The Hardest Things About Starting A Real Estate Investment Company

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Services for Real Estate Pros with Adwords Nerds

Starting out in real estate investing is hard. Really hard.

 

Now, that doesn’t mean that you shouldn’t do start. But you should be prepared, and know what you’re getting yourself into.

 

In this article, 8 investors share what, in their experience, the hardest thing has been about getting their real estate business off the ground.

Getting a consistent flow of leads and deals.

Probably the #1 most difficult part of getting started in investing, is getting leads, and closing deals. As you’ll see, this is what most of the investors I pulled from indicatec was the single hardest part of starting out. It’s what Jesse, founder of AJX Homes, describes as  “the unknown of if you will make money, or how long it will take.”

 

After all, you can’t really grow if nobody knows about you, trusts you, and requests offers from you. And even if you’re getting leads, there’s no guarantee you’re going to close them. 

 

And even when you do get a few leads, there’s still the trouble having a consistent flow of deals so that you’re bringing steady money into the business.

 

Now, with enough cash thrown at some ad spend (whether it’s Adwords, other PPC channels, mailers, etc.), anybody can get 5 or 10 leads submitted. But getting consistent, monthly (or weekly) deals is another challenge entirely.

 

That’s exactly what Anthony, the owner of Sell As Is Now, cited as the absolute most difficult part of getting started, “the hardest thing about getting started in the investing business is getting a consistent deal flow going. You don't want to have those roller coaster ups and downs. You always need to be marketing to stay consistent.” Teresa, who co-owns We Buy Sun Coast with her husband, agrees. “Not getting any calls or motivated sellers reaching out to you is the hardest thing to deal with.” 

 

And leads don’t come without some sort of marketing plan in place. It’s very unlikely anyone is just going to come to you and request an offer. So that means that whether it’s cold calling, using direct mail, or investing in online marketing, you’re going to need a solid marketing plan. Especially when it comes to online marketing, many aspiring investors or beginners simply take an “if you build it, they will come” approach.

 

They think, “but I build a website! Where are the leads?” And they quickly learn that the market is competitive, and it’s not going to be easy. Elizabeth is a proven investor and the founder of Cornerstone Home Buyers. She says, “the hardest lesson to learn is that your number one job is marketing. Without a steady stream of leads, you will be out of business before you ever get started.”

 

So if you’re thinking of getting into investing, just be prepared - the #1 for many of you will be finding a channel to gain consistent leads, and close deals consistently, so that you can grow.

 

However, once you do start to gain leads and close deals, you’ll find another major hurdle...

Getting the right people on your team.

 

Rhen is Chief Operating Officer at Irby Home Buyers, and investment firm working in Alabama and parts of Florida. They’ve been very successful, but he states that the most difficult part for them was ”leadership, and getting the right people on the team to move us forward.”

 

Irby now has robust systems and processes that help them consistently close deals. They’ve expanded to a small team to help them handle all the work, but it doesn’t come easy. 

 

So be prepared to face this second major difficulty: building a high quality team who you can trust and lean on when leads start coming in. For some of you, this will be estimators or sales people. For others, this will be a marketing team. And for others the challenge will be finding reputable builders, title companies, and waste/debris companies who can provide consistent service and on-schedule delivery.

 

So we’ve seen that starting your company, creating a marketing strategy, gaining consistent leads, and over time, putting together a solid team, are two of the biggest obstacles you’re likely to face as a new investor. 

 

However, many of you will be pursuing this as a side hustle, working on it nights and weekends, or under another investor who is coaching you, until you can go full-time. And you’re to be applauded for that - it’s far less financially risky. But that means that the third major obstacle you’re going to have to face is...

Persevering through the obstacles.

Xavier runs a website called Fast Cash 4 House. He says that in his experience, the toughest thing about starting a real estate investment company is going to be “finding the time and staying the course.” He goes on, “life has a way of throwing obstacles at you, but you need to make it your mission to accomplish what you originally set out to do.”

 

Speaking as someone who has worked on side projects, he’s absolutely right. If this isn’t full-time for you (and frankly, even if it is), persevering through the difficulty is the absolute hardest part, in my humble opinion. It’s possible to eventually figure out a good marketing strategy; or eventually find a quality team you can rely on. But you can’t figure those things out if you give up before then. And that’s the hardest part. If you launched a website and put out mailers, and didn’t close a deal for 6 months, would you persevere? I’ve seen many investors who don’t, or can’t.

 

This is where factors like what stage of life you’re in, and how committed you are, come into play. 

 

But let’s say you’re committed. Let’s say you stay the course, and start getting leads, and identifying opportunities. Then you’ll face an obstacle many proven investors face...

Actually finding a good deal (as opposed to bad opportunities).

I can imagine that the temptation to close on the first property that comes along is pretty intense. 

 

I can imagine it feels scary to let a bad deal go, after you’ve waited so long for it, and you aren’t sure when the next one will come. But if you can’t identify the truly good deals from the bad or mediocre, you won’t be successful. You may spend lots of time, effort, and money making low profit margins or breaking even.

 

That’s why being able to spot the good deals is what Beau, owner of Beau Buys, says is the hardest challenge for newbies. “Finding deals is the hardest part,” he explains, “every run down house you see is not a good deal. Good deals are hard to come by.”

 

So be prepared to turn down deals that may tempt you, and really work on educating yourself to spot the signals that indicate a good deal.

 

Add to this that you have to...

Doing a lot, with a little.

It’s not just that you need to create a marketing plan, create a funnel to bring in a consistent flow of leads, build a successful team, and identify good deals from bad. The challenge is that you need to do this with very few resources. 

 

Unless you’re really well funded, you’re probably trying to do all this as a 1 or 2 person operation, as a side-hustle, between 7pm and 2am, or on the weekends. You probably have a limited budget, and need to make it count.

 

This pressure to do a lot with a little is what Jay, the founder of We Buy Carolina, says is the hardest part of starting out in investing. “Creating deal flow with limited resources is the hardest part about getting started,” he says, “This business is a numbers game, you need to leverage your time and resources. In the beginning and without the latest tools, it was tough to get enough calls coming in from motivated sellers. It took tons of time to "drive the streets", go to the courthouse to track the owners, and then send out mail pieces, screen sellers, put out bandit signs, etc.” 

 

Now your approach may not be the same as Jay’s. But the point remains true: you’ve got a limited amount of time and resources, and you’re trying to get off the ground, and that’s just difficult.

Summarizing the hardest parts of starting.

So as we’ve seen, investors believe the hardest part of getting started is:

 

  • Finding truly good deals.

  • Creating a way to get steady leads and developing a marketing plan.

  • Creating a trustworthy team to follow up with those leads and scale your business.

  • Doing all this with very little time or money.

 

It’s not impossible, but it is difficult. I’m a big believer that you should weigh the cost before you start out on something like this. If these things scare you off now, you can avoid lots money, time and energy. But if these things just paint a sober reality, and seem like a challenge you’re ready to push through and overcome, then you’ll be all the more prepared.

 

 

 

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