fbpx

The Daily Actions Full-Time Real Estate Entrepreneurs Take

Share This:

Episode Summary

Listen on iTunes
Listen on Spotify
Watch on YouTube

If you want to become a full-time real estate entrepreneur, it comes down to one question: what do you actually DO every day? It turns out that there are several clear, specific things you must do every day or every week—and if you do them, you will predictably be able to succeed in being a full-time real estate entrepreneur.

In this episode, Jeff explains the four big categories of daily actions that you must take to become—or remain—a successful full-time real estate entrepreneur.

Episode Transcript

So you want to become a full-time real estate entrepreneur? That is awesome. I am in full support of that. And I think that if you wait until you feel like you’re ready, you might find yourself waiting forever. But of course, being a full-time real estate entrepreneur isn’t an idea. It is a reality. And that means that the reality is that there are certain things you have to do certain things you truly have to take action on every day. And in today’s episode, we’re going to talk about the four categories of the daily actions that you must take as a full-time real estate entrepreneur, whether you’re trying to get to that status or whether you are at that status, and just trying to stay there. So let’s cue the theme song. We’re gonna dive right into talking about these four categories.

Welcome to Racking Up Rentals, a show about how regular people those of us without huge war chest of capital or insider connections, can build lasting wealth acquiring a portfolio of buy and hold real estate. But we don’t just go mainstream looking at what’s on the market and asking banks for loans nor are we posting We Buy Houses signs are just looking for quote “motivated sellers” to make lowball offers to. You see, we are people-oriented dealmakers, we sit down directly with sellers to work out win-win deals without agents or any other obstacles, and buy properties nobody else even knows are for sale. I’m Jeff from The Thoughtful Real Estate Entrepreneur. If you’re the kind of real estate investor who wants long term wealth, not get rich quick gimmicks or pictures of yourself holding fat checks on social media. This show is for you. Join me and quietly become the wealthiest person on your block. Now let’s go rack up a rental portfolio.

Thanks for joining me for yet another episode of Racking Up Rentals. Show Notes for this particular episode can be found at thoughtfulre.com/e92. Please do us a massive favor by hitting the subscribe button in the podcast app takes about point two seconds to do that I would so appreciate it. It really helps other thoughtful real estate entrepreneurs to find the show, because the platforms know that you are subscribed. So thank you so much! Onward with today’s episode.

So as of the recording of this episode, it’s early Middle 2021. I am just about to hit my eight-year anniversary as a full-time real estate entrepreneur. And before that, from about 2003 to 2013. I was also a full-time entrepreneur but not in real estate. So when I transitioned in 2013, I transitioned from entrepreneurship to entrepreneurship. But the types of businesses I ran weren’t just out 100% absolutely, completely different. So in 2013, as I entered that world and started trying to figure it out, I was stumbling around in the dark basically felt like I had a blindfold on for at least the first couple years trying to figure it out. And it wasn’t until I met my own coach, my own mentor, Greg later that I really have learned what I should be doing every day as a real estate entrepreneur, to allow myself to have enough business and deals and progress to keep myself afloat. And in today’s episode, I really want to talk about what those four categories are of daily action. So this basically tells you, here’s what you should be spending your time on. If you are working towards becoming a full-time real estate entrepreneur, or you are one and you want to continue to make sure you can stay in that arena and remain self employed as a full-time real estate entrepreneur. So let me give you the four categories real quickly. And then we’ll dive deeper into each of them.

The four categories are these: Number one is sellers — everything related to communicating with developing relationships with sellers. Number two is money — everything related to cultivating financial resources, you need to get the deals done. Third is studying — everything related to making sure that you have the knowledge, especially about your market that you need to make good decisions in the moment. And lastly is what I would call users — everything related to finding, connecting with and understanding the people who will ultimately utilize the properties that you buy. And at the end, I’m going to give you a bonus tip that sums up a lot in one very, very simple, simple, simple, simple daily action that I highly recommend you do that will serve you in almost all of these areas. So without further ado, let’s dive in to each of them individually.

