I’ve always considered the Army recruiting slogan above to be as good advice as anyone can be given. The Army takes a lot of time testing new recruits to see what their aptitudes are before assigning them a duty. Entrepreneurs’ aptitudes are tested by the ventures they attempt. The more we can learn, the better equipped we’ll be to deal with challenges that come our way. But that doesn’t mean that we’ve got to learn everything about everything before we start out.
One thing the new Army does well is to provide “on the job training”. The trainee spends enough time in the classroom to learn a technique, and then goes into an actual work environment to perfect what he’s learned before learning something else. This approach to learning has proven to be very effective. Those who would become successful in real estate would do well to emulate this example. In other words, once a technique for buying, selling, financing, trading, or managing property has been explained, it should be put into practice as soon as posssible, and honed with additional real world transactions so that it can become a valuable tool. Some civilians act as if learning something was merely a matter of ingesting new information without the obligation to put it to use. Hopeful aspirants pay thousands of dollars for “home-study” tapes thinking there’s some “secret” for making a real estate fortune. Garage sales are loaded with these tapes.
As with “fad” diets, “fad” approaches to making money in real estate come and go with every T.V. infomercial. Hopeful “wannabee” real estate tycoons shift their goals with each “how-to” tape they buy. One month they are going to learn how to be property managers, and get paid out of rents “off the top” even before the owner gets paid. The next month, they’re going into the discounted Note business to reap huge rewards without any effort. Next, they’ll make big money fixing up property. Then they’ll buy foreclosures. Next they’ll buy and sell using Options to control property until they can flip it. They don’t focus on one program long enough to put it to practical use in order to gain skill and experience before switching to another. This almost guarantees that they will bounce from fad to fad, and failure to failure until their money runs out. Successful people whom I know personally, have patiently acquired knowledge, skill, and experience one step at a time, earning as they were learning.
If I were going to plot a reasonable approach for a novice to take, first, I would suggest he study a fundamental real estate text book; such as those that a real estate licensee must read to pass their license exams. So long as it weren’t illegal, he might become a “bird dog” for a dealer, looking for houses to buy, fix-up, and sell. From time to time, he should insist that he be permitted to make a small investment as a part owner of a house rather than being paid.
As he learned more about the business, he’d next try to find a landlord who would let him help manage his rentals. This is what I did while I attended night school to earn my apartment management credentials. I picked up lots of tips from other students in the class, and made fruitful contacts for finding bargain-priced materials and maintenance people. I also got valuable experience in collecting delinquent rents and processing evictions. It was low-paid work, but it led directly to being able to manage my own houses a little later on.
My next step would be to study everything I could about real estate Options while I looked for houses that I could Lease-Option from owners who couldn’t sell and didn’t like management. I’d sublease these properties and try to build in a spread between the rent I collected and the rent and maintenance costs I had to pay out. I’d also try to get a credit for each on-time rent against the price of the house if and when I bought it, or sold it to someone else. All these activities would provide the skills I needed gleaned from actually trying to put into practice all the things I’d learned from books and seminars. Getting into shape and making money both require hard work, but the self-satisfaction and self-confidence they generate can’t be duplicated. Ted Turner’s motto is “Early to bed; early to rise; work like hell; and advertise.” That’s not bad advice for anyone who wants to succeed.
