Podcast Summary
Listening to the entire podcast for valuable insights: New investors should listen to the entire podcast for valuable insights, engage with guests, and use tools like DealMachine and Rent to Retirement.
Key takeaway from this episode of the Bigger Pockets podcast is the importance of listening to the entire show for valuable insights, especially for new investors. The hosts encourage listeners to make it to the end, as there is often valuable advice and information given towards the end of each episode. Additionally, they encourage listeners to engage with their guests by asking questions on the show notes and leaving honest reviews on iTunes. The episode features an interview with real estate investor Mike Simmons from Michigan, who shares his experiences and insights into getting started in real estate, as well as some humor along the way. The episode also highlights the benefits of using tools like DealMachine for lead generation and Rent to Retirement for buying rental properties with no money down.
Exploring Real Estate Investing Opportunities Despite High Interest Rates: High interest rates present challenges for real estate investors, but platforms like Fundrise offer private credit strategies to earn attractive interest rates by funding high-quality assets with creditworthy borrowers. Caution and research are crucial, but the potential rewards can be significant.
Despite high interest rates making it challenging for real estate investors, opportunities still exist through platforms like Fundrise's new private credit strategy. This strategy allows investors to earn attractive interest rates by funding high-quality assets with creditworthy borrowers. Mike, a guest on the show, shares his personal story of how he was drawn to real estate investing after being uninterested in the stock market. He found excitement in the fast-paced, unpredictable nature of real estate and was inspired by the various resources and people he encountered online. While it's essential to be cautious and do thorough research, the potential rewards of real estate investing can be significant. With Fundrise, investors can take advantage of this unique market environment and potentially earn strong returns.
Focus on one strategy and work it through: Choose a real estate strategy, stick with it, and give it your all before moving on to the next. Find a supportive community or mentor to help stay focused.
Getting started in real estate investing can be overwhelming with the abundance of information and different strategies available. The speaker shared his personal experience of getting caught up in reading and analyzing various options, leading to paralysis by analysis. He emphasized that while learning is essential, focusing exclusively on one strategy and working it through is crucial for success. The speaker also highlighted the importance of finding a supportive community or mentor to help narrow down options and stay focused. It's easy to get swayed by different opinions and persuasive people, but ultimately, it's essential to choose a strategy, stick with it, and give it your all before moving on to the next.
Real Estate Investing: Filter Through Information and Take Action: Filter through resources, learn from mistakes, and stay committed to real estate investing goals
Real estate investing offers various niches and strategies, leading to numerous ways to succeed. However, it's essential to filter through the information and eventually take action. The Ultimate Beginners Guide to Real Estate Investing at biggerpockets.com is an excellent resource, but learning through doing is the most effective way. My first deal in 2008 was a valuable lesson, as I lost my earnest money when the bank went out of business. Yet, I learned from the experience and bought a house a few months later for half the price. It's crucial to be persistent, learn from mistakes, and stay committed to your goals.
Balance rehab and costs for profitable real estate investing: Research competition, schedule multiple contractor appointments in one day to find reliable and cost-effective contractors.
Successful real estate investing involves striking a balance between adequate rehab and reasonable costs. Over-rehabbing can lead to financial losses, while under-rehabbing may result in lower selling prices. To avoid this, investors should research their competition by attending open houses and adjusting their renovations accordingly. When hiring contractors, it's more efficient to schedule multiple appointments in one day, rather than spreading them out individually. This creates a sense of competition among contractors and ensures a good use of time. While some may view this approach as rude, it ultimately leads to finding reliable and cost-effective contractors for the project.
Avoiding Legal Issues with Contractors: Clear contracts, release of liens, and paying with checks can prevent legal disputes and liens on property during home renovations.
During a home renovation project, it's crucial to ensure that all contractors are paid on time to avoid potential legal issues. The speaker learned this lesson the hard way when he chose a contractor based on personal likability rather than professional reliability. The contractor failed to pay subcontractors, leading to a lien being placed on the speaker's house. To prevent similar situations, it's recommended to have all contractors sign a release of lien, ensuring they won't put a lien against your property for non-payment if you pay them. Additionally, always pay with checks and avoid cash transactions. The speaker also learned that attempting to do manual labor without sufficient skill can lead to additional costs and delays. Overall, it's essential to have clear contracts and agreements in place and to understand the scope of work and payment structure before starting a renovation project.
