Investor Cheat Code Podcast with Mike Simmons

We've spent this week talking about setting goals, and today I want to talk about a very important factor in your success. On Wednesday I shared with you that massive action is the key, and it is. But in order to take massive action, you have to get yourself in the right mindset for this business. That can be the hardest step.

What do I mean by mindset? I'm not talking about affirmations here. I'm talking about what will often keep you from taking action: fear. The surest path to failure in this business is fear and inaction. The two go hand in hand; fear leads to inaction. You don't do anything because it's too scary. That is the biggest problem that investors, especially beginning investors, have. I talk to a lot of you about this. I've given many answers to specific questions, and specific steps to take in the business. But often, not knowing these things is not what's stopping you. What's stopping you is fear.

How do you break through fear? I'm assuming the  vast majority of you have ridden a bike. I'm pretty sure you were nervous about it at first, and I'm pretty sure you fell and got scraped up a few times. But you got back up and you did it anyway because you wanted to do it. What about your first day of school? You might not remember but I guarantee you were scared. What about the first time you asked someone out on a date? Real estate investing is not any different for these life experiences; you're scared and sometimes it works out and sometimes it doesn't, but you still do it. And if you get help and direction from someone who knows what they're doing, it'll work out way more often than not.

You will make mistakes when you start in real estate. But the sooner you make those mistakes and take those first steps, the sooner you can learn for them, get past them, and go on to do great things. This business is simple. It's scary when you start, I'll grant you that. But for me, real estate in a nutshell is: Find a good deal, get it under contact, wholesale it to someone else or buy it yourself, and, if you buy it yourself, either flip it or hold onto it for long-term investment. Repeat. That's it. The hardest part is dealing with fear, and doubt, and procrastination. But I get through those things because I know why I want to be in this business.

It doesn't take brains. It takes guts, faith, and belief in yourself.

If you can conquer your fear and take massive action, you will find success.

Today we're going to talk about business goals, or business minimums as I said on Monday. This episode is really geared toward the beginning investor, but I think you'll find some interesting things to think about even if you're more experienced. I often ask beginners: what do you want to be when you grow up?

A lot of people out there treat real estate as a hobby, not a business. I was guilty of this for a while. But if the answer to that question is "I want to be a real estate investor," you need to know why. If it's just because you want to make a lot of money, it will be hard to sustain the enthusiasm for that. Money only motivates you to a certain extent, and only for a short amount of time. Now, if money will bring you freedom, or allow you to spend more time with your family, or allow you to donate to a charity you believe in, those things will keep you motivated and drive you for a long, long time. Think about that when you're thinking about this business.

Once you have your why, and you know that you want to be a real estate investor, you need to a plan to get there. The easiest and fastest way to get where you want to go is to find a guide. You need someone to show you the way. Where do you find a guide? Network, network, network. Get out there and meet people. Tell them what you want to do. Tell them what your driving "why" is. Where do you network? If you've been listening to this podcast, you probably have a good idea. Go to your local real estate investing meetings. Go listen to the speakers they bring, but also to network with people in the industry. Talk to friends and family. You never know who has a connection. Network in other professional or social groups. Network online; you can join Facebook groups for investors in your area. Join local real estate masterminds. You could find them on meetup.com, or start your own.

Here is the key to being an incredibly successful real estate investor: MASSIVE ACTION.

Write those words down and put them somewhere where you'll see them every day. Go out there and take massive, consistent action and you will find success. Take massive action, and then keep taking massive action. So get out there and get started!

Welcome back to Just Start Real Estate! It's been a few weeks since my last episode, and I'm excited to be back.

I'm dedicating this week to getting you started in your real estate investing business for 2015. If you're not a brand new investor, these episodes will reenergize you and give you the motivation you need to knock it out of the park this year. If you are brand new, and maybe you haven't done your first deal yet, these episodes will give you a solid base of goals and strategies to get you started.

