Probably one of the hardest things about investing in real estate is getting started. Just like every other investment, investing in real estate requires money—either all cash or a down payment. You’ve probably heard many real estate moguls preaching about the “no money, no experience needed” system to get started. Just stop for a moment and think about it. If you have no money and no experience, how the hell would you invest, or how would someone let you invest in real estate with no money and no experience?
You can’t.
Investing in real estate requires one of three things: Time, Money, or Knowledge. You need to have at least one, if not all three. Time, Knowledge, and Money.
With time invested, knowledge will come, and money will automatically follow.
Needless to say, time is your greatest asset. Everybody has the same 24 hours a day. Warren Buffet or Bill Gates doesn’t have 25 hours a day. They have 24 hours, just like you. But what the rich did with the 24 hours they have is what makes the difference. Are you willing to invest your time to start gaining more knowledge in real estate?
Prior to my first deal, it took me countless hours to study financial education and real estate. I read books, attended seminars, talked with people in the industry, and looked at houses. I still do now, and I will never stop. During my first deal, I didn’t know a single thing about contractors and contracting. I woke up at 4:00 AM to paint the house, went to work at 8:00 AM, then came home at 5:00 PM and kept working on the house until 9:00 PM, not to mention the weekends. I did what it took to get the job done. I share this not to brag, but just to give you an example of the amount of time and effort it takes to get something done. Most people I see underestimate the amount of effort needed to invest in real estate and quit when it gets hard.
Time is your greatest asset. You have to use it wisely.
Let’s chat about money for a bit before we get to knowledge. How do you acquire money to start in the beginning? If you have a secret sauce for this, let me know because I need it too. For me, it was about saving, spending smart, and working long and hard to get the extra money. Saving and spending are other broad topics that I won’t have time to touch on here. You could probably phone Suze Orman on the “Can I Afford It” show, and she can help you with it.
Everything has two price tags. One is the retail price, and the other is the discounted price. The moment you learn and commit to never paying retail for anything, you’ve already taken your finances and lifestyle to the next level. See my resource section for this. Once you learn to control your spending, you will have money to save and invest.
In my opinion, this is actually your pre-entrance exam into real estate investing. If you don’t have the diligence and commitment to save money and prioritize long-term goals over short-term pleasures, then investing in real estate will be almost next to impossible. Investing is much, much harder than controlling your spending. Start with this first.
Don’t get me in trouble, but I funded my first deal using my financial aid money from school. This was my unfair advantage combined with smart spending.
I turned my disadvantage into my unfair advantage.
My parents’ low income allowed me to go to college almost for free. I was able to apply for financial aid, keep my grades high, and apply for every single scholarship I could reach. While other cool kids went to the school bookstore and purchased a $1,000 textbook for class, I went on Amazon, eBay, and Craigslist, hustling to buy books for a fraction of the cost and selling them back when the semester ended. I lived at home, ate at home, and drove a 1998 Corolla, while my fancy friends lived like kings and partied like rockstars. On top of that, I also took on a job when I wasn’t studying and offered a service to fix computers. I did that for five long years, and here came the result at graduation. Of course, I wasn’t the top graduate in my class, but while other kids graduated in debt, I graduated with dry powder in my bank account, ready to go shopping for real estate.
That’s how I found the money to fund my first real estate deal. Nothing creative. Just straight-up saving, and you can do it too.
Then there’s knowledge. This piece of the equation seems easy but is actually the hardest of the three to acquire. Your brain is your next greatest asset after time. I would suggest being very conscious of what you put in your brain. Just like with most people, it’s easier to gain weight than to lose weight. It’s harder to unlearn than to learn. Like many, I wasn’t brought up in a wealthy family, and I wasn’t trained to think like a wealthy person. I had to go through many paradigm shifts and “empty my teacup” many times to transform my brain into a different school of thought. I laughed at the concepts of OTM and OTP when somebody first brought them up. I used to believe that you must do everything yourself to be successful and that using other people’s money and time is cheating! It took me a couple of years to unlearn that way of thinking.
One of the podcasts I recently listened to had a great analogy: How do people usually check the expiration date before buying milk? I bet everyone does. But how many people usually check the expiration date of their thinking? I bet very few. It may sound funny, but ideas and knowledge expire just like milk. Learning is a lifelong journey. You have to constantly learn new things and unlearn the outdated. The hardest part about learning is not learning itself, but unlearning. You have to commit to learning until the day you die. You’re dead anyway the moment you stop learning.
With time invested, knowledge will come, and then money will follow. It’s as simple as that.
Chapter Summary
With time invested, knowledge will come, and then money will follow.
You need Time, Knowledge, or Money to get rich. Get good at one thing.
This sounds boring, but saving up is the best way to start investing. Investing is harder than saving. If you can’t save, don’t even think about investing.
Milk has expiration dates. So does knowledge—check the expiration date of your knowledge.