I’ve bought over $100 million worth of real estate.
5 things I’ve learned along the way that might surprise you:
1. The best deals can be analyzed on the back of a napkin.
Real estate can be over-complicated to that point that its unapproachable.
When we built our first building back in 2017 we didn’t know how cap rates were calculated or what a debt yield was.
We had a basic spreadsheet and a gut feeling we could out-operate the other players. We got the big things right and it worked.
2. Cash is king and the person with cash calls all the shots.
If you have no money and you can’t raise money you will never own the upside and real estate will be very tough for you.
Because the family office or the general partner you join forces with will (rightly) be entitled to almost all of the upside.
Sweat equity isn’t as valuable in real estate.
3. Sourcing deals is priority numero uno.
We have built a machine with 7 people who spend 100% of their time calling owners, underwriting deals, doing market studies and making offers on real estate.
It is a numbers game. Don’t get emotionally connected to any one deal. You’ll underwrite 100 deals before you buy the first one.
4. Analysis paralysis is REAL.
There are hundreds of factors that impact the value of a piece of real estate or the future head winds or tailwinds you may face.
If you’re the type of person who needs every answer before you pull the trigger, you’ll never make the leap.
5. Real estate is NOT passive.
People think you just buy a property and then go to your mailbox and cash the checks.
Real estate is a small business and you are providing your renters a service. I have 50 employees inside of my real estate firm. We answer calls, rent units, clean units, collect payments and deal with deliquency. We have 5+ contractors at every property who help us maintain it.
If you don’t know how to manage people and delegate, you will fail.