Today’s REI Classroom Lesson
Bob Diamond comments on how to grow your business quickly and successfully while still being cautious.
REI Classroom Summary
Discover more about starting with one deal and building upon each success progressively.
Listen to this REI Classroom Lesson
Real Estate Investing Classroom Show Transcripts:
Mike: 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.
Bob: Hello. This is attorney and investor Bob Diamond and welcome to the REI Classroom. The question of the day is how you go big in real estate.
Mike: This REI Classroom real estate lesson is sponsored by VirtualStaffNow.com.
Bob: And as an attorney, as an investor, I have a lot of experience with this. I’ve seen clients that have gone huge. And the question is how do they get there? Well, the good news for you is they didn’t start there. People start and build up. And it reminds me, if you look actually over my shoulder here, right there, I’ll probably show you this. If you look over my shoulder, you know what we see? We see the Donald Trump buildings. And let’s just back up here. I’ll show you. Those buildings back there are the Donald Trump buildings that are on the Upper West Side in Manhattan. And Donald Trump did not start building 50-story buildings on the Upper West Side of Manhattan along the Hudson River. That’s not how he started. He started with one apartment building and a dad who had done some real estate investing and he started with big dreams.
So the question is how did he get from small apartment building to that empire? And by the way, those buildings are worth, at a minimum, a couple hundred million dollars each, and he’s got like 10 of them standing behind me. Anyways, the question is how do you get from where you are today to maybe doing single-family houses or maybe even just thinking about single-family houses to going big. Well, here’s the way that it starts.
Number one, you start out and you document all of your success along the way. This means that you keep copies of your settlement sheets. You keep copies of your deeds. You keep copies of the checks that you received. You document everything nice and neatly so that as you go along, and you say to someone, “Yeah I’ve done lots of deals,” and someone says, “Well, tell me about the deals you’ve done,” you’ve got a three-ring binder ready to go with all the documentation including pictures, settlement sheets and everything else that you can actually show and document your success very easily. That makes you look organized and also makes people understand that you’re truly a real businessperson and you’re not just some five-minute flake.
So you do that and you’re going to find that with each success is going to build upon. So make sure you very carefully select your deals. That’s the second thing. The most successful investors are very careful. They market to get a lot of sellers to talk to. Then, they pick their deals carefully. They don’t do mediocre deals because when you say yes to a deal, it means two things. Number one, it means that you have to do work to bring that deal to fruition. The work that you’re doing there is going to prevent you from finding other deals. It’s going to cause what’s called opportunity costs. Meaning you choose to do A, that means you’re not going to do B. So, make sure that you choose carefully. And if the deal is not right, if it’s not a good deal, just move on. Don’t do that deal. Do something else.
The second thing that means when you pick a deal is that you’re in. You buy that property and if you paid too much or otherwise made a bad deal, picked the wrong property, well, you may not make any money in the end. I’ve had people, especially newer investors, they get kind of locked in. They’ll say, “Well, I’ve got to do a deal and I just haven’t been able to find anything so I’m going to do this one.” A deal is only a deal if you’re paying the right price. If it’s too expensive or if it’s not the right deal, skip it. Just skip it and spend your time that you would have wasted on that profitless deal to finding your next deal and doing it that way.
When you do that, you’re going to be a strong businessperson because you know when to say know and you walk away. And strong businesspeople walk away from bad deals. And you’re going to be a strong businessperson, right? Yes. Say yes. “Yes, I’m going to be a strong businessperson.” So as you build up your track record and success, what you’re going to find is people that have money to invest are going to want to back you. And they’re going to say, “Hey, can I get in on these deals?” And as time goes by, you’re going to have more people that are going to want to put money on your deals, number one. And number two, you’ll be able to retain more of the deal for yourself and get money less and less expensively as you have your track record of success.
And you can build your track record of success to whatever you want. Honestly, it can be that, what’s standing behind me, or it can just be five triplexes in your town that will help you retire with a good amount of savings. It can be whatever you define it to be, but those things are the important things. Number one, select your deals carefully. Number two, document your deals so you can document your success. And number three, pick your deals. Pick your deals so that you’re doing only the winners and that way, you build up your team of investors, meaning cash people behind you and the better that you do, the better terms that you’re going to get on cash. So that’s the tip and that’s how people go big.
This is Bob Diamond, attorney and investor. I hope you take this advice in counsel and you go out and you make your dreams come true.
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