Real estate is an entrepreneurial business where almost everyone aspires to do their own deals. However, starting your own firm is incredibly challenging. When starting a real estate investment firm, aspiring entrepreneurs tend to rely heavily on their network for support, they’re reactive rather than proactive, and when they look back, there’s many things they would have done differently.
I created this guide to help you avoid the common mistakes, pitfalls, and growing pains that most real estate entrepreneurs experience when just starting out. This is by no means a road-map, but if you apply any of this advice, you’re better off than 99% of real estate entrepreneurs just starting out.
Here is a preview of what 20 successful real estate operators wish they knew when you were starting their firm. The advice contained within the guide is truly priceless and if applied to your business, will help you avoid many of the challenges entrepreneurs face when just starting out.
Sijit Sitole – Cambridge West Partners: “Don’t spend too much timing thinking about timing, which isn’t to say you can ever stop thinking about price and value, but ultimately “what inning” we’re in is less relevant, especially in the short term; and the short term is absolutely relevant when you are starting out. Don’t dwell on, “where in the cycle am I?” Ultimately that will not define you – your strategy, ability to identify value and risk, and execution will. You’ll never have so little “control” over timing as you do when you start. You want to be prepared when the market presents more opportunity, but when you’re starting out you have to do more than that. You have to look for value, dig deep for value-add, and identify risk; and when you see risk you can’t just price it or run from it – seek to actively and creatively mitigate it.”
Jeff Wainwright – West End Capital: “In the early stages, it’s easy for entrepreneurs to be consumed by the fun aspects of starting a new venture; the excitement of finding that first deal, the upside potential of the business model, anticipated growth plans, profits to be made, etc. However, it’s important to not lose sight of the risk part of the risk-reward equation. Spend some time with your team/partners analyzing what “holes” there are in your combined skill-sets and personality traits, the biggest potential risks to your business model, and what a downside scenario might look like. Once these issues/risks are identified, it’s a good idea to take it one step further and think through potential ways to mitigate these issues upfront, or how to best address them if they do arise in the future. In summary, focus on the downside first, and the upside will usually take care of itself!”
Brad Johnson – Park Street Partners: “Make more offers. The first six months I spent countless hours pouring over deal info, market data and excel spreadsheets before submitting an offer. I’d finally land on a price and send in an offer only to find the deal was already under contract or the seller changed his mind. A half-year of hard work led to bupkis. Silly me. New real estate entrepreneurs are especially susceptible to analysis paralysis. To prevent this, get very specific on what type of opportunities looking for, run a back of the envelope and pull the trigger. The best in the business are not obsessing over cash flow models; they’re doing deals.”
Arvind Chary – Atlas REP: “Take every meeting you can when with brokers, lenders and competitors. We met our first investors through an impromptu meeting with a sales broker and his HNW client who needed help underwriting a deal. Our first partnership was formed after meeting with a competitor of ours. Instead of bidding on deals against each other, we partnered together to buy the same deals. Most of our deal flow, partnerships and equity relationships have come through fortuitous meetings with the right people at the right time.”