And the first category is sellers. And we’re going to talk about really two things that we need to be doing all the time as it relates to sellers because I want you to remember, we’re not shopping for properties. We’re shopping for people really; we’re shopping for people with whom we can have a reasonable conversation about a piece of Real Estate. And the first thing we need to be doing is we need to always be marketing. Now, there are lots of different ways to do marketing. And as you probably know, from the thoughtful real estate approach, we like to send people, what we call thoughtful direct mail letters. And these are very, very, very different than what is sort of industry standard among real estate investors who have the kind of We Buy Houses message and approach. That’s not at all what we do. We are marketing with a totally different type of letter. And if you’re interested in learning more about that, you can go to www.sellerdirectmail.com, and find out kind of more about what we do and get some help with that if you would like. But the bottom line is, no matter how you are actually creating those marketing pieces, they need to be going out very, very consistently. And I mean, like on a weekly basis.

Now you don’t have to send a small batch of letters every day, you could do that, I guess, if you wanted to. But I would say on a weekly rhythm, you need to have your marketing being deployed. Now, you’ve probably heard me talk about the idea of planting seeds before but it’s just such a perfectly apt metaphor for what we’re doing here. We’re always planting seeds when we send our letters. And when we plant seeds, we know some of the seeds will sprout right away, some will never sprout. And some will sprout anytime from you know, five days from now, to five years from now. And that’s okay, because we’re always sprinkling seeds. And sooner or later when we’re always sprinkling seeds, and they’re all sprouting on different schedules pretty soon. That means our phone is always ringing with sellers that we can talk to you. So the first thing you need to be doing every single day is making sure that that week, you are moving your marketing for that there are new marketing pieces hitting the mail stream or whatever form of marketing I guess you might be doing. I’m going to use the term mail because that’s what I really advocate for. But that needs to happen every single week. And if there are daily actions you need to take to be getting your lists, or to be coordinating with the people who will physically assemble your letters, and all of that that needs to be happening every single week. Secondly, is what do we do after the phone rings. And this is probably the number one biggest category of all the things we’re going to talk about today. And that is you need to be following up with your seller leads, talk to sellers. That’s really the simple bottom line of what we are focused on making sure we’re doing all of the time because the marketing might be sort of the first domino and a series of dominoes. But you can knock over the marketing Domino, get some leads, and then fill the follow up with them and nothing goes any further. So every single day, literally every single day, you should be talking to people who own real estate who use real estate you would like to buy, especially those who have kind of raised their hand by responding to your marketing. And indicating that they’re willing to have a conversation with you.

Now, we call our process of slow negotiation slow dancing, because some of these conversations are really not very direct. They’re not very immediate. Sometimes they just happen over the course of weeks or months or even years. I’m closing on a deal next week, that has been a four-year slow dance. And that’s okay, because that’s just how this works. But if I hadn’t been calling that person, following up with them scheduling meetings to run by and say hi and see how they’re doing, then this deal would not progress. So we always need to be following up with our seller leads and progressing that conversation to the point where ultimately, we are making a proposal right now you’ve heard me get on this soapbox before too. We don’t make offers, we make proposals. And if it takes four years to get to proposal, it takes four years, don’t rush it, we’re not in the I need to make an offer in the next you know, 48 hours or this is a waste of time type of mentality that is not at all, what we do as thoughtful real estate entrepreneurs. So we are progressing the relationship to the point where we can give them a proposal that we know is reflective of the solving the person and solving the deal that we have done up to this point.

By the way, if you need a refresher on the broad process of how we approach working with sellers, you should go back and check out the episodes related to the Y.E.S.S.E.S framework. That’s Y-E-S-S-E-S. The Y.E.S.S.E.S framework is a framework for getting off market sellers to accept your proposals. It describes the entire process for how we tend to work with our sellers. And ultimately, we are progressing to making a proposal. And then even after the proposal we are progressing to, you know the other stages of getting their feedback, finalizing an agreement and putting this baby in escrow. So in the category of sellers, we’re talking about marketing on a weekly basis, and if you need to do things daily to accomplish that weekly metric, do the things daily, every day, literally. Secondly, we do need to be talking to seller leads we need to be pushing those conversations forward, even if it’s just a Hey, I haven’t heard from you in a while, just want to say hi, see how you’re doing anything like that, Hey, can I swing by one of these days, we’ll catch up over a cup of coffee, whatever is sort of normal in terms of the culture of your relationship with that person, you need to be pushing those leads forward every single day. I wouldn’t call the same seller every single day. But every single day as your database and your roster of leads that are kind of warm, that you are keeping warm and cultivating, you should be contacting somebody from that list at least once every single day. Moving on to the second category.

