Steve Rozenberg goes over valuable lessons he’s learned so that you don’t have to make the same mistakes.
Steve emphasizes how important it is to know the laws, have policies and procedures in place, and how crucial it is to have a vision and strategize to achieve your goals.
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.
Steve: Hi, this is Steve Rosenberg. I am the co-founder of Empire Industries Property Management Company located down in Houston, Texas. We currently manage about 500 single-family houses all over the Houston area. Today, what we’re going to talk about is not making the same mistakes and advice for new investors.
Mike: This show is sponsored by PassiveRental.com.
Steve: I get a lot of people that always ask me, “What should I do? What should I not do?” and to me, this really touches inside of me because when I was learning to become an investor and I first started, nobody every showed me or helped me how to avoid making mistakes. And because of that, I made a lot of mistakes. Now, I learned a lot of lessons and a lot of things that I think made me successful to who I am today because I fell down a lot but I got back up and I kept learning. And to me, if I can help somebody avoid those mistakes that I made and that I know other people make, I think it’s very helpful.
So one of the biggest things that I would say when you’re first getting into investing is you need to have the correct mindset. And no one ever explained that to me and I don’t think a lot of people understand what that means. And what I mean by correct mindset is, when you own a rental property you need to realize that that is a business. And you need to change your mindset from being a landlord to being a business owner. And that business owner owns a business that has a rental property.
And that is a huge paradigm shift for people to do. And what I mean by that is you have to realize where is your time better spent. A lot of people, the one thing that they do not value and they do not protect is their time. And they allow their time to be wasted or they waste their time by doing things that are not as productive and don’t make them as much money. Such as going to Home Depot and price checking paint SKUs when you could easily hire someone to do that and you can go do something else, whether it’s productive where you are spending time with your family, spending time on your career, or going and looking out for better deals.
So you need to understand that when you own a business as a property owner, you have a business. And what that means is you have profit, you have loss, you have income, you have expenses, and most importantly, you have laws that you have to abide by. And you have to understand those laws because you are going to be held accountable for those laws. And you want to make sure that you know them. And anyone that gets involved in any business, whether it’s landlording or making a vehicle, there are laws associated with everything.
And a lot of people just think they’re going to get in, be a landlord, and everything’s going to be fine. And they never look at the downside. They never look at the worst-case scenario because they never plan. They don’t have a business plan and they don’t have the mindset to do that.
So my goal is to help people understand before they even get involved in investing that they need to look at it like a business. In my opinion, when people invest in real estate, the investment in real estate is really a vehicle to get you something down the road, whether it’s cash flow, whether it’s a return for your retirement, your safety blanket, whatever it is, it’s just a vehicle. And that vehicle could be a stock market; it could be anything. The vehicle just gets you to the goal. And a lot of people don’t realize. They fall in love with the vehicle. And the vehicle can be interchanged out, it can be bought, it can be sold if it’s not performing the way your business plan reflects.
So having the mindset is the fundamental thing that you really need to do because you start looking at things objectively. You look at deals based on numbers, not based on emotions because you live down the street. If it doesn’t financially make sense, you don’t buy it. If you own a property and it’s not working out financially, then you consider selling it.
The next thing I would say, when it comes to being a new investor, when you start off, is you have to have policies and procedures and you have to have structure. Again, this was something that I did not have. We owned about 35 houses. We had a 30% eviction rate, and a tenancy average of about eight months. Why? Because we didn’t treat it like a business and we had no policies and procedures.
Now, we run 500 houses with a 1% eviction rate because we run it like a business and we have policies and procedures. So you want to make sure that you have these policies and procedures not only in place but written down and followed. Even if it’s on a piece of paper and it’s just you, the investor, it’s very important to have those and you follow them.
One last thing I will say is, a lot of investors are basically considered entrepreneurs. And one thing to think about is the reason why most entrepreneurs fail is not because they don’t have the heart, and they don’t have the drive, and they’re not willing to work 30 hours a day if they had to, it’s because they have no vision and they don’t have a business plan, they don’t have goals. They just kind of ready, shoot, aim. And they don’ t think about everything that needs to go into running that business.
So I think that’s the reason a lot of entrepreneurs fail is lack of vision. It’s not lack of hard work; it’s not lack of drive. We all know we’re willing to do it and we’re willing to roll up our sleeves. It’s because you don’t have that plan, you don’t take the time to pre-plan the game before you get into the game, if that makes sense.
So my advice is to treat it like a business. Have a plan, have a policy, have a procedure. Come up with what your goal is going to be and then you have a strategy to get to that goal. Again, this is Steve Rosenberg with Empire Industries Property Management in Houston, Texas. Thank you.
Mike: PassiveRental.com is your source for turnkey done-for-you rental properties. If you’d like to be an investor and not a landlord, please visit PassiveRental.com to learn how to purchase cash flowing, professionally managed rental properties in the hottest rental markets across the country. We can also help connect you with financing for your next property. Invest the easy way today and get started by visiting PassiveRental.com.
Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers, or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.
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