So many people ask me how to become a real estate investor. It’s a common question because it’s sort of hard to find a detailed answer. Well… today’s post fits the bill and approaches the answer to this question in the perfect way.
First, have you joined our private FlippingJunkie facebook group? Come network with us!
Recently, I did an interview where I was asked what I would do if I had to start all over again from scratch, without much money.
This is a very interesting question and one that most people answer with a lot of motivational hoopla about how they would be confident and persistent.
I agree with that, but I really got to thinking about how I would do things differently.
Instead of just saying that I would do more of what I did that worked well, I wanted to consider also what I might do that I didn’t do before.
Interesting…take the best of what I did that worked, but also some creative things that I hadn’t done but could do.
Not only did I want to consider what else would work, but what would accelerate the progress?
What would allow me to flip more houses, make more money and do it faster?
Hindsight being 20-20 and everything, I am able to see what worked and what didn’t.
I’m able to see where I wasted a lot of time and where I should have been spending more of my time.
I’m able to see exactly why my wife was so smart when she chided me for wasting so much time designing our business cards…
So what didn’t work well enough to do again?
Business cards didn’t work so hot. Neither did door hangers.
The 15 billboards worked to get name recognition and some deals but not really much else. The cost per lead and cost per deal ended up being too costly.
The car magnets didn’t do anything more than make me feel embarrassed everywhere I went for the month or so that I used them. I don’t recall getting a single call from those.
What did work that I would do more of?
I could say bandit signs. Those worked very well for so many years, but lately, just haven’t been pulling. I think maybe my area has become a little saturated and the city has definitely cracked down on them.
Anybody that’s read the blog for any length of time, knows that my house buying website DannyBuysHouses.com has generated most of my leads. This one is a no-brainer to continue.
Of course, being that I was starting over, it would have to start as being a brand new site and taking the time to get it to rank in the search engines would take several months. But, this would be very well worth it.
I’ve done well with targeted direct mail and would certainly mail to probate lists.
I’d skip the absentee owner lists as the competition locally for those has made them a lot less productive. I think a lot of new investors get burned out by trying to mail to absentee owners where there is a lot of competition.
Later in this post, I’m going to share with you my thoughts on how to better utilize direct mail.
Time is the one thing we can never get back. Making a crap ton of money won’t buy it back for you!
Wasting time on unproductive tasks is especially a problem when you are starting flipping houses part-time, as most people do.
You just don’t have the time to be doing things that don’t further your chances of getting awesome deals and making serious cash to create lasting momentum.
[tweetthis]Momentum is the key to starting flipping houses. You don’t start by moving a mountain, you start with baby steps.[/tweetthis]
But…. some people seem to start with leaps and bounds. How?
Doesn’t it seem like some people are able to do way more than we are able to? We all have the same 24 hours in the day, but some people seem to be able to accomplish twice as much.
I just finished a very good book by Gary Keller. He talks about how super successful people get more done. According to Gary, the secret is focus.
Well… not only focus, but priority. The reason why some people are able to achieve so much is because they focus their energy on the right things. This gets into Pareto’s principle, which states:
Roughly 80% of the effects come from 20% of the causes.
Put another way:
[tweetthis]20% of the things we do, produce 80% of our progress.[/tweetthis]
This is the secret!
We simply need to determine the shortest possible course to success and focus like we’re an OCD-psycho, hell-bent on reaching our goal.
Like I said, I don’t want to just throw out some motivational, pep-talk…so, let’s get to the meat and potatoes.
I would focus on bird-dogging and wholesaling houses to start.
This is because I am assuming I am starting flipping houses with little money and not much time.
Birddogging leads and wholesaling deals will allow me to generate money faster, with a hell of a lot less risk. This would allow me to build momentum much faster so that I could go full-time… if I was starting part-time (which most people do).
So, what exactly would the 20% that would produce the 80% of results in getting started and succeeding at flipping houses (starting with bird-dogging and wholesaling) consist of?
Number one would be building relationships with the right people:
Step 1: Find the most successful active real estate investors in the area.
