Last Night’s Meet Up (November 15, 2013)

I attended a local real estate investor’s meet up last night. This wasn’t my first event, but I was still excited to meet other like-minded individuals living in the same neighborhood as me. As anyone who has looked into investing in the Bay Area knows, prices have gotten out of hand this year!

Prior to the meet up, I was in communication with one of the more advanced members, who happened to be one of the attendee’s. Actually, this was the main reasons why I was so eager to go — I wanted to learn from a local “guru”. There were a few other newbie investors there, looking to get started with their first deal. And finally, there was myself, someone who’s probably not a beginner, but by no means an expert either.

The event was fun. I got to pick this guy’s brain a little bit, and marveled at many of the things he had to say. In fact, I learned quite a bit, which I will gladly share with everyone.

Attitude

One thing this guy kept harping on was ATTITUDE. He said the fundamental difference between a successful real estate investor and a “nobody” is that a successful real estate investor is someone that is capable of willing themselves to success. Attitude is EVERYTHING!!! Unfortunately, most of us (myself included), don’t get as far as we’d like because we place artificial ceilings that prevent us from reaching for more. In other words, we don’t bother shooting for the moon… so as a result, we can’t even reach the stars!

After having a day to reflect, I get where this guy is coming from. Just to give you some background, he’s an investor who’s most likely in his mid-thirties. He owns about 15 properties in the Bay Area, and has since retired from his 9-5 job. He’s now a full-time real estate investor. He started investing in 2009, after the financial crisis hit, and attacked the market with guns blazing. He knew that the window of opportunity was “once in a lifetime”, and didn’t want to miss it.

He didn’t. He purchased 15 properties between 2009-2013, mostly from the courthouse steps. He learned how to play the game, borrow money, buy under-priced, fix up and refinance, flip or rent out, and finally pull the equity back out so that he could repeat with the next property. Over and over again. The flips helped raise capital, and the buy and hold properties are now providing him with more cash flow then he’ll ever need.

The amazing thing is he did all this in a period of 4 years! If you want to go on the basis of net worth, he estimates that he’s made close to $3 million in that timeframe.

Let me repeat, $3 million in 4 years.

Fear of Success

This guy is smart. He’s determined. And quite frankly, he’s real ballsy. To do what he did is not for the faint of heart. At a time when everyone was freaking out and selling their homes and stocks, this guy went on a buying spree. He knew the numbers worked, and that the buying opportunity wouldn’t exist forever. While others were screaming that the sky was falling, this guy worked some serious magic, and borrowed as much money as he could — from friends, relatives, co-workers, banks, private money lenders,… EVERYBODY.

As a result, he scored deals that most people didn’t even know existed. In the Bay Area, condos and townhouses fell from $400k to $200k or so. This guy went to the courthouse and bought a few for $120k. Instant equity. He then fixed them up and re-financed them. Since he got them at bargain bin prices, the appraisals always came out much higher. After refinancing, he let them season for 6 months or so, then opened up HELOCs to recapture the equity. Lather, rinse, repeat. To the tune of 15 properties in 4 years!

The reality is, if you want to achieve phenomenal results, you have to re-wire you brain. Stop being afraid! Stop thinking like everyone else. This guy was telling me how his wife and mom would get on his case for hours on end for being “a complete idiot.” He said his mom was fully convinced he would bring financial ruin to the family, and reminded him on a daily basis. It didn’t matter… he didn’t listen, and just kept on marching on. Now, his family, and future generations are set for life. All because he had the courage and conviction to think outside the box. He wasn’t afraid to succeed.

It’s all hindsight now, and I am so grateful for being able to win two properties in the Bay Area in 2012-2013… but this guy didn’t limit himself to just two. He used his brain and found a way to buy 15!

It’s Not Difficult

Real estate investing is not rocket science. It’s so easy, you don’t even need a high school education to understand it. It only appears difficult because almost everyone around you tries to scare you into thinking “it’s a bad idea!”

We’ve heard it all before from the misinformed:

“Debt is bad! So, leverage must also be bad!”

“I don’t know… I heard some guy lost his house once…”

“You better be careful… Although I’ve never done it, out-of-state investing is extremely risky.”

“Why do you want so many properties? What if you get sued?”

Fear this, fear that. Let fear govern your life and you’ll get absolutely nowhere. What’s the alternative? Work for the man from 9-5 for the next 40 years of your life?!? To me, that’s insane… and something I am terrified of! To me, that’s real fear!

Most successful real estate investors I’ve met, and this guy included, have all told me the same thing:

“I’ll borrow as much money as I can. I’ll leverage to the max.”

“If you have the cash (this includes borrowed cash), the deals will come.”

“You want a real advantage? Go in all cash.”

“It’s a game of numbers. You’re basically just shuffling money around. You just need to find a way to continually tap into your equity so that you can score even more deals.”

Summary

This local meet up was very interesting. I’m glad I went and got to meet a more seasoned investor who’s well ahead of where I’m at. I learned a few things, and I’m more motivated and inspired to succeed than ever before. It’s crazy to think just how lucrative real estate investing can be. There’s just so much money that can be made in this game. Here I am working hard trying to reach $2000/month in passive income or so… and you run into someone who’s probably banking like $7,000/month or so, and did it in only four years. Amazing… I must say, it was pretty neat getting to meet someone who’s still really young and has already reached early FI!

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Cash Cow Couple
Guest

Really interesting thoughts, thanks for sharing. $3 mil in 4 years is pretty impressive. I have mixed thoughts on real estate investing, especially since I missed the bust and the foreclosure pricing. Buying, fixing, flipping, or renting can be lucrative, but they also take serious work. Housing prices have historically risen at about the pace of inflation, so they do little beyond keep their value if you just buy and hold at market pricing. Leverage is a dual edged sword as well. But if you can time the market like that guy, or find ways to consistently buy low/sell high, there is a lot of money to be made!

Max
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Max

When’s the next one of these meetings I’d like to come learn some.

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