The second category is money. This is everything related to cultivating the financial resources you need to get your deals done. Now, as you know, we are very, very big fans of seller financing. And so in those cases, seller financing is cultivated and arranged really in the same processes, negotiating the proposal for your actual purchase of the property. But even besides our primary financing, in the form of seller financing, we always need to have cash resources, we need a backup loan plans, we need to have lots of money resources, if money is represented by toolbox, when we open that toolbox, we want to see a lot of different options. And of course, the best time to line up money is when you don’t need it. Right sounds a little counterintuitive, perhaps, but also probably sounds very common sense, which is that when you are in need of alone, if you show up and you come hat in hand and say I need a loan for this, that’s not the time when you have the most leverage or ability to make a good decision. So we always want to be lining up our money resources before we actually need them. And I want to talk to you about kind of two broad categories of money resources.

The first one is the one that we really prefer as thoughtful real estate entrepreneurs, and that is private individuals. private individuals are great resources simply because we can have a real conversation with them. Much like how we really appreciate working directly with sellers, rather than through real estate agents. When a property is listed. We also really like the idea of being able to talk and communicate directly with private individuals about money as well. Now, when I talk to people about this, oftentimes they say, Well, I don’t know any rich people. And to that I have to push back. And first I must say, I have felt that way, too. I have been coached out of thinking that way myself, because there’s a couple important factors. One is yes, you probably do know some rich people. But more importantly, number two, they don’t have to be rich people for you to be able to work with them in a financial capacity. Because private individuals, regular people oftentimes do have resources that they are not using in the most optimal way, right. Now, maybe you don’t have a massive database of people who have a checking account balance of $2.8 million. That’s okay. They don’t necessarily need to, but I bet a lot of them do have retirement programs, I bet some of those retirement programs or self-directed forms of retirement programs. And I bet those people within those accounts are always looking for different or better options, maybe to diversify the investments that comprise their retirement fund, they might be things looking for things that are in a different form that they like the tangible nature and quality of real estate. They like the sort of non-stock market type of aspect of things like real estate, or loaning money to somebody like you who they know personally, and like and trust. There are people who have home equity lines of credit on their own houses, and they can be a lender. using that as a source of funds. I personally have a lender who’s got a home equity line of credit on his house, he can borrow against it at an affordable rate, let’s say 3%. And he can loan it to me for short term projects at 8%. And that’s a great arbitrage for him from 3% to 8%. And he collects the 5% margin. So you definitely have access to people who probably have more resources than you realize not because they’ve been hiding their wealth from you, but because they might not realize how they can tap into some of those financial resources that they have. And if you understand those ways, then you can be having conversations with them as well. There are definitely people who really appreciate the idea of working with an individual like you if somebody they already know like, and trust something that’s different than what they’re currently doing. That can really give you a strong competitive edge. So one thing you should always be doing every week is having conversations with private individuals to put proposals in front of them.