This can be accomplished pretty easily by:
Step 2: Get in touch with the top 3-5 investors in town
Here are some tips on this step:
Step 3: Find deals that meet their criteria
Here’s the fun part. Get out there and find the deals that the top investors would kill for. Let’s take a look at what the 20% top approaches would be for doing this quickly without much money look like, in my opinion:
Direct mail to focused lists with the mail pieces focusing on specific problems.
In my quest to accomplish as much as possible in the shortest amount of time, in order to build momentum, I would constantly be thinking about systems and working to get time-sink tasks removed from my daily to-do list.
There are a million-and-one time killing tasks house flippers end up doing. They only need to be doing a handful of them. This is where systems come into play.
Document EVERYTHING you do
If you document all of the tasks you do, you give yourself a huge leg up over your competition…and this helps to keep your motivation and excitement up.
Believe me when I say, stuffing envelopes and handwriting addresses on the outside will drain your will power very quickly. Going to Home Depot 5 times a day will make you want to drive off a cliff.
Optimize for efficiency
By documenting your daily tasks, you create a way to optimize for efficiency. You will have a written guide for when you do a particular task that you can refer to and improve as you find ways to improve the process.
Then, after you’ve done some wholesale deals, you can afford to bring on some help. This is where it gets really cool.
Have someone else do the tasks you shouldn’t be doing
You will have already documented and improved the efficiency of your tasks and so training is super simple. All you have to do is hand them a binder with the documented processes!
Make rules regarding needing your approval before updating the processes and make it very clear that the processes are to be followed strictly.
Now that you have someone else to do the time-killing tasks, focus on the tasks that produce the most….like getting out there and making offers!
You will now be in a much better position to give that call from a motivated seller that found your website the attention it truly deserves. You won’t be thinking about how you need to get off the phone to finish stuffing that stack of letters to probate leads.
[tweetthis]It’s not that people don’t want to be productive, it’s that they are afraid to get out of their comfort zone.[/tweetthis]
Most of the 20% of things you can do that will produce 80% of the results, will most likely require you to get out of your comfort zone.
I really feel that this is one of the absolute biggest reasons most new investors don’t get very far and give up.
Getting yourself out of your daily routine to make a point to contact the TOP people flipping houses in town is probably going to produce a high level of anxiety. Accept that and do it anyway!
Yeah, you will probably look like an idiot during most of those first phone calls. But who cares, besides you?
I know I looked like an idiot… but it helps me to grow and improve each time. It’s the only way.
So, if I was starting out all over again (without much money, without much time, without any contacts in the business), I would do the things outlined above as the 20% of actions that will produce 80% of my results. Doing those things will create anxiety, but I know that by doing them anyway, I will climb the ranks of successful house flippers very quickly.
Then, people will be seeking me out as someone they want to find deals for and then things grow exponentially.
How would you like to get your hands on my exact process for keeping track of my daily and future tasks, prioritizing them so that I focus on the 20% and easily keep track of what I’ve already done?
You can. I made a FREE report that outlines my process and the FREE website I use to do it with that I can access from my phone:
Be sure to take advantage of the free bonus guide above!
If you have anything to share that would help people skip over wasteful tasks while getting started flipping houses, please share in the FlippingJunkie group on Facebook. I look forward to reading your suggestions and I know a lot of other members will be very grateful for anything that helps them progress faster. Thanks for visiting FlippingJunkie.com!
Next: 206: Taking Massive Action
Great article Danny! I haven’t ready that Gary Keller book, but The 4 Hour Work Week goes over the same 80/20 rule. It’s hard to make habit, but a very important rule to follow!
Thanks. The 4 Hour Work Week is also an excellent book. Thanks for reminding me. I need to read that one again. 🙂
Good info. Especially helpful for a new investor like me, and in your market. Hopefully I can be helpful someday for you!
Glad you found value in the article.