Today I want to dig into the idea of setting goals. What's the point of making a goal or resolution for the new year? I think you need goals in order to know where you're going. You need to know where you want to be in order to figure out how to get there. Setting a goal gives you an ultimate destination and allows your brain to start working on a roadmap. Most people are wired so that as soon as they set a goal, their brain starts problem-solving and working on solutions. If you don't have goals, you can't reach your potential. If you don't let your brain stretch and think about where you ultimately want to be, you don't have any direction to get anywhere.

This year I'm trying out a new idea in my goal-setting. I heard about it on Sean Terry's podcast. He's a wholesaler in Arizona, and he mentioned a concept called "the January letter." In January, you write yourself a letter as though it's already January of the year ahead. So in 2015, you write yourself a letter as if it's January 2016 and you document your accomplishments of the past year. You're essentially telling your brain what you expect to have accomplished and you're phrasing it in a way that makes it seem very attainable. I suggest you try this and make a habit of reading that letter every day throughout the year. It's very powerful. I'm trying this for the first time and I challenge you to try it as well.

Now, I'm not a fan of something called "the secret," which is based on the law of attraction. I utilize the goal of attraction in my business, but I don't think you can just decide you'd like to be a millionaire and suddenly you will become one. It's more about putting your mind in a positive place. I have a mentality of abundance: my success does not take away from someone else's success, and vice versa. I see people in the business be very secretive about their accomplishments because they're afraid someone will "steal" their success. I don't do that; if someone asks me a question about my business, I tell them. I think that when you have that mentality of abundance, you will realize abundance in your life. Be open to helping people and answering questions, and you'll be amazed at what will come back to you.

I'd like to talk a little more specifically about my goals for 2015. Wholesaling is the newest branch of my real estate business, so I'm focusing on that this year. My goals are to:

build and grow my wholesaling business so that I'm doing two to three deals per month

make $7,500 in profit on average from each wholesaling deal

partner with four other wholesalers and do one to two co-op deals per month

build up an army of birddogs in my market to bring me deals

hire one full-time acquisitions manager

get better at marketing

I talk through each of these goals in more detail on the podcast, so make sure you listen to the full episode. I'll give you updates on these goals throughout the year.

A note of these goals: I have been calling them minimums this year, not goals. A goal should not be a finish line; I want to maintain my drive to go past it. All my minimums are attainable, and I hope to go even further.

I find this time of the year very exciting. It feels like a fresh start and a chance to regroup and set new goals. That's true in life and in business. Setting goals is important, and I think it's important to feel like you can meet or even exceed your goals. A goal to me feels like a finish line, so it doesn't allow me to go further.  So this year, I'll be setting my 2015 minimums. This way, I'm setting them as the least amount I will accept for myself this year, but I want to go beyond that. I'll let you know how that goes!

Today I want to give you some advice on how to do your first deal. Once you've made it through the fear we discussed yesterday, you should partner on your first deal with someone more experienced than yourself. Find someone in your area who is successfully doing the type of real estate you want to be doing, and see if you can partner with them or shadow them on their next deal. Find a way to add value for them (for example: find the deal, find some funding). Don't think that you're making a mistake if you give away some of the profit on your first deal--you're not. You just need to learn, and you can't beat free education! You'll never learn more than when you're doing your first deal, and you'll never have a higher success rate doing your first deal than when you do it with someone successful.

With the holidays coming up and everyone's schedule getting very hectic, this episode had to be posted on a Thursday instead of a Wednesday. Not to worry though, Friday's episode will be on time and I hope you'll listen to both as you wrap up your week.

In this episode, I want to break from my usual format a little bit and talk about a conversation I had with a friend about real estate. This podcast is about helping new real estate investors by giving you the tools and information you need to get started. But I recently heard this friend express his interest in investing in real estate but hesitate in actually talking to me about the business. I told him he was going about this too slowly.

I know the cycle--I went through it too. I would read about the business, read success stories, dip my toe in the pool, but I was too afraid to get started. I gave my friend the following advice:

Real estate is simple, but it is not easy. The information is simple, but the execution is hard. It takes hard work.

Fear is what keeps people from getting started. If you allow yourself to be afraid, you can get paralyzed.