Now these proposals could be two different types of proposals. It could be one very specific proposal that says I have a project or Have a deal. Here’s very specifically what I’m proposing to you for that. Or the other way to do it would be to say, here’s a proposal for how we would work together. In the future, when a deal comes up, here’s how it would come to you, here are the types of things that would likely reflect Is this the type of thing you would like to be involved with in the future. And if you were always having conversations with those private individuals, you will be thanking yourself later, when an actual deal pops up, and you’ve already sort of primed the pump with that relationship, they already know what to expect, they’re already warmed up to the idea. And now you can go to them and say, Great, now we have a real opportunity, and it’s time to take action does this fit your investment criteria as well as I think it does. The second type of relationships that we want to be focused on when it comes to lining up money would be what I would call non-bank lenders. Now, it doesn’t hurt to have bank lenders in your database as well. In fact, it would be really smart to have those but as you know, our bias on this show, and in our school of thought is we try to work with non-bank lenders, especially regular people whenever we possibly can. But non-bank lenders can be very useful in terms of creating other sources of liquidity for you or, or loans as well. Non-bank lenders can be great sources of maybe lines of credit, credit cards themselves, maybe a credit card has got, you know the word Chase Bank on the top, so maybe you call that a bank lender. But the idea is still that it’s not necessarily a bank mortgage that you are applying for. In that case, we’ve had great success using certain programs for credit cards that have given us access to cash, we needed to get deals done. We have lines of credit in our personal names, lines of credit in our business names, with sometimes they are banks, sometimes they’re Non-bank not banks, personal loans, just signature loans, things like that. So some of these are secured. And but many of them are not secured. So they’re their signature type of loans, where it’s your credit that’s on the line. And you’re promised to make payment but not necessarily providing a piece of collateral, then the second category within non-bank lenders would be hard money lenders.

Now, everybody thinks of hard money lenders, as loan sharks who make extremely expensive loans. But I have found while non-bank there are many of those, of course, that there are also many hard money lenders who are creating programs these days that fit new and different needs than they used to. So whereas in the past, they might have only loaned money on projects, like flips, at very high interest rates, very, very short terms. A lot of these hard money lenders these days are developing products that actually fit for long term holds. I got a loan a couple years ago from an organization that I considered to be a hard money lender; I would have used those words. And I guess I probably still would, but I didn’t realize that they had just created a brand-new program for rental properties. And was it more expensive interest rate than say a Fannie Mae, Freddie Mac type loan? Yes, absolutely. But it wasn’t 12 14% like we might associate with hard money, loans, it wasn’t anything like that. And it wasn’t a nine-month term, it was a 30-year term. In fact. And so it’s always good to have those types of lending relationships already established, as well. So on a weekly or monthly basis, I would definitely be recommending that you be cultivating those types of relationships with non-bank lenders. But really back to the first category within money, it is very much about people. And one more point on that topic is, if you can find out who is loaning money on other projects in your town, then that can be a very powerful bit of knowledge for you. Because now you could go to those people and say, Hey, I see that you are involved with financing some of these projects, you know, I create projects as well, it’d be interesting to hear what types of projects you are looking for. So that can be a really good way to spend your time and energy on a weekly basis, as well.

Moving on to the third category, we’re going to call this studying and studying in this case, is about studying market knowledge. Now, real estate comes with a lot of studying to begin with. And I don’t necessarily mean in this case, reading books listening to podcasts like this one, as non-bank being reflective of what I mean here. By studying you’re not learning concepts. In this case, you’re learning about your market. And that’s what I mean by studying. One of the reasons I’m a big advocate for investing locally, to where you live, is that I think that there is a very hard to overstate level of value and benefit that comes from knowing your market inside and out. You know, I do business and really to markets and you could give me an address and I could pretty much close my eyes and why couldn’t certainly picture that house or that property specifically, I can have a very good idea of what the feeling of that neighborhood would be like, and what some of the main sort of financial metrics or trends or price points and things would be like in those types of areas.

So let’s talk about market knowledge in two ways, sales prices and rental prices. Sales prices are really important for you to have kind of a back of the hand intrinsic and gut level feeling for if you drive up to a house, and you see a for sale sign in front of it, I would really like for you to be able to look at that house without looking at the sign and have a pretty reasonable guess as to what that house is probably selling for. Right? If you know that this is a four-bedroom, two-bathroom house in this particular neighborhood, and you can see it, it looks the way it looks, I want you to be within, you know, 5% variance one way or the other of knowing what it’s selling for. So absolute prices, absolute dollars, would be one way of understanding prices, but another way of understanding prices would be price per foot, right? What is the average price per foot? If you take the two-bathroom sales price, or the value of a property divided by the square footage of the structure? What is that price per foot, because that metric is also very important for you to understand as you go out and you assess other opportunities. And when you just look around different neighborhoods from neighborhood to neighborhood, how do these prices vary? You know, I would like to be able to ask you, and neighborhood x, if you had a three-bedroom, two-bathroom house and the same house was in a neighborhood Why? What would be the difference in price between neighborhoods X and Y for that same two, three-bedroom, two-bathroom house, you should be able to have a fairly back of the hand gut instinctive type of answer to that question and have it been reasonably accurate. So why did why is this so helpful?

