Getting Started As A New Real Estate Investor (Tigers Blood Formula)
Cody Sperber's Top 5 Principle's To Follow When Learning How To Invest In Real Estate
Everyday I get asked by people "How do I learn to invest in real estate?" They see the freedom I have to take off whenever I want, go on any vacation I want, and buy whatever I want. Let's face it, I am a nerdy guy that somehow landed a smoking hot wife. It's either my amazing sense of humor, or she can sense the real estate "Tigers Blood"!
But my success didn't happen by accident. My first few years investing I wondered around aimlessly trying to find good deals (hard as hell if you don't have anyone showing what to do), or find some money (even harder if you don't have a proven track record). I did all the things you would expect from a newbie investor. I joined the local REIA, I started going to networking events, I read Rich Dad Poor Dad and Donald Trump books. I even got myself a fancy little business card. When people asked what I did I would say proudly "I am a real estate investor!" The problem was I had no idea what I was doing. In fact if you know my story...I actually quit pretending to be a real estate investor after the first year or so of floundering around.
Then something awesome happened. I was invited to a Jack Miller seminar and for the first time I was surrounded by hundreds of very successful investors. I could just sense that something was different about this group. They cared deeply about each other and seemed to follow a common profit formula. The principals I learned from hanging out with some of the "old school" guys that I met there (and my mentor Lyle who was a Jack Miller insider) have changed my life and allowed me to break through the daily grind and live a financially free lifestyle.
Principle #1 - Live Debt Free
These guys didn't drive fancy cars, or wear three piece suits with nice watches. In fact, they took the opposite approach. They prided themselves on driving a car they traded a crappy property for and have been driving for 10 years. They drank box wine and made fun of young guys like me that were out perpetrating and pretending to be successful. They stressed that a new investor had to learn how to invest in real estate the right way...by being debt free and only spending money on investments that produced cash flow.
Principle #2 - Cashflow Is King
While some members of the "inner circle" were wholesalers like myself, most of them invested for long term wealth. They were patient investors that understood that the only way to break out of the rat race and build some real wealth was either to own tenanted rental properties that they eventually would own free and clear, or carry paper and "be the bank". They structured deals to have ammortizing loan structures and stuck to the fundamentals of investing. They never got emotional and focused on "the numbers" of a transaction. If it didn't positively cashflow, they didn't do the deal.
Principle #3 - Stay Laser Focused
Real estate investors by nature are entrepreneurial. And entrepreneurs are by nature opportunist. While this is a great trait to have when first getting started in a new business, it can be difficult to not get "shiny object syndrome". My mentor Lyle (whom I hired at this particular event and have been great friends ever since) tells me to "keep articulating the ball down the field and eventually you will score a touchdown!" Basically what he is saying is to stop worrying about every great idea or investing strategy that comes into your world and STAY FOCUSED on the principals of investing. In the book Outliers by Malcolm Gladwell he talks about his 10,000 hours theory. What he states is that in order for you to become in the top 5 % of any given field you have to put in at least 10,000 of practice. While it doesn't take this long to make a ton of money in real estate, when first learning how to invest in real estate you will want to be patient, stay focused, and put in the time needed to master your craft.
Principle #4 - There Is No Free Lunch
If a deal sounds too good to be true...it probably is. This holds true with Gurus pitching you the latest and greatest investing education, to a real estate agent telling you "this deal is guaranteed to be a winner". Like Warren Buffet, run towards a market when everyone else is running away. Wake up everyday with the mindset of a hunter and don't get caught up in the latest investing trends. Stick to the principles of investing (stay off government / attorneys radars, buy low, get cashflow, and sell when you can make a solid profit) and you will retire wealthy and live financially free.
Principle #5 - Your Network Is Your Net Worth
The last thing I want to share with you today is the importance of a solid network. I have been fortunate enough to build an amazing network of very successful investors, but more importantly just all around great people. My network brings me deals, lends me money, and buys me pizza and beer. I can call them with any business / personal problem and I know I will always get solid advice. I am a member of an elite mastermind of the top 40 residential real estate investors in the country and each year I still attend a couple of seminars to keep up my educations and hang out with my friends. Jack Miller's group showed me the importance of surrounding yourself with successful, like-minded people that put friendships first over money. I can guarantee that not a single one of your real estate deals will go according to plan, but if you have the right power team and network in place there is no hurdle you can't handle.
Well I am done rambling...I hope that if you are reading this right now, and you want to learn how to invest in real estate, you take my advice to heart. These principles changed my life and if you live by them, you will end up the same place I am (minus my hot wife :-)).
Your friend in prosperity,