Brian Schwatra, an agent with Intero Real Estate Services in Los Gatos, has been running a program called Stay or Go Homeowner for about 15 years in the Bay
What is the best advice for someone getting into real estate?
What are some real estate investing hacks and tips?
This isn’t a comprehensive list by any means. But here are 12 tips: some basics and some more advanced. (And definitely read’s post. It’s excellent and—unsolicited testimonial— is an excellent site.)
Do a lot of initial studying and research on real estate investing. That term can mean 10 things to 10 different people—everything from wholesaling to rehabbing to owning a mobile home park. Or it could refer to buy-and-hold single-family homes or apartment buildings. Or investing in tax liens. Or (though I wouldn’t really include this) it could refer to some activities conducted by real estate agents. Get a good sense of what area of investing you’re interested in.
Figure out what you’re comfortable with. Although there’s a lot of money to be made in short sales and foreclosures, some investors simply don’t feel right buying foreclosures and short sales. There are lots of niches, but some people would prefer not to deal with them. (Buying properties from divorcing couples, for example.) And figure out your comfort level with different strategies. Some people don’t mind door-knocking. Others do. Some people don’t mind cold calling. Others do.)
Now learn more about the technique(s) that seem to be the best fit. Join one or more local REIAs (real estate investment associations). Spend time on Bigger Pockets. Attend some courses or “boot camps.” But, please: Don’t spend $40,000 on one program. That’s just not necessary. You can get good or better information out of $1,500 programs.
Understand that marketing is essential. You need to know how to market. You need to get leads, to attract possible sellers or buyers. You need to understand the basics of direct mail and websites, marketing funnels and targeted messages.
Money: You’ll need some money for marketing. And, depending on your strategy, you may well need some money for whatever strategies you choose. Know where the money’s coming from.
Here are a few more advanced techniques:
Marketing: Yes, I mentioned this in the “basics.” It fit in here, too. Track your results. Did one mailing list work better than another. If you’re using bandit signs, does one location work better than another? Or one message work better than another? Test, retest, and refine.
Identify niches. And, generally, the narrower the niche (with a more targeted message), the better. Broad niches might be people who can’t make their mortgage payments. Narrowing it down a bit, people who are relocating or “tired landlords.” Narrowing it down further, people going through a divorce or people who’ve inherited a property. Or people who’ve been cited for code violations on their properties. Work those niches with targeted messages.
Economic conditions change. So does the composition of sellers and buyers. Sometimes it’s fairly obvious. In many areas, the real estate market heats up in the spring and cools down in the winter. Or in the time period 2003–2006, real estate in many areas was hot; the trick was finding sellers. Once the bubble burst—2007–2010 or so—the strategy was to buy up as many low-priced houses as possible. Rent them out for the cash flow and wait until the market recovered. (In many areas, it already has.) And sometimes successful marketing techniques no longer seem to work. Bandit signs are a great example. I’ve heard many investors talk about how they worked well . . . until they didn’t. Stay nimble enough to respond to changing conditions.
The best deals often are the ones you uncover for yourself—and then turn from an average deal to a great deal through negotiation. Yes, sometimes there are OK deals on the MLS. But not too often. Search for deals where other people aren’t. Then learn how to make the deal even sweeter.
Don’t assume. Don’t assume that a seller always wants the highest price. Maybe the seller wants to sell quickly. Or he/she doesn’t want a lot of people tromping through the house. And don’t take things at face value. A seller says: “I want to sell because I’m moving out of the area.” OK. Find out why. Health reasons? Job? Is it urgent or can it wait? What are the owner’s options if he/she can’t sell?
If you’re not a real estate agent and don’t want to become one, nevertheless work with one or more. They’re valuable for comps and other information. But you can help each other. If you run into a hot lead who simply can’t afford to sell for what you can pay, refer that person to the agent. Similarly, if the agent gets a lead from someone who really needs to sell immediately and the agent knows it’ll probably take 90 days to get a contract on the property, he/she can refer the lead to you.
Learn how to relate to the seller. There are lots of different ways to do this. Everything from reflecting hand gestures and body language to talking at the same speed (whether fast or slow) as the seller. There are other ways, too: Look for past experiences in common. And listen. Really listen. Don’t just focus on what you want to say. Listen to the seller and what he/she says.