Well, of course, as you’re out in the world, looking at new opportunities, you’re meeting with a seller? And they say, yeah, you know, I’m kind of thinking I want about 325 for this property, you need to have some kind of alarm system in your head that goes off that says, you know, ding, ding, ding that he’s about, right? Oh, my gosh, that’s way low. That’s could be an amazing opportunity, or, man, this person is, you know, really not thinking of it in the same way I am. So you need to be able to have a gut instinct on that. Now a similar topic, but just a slightly different financial metric would be rents. What are the rents per unit type in different types of neighborhoods? Right, so let’s say you go to your A plus neighborhood, and you see a duplex, and you know, the duplex is 1000 square feet, it’s two bedrooms, two baths. First of all, when you look at that, and you say, a two-bedroom, two bath unit, 1000 square feet, does that seem big to you? Does that seem small? Does that seem common? Does that seem rare? In a good way? Is that a bigger unit like in my mind, 1000 square feet for two-bedroom, two-bathroom unit is that’s a pretty generously sized unit. And so I two-bathroom like that. And I want to understand what the market demand is like for that. So what would the typical rent be for a two-bedroom, two bath unit? What would the typical rent be for a two-bedroom, one bath unit? Now let’s say we take that same unit. And again, we think about it in the context of neighborhood x. We think about it in the context of neighborhood Why? What are the rents going to be in those two different neighborhoods for the exact same unit, you also need to have a good sense for that? rents can also be expressed as a price per foot or sometimes even a price per bedroom. But I would suggest a price per square foot is also very helpful, right? And in the case of rents, the price per square foot is usually thought of in terms of a monthly type of cost, right? So if you’ve got a 12 $100 unit, you would think about the price per square foot on a monthly basis. And again, why is this helpful to you? Because when you are looking at a property when you’re talking to a seller, and that seller says yeah, I’ve got my duplex here, and the rents are about $1,000 a month, but I think that’s below market. And you say oh, well, what do you think market is and they say I think it should be at least 1075 if you know, because you are the one keeping your finger on the pulse of the market that that unit all day long is a 13 $100 unit. Oh my gosh. Now you’ve got an opportunity, right? To refer to an episode a couple back, now you see a Delta. You see a delta between what your expectation of rents are based on your diligently achieved market rent knowledge and the sellers now you’ve got yourself an exciting opportunity. So studying is about market knowledge, in terms of prices, and rents. You could also say market knowledge certainly in terms of what’s happening in each neighborhood where the general trends and vibes are, what new things are being developed in one particular neighborhood. things along those lines too, but it’s very important that you know your market, inside and out.

The last of our four categories is what we’re going to call user. So these are basically the people who will utilize whatever property you were buying the most obvious and probably simple relatable example is a residential tenant, right? When you buy a duplex, you aren’t really wondering, I wonder who’s going to rent this not probably somebody who wants to live there. Probably somebody with, you know, one potentially roommate, maybe one kid, maybe one dog, there’s, you’re not wondering, I wonder if an institution is going to want to rent this from me, or somebody you know, who wants to run a store out of there, it’s that part’s pretty obvious. But there are other situations in your investing life, your real estate, entrepreneurship life that are not quite as obvious. So when you buy something, you might be wondering, Well, what would the user base of renters be here? What would the user base of retail buyers be people who want to maybe buy this property and move into it themselves? What would be the user base of people looking for a wholesale deal, like maybe there are people who are in the business of flipping properties, who would like to have access to certain deals, maybe there are people who are landlords who are looking for more rental properties to buy and maybe some of those landlords are turnkey type landlords, they just want to buy a property that’s already in good shape that’s already rented up at market rates, and you could sell them a market rate rental property as an investment. Maybe, you know, people who are developers, and they’re looking for properties where they can tear an existing structure down and build something new. Maybe you’re looking for businesses, who will take over space that they can utilize in a certain way for their business, right, you know, maybe to run a retail store or have an office or have a warehouse. But the point of understanding users is so that you can kind of play matchmaker, right, that’s really sort of what we do at the end of the day, is we kind of play matchmaker between people who want to sell a property, people who might want to buy a property, people who might want to use a property in some way.

