When we first started doing deals we ran into the issue of not having the experience to get the funding to do deals. As many people know, if you are going the hard money lending route they don’t care as much about your income and credit as they do the quality of the deal and your track record. Because we were new we weren’t getting the best deals and because we had no track record people didn’t take us serious. I was forced, as I have always been forced, to find a way where there is no way.
Some people would house hack their way out of this predicament but for me that wasn’t an option. I was in law school and not working so I couldn’t qualify for conventional lending. I came up with a few different ideas. That idea became a partnership fund similar to what Warren Buffet did.
In implementing these ideas I started seeing hidden benefits that reveal themselves to the people on the field. After a year and a half of doing this, with a few rehabs under our belt I have built the track record that I lacked in the beginning. I am now credible in the real estate space and not just a hopeful investor. Here are some of the ways I was able to build a track record as a real estate investor without using much if any of my own money.
Provide opportunities for others
A lot of people who get into real estate investing or business don’t do it to elevate others, they do it to elevate themselves over others. This is a huge mistake, especially in the black community. By providing opportunities for others I was able to gain access to the resources of others and create a win win for all involved. By expanding my vision outward I rose along with the people involved.
This was also true with stock market investing. By providing a club where people could come and learn I actually learned. I was required to stay ahead of the pack and produced social proof and that skill translated into over a 1000% ROI in my personal portfolio.
When I look at the Bezos fortune I realize that he didn’t set out to make money. He set out to improve things. The same can be said for Steve Jobs, Bill Gates, Donald Trump and his father, etc. The key to wealth isn’t selling things, it is in making things better for people. The more people you can improve things for the wealthier you become. I gained wealth by creating wealth for others. It really works.
Take less than what you think you can earn
The problem with people with no experience but a lot of knowledge is that they think they are more valuable than they actually are. These are the degreed who don’t work for free at internships, these are the people who do business and overcharge for everything, these are the people that flip homes and over charge. I never wanted to do business like that.
This year I did a lot of things for free. I managed property for free, I managed rehab for free and I also took a lot less in terms of profit share than the people I worked with. All of this was valuable though. All of this positioned me to now gobble up opportunities and leverage all of the relationships I built over the last year. I now know contractors because I put myself under the stress of having to find them. I now have mentors and wholesalers in my rolodex. Those are all assets. Assets you get by doing and by paying people.
I took less than what I should earn in money and gained it in experience and connections. There is no zero sum. You always get what you are worth. The market doesn’t lie. If you want more value you become more valuable. In this rare instance it matters more about how truly valuable you are not what you think your value is. I recommend if you want to get started and don’t have money, go do something for free or for less than you are worth.
Do the work
There is this huge glamorization of passive income and not enough focus on income, period. I think this is the lazy mans vision of wealth. A lot of people don’t want to do the work but they want a lot of money so they think passive income is the path to the easy but wealthy life. This is ridiculous. All roads lead through work. Work is the best mentor.
By working, I was able to gain all of the skills hands on that people who ride on deals passively never see. I was up late stressed, I was fielding questions, I was dealing with deadlines. The most value in the real estate deal is the education and you get that education through the work. The ROI is basic. The ROI is implied. The bigger aspect is what else you can get out of the deal. For me, that was the track record of being someone that has pushed through problems, found solutions and proven myself to contractors and mentors as someone who makes things happen. That is worth more than the rental income.
The great thing about all of this is now I am able to do deals solo and I am able to access funding. Now I am also able to scale and do bigger deals because I speak from a place of experience not from a place of hopes and dreams. This alone is worth millions if not hundreds of millions.
I came to this realization when I looked at a funding email that I received. I realized that now I can get access to better deals, I can estimate rehab a lot sharper and I have a solid knowledge of values and rents. This came from experience not from knowledge. This means I can command the funding. This means I can do larger deals where I really want to invest which would be close to home. I didn’t start investing how I did and where I did because that was the goal, I did it because that was the path toward getting to my actual goal. If you aren’t on track toward your real goal its probably because you aren’t credible and don’t have a track record. Its your job to get that by any means.
Almost every big time investor started out buying crappy homes they could afford and then leveraged the track record, experience and capital to invest where they want to. This is a lot better than complaining and not doing anything and it ultimately gets you where you want to go. The track record is what matters not the ROI. Be great.
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Thanks for reading!
Be great, invest well,