DIY home repairs can add significant time and cost to a project: Consider the opportunity cost of time and potential impact on selling price before DIY home repairs
Attempting to save money by doing home repairs and renovations yourself, especially when fixing and flipping houses, can often end up costing you more in time and potential lost sales. The speaker shared their experience of trying to scrape off old paint and fix up a basement, only to realize they were adding significant time to the project without saving enough money to justify the delay. They also learned the hard way about overpricing a house when selling it, which led to a lengthy sales process and potential negative stigma for the property. To avoid these mistakes, it's essential to consider the opportunity cost of your time and the potential impact on the selling price when deciding whether to DIY or hire a professional.
Investing in Detroit: Opportunities and Challenges: Detroit's economic struggles present potential real estate investment opportunities, but thorough research and a solid understanding of the local market are crucial to avoid losing propositions.
Detroit, and potentially other Rust Belt cities, can present opportunities for real estate investment, but it's crucial to be aware of the potential risks and challenges. The city has faced economic struggles for a long time, leading to the destruction of thousands of properties, and some unscrupulous individuals may try to lure unsuspecting investors into buying potentially losing propositions. While there are cheap properties available, they don't necessarily equate to good investments. Detroit serves as a representation of cities facing similar challenges, and investors should be cautious and well-informed before entering such markets. Despite the concerns, Detroit does have good areas, and investing there can be successful, but it requires thorough research and a solid understanding of the local market.
Investing in Detroit: A Specialized Approach: Detroit investing involves higher risks and unique challenges, requiring experienced investors with local knowledge
Investing in Detroit, Michigan, requires a deep understanding of the city and its unique challenges. The speaker shares his personal experience of trying to invest in Detroit but encountering numerous problems due to his lack of local knowledge. He emphasizes that there are both good and bad areas in the city, and some people genuinely want to live there. However, investing in Detroit is not for beginners, as it involves dealing with higher risks and more frequent issues compared to other markets. The speaker warns against underestimating the challenges and advises investors to be cautious and experienced. He also shares a personal story of someone breaking into a house he was flipping and taking over the property, illustrating the level of risk involved. Overall, the speaker's message is that investing in Detroit requires a specialized approach and a deep understanding of the local market.
Dealing with squatters in Detroit rental properties: Be cautious when renting in lower income areas, abandoned houses require significant investment, and Detroit has potential for positive change
Evictions due to squatters breaking into properties and refusing to leave can be a common issue, especially in lower income areas. This was shared by the guest, who had personal experience with this situation in Detroit. He emphasized the importance of being cautious and careful when dealing with rental properties in such areas. The guest also mentioned the prevalence of abandoned houses and the need for significant investment and progress to improve the city. The discussion touched upon the challenges of defending the city's decisions and the potential for Detroit to become a more progressive, green city. The guest's investment strategy focused on flipping houses in the suburbs of Detroit, also known as Metro Detroit. Despite the issues, the guest remained optimistic about the potential for positive change in the city.
Learning from Bad Tenants and Mistakes: Making mistakes is normal in real estate investing. Learn from others' experiences, invest in properties with strong cash flow and equity, and secure your property with a reliable home security system.
Making mistakes is a natural part of the real estate investing journey. The speaker shares his experience of having a bad tenant and low rental income, but emphasizes that it's an opportunity to learn and improve. He encourages listeners not to feel alone or discouraged, as many investors have gone through similar experiences. The BiggerPockets platform exists to help investors learn from each other and avoid making the same mistakes. Additionally, the speaker mentions the benefits of investing in rental properties with above-average rent, immediate cash flow, and built-in equity, like those offered by Integra Development Group. Lastly, he emphasizes the importance of securing a property with a reliable home security system like SimpliSafe for peace of mind.
Acting Quickly in Real Estate Investing: New investors should find a mentor or experienced investor for guidance to avoid costly mistakes in real estate investing, focusing on important numbers like after repair value, rehab costs, realtor commissions, and holding costs.