“Hopefully I can be helpful someday for you!” Find me some deals and I’ll gladly pay you for them! 🙂
Been looking… as you’ve probably noticed over the past year there’s been a ton of competition around here, not sure how you do it 😉
You care for deals only in your area? Once in a while I have them and last one my own agent got under contract since he is a big time investor as well as a broker. Please, let me know.
I will look at leads for other areas. If I’m not interested, I could probably help find someone that is. 🙂
Should I send you the lead in “reply” mode or otherwise?
Also just checked your “secret weapon” that helps you to stay focused on 20% of the tasks making 80% of them done for you and wish to try it. My poor organization really dragging me back from achieving goals I wish to accomplish.
You can send me an email with them. Thanks.
Good stuff! Staying focused is definitely key, but can be really hard to do. The thing that is hardest in the beginning is determining the avenue that produces the best results. It seems like there are so many potential ways to go after deals and some of determining what works is experimenting. Your tips on actions that produce the best results for you are good and help provide a clearer path toward getting results sooner rather than burning time on ‘time wasters’. Thanks for the great info!
The tips are good and they don’t have to be the only things to do, like you suggested. They are more of a way of thinking so that you focus on improving your deal finding. Guess it always sounds easier in theory, but definitely worth trying to do.
Nice Article – I recently read The One Thing – Great Read – because of it I now use ‘chrome nanny’ to stop my habitual Facebook checking 😉
I go through periods where I try to not check email except for 2 times a day. That lasts for about 2 days…
Man what a great post! Whew where to start on ideas. I’d say do things that last the longest. For example I’ve tried everything in marketing and the things that stick the most work the best. Bandit signs ARE a great tool. Especially if you can stick them high where people can’t easily reach them. Because now your money is working hard for you for a few days at a time. Something you did ONCE working over and over. Same with wearing a custom t shirt. Wear that t shirt EVERY DAY if you only can afford one or until it gets stinky then wash it. lol but who cares we’re talking about changing your life here! A website is another great idea especially with all the free ad websites. You do it ONCE and it works hard for you over and over again. 🙂
Great ideas, Adam.
I need more t-shirts.
Thanks Danny! This is an awesome write up. I’m saving the link to this one, so I can refer back to it.
Great idea, Josh.
Great post. If we could just focus on the 20% and eliminate or outsource the other 80% we would be 500% more productive. Who wouldn’t want a 500% raise.
Awesome way to look at it!
I’m in the process of making custom hats. You can wear them every day and you don’t have to wash them……as much.
I like that idea. Then I wouldn’t have to get my hair cut as often and would save even more time. 🙂
Hey Danny, you just mentioned Probates. That too is a hottly mailed area, especially agents. I’ve never figured out how to compete against an agent.
What other lead areas / tactics can you share?
I agree that absentee is toast. Just wasting money. My own mail box is full of postcards and so must the folks I’m mailing.,
Good to see you on Flipping Junkie.
I think probates like many other direct mail sources can still work well, but there needs to be fine tuning. Yes, a lot of people might be mailing to some of these lists, but I’d bet the vast majority only send one letter or one postcard. What if you send a series that makes them think of you as soon as they decide to sell instead of the other guys that are all a blur.
In addition to that, most buy their list from a source that is selling them to a ton of other people. Usually these lists are not as accurate as can be as they might contain probate cases where there is no real property. Sometimes taking the extra effort or cost to have someone do your case pulling is worth it.
Here is a list of 57 motivated seller marketing ideas (none are expanded upon, just listed): http://flippingjunkie.com/2012/57-motivated-seller-marketing-ideas
Thanks for the great post! I’m especially loving the “Document EVERYTHING you do” – it’s so easy to get lost if you don’t!
The majority of REI articles/posts usually use the theme of, “This is because I am assuming I am starting flipping houses with little money and not much time.” That makes sense as that is again the majority. I would love to see a post that talks about, “This is because I am assuming I am starting flipping houses with a lot of money and a lot of time”.
Great idea, Ralph.
I will probably do a post like this soon.
