebook Groups,\\xa0 etc. What have you heard about \\u2026?
- At the event, get the presenter\\u2019s full name. Find out where he/she is from. Note as many property addresses as you can during the event. Check those addresses online for ownership and transfers of ownership. Look for an entity that owned the property for 4-6 months in the past two years. Later on, if you get a chance to speak with the presenter, casually drop the name of the entity you found and see if you get a glimmer of recognition. If you\\u2019re convinced they are lying, just for fun, make up an entity name (or use your own if you have one) and ask them if that was the entity that bought 123 Main St (or whatever). See if they say yes.\\xa0
What is \\u201cgood, actionable information?\\u201d
Begin with an honest and trustworthy information broker.
Verify with multiple honest sources.
Dip a toe in.
Trust further.
What is hype?
Loud excited, lots of exclamation points.\\xa0
Preys on your fears