When the recession hit, so did reality: I knew a lot about my occupation (physical therapist), but very little about how to run a business.
The income dried up just as quickly as my debt grew. I started to cut out everything I could and even sold my car, books and anything else I could think of just to pay my tax bill. Eventually there was nothing left to sell …
And then someone invested in me.
To close my business would have cost around $US20,000 in personal guarantees, so I literally couldn’t afford for it to go under.
My family had nothing and lived hundreds of miles away, so asking them for help or even a sofa to sleep on was pointless. Ashamed and embarrassed, I moved into my office with one bag and a blow up bed that I then called home.
I always had an interest in real estate and knew that if I could just figure out what all of those investors seemed to know I could be successful — no matter what position I was starting from!
And then, someone invested in me.
In that first year, I managed to raise $US1 million to buy $US2 million worth of real estate. Within two years, my annual rent roll was $US460,000 from 100 tenants, and three years later, I’m in the middle of two $US5 million developments and am on target to double the portfolio.
There is only one secret to creating wealth in real estate, and that is this:
Use other people’s money!
Regardless of how much you have, you will run out at some point, so the sooner you master joint ventures, the quicker your business will grow.
Here’s how to do exactly that.
Build your network before you need it.
Have you ever bought something from a salesman that you had absolutely no need for? I recently popped into an electrical store and walked out with a whole bunch of other stuff I didn’t even need! Why? Because I knew, liked and trusted the salesman. He knew his products, he was able to match me to something I liked, and eventually, I wanted it. Ultimately, I bought into him.
It’s no different for you. If you’re likeable, knowledgeable and can make an appropriate, ethical, and profitable investment opportunity people will buy into you. By building your network before you need it you have the opportunity to build genuine relationships with people interested in you and what you do.
Specialize in one strategy.
One of real estate investing’s greatest aspects can also be one of it’s biggest downfalls, as well. There are so many individual strategies and ways to make cash it’s incredible, but with every strategy there are things to learn and inevitably mistakes to make. If you keep switching not only do you never become a true expert, you also don’t allow yourself to become the ‘go to’ person for anything.
When I first started investing I made a name buying cheaper houses. Even though I eventually moved away from that to much bigger developments, whenever anyone mentioned a lower value property my name always came up in conversation. When potential investors are looking for where to put their money, being the person whose name constantly comes up is so powerful.
Make money … and a difference.
The reality is no matter how great your offering is, there are 100 places for investors to put their money. By being ethical in everything you do you will automatically stand out above the crowd. It creates an awesome selling point if you can show investors that not only will they be doing great business by working with you, they get to make a difference, as well.
While you’re not looking for the next Mother Theresa, you are looking to work with a decent, honest person whom you can trust and work with for the long-term.
Give first, ask second.
When looking for a JV partner it’s easy to go out and look for everyone that has what you need. The really powerful way to find JV partners and demonstrate your professionalism and knowledge is to flip that over and go looking for people you can add value to.
Join conversations aiming to help, support and encourage others. Join groups and forums where you can add value because you never know who is listening, and you’re automatically on high ground when investors come to you rather than the other way around.
Sell through … not to.
Asking for money can be uncomfortable, especially in the your early days. When you’re nervous, try this: In conversation with a potential investor ask them what brought them to the event and what they’re hoping to gain from it. When they reciprocate the question, reply with “I have a fantastic business proposal and the experience to deliver the project. I’m looking for a JV partner who might want to invest. If you know anyone who would like ‘X’ per cent return on their money over a year, please feel free to connect us.”
How awesome is that? You have completely taken the heat out of the situation while still fully explaining what you have to offer. If they are interested (which they often are), they will let you know.
When I started investing I had no money, no confidence and no home. Just a few short years later, we have a multi-million dollar portfolio and successful businesses by following these simple steps. Wherever you are now in your life, just know this: It’s absolutely 100% possible for you, as well.
Kemi Egan is co-founder of Freedom Academies, Freedom Investments & Freedom Homes. She is a real estate investor, mentor, wealth strategist, and author of the #1 bestseller “The Power of Real Estate Investing.”