It’s Not Who You Know, It’s What You Know

It’s not who you know, it’s what you know. Discover how you can leverage knowledge and proven strategies to get your first deal closed, without needing a fortune or high profile connections.

3 Pillars of Real Estate Investing

Many people believe that to succeed in real estate, they need to have money and connections in high places. And while money plays a role and certainly makes things easier, it’s certainly not a prerequisite for success. In fact, many successful real estate investors started with modest means, focusing instead on three foundational elements: knowledge, strategy, and strong relationships. In this training, you’ll learn how you can leverage your knowledge to create value for others and get your first deal closed without needing a fortune upfront. Plus, we’ll discuss three crucial aspects you need to understand about sellers to turn them from strangers into friends, and then from friends into sellers.

2 Keys to Real Estate Success

You Do Not Need High-Profile Connections: Real estate is a relationship-based business, however successful real estate investing does not require knowing people in high places. If this is your mindset, you need to shift your thinking away from this misconception. Many successful investors, including our students, had no connections starting out.

Genuine Interest is Key: The true driving force behind success are the relationships you establish. When you take a genuine interest in people, whether they are sellers, agents, or property managers, you build a network of trust. It’s the secret sauce that drives success. Remember, people don’t care how much you know, until they know how much you care.

Darryl’s $1.5 Million Multifamily Deal

Our most successful students have shown that they didn’t need connections in high places to thrive. Instead, they focused on nurturing relationships with sellers and using the knowledge and strategies they learned through our mentorship. To illustrate how these principles work in practice, let’s look at a real deal from one of our students, Darryl. Despite starting as a beginner, Darryl leveraged his knowledge and built strong relationships to secure a trophy property.

Real Deal: Darryl purchased a beautiful12 unit multifamily property for $1.5 million, a slightly below-market rate for a property appraised at $1.55 million. Often trophy properties don’t cashflow because of the high purchases price, but because Darryl secured great financing and the way we structured the deal, this property cash flows from day one.

No CAPEX: Again, this is a trophy property in excellent shape and there were no capital expenses or major repairs to make. Any minor repairs found in the inspection report were dealt with by the seller.

Rent Upside Potential: The property, located next to a hospital, offers excellent rent upside potential and Darryl has already begun to raise the rents to market value.

Expansion Potential: The property has an additional 2.8 acres zoned R4 (high density residential), meaning Darryl can build two more 12-unit buildings on the property. He has two choices: he can build or develop it to a certain point and then sell the land.

Financing: Because the numbers for this deal were so strong, the lender felt comfortable with 20% down, (80%LTV) at around a 6%. And despite not having the full down payment, Darryl managed to incorporate an investor, impressing them with his knowledge and a well-prepared presentation. Again, this underscores the importance of mentorship.  Even beginners, with the right knowledge and relationship-building skills, can achieve remarkable deals.

The Role of Relationships

Darryl’s success hinged on his ability to build a strong relationship with the seller. Found off-market, Darryl met with the sellers in person several times, fostering trust and rapport. Initially, the sellers were not motivated, but they were interested. At this point, we advised him to make a full-price offer, however after countering back and forth, Darryl and the sellers couldn’t come to an agreement. We then suggested he raise the price but with seller financing. This is a strategy we use to keep the relationship going, however the owners decided not to sell. But because Daryl maintained contact via text and continued nurturing the relationship over six months, they eventually contacted him and agreed to sell to him with the stipulation to self-manage the property. They had been burned by local property managers in the past, and they didn’t want their beautiful property to be ruined again. So, we got the property under contract and closed the deal forty-five days later. Despite taking 12 months to close, this life-changing deal came about because of the right knowledge, sound strategy, and patiently nurturing the relationship.

Keys to Darryl’s Success

Genuine Interest: The first key to Darryl’s success was his relationship with the sellers. He met with them in person, had lunch, met for coffee and shared stories about their lives. He was genuinely interested in them and that built trust between him and then sellers. Eventually, they trusted him with their property.

Patience: His patience and perseverance paid off when the sellers, finally ready to sell, trusted him to manage the property. It took him 12 months to close this amazing life-changing deal, but this trophy property was worth the wait!

3 Key Things to Know About Sellers

#1: Sellers Prefer to Work with People They Like

Sellers, like anyone, prefer to work with people they like. Be likable and work on your people skills, and show genuine interest. For instance, I had a deal in the south-east I was working on and while on the phone with the seller I could tell she was doing something by the noise in the background. So, I asked her what she was up to, and she told me she was making her famous spaghetti sauce. I took this as an opportunity to make a connection because I love spaghetti too! So, I asked her for the recipe, made the sauce (which was delicious) and called her back to tell her how it had turned out. Long story short, after many conversations, I got the property under contract, and when I flew out there, she invited me to have dinner with her and her family.

#2: Most Conversations Are Not About Real Estate

Often, the best conversations with sellers are not about real estate. We teach our students to build deeper connections with sellers by using the acronym F.O.R.D. (Family, Occupation, Recreation, Dreams).  Here are some example questions to guide your discussions using the F.O.R.D. method:

Family – “Who owns the property besides you, someone in your family?”

Occupation – “What do you do for living? How did you get started?”

Recreation – “Now that you’re successful, what do you do for fun? Do you buy more property? Do you have a boat? What do you do?”

Dream – “What do you plan on doing with your profits if you sell the property?”

The idea is to use similar questions to break the ice and make personal connections with the seller.

#3: Patience in Uncovering Seller Motivation

Take the time to uncover what motivates the seller. This might take several calls and conversations but be patient and peel back the layers of their motivations. It’s invaluable for structuring a deal that meet their needs and yours.

Questions or Comments? Text PETER to 833-942-4516.

Every Successful Commercial Real Estate Investor Has a Mentor

Darryl’s deal proves that, it’s not who you know, it’s what you know. You don’t need vast amounts of money or high-profile connections to achieve success in real estate. If you’re ready to take the next step to gain the right knowledge, learn how to implement proven strategies, and cultivate genuine relationships, just like Darryl, apply to our mentorship program here:  Commercial Property Advisors Protege Program