1 Year Later, A Reflection

It’s been one year since I started my real estate investing journey full-time. This is intended to be a reflection of my failures and accomplishments, my lessons and hardships, and how I plan to overcome obstacles and progress from here. The jump from college student to agent and college student to full-time investor was quite the rollercoaster over the last 3 or so years. I’ve won and lost many times (more so lost so far this early in the game). However, in retrospect of this last year, I have a lot to be grateful for. I’ve done things few others would even try to do. I’ve struggled so mightily beyond what I ever could have expected, yet I’m still here pushing forward. These are things to be proud of. Although it often feels bleak and hopeless, my gift and curse to never throw in the towel continues to rear its head. Here is what my journey has looked like over the last year.

The decision

Just over a year ago I was cashing checks as an agent with a partner I had at the time. I had just cashed the biggest check I’d ever received, $8,500, for selling a house on the shore of my hometown, Massapequa NY. I had been investing a lot of my money blindly back into the business for things I didn’t really need such as paid leads. In retrospect, that was definitely a mistake. Never throw money at things you don’t really understand or need. I always wanted to invest in real estate, but I found that most of my day was spent either in class or cold calling for listings. Long story short, I discovered an amazing real estate investor named Pace Morby on a podcast called BiggerPockets teaching the viewers how to invest with little to no money out of pocket. He talked about subject to and seller finance and how he is able to buy deals using none of his own money. I had never heard of these strategies before and it enthralled me to learn more. I began moving more towards taking the leap into investing until one day after my partner at the time and I parted ways, I cashed my last commission check and walked away from being an agent. I was going to become a full-time real estate investor.

Lessons learned:

1. Never put money into something you don’t understand.
2. Be careful who you partner with and be very picky.
3. Never stop learning.

The beginning

In the beginning, I didn’t know where to start. I joined a different real estate brokerage and learned about a method of getting into real estate investing called wholesaling. Basically, this method would teach me how to find deals and I would make money by putting them under contract and selling the rights to the contract to other investors. At my new brokerage which at that time was Keller Williams, I had a mentor that coached me through my daily schedule and made sure I was on a routine. I drove around my town looking for properties that could become a good flip, I looked on my MLS for leads that could work as a flip, and I did some outreach on Facebook to people looking for leads day after day. This was a very lonely and scary time for me. I had no income coming in, no guarantee of any income, and I had jumped in full-time to try and make something happen. I was reading books and watching videos from BiggerPockets and the real estate investor that had inspired me in the first place, Pace Morby. Pace had a community called Subto that I wanted so desperately to join. It was $8,000 and I didn’t have that type of money, but I eventually did it because I felt as though I needed to in order to gain some traction with like-minded people. This was a good idea. Being in a community of people who you can lean on and have similar goals and ambitions to you can make your business take off even if it doesn’t happen immediately. At this point I was well on my way to my goal.

Lessons learned:

1. Community is the key ingredient to success.
2. You need to find ways to gain traction.
3. No result comes without consistent action.
4. No worthwhile goal is achieved without some level of risk.

Cortland, New York

At this time, I was teetering with the idea of buying student housing in my old college town of Cortland, New York. I went up to Cortland with a friend who eventually became my partner to see a couple of houses. We ended up putting an offer in on a property. The idea was he would bring the down payment and closing costs. We would do a little bit of work to the property and rent it out to college kids. After the work was done, we would cash out refi as much of our money out as we could. Our offer got rejected and this really hurt me at the time. I was ready to go all-in on this market. Suddenly, a prominent investor in the area put their entire portfolio on the market. This excited me and I wanted to jump into it, but this was a $4.5 million dollar ask for an asset. I had never seen that kind of money before. How could I possibly do this? I asked myself. I searched for answers to this question through the Subto group I had joined and found someone who helped me put together a method that we could use with no money down. We were able to get the deal under contract for $4.25 million dollars! This was such an amazing boost for me and I finally felt like my work was starting to pay off. I even got another deal that was 7 units under contract for $975,000 a month or so later. I was on the moon! I was going to be rich and it was going to be easy! Not so fast…

Lessons learned:

1. Community over everything when in need.
2. Don’t say you can’t do something, ask how it can be done.

The Cortland Low

After struggling with the deals trying to piece everything together with no experience or any idea what I was doing, I managed to get a lender on board to finance a portion of the deals. After inspections for the $4.25 million dollar deal I was in awe of how terrible the condition was. It ended up being north of $400,000 of work that needed to be done at the time (probably more now). The unit occupancy was also 10% lower than we were told upfront. All of this caused us to  back out of the deal and I was crushed. 3 months and a lot of time and money spent on this deal for nothing to come out of it. Looks like I wasn’t going to be rich quick after all.

