3 answers
John
Student
Miami Gardens, Florida
6
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what is the best way to get into real-estate?
#architect #business
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3 answers
Paul Nehrbass
Director
1
Answer
Austin, Texas
Updated
Paul’s Answer
Real Estate has a number of different paths. You need to determine which of these fits your interest and goal.
You can divide Real Estate into three specific paths.
1) Service (Agents and Bankers)
2) Investment
3) "Get Rich Quick Pipe Dreams" :).
In the service related Path, you provide a service that helps a property be purchased or sold. This includes Real Estate Agents, Mortgage Bankers, and Appraisers (as well as many others). In this path you typically receive a percentage of the sale to assist with selling it. For instance, a Real Estate Agent may receive 3% of the purchase price to sell the home, another 3% to purchase a home, or 6% if they do both. Mortgage bankers also receive a percentage of the mortgage price used to purchase the home (usually around 1.5% or less). This type of work typically requires some sort of certification (Real Estate or Mortgage Banker License) . There are also straight fees for service, such as appraisers (who also need to be certified), who are typically paid around $500 per house evaluated or so.
This type of involvement in Real Estate involves hard core hitting the pavement. No one is going to give you a house to sale, or ask you to find a house to purchase on your own. When you join these fields, YOU are the marketer. You spend your weekends doing open houses, and weekdays on the phone or social media to find new clients (Open houses are not for selling houses. They are for Real Estate agents to drum up business). As a banker you must find the people who want to purchase a house. Just like a Real Estate agent, if you are not comfortable feeling desperate to have every person who walks through work with you, this will likely not be the job for you (big exaggeration here...but you get the point, you heavily rely on others for your pay check). That being said, I have met people who so excel at making relationships that they can sell 40 houses in a year. To be somewhat successful in this area, you need to sell around 1 house per month. That means you need to find 12 people who trust you enough to buy or sell a home. It also means that you likely need to have new relationships with over 120 people a year (likely a lot more). Marketing is a huge part of this business. You have to be comfortable with using Social Media to drum up business and your reputation is everything. If you mess up a deal, everyone will know and you will loose your business and have to start over :(. This is very painful.
The Investment path is a little different. In Real Estate investment you are typically putting your own money at risk to purchase or sell a home. You need no license to do this, but typically need some cash to start. A good way to start with this is to purchase your first home using an FHA loan (3% to nothing down), fix the property up using your own money, and sell the property at a higher price then the cost it took to purchase and fix. This type of investment is called a live and flip, where you live in the property and pay the mortgage while you are in the house. Hopefully, the house you purchased increases in value and you have money from the sale to purchase your next live in flip. After a while, you can save up to purchase your first actual investment.
In order to purchase an investment property you will need at least 20% of the purchase price in cash. So, it takes awhile to save for one of these, but after you do a couple live and flips, you can us the money to purchase two homes, one a live and flip, the second your first investment property. Banks will loan you the money for the investment property, but you have to show that you have the income to support it, and the home you live in, so it get's tricky. That's why the live and flip works best short term.
I've known people who have started at 18 years old with a $35 K broken down condo t, and have lived and flipped a house every 2 years settle in a $1.5 million home on a hill by the time the reach 50. It takes dedication, smarts, the ability to save, and the understanding that, which each house, you save the profits. You don't spend the profits on a new car, or a vacation, cloths, going out to eat. Your goal is to take the funds form the value, and continue to invest in better houses that provide greater return. It also helps if you learn how to do the fix up work your self. Hiring contractors is HUGE expensive. Some of the most successful people I have seen do this do their own dry wall, painting, plumbing, electrical. If your purchase a house at the right price, you "may" be able to hire contractors to do the work, but it really eats into profits.