Acting quickly is crucial in real estate investing, especially when using the MLS to find houses. With many people looking at the same properties, being fast is essential to securing good deals. However, new investors need to be careful not to make mistakes with their numbers. The best advice for new investors is to find a mentor or experienced investor in their area who can provide guidance and shortcut common mistakes. This can be done through local real estate investing clubs or simply reaching out to successful investors for advice. The numbers to be aware of include after repair value, rehab costs, realtor commissions, and holding costs. By working with a mentor, new investors can learn the basics of real estate investing without making costly mistakes. The article mentioned in the conversation highlights Detroit's housing market boom, demonstrating that opportunities exist for investors in various markets.
Detroit Suburbs Economy on the Rise: Housing, Payrolls, and Manufacturing Growth: Detroit suburbs economy is improving with positive housing, payrolls, and manufacturing growth indicators leading to increased hotel stays and real estate investment opportunities. Buying, renovating, and selling 1,000 sqft homes for profit is a common strategy.
The economy in and around Detroit, particularly in the suburbs, is experiencing a significant upswing. Housing starts have seen gains for 11 of the past 13 quarters, payrolls have been positive since April 2010, manufacturing growth has outpaced the national average since March 2010, and local household finances have improved for 11 of the past 13 quarters. These positive economic indicators have led to increased hotel stays and overall growth in the area. When it comes to real estate investing, one typical deal in Michigan involves buying a 1,000 square foot, 3 bedroom, 2 bathroom brick ranch for around $50,000, spending $20,000 on rehab, and selling it for around $110,000 to $115,000. The first deal was financed through a mortgage and personal savings. Success in real estate investing in this area comes from networking and putting oneself out there, as investors began approaching the speakers after seeing their renovation projects and expressing interest in investing.
Sharing experiences and successes in real estate can attract opportunities and investors: Networking and sharing real estate investing plans and successes can lead to more investment offers than one can use.
Sharing your successes and experiences in real estate investing can help attract more opportunities and investors. This was the experience of the speaker, who started by networking and sharing their plans for house repairs and after repair values. As they gained credibility through speaking engagements, they received more investment offers than they could use. The speaker emphasized that this doesn't mean bragging, but rather sharing what you're doing and demonstrating success. For those just starting out, they suggested joining local real estate investing clubs and connecting with those who are actively investing and looking for partners. By sharing knowledge and experiences, new investors can build a reputation and potentially find private money.
Networking and Building Relationships for Business Growth: Networking and being open to different partnership structures can lead to successful business growth. Clear agreements and timeframes are essential to protect both parties.
Networking and making yourself available are crucial for finding investors and growing your business. The speaker shared his personal experience of partnering with investors for real estate projects, emphasizing the importance of being open to 50/50 deals when starting out. He also explained the concept of a rate of return, which is a monthly payment of simple interest on an investor's capital, and how it differs from a 50/50 partnership. Lastly, the speaker discussed the importance of having clear agreements and timeframes in place to protect both parties. Overall, the key takeaway is that building relationships and being open to different partnership structures can lead to successful business growth.
Making private investors comfortable for successful real estate deals: Offer favorable terms and transparency to ease investor concerns, consider no-money-down deals, get educated and find a mentor for real estate investing beginners.
Making private investors feel at ease is crucial in real estate investing. This can be achieved by offering favorable terms and maintaining transparency throughout the investment process. The speaker shared his experience of offering a 6-month foreclosure clause and splitting profits 50/50 with investors, while making no payments during the flipping process. This approach allows for essentially no-money-down deals and has worked effectively for him. For beginners, the first step to getting started in real estate investing is to get educated and find a mentor. Education is essential to understand the ins and outs of real estate investing and to make informed decisions. A mentor can provide valuable guidance and help avoid costly mistakes.
Collaborating with Competitors in Real Estate: Sharing knowledge and experience with others in the real estate industry, even competitors, can lead to valuable connections and deal flow.
Helping others in the real estate industry, even those who are new or considered competition, can benefit both parties in the long run. It's important to be friendly, personable, and willing to share knowledge and experience. Starting off in real estate, wholesaling might seem appealing, but it requires a solid understanding of buying, renovating, and selling. Flipping houses, on the other hand, can be a good starting point, especially with some guidance from experienced professionals. Ultimately, success in real estate comes from a combination of finding the right method, area, and personality fit. Helping others and collaborating with competitors can lead to valuable connections and deal flow.
