How To Become A Real Estate Mogul (Stage 3)
How To Become A Real Estate Mogul (Stage 3)
Well... are you feeling like a real estate mogul yet? In my last two blog posts I covered the first 2 stages of becoming a real estate mogul so if your just seeing this series for the first time (or need a quick review) visit these links:
In today's blog post we will continue talking about the evolution most real estate investors have to go through to reach mogul status. Turning your real estate investing "hobby" into a fully automated 7 figure a year income is easier than you think... as long as you follow my road map. The real estate investing business is not easy... but it can be simple as long as you don't try and "wing it". Instead, follow the path many have blazed before you and utilize proven business and marketing systems to catapult your success and help you achieve your dreams.
Stage #3 - Doing Fewer, BIGGER, Better Real Estate Deals
By the time you reach Stage 3 your wholesaling business is systematized and you have begun to outsource certain tasks to virtual assistants, interns, or in-office employees. Your power team is fully trained and supporting your business goals and most importantly, your offline marketing (direct mail, bandit signs, craigslist ads, bird dogs, etc.) is focused and you have branded yourself as the local area real estate expert online. As you begin to consistently close multiple wholesale deals each month, now it is time to begin your transition from "wholesaler to rehabber", or "wholesaler to buy-n-hold investor" by cherry picking out the best deals you come across. Funding your "rehabs" or "keepers" can be done in one of three ways:
- Save The Profits From Your Wholesale Flips And Pay Cash.
- Leverage Your Profits From Your Wholesale Flips To Get A Hard Money Loan.
- Use The Credibility From Your Wholesale Flips To Bring On A Partner Or Private Lender.
SPECIAL SIDE NOTE #1 - Keep a "deal journal" of all the deals you have completed as well as clean profit and loss records. This way when you go to raise private money or take on a partner you are prepared and organized.
SPECIAL SIDE NOTE #2 - Raising private money is easier than you think as long as you have built your investing business using proven systems and spent the proper time branding yourself in your local market. People with "lazy money" will find comfort in your professionalism and credibility because you are showing them that you not just "winging it". You have a plan, a system, and a real business which helps them justify investing with you.
Wholesaling Real Estate Is Not Really Investing
In a moment I am going to share an example with you to show you why you want to graduate from strictly being a wholesaler to being a well-rounded investor. But first, I want to make a quick point. Wholesaling real estate is not really investing. The definition of real estate investing is the "purchase, ownership, management, rental, or sale of real estate for profit". And while technically, the "double close" method of wholesaling real estate does allow you to get your name on the deed (even if it is for a brief moment), wholesaling is more about control that ownership. It's hard to say your an investor when you only wholesale and you NEVER take on any risk (other than your reputation and whatever small amount of earnest money you put up).
So you may be asking yourself... BUT CODY... WHY DID YOU START OFF BY TELLING ME THAT IF I WANT TO BECOME A REAL ESTATE MOGUL, THAT I NEED TO LEARN HOW TO WHOLESALE REAL ESTATE?
Well... because the skills you will learn by being a wholesaler are invaluable for helping you evolve into a versatile real estate investor (which is why I always suggest that new investors start with wholesaling first).
And having mad skills is great and all... but let's be honest with each other... why make $5,000, $10,000, or maybe even $15,000 on a wholesale deal when you could make $40,000, $50,000, $60,000 or more on that same deal if you simply take the time to rehab and retail the property?
Rehabbing Deals For BIGGER Paydays And Transitioning Into Becoming A Real Estate Mogul
Now I want to share a quick example of a property that I was about to wholesale for a quick $13,000 profit, but instead decided to rehab which in the end produced a HUGE $57,783.91 profit. The reason I am going to show you this is not to brag... but to enlighten your understanding and show you how to invest in real estate the right way, and detail out the path towards becoming a real estate mogul.
915 W. Wilow Ave Phoenix, AZ
Purchased At Foreclosure Auction For: $159,200
Back Taxes Owed: 1,333.52
Rehab Cost: $ 19,788 (New Kitchen, Bathrooms, Tile, Interior and Exterior Paint, Light Fixtures, and Front Yard Landscaping)
Sold For: $240,00 CA$H
Total Time: 5 Months
When I purchased this property I had a local cash buyer lined up that wanted to buy it from me for $172,200 and he would pay the back taxes and all closing costs. It was a very enticing offer and would have put a nice chunk of change in my pocket and allowed me to focus on finding my next deal. But I knew I was leaving a huge amount of money on the table so I cherry picked out this deal and began the rehab. I used a local general contractor that I met down at my local Real Estate Investors Association meeting and paid him 1/3 upfront to get the materials, 1/3 half way through the rehab, and the final 1/3 once the project was completed and I did my final walk through. I had a bonus built in for him of $1000 if he completed the project on-time and on-budget once I sold the property. He did a great job on the rehab and yep... you guessed it... came in under budget, and a few days earlier than expected.
The greatest part of this deal is my general contractor did all the repairs, and my real estate agent brought me a buyer. And even though it took 5 months, I barely did any more work than when I wholesale, but I ended up making 4-5 times more money!!!
Making Money From Every Angle - Just Like A Real Estate Mogul
As you complete more and more deals, your ability to" Transactionally Engineer" deals will become second nature. Your ability to uncover hidden profit centers and maximize profits by deploying different investing techniques will also become second nature. Evolving from being a "quick turn" real estate investor, to being a "BADA$$ money making machine" is easy if you have the right mentor(s) showing you the fastest path towards "Mogul Enlightenment". In my next blog post I will show you how to reach the final stage (Stage 4 - Tax-Adverse, Passive Real Estate Investing) of becoming a real estate mogul and teach you how to transition from being an "active" real estate investor to becoming a "passive" real estate investor.