The difference between people successful real estate investors and aspiring real estate investors is action. In a recent interview, Dennis Fassett had an interesting story about his first actions in real estate.

The people who push through their fear and take action are successful.

You're going to have to get out of your comfort zone.

Anything you want to know about real estate is out there for free, on the internet, right now.

In this episode, I interview Chandler Crouch. Chandler is nothing short of amazing. At a very young age, he has managed to do several different types of real estate transactions and make himself one of the most successful realtors in Texas! This is a long episode, but I didn't want to cut this great flow of information short. I know you're going to love this interview as much as I did!

Chandler has been full-time in real estate for 12 years. He has worked both as an investor and independent broker during that time. He currently spends most of his time working as a broker in Texas. Chandler started out with $2000 of maxed-out credit card debt and living in a $365-a-month apartment.

He has done many different transactions in the course of the last 12 years, including short sales, subject to's, owner finance, lease options, rentals, rehabs, HUD deals, wholesales, as well as hard money lending.

Currently Chandler manages three teams of agents and focuses primarily on brokering luxury properties in the Fort Worth/Keller area of North Texas.

Chandler's start in real estate investing came when he went to pay rent at the apartment complex where he was living at the time. The owner of the complex asked him if he would be interested in getting started in real estate investing; Chandler jokingly called it "divine intervention".  He was able to work with the owner of the complex by helping him rent out the vacant apartments. In order to really get started and get his feet under him, Chandler started attending local real estate investor meetings. It is there that he met and networked with other real estate investors and got his business going! He got his realtor's license and started representing some of the people that he met in the real estate investing meetings by holding open houses for the properties that they were trying to sell.

Chandler started out doing a lot of subject to investing. Even though this is how he got his start, and he did quite a few of them early on, he does not necessarily recommend this method to others. It can be a bit tricky, and there are challenges that could definitely arise that might make it not worth the effort. It is a legitimate form of investing, but maybe not one that Chandler would recommend at this point.

When I asked Chandler what some of the mistakes that new investors make are, his answer was very interesting and extremely educational for new investors. Essentially, he said that new investors who come to him so he'll help them find deals usually give him requests that are so broad and so vague that it is almost impossible to help them. Instead of asking for specific types of properties, they essentially just tell him: "send me anything that's a good deal." The problem with that is that when a deal comes across Chandler's desk, the investor who said "just send me anything" doesn't necessarily come to mind as much as investors who specifically asked for a deal like the one he is looking at. New investors need to learn how to make it easy for realtors to help them find deals. Ask for specific ZIP Codes, specific types of houses, specific price points, etc. That will make you more memorable, and also make it a lot easier for the realtor to help you.

I asked Chandler to clarify and give me an example of how a new real estate investor should approach him if they want to get maximum value and maximum results. The answer he gave was phenomenal! It is something I have never heard anyone say before and was definitely something all investors should hear. It was so incredible that I want you to hear it for yourself and I'm not going to transcribe it here in the show notes--go check it out!

Chandler also described a way to determine the after-repair value of houses without using a realtor. It is incredibly clever, and a great way for people to get a base value without having to use a realt...

Today we're going to talk about the importance of having more than one exit strategy. It's more important for new investors, and new investors rarely do this well.

You need more than one exit strategy in case something outside of your control changes after you buy the house or if you simply realize you screwed something up. Listen to the full episode for an example of how this might happen, especially to an inexperienced investor. If you're stuck with a house you won't be able to make a profit from, you have a few options. Often investors end up renting a property instead of flipping it because that requires less rehab.

As a new investor, be careful and conservative. Run deals past more experienced investors in your community. Still, you must make sure you have alternative strategies in case something happens. Think about whether you can rent instead of flipping, or find backup financing, or just wholesale it. A bad deal happens to the best of us, just make sure that, every time you purchase a property, you have a way out.

Today we're going to talk about market selection. How do you know which markets, neighborhoods, or areas are best for your specific investment model? This is an important question to consider as you set up your business.