Finding the right balance in real estate investing: Effective tenant screening, proper documentation, clear contracts, and avoiding cash payments are crucial for successful real estate investing. Personal preferences and goals determine the focus on property management or deal finding.
Successful real estate investing involves finding the right balance between different aspects of the business based on personal preferences and goals. Some investors thrive on managing properties and dealing with tenants, while others prefer to focus on finding deals and leaving property management to others. The speaker in this discussion plans to do more buy and hold investing in the future to secure his retirement, but recognizes the importance of effective tenant screening and proper documentation to minimize potential legal issues. Another important consideration discussed was the potential risk of hiring a bad contractor and the importance of having clear contracts and avoiding cash payments to ensure accountability. Additionally, the decision to texture walls on a flip was debated, with some investors preferring the look and others finding it unnecessary or even detracting from the property's value. Overall, the conversation highlights the importance of being informed, flexible, and strategic in real estate investing.
Real Estate License: Necessary or Not?: While a real estate license can offer benefits, it's not essential for everyone in house flipping. Understanding neighborhood predictability and house value is crucial, and financing options like hard money lenders or private lenders have their pros and cons.
While having a real estate license can provide certain benefits, such as direct access to the Multiple Listing Service (MLS), it may not be necessary for everyone, especially for those who have a reliable realtor or prefer to focus on other aspects of house flipping. The interviewee shared his personal experience and preference for not having a real estate license, but acknowledged that it could be beneficial for others. He also emphasized the importance of understanding the predictability of neighborhoods and the value of houses in those areas when flipping houses. Additionally, the interviewee shared his thoughts on hard money lenders, expressing that while they have their place, he personally prefers private lenders or mortgages due to the costs and paperwork involved. Overall, the discussion highlighted the importance of understanding individual preferences and circumstances when making decisions related to real estate investing.
Using a smartphone for real estate business: The guest uses his smartphone for emailing, creating spreadsheets, and checking listings for his real estate business. He also recommends books 'Rich Dad Poor Dad', 'The Art of the Deal', 'The Millionaire Next Door', and 'Wealth Attraction for Entrepreneurs'.
The guest, despite some interruptions, shared how he uses his smartphone extensively for his real estate business. He uses it for emailing, creating spreadsheets on Google Docs, and even checking listings on Zillow. The guest also mentioned his favorite real estate book, "Rich Dad Poor Dad," and a curveball choice, "The Art of the Deal" by Donald Trump. For business books, he recommended "The Millionaire Next Door" by Thomas Stanley and Dan Kennedy's "Wealth Attraction for Entrepreneurs." The guest also mentioned his hobby, but it was not explicitly stated in the conversation.
The Importance of Taking Action in Real Estate Investing: Successful investors take the first step and keep taking action, regardless of their background or intelligence. Consistency is key to success in real estate investing.
Successful investors take action and consistently keep taking action, regardless of their background or intelligence. Mike Simmons, a 4th degree black belt and real estate investor, shared his experience and insights on the BiggerPockets podcast. He emphasized that taking the first step is the hardest part, but keeping at it is essential for success. Mike also runs a real estate education platform, Just Start Real Estate, and hosts a podcast for beginners. To connect with him, visit his website or email him at [mike@juststartrealestate.com](mailto:mike@juststartrealestate.com). Remember, action and consistent action are the keys to success in real estate investing.
Find Investor-Friendly Agents with BiggerPockets Agent Finder: Utilize BiggerPockets Agent Finder to connect with local experts, navigate markets, and make informed real estate investment decisions.
Finding the right investor-friendly real estate agent is crucial for those looking to get into or advance in real estate investing. With the market constantly shifting, having an expert local guide can help navigate neighborhoods, analyze numbers, and build confidence in making informed decisions. BiggerPockets Agent Finder is a free resource that allows you to easily connect with such agents by entering your desired location and investment goals at biggerpockets.com/deals. Remember, it's not about timing the market perfectly but rather spending time in the market to achieve financial freedom. As always, investing involves risk, so consult with qualified advisors before making any decisions.