Danny, I’ve been listening to you on a lot of podcasts lately. I’m in the process of moving to SA in the next couple of months to follow in your footsteps! Is there a direct email to keep in touch with you for future advice? Thanks in advance
Welcome to San Antonio.
Danny, do you recommend getting a hard money loan here in San Antonio for the house and repairs? Seems like a good way to start flipping if you don’t have the funds right away.
I do recommend it, but only if the loan costs don’t eat up too much of the profit. I would look for hard money that has at least 12 months with possibility of extending the loan, under 15% interest and no more than 1 point.
Thank you for your help! Its been my dream for years to flip houses. Now that my job in the oilfield could be at risk, I think now is a great time to start and stop thinking and just do it.
Can you please recommend a hard money lender here in San Antonio. All the reviews I see on the internet and biggerpockets.com are negative. This would help me out so much!
Great article and great website! I’m learning a ton of info! One question I have is how do you figure out comps here in Texas? Since it is a non-disclosure state. Zillow and Trulia don’t have the info. I don’t have MLS access. What would you recommend? Is there a formula you use?
Great question, Anthony.
Some investors look at what is for sale (Realtor.com) and just take a little off the price as most houses sell for a little less than they are asking. Others add a certain percentage to the county appraisal value (usually about 10%). Granted these are definitely not very good ways to determine value but can get you in the ball park.
The key is to build a relationship with an agent. Have them run comps for you. Easier said than done, but it’s what most investors do.
Amazing article, Danny. It alwys annoys me when I see a business spend their entire budget on leaflets and door hangers and call it a day.
GREAT article Danny!! I’m just learning and I want to get int rehabbing, but need more finances. Wholesaling seems to be a great way to get started. Planning to attend my first local REIA meeting very soon.
Great to hear you are starting to take action.
Comfort zone thing is very important. Being able to do stuff you don’t feel good doing, is the key for success.
Great article Danny – thanks for posting. I’ve read 4 Hour Work Week and the Keller book and found them both helpful. Keep up the good work!
Great Article…gives new investors an insight on an experienced person and mistakes that can be made…
Great post and lots of good stuff to think about. I saw a few other posts on the 4 hour week week, great book…pretty much anything from Tim is great. Great post and a good read for anyone starting out for sure.
Thanks, David. Glad you enjoyed it.
I have been building up the courage to finally take on my first flip. With a little pushing feom my wife of course. I have found a house that fits into the criteria that you have mentioned (65% of afv – rehab costs) but how do you know when a house needs to much work? How do you know when to walk away?
I actually go on 70% of ARV minus repairs now that the market has heated up again. The house needs to much work when the cost of repairs costs more than what is owed on the house. If the owner owes 10k and repairs cost 50k and the ARV is 100k. You can offer 20k.
Great post. Very helpful. I’m a few years behind so all help to get ahead is greatly appreciated. Just bought five houses in Florida using some of your strategies. Efficiency is everything. 80/20 is everything!
Great to hear, Lars!
Keep in touch.
great stuff. im a new investor and im starting off by wholesaling. i have a long road ahead but your blog makes it understandable and seemingly fun.
I’m really thinking about getting into the flipping business. After reading this I’m going to do it. This article was a great insight into business. Thank you!
Great article. It’s interesting that much of your “brick-and-mortar” advertising (business cards, postcards, billboards) were some of the least effective methods of advertising. So many agents assume the market behaves like it did decades ago. You’ve proven that not to be the case.
Thanks for sharing. In addition, when purchasing a house that you plan to rent out or whatsoever, be sure you know all of the local laws relating to rental properties. For example, you may need a minimum size for a room to count as a bedroom, or you may be required to provide a certain amount of parking.
The Book the One Thing changed my life and my focus.
Man I wish I had this info years ago. Thank you.
Has anybody flipped in WA state? seems like the flippers are getting the houses before we can. makes it hard to get started. any suggestions?
REad this blog post a lot when starting out. Well, it was after I was a year into wholesaling. Great article just to teach yourself to think about what you’d do differently if you started over at any point in your career.
Glad to hear it, Tyler.