The last group is the "get rich quick"". You will find 1000's of seminars telling you how you can purchase a house with someone else's money. The truth is, everything these seminars is telling you is 100 percent true if not painted with pretty pictures. There are many different ways you can skim through the system and purchase a house with no money, using someone else's loan, etc. The problem is that EVERYONE knows about these mechanisms and EVERYONE is trying to get that 1 house in 10,0000 that this happens with. Taking one of these seminars at some time can be interesting, but realize that they are selling a dream, not a reality. (The seminars are rarely worth the price. Most of the seminars are set up so they can sell you the "upgraded strategy". "For an additional $1000 dollars you can have may recording on how to flip houses using short sale strategy". NEVER purchase the upgraded strategy......that is where the snake oils get their money. However, in these seminars you can pick up information on probate, short sales, and foreclosures. That information can be interesting. But very few people succeed using only these strategies.
I have over 30 years in Real Estate and the most successful people I know invest wisely, save their money, and stay consistent with their goals. Each house purchased and sold correctly, with the correct analysis, provides a little more to upgrade to the next investment.
In summary:
If you are good with people. Good with social media, and enjoy making relationship, and people generally find you very trustworth, the Real Estate Service industry may be for you. Realize it will take you 1 to 2 year to make any money and many more to make significant money. Selling 10 house worth $400,000 will net you around $133,000, but this is really really really hard to get to. It takes a lot of work.
If you are good with money, can live in a place that has roaches as neighbors, can save your money, and are comfortable doing a little elbow grease, the investment path may be for you.
If you love it all together, combine your Real Estate Agent experience with Investment, although that brings on a whole slew of other issues, legal and ethical, that you need to be concerned with.
Hope this helps.
You can divide Real Estate into three specific paths.
1) Service (Agents and Bankers)
2) Investment
3) "Get Rich Quick Pipe Dreams" :).
In the service related Path, you provide a service that helps a property be purchased or sold. This includes Real Estate Agents, Mortgage Bankers, and Appraisers (as well as many others). In this path you typically receive a percentage of the sale to assist with selling it. For instance, a Real Estate Agent may receive 3% of the purchase price to sell the home, another 3% to purchase a home, or 6% if they do both. Mortgage bankers also receive a percentage of the mortgage price used to purchase the home (usually around 1.5% or less). This type of work typically requires some sort of certification (Real Estate or Mortgage Banker License) . There are also straight fees for service, such as appraisers (who also need to be certified), who are typically paid around $500 per house evaluated or so.
This type of involvement in Real Estate involves hard core hitting the pavement. No one is going to give you a house to sale, or ask you to find a house to purchase on your own. When you join these fields, YOU are the marketer. You spend your weekends doing open houses, and weekdays on the phone or social media to find new clients (Open houses are not for selling houses. They are for Real Estate agents to drum up business). As a banker you must find the people who want to purchase a house. Just like a Real Estate agent, if you are not comfortable feeling desperate to have every person who walks through work with you, this will likely not be the job for you (big exaggeration here...but you get the point, you heavily rely on others for your pay check). That being said, I have met people who so excel at making relationships that they can sell 40 houses in a year. To be somewhat successful in this area, you need to sell around 1 house per month. That means you need to find 12 people who trust you enough to buy or sell a home. It also means that you likely need to have new relationships with over 120 people a year (likely a lot more). Marketing is a huge part of this business. You have to be comfortable with using Social Media to drum up business and your reputation is everything. If you mess up a deal, everyone will know and you will loose your business and have to start over :(. This is very painful.
The Investment path is a little different. In Real Estate investment you are typically putting your own money at risk to purchase or sell a home. You need no license to do this, but typically need some cash to start. A good way to start with this is to purchase your first home using an FHA loan (3% to nothing down), fix the property up using your own money, and sell the property at a higher price then the cost it took to purchase and fix. This type of investment is called a live and flip, where you live in the property and pay the mortgage while you are in the house. Hopefully, the house you purchased increases in value and you have money from the sale to purchase your next live in flip. After a while, you can save up to purchase your first actual investment.
