How do you make a lot of money in the real estate game? What is the answer to this magical question that has stumped so many people interested in getting in the game but who just haven’t seemed to understand it? Well, the answer can be complicated, and it can also be simple. For your sake, I’ll stick with the simple explanation.
To begin, I will warn you that investing in real estate is not magic, it is like any other asset class, truth be told, there really is not one ‘’magical’’ asset class that reigns supreme over every other. The ‘’magic’’ in any one investment class lies in the person doing the investing. So, to make money in real estate, you have to become the type of person who can effectively invest in real estate. And, to get really good at it, you’ve got to commit yourself to it, it is going to be a full-time gig. So, before jumping in and going all in, make sure you understand the problem is never the asset class, the problem is likely you as there are people making money in all the asset classes all year round.
To help illustrate the point above, I’ll use an example that Warren Buffet gave, he said when there’s a parade, you want to be the only person on your tippy toes, but if everyone else is on their tippy toes and so are you, then it cancels out. Similarly, in real estate, bet one of the few on your ‘’tippy toes’’ you’re going to need to know things that other people or the rest of the ‘’parade’’ does not see. To see things they don’t, you’re going to need deep expertise in once specific area of real estate which will come through time invested in learning about it. If you choose not to, it will be like an asset class like every other for you and you’ll end up reverting to the mean and staring at the ‘’parade’’ at the same level as everyone else.
The main point to making money in real estate is to seek mastery of it and invest for the long-term in developing your level of mastery.
You also want to know about all the players in the real estate game. So, below I’m going to go into greater detail on the ones you need to be aware of the most.
Players in the real estate game
Why should you know about the different players in the real estate industry?
If you’re interested in real estate investing and intend on doing big business, you can’ afford to focus on all the steps in between, you need to be focused on the things that make you money which are doing more and more real estate deals that put cash flow in your pocket or lead to you making more money. All the other steps in between that distract you from your ultimate goal of being the best real estate investor you can be can be outsourced. So, to give you an idea of who the other players you’re going to be working with, I put together this article. I’m keeping things simple and brief, because this stuff isn’t rocket science.
The different players:
Realtors: Realtors help you purchase and sell real estate and will help negotiate on your behalf, find you deals, help sell your properties and draw up the contracts. There are typically two types of agents: seller’s agents and buyers agents. They are also referred to as real estate brokers, real estate agents and real estate consultants. You can call them whatever, all you need to know is what they can do for you. You can find them all around the world, the other week, I came across surrey realtor Shawn D, check him out if you live nearby.
Property managers: They deal directly with the tenants in your cash flow investments, so you don’t have to go running around to collect the rent. They also help repair and maintain the property for you while you are busy doing other things if you are an investor. They deal with all the bullshit, so you don’t have to so, you can focus on doing deals. If you’d like to know about some great property managers, there’s a link.
Mortgage Brokers: Mortgage brokers are the middlemen between the people who help and the mortgage company, they help get you conventional financing.
Appraisers: Appraisers help in giving you the value of a property by doing their analysis of it.
Lawyers: They help with the paperwork and legal issues
Accountants: Accountants help with all the numbers, financial statements, income statements, taxes etc.,. For your own accounting, you may want to use sites like quickbooks or Xero.
There are also intangible players like external factors detailed in this video:
Cities all around the world are being affected by these external ”players”. Even real estate in Vancouver has been continually going up higher than most cities in the world.
It would help to add, realtors, property managers, and mortgage brokers need to get a trading services license from their given state or province depending on where you live while appraisers do not need to go through any formal training. Theoretically, you can start calling yourself an appraiser right now so just make sure you get someone who knows what they are doing if you choose to work with one.