You feel a surge of excitement as you imagine building your own modern real estate empire. You’re already brainstorming how you’ll secure financing for your future deals and what types of deals you’ll pursue. You’ve even found contractors who can help you with any renovation work you’ll need to do. But if you plan to set sail on the open sea of real estate without a rudder to guide you — also known as a real estate mentor — you’re selling yourself short.
The reality is that if you want to thrive in the competitive and constantly evolving real estate investing world, you must enlist the help of a real estate mentor. Here's a rundown of 10 good questions to ask a mentor early on to put yourself in the best position to succeed in the real estate investing business.
It’s a good idea to choose a real estate mentor whose investing strategy mirrors yours.
The main strategies you can use include buying and selling (also known as flipping), wholesaling, and buying and holding (also known as owning rental properties). In addition, you’ll need to decide whether you plan to zero in on commercial properties or focus on residential ones. The best mentor is one who has extensive experience in using the strategies you’re aiming to use.
As you embark on the path to investing in real estate, you may immediately assume that all fixer-upper properties are excellent deals. Wrong.
The truth is that both experience and attention to detail are needed to decide if the cost of renovating a property would surpass your possible profit from that property.
See if your mentor will allow you to accompany them on a property tour. This will give you a firsthand look at how they determine whether a property is worth investing in. In addition, ask your real estate mentor what their target return on investment typically is. Such insight from a mentor can help you to consistently choose lucrative investments in the future.
Just as a hiring manager may want to know how seasoned a job candidate is, you should find out how experienced your real estate mentor is right away.
Ask your mentor how long they have been investing in the real estate industry, as well as what caused them to become a property investor. Also, ask how many real estate properties they own in total.
It’s also a wise idea to ask your mentor how many real estate assets they purchased last year, as well as what their plans are for the current year. Why? Because you want a mentor who understands not only past markets but also the present market climate.
The answer to this question will help you to choose the right property financing avenue for your needs. For instance, you could seek a loan from a bank, or you may want to tap into the resources of accredited investors instead. Your real estate mentor can tell you the pros and cons of each approach and share with you what has worked best in their situation.
Ask your real estate mentor what technology they are leveraging for automating tasks. These technologies may range from property management software to lockboxes, for example. The right technology will save you time and ultimately improve your investing experience.
Your first year will probably be your hardest one. However, you can save yourself a lot of confusion and heartache by finding out what costly mistakes your real estate mentor made starting out, and how to avoid these mistakes.
As a general rule of thumb, wise mentors use property management companies to help them manage their rental properties. If your real estate mentor doesn’t use such a company, you may want to think about finding another mentor.
Using property management companies will prevent you from having to go hunting for late rent payments or spending a lot of time on property repairs. In other words, it’ll give you the freedom you need to thrive as an investor.
Be sure to ask your real estate mentor for their references — and I’m not just talking about other real estate investors who are gleaning wisdom from them.
Feel free to also talk with your mentor’s past joint venture partners or even people who’ve purchased their properties. All of these parties can give you insight into what they liked (or did not like) about your mentor’s work, and this can impact how you approach your future projects.
All experienced real estate investors have experienced setbacks in their careers. Learning about these setbacks from your real estate mentor early on can help you to make wise decisions both now and in the future.
This is yet another critical question to ask your real estate mentor, as the whole point of getting into property investing is to build wealth. Your potential mentor should be able to tell you how they will sell their investment property to turn their equity into cold, hard cash.
For instance, maybe your mentor plans to sell a property to a tenant using a lease option. Alternatively, they could sell a property using a real estate broker, or they can wholesale the property to another investor. Understanding your mentor's real estate investing strategy is paramount because you may end up needing to leave the game at any point, and you need to be prepared for this.
Building a property investing career can no doubt be exciting, but it can also be intimidating. The good news is that I, Joe Fairless, can walk you through it from the start, serving as your hands-on real estate mentor. Contact me today to find out how I can help you to start on the right foot and keep moving in the right direction.
About the Author:
Joe Fairless is the co-founder of Ashcroft Capital, a fully integrated multifamily investment firm with more than $2.7 billion in assets under management, and the founder of Best Ever CRE. His podcast, the Best Real Estate Investing Advice Ever Show, is the world's longest-running daily real estate podcast with more than 500,000 monthly downloads.
Disclaimer:
The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.