Q&A #1 — Beginning in Real Estate

A few people have started sending me questions. I thought it may be best to share my responses with everyone. If you have any of your own questions, feel free to post them in the comments, and I promise to reply.

“What are your favorite 2–3 instructional books or resources on real estate investing? If someone had to teach himself, what would you suggest they use?”

1 — rich dad poor dad — kiyosaki
2 — cashflow quadrants — kiyosaki
3 — millionaire real estate investor — by gary keller

What are the biggest wastes of time when someone is starting out?

1. Not actually looking at deals in real life, in person, seeing the properties. Many newbies try to pencil everything out using spreadsheets, which is great, and is necessary, but then every single property is different, some have deferred maintenance, some do not, some have value adds, most people waste so much time actually penciling everything without going to look at anything in person.

2. Bay Area people thinking they don’t have enough to invest because it’s expensive where they live, when they could start out in another cheaper city. Live where you want to live, and invest where the numbers make sense. I lived in the bay area for 10 years, and bought property elsewhere.

3. Not talking to a bank and getting pre-qualified early on, so you know what you can afford and not. It doesn’t cost anything, bankers always have my information, I always know what I’m qualified for, and then when I find a deal I can close. People make mistakes falling in love with something and then doing it the other way around.

Who are the most impressive, lesser-known teachers in real estate investing? Who trained you or influenced you?

1. Robert kiyosaki
2. The real estate guys

Our family has been doing real estate for 100+ years. Picked it up from family, read a bunch of books, rich dad poor dad book changed my life. That was the start. I’ve generally created my own communities, first being an investment club in college where I taught people how to invest. I still do this today.

Fortunately, most real estate is pretty basic, it doesn’t change quickly like technology, and a few core good ideas and you’re on your way. You don’t need too many teachers to know most of what you need to know.

The real estate guys have a podcast, I followed them before it even existed, almost 10+ years ago.

Have you trained others to do this? Have they replicated your results?

1. Yes I do a lot of coaching, and am writing a book on investing in general.

2. No, it’s too long of a cycle. We make money actively on the internet, and invest into passive real estate investments which take a while to really gain wealth. Unfortunately, most people focus making money, those who have done it successfully, generally… end up losing their money because they don’t invest. They never learned the key principle from rich dad, what an asset vs. liability is, in the rich dad sense, bought liabilities and quickly lose everything. I’m 31 now, and many people I know who made it, lost it, and now are re-making it, are starting to realize after they lost everything to invest and start rebuilding and will invest and save, for that reasons, no not a lot of them, and they have a lot of limiting beliefs and trying to buy things in SF and California. Some of the most expensive markets in the world.

What are the biggest mistakes and myths that you see in real estate investing?

Myths…. That all real estate people have a lot of money. Some do, but it takes a long time. Most people’s properties are full of debt, and cashflow is generally pretty scarce, it takes a while to build up equity and have enough extra cashflow over debt service to make any real money. It’s faster to make money on internet. But the wealthiest families who know how to protect their money over generations, have put it into gold, art and real estate. Through wars and famine, they’ve been able to hold onto their wealth. Biggest mistakes is people not reading a single book about financial independence, or personal development in general after school, and fail to understand even the most basic of finance investing, compound interest and other variety of topics.

Disclosure: If you want to go “active” into real estate, you can build wealth fast. That will be any sort of active development, flipping, adding value/equity, syndicating deals and doing other things. That’s a business. If you want to be “passive” investing into real estate, you’ll generally get slower returns. The best is just to build an “active” business that spits out excess cashflow (real estate or the internet), and invest, invest and invest it into “passive” deals, and not needing any money from your investments to live.

Most people screw up their regular cashflow, and then sell all of their investments to cover their loses, and get out because they don’t plan their day to day living and reserves properly.

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PS: My goal is to create a simple investment book by the end of the year which I’ll share with everyone. If you would like updates on new blog posts, and the release of it. Please give me your email here, and I’ll add you to my list.