Lessons learned:

1. There is no get rich quick, only get rich slow.
2. It’s okay to make mistakes, as long as you learn from them and don’t continue to make the same ones
3. Understand what you’re investing in, what to look out for, and what the process looks like.
4. You don’t need to hit a home run in the first inning to win the game. **

The beginning of GVI

During this time, I got together with two partners and launched a wholesaling company to do business in Florida. One of the partners lived in the area we wanted to do business in. The three of us opened a bank account and hired a virtual assistant from Pace Morby’s company, Start Virtual, to cold call for us. Day after day we got leads. The first week in business, we got a deal under contract! This was going to be easy, we thought! 1 deal in 1 week, we’re going to make millions! Not so fast. It took us months of pushing the deal to buyers for us to gain any traction. We pushed it everywhere to everyone. We recruited help from the Subto community and I met two future partners this way that are absolutely amazing at what they do. All of this was happening while we spent a fortune on this virtual assistant to not get any good leads. We were running on a hamster wheel trying to catch our breath. Eventually we ended up selling the wholesale deal for a fraction of what we thought we’d get. We fired our virtual assistant and started focusing on larger assets with a small team we assembled from closing the nightmare wholesale deal.

Lessons learned:

1. Nothing is as easy as it seems.
2. Spending money doesn’t guarantee success.
3. Tracking progress and KPIs are vital to healthy business.
4. Momentum and traction ebbs and flows. You need to continuously innovate to keep gaining traction.

GPGVI

After we closed our first wholesale deal we got big fast and started chasing big assets with our no money down strategy from Cortland. We got another Cortland deal under contract and recruited the help of our two new partners from Subto to close it. We created some systems and spreadsheets to underwrite deals and track our progress. These systems were quite rudimentary and didn’t keep us organized well. All over the country we were looking for deals. We got an 18 unit deal under contract in Victoria County, Texas, and a 15 unit package in Ticonderoga, New York. In addition, we closed on a subject to deal that was a single family property in Iowa. We were on the moon and thrilled with our progress. Then, the sky came falling and the rainbows turned into thunderstorms. Issue after issue after issue. We spent tens of thousands of dollars to make repairs to properties to satisfy the bank, order appraisals., pay for legal fees, etc, and we just couldn’t find a way to close. We had gotten in over our heads and it was taking a huge amount of time and energy to sort everything out and make sure we could close and regain our money. Some of this is ongoing now and we are hoping to stop the bleeding and put an end to it very soon. I will update this blog as soon as something happens in regard to these deals. I’ve learned several lessons from these endeavors specifically which I will carry with me for the rest of my time in real estate.

Lessons learned:

1. Just because it seems great doesn’t mean it is.
2. Be mindful of working with different institutions during times of market uncertainty.
3. It matters where you do business.
4. Do your research before getting into a deal and ask for several people’s opinions beforehand.
5. Have better systems and processes to tackle what you can handle.
6. If a deal is going to consume your entire life after it’s under contract, don’t do it.
7. It matters who you work with.
8. Don’t let emotions and personal feelings get in the way of savvy business.
9. Continue to fine-tune systems and make sure everyone’s roles are crystal clear.
10. Everyone shouldn’t be doing everything.

 

Where does this lead me from here

From here, I’m pretty clear on where I’m going, what’s gone wrong, how to do better, how to stay organized and flourish in my role, and who I work well with as partners. I have learned so many difficult lessons over the last year. I’ve made no money investing so far although I’ve done a wholesale deal and I own a house in Iowa I bought using creative finance. I am hoping to close out the deals I have under contract and move into the next phase of my business and life. As grateful as I am for my failures and lessons over the last year, it does take a lot out of you when you feel like you aren’t getting a return on your time. I know how hard I work and I know that being consistent and constantly optimizing will get me to where I need to be. Here are some of my final takeaways and lessons from my first year in real estate:

1. Being your own boss is extremely difficult. I didn’t want to work a 9-5 and now I work 60-80 hours a week with no immediate monetary reward. It is exhausting and it isn’t for everyone. Know this and understand this from day one to set expectations if you want to go this route.
2. Be careful who you work with. Some partnerships will unfortunately just not be the right fit. Make sure you vet as much as possible before getting into business with someone. Business is a marriage.
3. Understand what you’re investing in or buying. If you don’t you’ll waste a lot of time and money.
4. Community is everything. In order to be successful, you need to surround yourself with who you want to become. This is so important, I paid $8,000 for it (even though you don’t necessarily have to do what I did LOL)!
5. Systems or the lack thereof will make or break your business. Everyone needs to have clarity on what they’re doing everyday and no one should be doing everything. A clear system, even if it’s a simple one, is absolutely vital to success.