3 Biggest Mistakes Of New Investors = REI Classroom Podcast

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Welcome back to the flipnerd.com REI classroom where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now let's meet today's expert host.

Hey everybody, my name is Scott Carson. I'm known as the note guy. You can find more information about me@weclosenotes.com but literally I'm your host today on the REI classroom with flipner.com excited to be here. Got a great topic for you, some really great tips that a lot of people struggle with. And while my focus is on note investing and helping people with distressed debt and turning problem properties into profitable solutions, we see a lot of note investors and real estate investors make three simple mistakes when they're getting things started.

This REI Classroom Real Estate lesson is sponsored by UglyOpportunities.com as a new investor.

Many people are looking for ways to make deals happen. And oftentimes people are looking to wholesale. They're looking to fix and flip or turn an injury performance doesn't matter what the deal type is, it doesn't matter what type of niche of real estate you're doing. These are basically three basic mistakes that plague everybody as a new real estate investor. Now the first one is they don't develop new note investors or new real estate investors develop a database. Let me say that again, they don't develop a database. And that's really the key. You've probably heard that your net worth is in your network. The riches are in the niches. Or we all have a tribe. It's a great book by Seth Godwin. If you want to read a book on how expanding your tribe can really drive income into what you're doing as an investor. But biggest thing is no database. And a database, building a database isn't really that difficult. Alright, the first thing that people do is they don't reach out to their warm market. They don't take their business cards. You know, I'm sure many of you have a stack of business cards sitting at home like I got a couple here that you put in a shoebox or it's collecting or avoiding dust collecting on that 2 inch by 3 inch place on your nightdresser. That's unfortunate because if you spent money going to an event and networking or going to a conference or flying across country, getting checked by tsa, spending money on a hotel and a car rental plus crappy hotel food, you really need to take the contacts that you meet and put them into something that you can use to communicate with something you can reach out to people. So not having a database is really no excuse. Everybody should have a database and there are some simple things that you could do. When I first started off, I simply just started putting a person's name, their email, phone number and city, state and Excel spreadsheet. And every night that I came home, that was the first thing that I did or the last thing I did before going to bed was putting their name into a spreadsheet so I could literally copy paste it via Gmail or Yahoo. Now, I would highly recommend that you use a service like a CRM tool like Mailchimp or AWeber, constant contact. Something that's pretty inexpensive. But use it, use it, use it, use it. It'll track your database. You'll be able to see who opens an email when you send one out, who clicked on a link. Really, really important to see how effective your marketing is. But that's the first big mistake most real estate investors do. They just don't develop a database. Now the second one, especially in the note business and happens a lot of times, it fixes flips, is real estate investors try to diy, all right, they try to do everything themselves. And you know, you can get away with it. But if you're going to be in real estate long term, if you keep trying to diy, you're going to end up rip, rest in peace, because you're not going to be a closing enough deals, you're going to end up goofing up, you're going to run out of income because you don't put systems in place. And if you really want to grow your business, expand your business, you've got to put systems in place and learn to delegate. All right? You're going to learn to have to put vendors in place or hire crews. You can't swing the hammer on everything and paint at the same time. And be effective, really, truly effective as a real estate investor if you're trying to do it all yourself. So that's the second thing. Don't quit trying to do everything. Quit being a jack of all trades. Because if you're jack of all trades, you're a master of none. Now the third thing that most note investors and real estate investors struggle with is not building private money contacts immediately. I see this extremely as a hurdle, extreme hurdle for those investors that have put a little bit of money away in their IRAs, or they have money coming for a 401k or they've got money, they don't develop private money contacts, they're like, oh, I'm going to prove concept first before I go out and talk to my database. You know, what that says is, I don't believe in what I'm doing. You have to. If you really want to buy deals, especially in today's market as a fix and flipper, you've got to buy in bulk. You've got to buy more than one. Don't be wrong. Yes, you'll win one or two here, but a lot of the seasoned investors aren't paying the top dollars that we see at the auctions and other things. They're waiting for the systems that come and they're waiting for the right price because they have the systems to be able to make things happen. And if you were trying to do it all yourself, you know you're not going to be able to do that. And the same thing comes right from writing a check. It's always better to leverage your own funds by using other people's money. Whether it's other people's IRAs or their other people's money, a private money database to you is worth its weight in gold exponentially. All right? If you're making 50% of a deal and you have none of your own money in the deal, it's like you made an infinite return on investment. Okay? If you are using other people's money, it allows for you to leverage even the money. You have to buy five deals instead of one deal or 10 deals instead of one deal. And what's unfortunate is a lot of real estate investors use their money until they run out of money and then they give up. Like, well, I gotta wait to buy or gotta wait till one of my other property sells before I have the money to go buy another one. And that's unfortunate. You want to have money available so that when you see a really good deal, you could spring on it, close quickly, and do other things with it. Now, yes, use your own money to fund purchases, but it's always good to arbitrage, have somebody come in, refinance your own money out of the deal, put it back in your pocket, and go out and do more deals. But that's the third and probably the biggest mistake in the long run for new note investors is the fact is that a, they're not using their own money. They're using their money. I'm sorry, they're using their money versus somebody else's money. And that's the key. Bernie, mad off the banks. I'm sorry. Not mad off. Sorry, wrong one. He was using somebody else's money for sure. But gotta love that all the big time investors out there are using and leveraging other people's money to make things happen. You should do the same thing too. And that's my lesson for the day on today's REI classroom. We'll see you guys at the next one.

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