In order to purchase an investment property you will need at least 20% of the purchase price in cash. So, it takes awhile to save for one of these, but after you do a couple live and flips, you can us the money to purchase two homes, one a live and flip, the second your first investment property. Banks will loan you the money for the investment property, but you have to show that you have the income to support it, and the home you live in, so it get's tricky. That's why the live and flip works best short term.
I've known people who have started at 18 years old with a $35 K broken down condo t, and have lived and flipped a house every 2 years settle in a $1.5 million home on a hill by the time the reach 50. It takes dedication, smarts, the ability to save, and the understanding that, which each house, you save the profits. You don't spend the profits on a new car, or a vacation, cloths, going out to eat. Your goal is to take the funds form the value, and continue to invest in better houses that provide greater return. It also helps if you learn how to do the fix up work your self. Hiring contractors is HUGE expensive. Some of the most successful people I have seen do this do their own dry wall, painting, plumbing, electrical. If your purchase a house at the right price, you "may" be able to hire contractors to do the work, but it really eats into profits.
The last group is the "get rich quick"". You will find 1000's of seminars telling you how you can purchase a house with someone else's money. The truth is, everything these seminars is telling you is 100 percent true if not painted with pretty pictures. There are many different ways you can skim through the system and purchase a house with no money, using someone else's loan, etc. The problem is that EVERYONE knows about these mechanisms and EVERYONE is trying to get that 1 house in 10,0000 that this happens with. Taking one of these seminars at some time can be interesting, but realize that they are selling a dream, not a reality. (The seminars are rarely worth the price. Most of the seminars are set up so they can sell you the "upgraded strategy". "For an additional $1000 dollars you can have may recording on how to flip houses using short sale strategy". NEVER purchase the upgraded strategy......that is where the snake oils get their money. However, in these seminars you can pick up information on probate, short sales, and foreclosures. That information can be interesting. But very few people succeed using only these strategies.
I have over 30 years in Real Estate and the most successful people I know invest wisely, save their money, and stay consistent with their goals. Each house purchased and sold correctly, with the correct analysis, provides a little more to upgrade to the next investment.
In summary:
If you are good with people. Good with social media, and enjoy making relationship, and people generally find you very trustworth, the Real Estate Service industry may be for you. Realize it will take you 1 to 2 year to make any money and many more to make significant money. Selling 10 house worth $400,000 will net you around $133,000, but this is really really really hard to get to. It takes a lot of work.
If you are good with money, can live in a place that has roaches as neighbors, can save your money, and are comfortable doing a little elbow grease, the investment path may be for you.
If you love it all together, combine your Real Estate Agent experience with Investment, although that brings on a whole slew of other issues, legal and ethical, that you need to be concerned with.
Hope this helps.
Awesome advice, Paul!
Kelly Albright
Danitra Cottrell
Relationship Specialist
20
Answers
Chesapeake, Virginia
Updated
Danitra’s Answer
If you happen to have friend or family member that is currently in real estate- reach out them to job shadowing opportunities
Kelly Albright
Operations
17
Answers
Las Vegas, Nevada
Updated
Kelly’s Answer
Hi John,
I notice that you are a junior in high school. Now, there's no possible way I can beat Paul's advice since it's very holistic, but what I would add is that for some real-world, hands-on related experience, you could always contact a realtor in your local area and ask them if there is any kind of part-time work you could do to help them in their business. Maybe they need things delivered, maybe they need photos taken of properties being sold, etc. I think this is a great way to get a "foot in the door."
Hope this helps.
Kelly Albright
I notice that you are a junior in high school. Now, there's no possible way I can beat Paul's advice since it's very holistic, but what I would add is that for some real-world, hands-on related experience, you could always contact a realtor in your local area and ask them if there is any kind of part-time work you could do to help them in their business. Maybe they need things delivered, maybe they need photos taken of properties being sold, etc. I think this is a great way to get a "foot in the door."
Hope this helps.
Kelly Albright