The market you choose to invest in has more to do with the type of investing that you plan on doing than anything else. Certain markets are more conducive to house flipping because people tend to buy houses, while others are more conducive to rentals because people tend to rent. When you're picking a market, it's important to determine and remember what kind of investor you want to be. What is your goal?

If you want to be a wholesaler, you should be aware of what kind of investments your buyers are looking for--are they looking to flip or buy-and-hold? Then, you can determine if the majority of houses in each area are sold or rented, and there are a few ways to figure that out.

In this episode, I interview Josh Bauerle, CPA and real estate investor.

Josh is a CPA and the founder of JDB Business Solutions, a tax practice specializing in working with small business owners and real estate investors to minimize their tax liability while keeping them in line with the ever changing tax code. He also owns a real estate investment company, Pinnacle Properties and Development, with his dad, through which they have acquired over 16 rental properties and 5 fix-and-flips. He lives in Denver, Colorado with his wife Courtney; they are expecting twins this February.

When I asked Josh how he got his start in real estate, he shared an incredible story about being in a car accident. He was in a car when it went over a cliff, and he barely escaped before the car exploded. As a result of the accident, Josh received a sizable amount of money. His dad immediately announced that he would not be spending the money on something frivolous, and suggested that they start the real estate company. Josh and his dad started that company and began investing in real estate.

At the start of the company, Josh and his dad were buying houses very inexpensively. They live in Ohio and, when the market turned downward, they were able to pick up great houses for $15,000. When the market started to go back up, they were having a harder time selling, so they turned their focus to rentals.

His interest in tax strategies started after reading the book Millionaire Real Estate Investor. Josh had always loved numbers, and promptly changed his major in college to accounting. He then graduated with his accounting degree.

After working for a company as an accountant for the last eight years, Josh decided he was tired of working for someone else and started his own accounting firm, JDB Business Solutions. His business focuses on small businesses and real estate investors.

Josh strongly recommends to all new real estate investors that you immediately form a relationship with a good CPA that understands the business. They will be able to help give you direction on the type of real estate investing model that makes the most sense for you; they will also be able to help you make a decision in terms of the business entity that you form from a tax perspective. Basically, having a CPA on your team from day one will help set you up so that you can avoid audits and other costly mistakes that new investors and new business owners often make.

I asked John about the different business entities available to real estate investors, and which one should be used for what type of investing. This part of the interview was extremely interesting and is packed with tons of information; too much to list here, but you should definitely listen because it can make a big difference to your bottom line at the end of the year. A quick summary would be that, for long-term investing such as rentals, Josh recommends an LLC as the best way to go from a text standpoint. If you are investing for quick profits, a corporation might be best for you. As I point out in the show, this episode is not to give you specific tax advice. You should speak to your CPA before doing anything.

For any real estate investor, keeping all of your records organized and accurate is key! This is something that I did not do a good job of when I started my real estate investing business, and it caused some problems. Josh recommends that you keep accurate and organized records. If this is not something you are good at, then you should hire a bookkeeper. According to Josh, a good bookkeeper for a brand-new investor who is not doing a lot of transactions per year should cost around $100-$200 per month.

New real estate investors who do not have a lot of properties and are not doing dozens of transactions per year, can probably get away with just using an Excel spreadsheet to track...

Today I want to talk your criteria. Know your criteria. What is it you are looking for? Five bedroom homes? Two bedroom homes?  Three thousand square feet? One thousand square feet? Write down what you are looking for so you don’t waste time sifting through deals you don’t want.

For new investors especially, it's very important to know what you're looking for and know what to ask realtors or wholesalers to look out for. Know what you can flip or rent effectively in your target market. Is there something that would make a property impossible to flip? Be aware of that so you don't waste time looking at those properties. For example, in my market houses need to have a basement, and if they don't I know I won't be able to make money from them. Be aware of  the requirements in your market and don't waste your time looking at leads that don't meet those requirements. Once you've done that initial sifting and sorting, you can do the harder work of calculating the numbers only on the properties that meet your initial criteria.