So let me just give you an example of the importance of understanding users. And maybe a less a slightly less obvious kind of way. If you are talking to a seller, and you’ve read, you’ve reached out to them about their four Plex, for instance. And in the conversation, you start to learn that they actually have a small commercial building somewhere and they say, you know, I kind of I don’t mind selling the four Plex, we can talk about that. But I really kind of want to sell this commercial building. Do you buy commercial buildings? Well, if you don’t already buy commercial buildings, you might be tempted to just sort of write that off right away and say, no, sorry, that’s not really my thing. I really want to talk about the four Plex. But what would happen if you knew of a business that was looking for a commercial space, if you have a friend who runs a business that has that needs a small warehouse, and they cannot find the property that they are looking for, but here now you have just uncovered an off market, commercial opportunity that could be perfect for them. Now you have the opportunity to play matchmaker and, you know, find some way to create a win for yourself by connecting that seller, and this ultimate user in the form of the business. But that would not be possible. If you weren’t out there talking to people about finding out what they’re looking for in real estate. If you weren’t already talking to your friend on an ongoing basis about, what are you looking for? Oh, gosh, you can’t find a warehouse building for your small business. Okay, well, I’ll keep my eyes and ears open. When you keep your eyes and ears open, then you start to see opportunities that you might not otherwise have.

So to recap, our four categories of the things you should be doing on a daily basis, to make yourself a full-time real estate entrepreneur and to survive in that arena. The four categories are talking to sellers constantly marketing and talking to the people that respond to you marketing. Number two, cultivating money relationships, often with private individuals, sometimes with non-bank lenders. Number three, studying your market knowledge so that you know exactly what prices are and rental prices and all sorts of things. So you can have a quick ability to understand whether a deal starts to make sense or not. And number four users and knowing who is looking for what in your market, and where they’re looking for it so that you can have the ability to potentially play matchmaker between buyers and sellers between lessees and lessors.

Now, I promised you at the beginning of bonus tip, and this is dead simple, but I know that not many people are doing this. And the simple tip is this. If you notice the common thread and everything we just talked about, it would be people it would be relationship ships with people. One thing that you could do this is a basic rule of thumb for me, you know how they say an apple a day keeps the doctor away? Well, this doesn’t rhyme very well. But a thank you card a day keeps the poverty away. I’m not sure exactly where that’s going. But hopefully you understand what I’m saying. Every day, send at least one handwritten thank you card. It can be two sentences long. It doesn’t have to be eloquent or anything but if you got in the habit of every single day, walking to your mailbox with at least one thank you card handwritten in it to somebody you have talked with or met with a seller, a money person, potential user, a buyer, tenant, anybody like that potential non-bank lender, if you can write a thank you card and put it in your mailbox every day. You will thank yourself later because you will be sowing the seeds of great relationships that will pay off for you in the future.

And that is it for today’s episode of Racking Up Rentals, a little bit of a longer one as we went through these four categories. Again, show notes for today’s episode are at thoughtfulre.com/e92. Please do us a big favor by hitting the subscribe button in your podcast app and rating and reviewing the show. I really personally appreciate that.

Did you know that we have a Facebook group for thoughtful real estate entrepreneurs also? It’s called a Rental Portfolio Wealth Builders. And we’d love to have you over there. You can just type group.thoughtfulre.com into your browser and you will be redirected right to that page.

If you liked this episode, and I hope you did please take a screenshot of it on your phone post that screenshot to Instagram and tag us We are at thoughtful real estate. I’ll see you the next episode. Until then, this is Jeff from The Thoughtful Real Estate Entrepreneur, signing off.

Thanks for listening to Racking Up Rentals where we build long term wealth by being a win-win deal makers. Remember solve the person to unlock the deal and solve the financing to unlock the profits.

Leave a Reply

Your email address will not be published. Required fields are marked *