The scenario: You’re seriously considering investing in real estate this year. You have the money, perhaps in a 401(k) or IRA, or you will after selling an existing property. You’ve done your research and have even attended a few seminars put on by real estate legends. You’ve learned the best cities in which to invest in real estate, and after crunching the numbers, your ROI potential looks amazing. On the surface, it seems like buying property is a no-brainer.
The Problem: You just can’t shake the feeling that the “experts” with whom you’ve been speaking might not be telling you the full story.
Reflect for a Moment: When was the last time you recommended a product or service that you didn’t also buy or use yourself? If you’re like most people, you haven’t. You wouldn’t feel comfortable giving this type of baseless advice. Unfortunately, not everyone lives by those same principles.
So how can you tell whether someone is genuinely trying to help you, or if they’re just using you to push their own agenda?
You may not be able to know beyond the shadow of a doubt, but you can take steps to protect yourself. Real Wealth Network co-founders Rich and Kathy Fettke, along with real estate professionals Ben Erik Smith and Aristotle Kumpis, offer the following advice on how to network for success, and why it’s so important.
NETWORK WITH LIKE-MINDED PEOPLE
Experience-based learning is one of the most effective ways to learn how to invest in real estate successfully. A great network is like a team that challenges and supports one another, which can open the door for new opportunities.
But not all networks are created equal, because not everyone wants to help you succeed.
According to California Realtor Ben Erik Smith, “The best way to determine if someone is looking out for your best interests is to figure out what their agenda is. In other words, if somebody is trying to get buddy-buddy with you, but all they ever want to talk about is investing in some obscure town in Idaho … you have to wonder. Why are they pushing so hard, to the exclusion of everything else?”
Since you can’t read minds (probably), you can never be positive about someone’s hidden agenda. The best solution is to find a network of “like minds” who are succeeding at exactly what you are trying to achieve. Most likely they’ll remember what it was like to be in your shoes, and there’s a good chance they also genuinely want to help you succeed.
DO THEY PRACTICE WHAT THEY PREACH?
Say you fork out $500 to attend a real estate seminar. Over the course of the day, you receive a ton of information. The experts spout their real estate success stories, rant about amazingly hot new markets in Middle America and play testimonial success videos of “real people” (who, for whatever reason, couldn’t make it to the event in person).
And they’ll teach you how to do it—if you buy their education package—for the unbelievably low price of $4,000. But, wait … if you buy today, they’ll cut the price in half. That’s a $4,000 value for just $2,000.
Seem too good to be true? That’s because it probably is.
The determining question: Are these so-called real estate experts also buying property in this “amazing market”? If it’s such a fantastic market, that guy you’re giving $2000 had better be investing in that market, too.
The best way to avoid getting scammed, says real estate adviser Aristotle Kumpis, is to “make sure you’re learning from real investors—investors who are actually buying in the markets they recommend, at the same time.”
When it comes to investor education, firsthand experience trumps all.
BEWARE OF GET-RICH-QUICK SCHEMES
Real estate investing advice and tools should provide real value to help you achieve your goals. If someone tells you that you can get rich quick by investing in real estate, you can be sure that they don’t have either of these things in mind.
“Investing in real estate,” says Smith, “is one of the best ways to build wealth. But this takes time. You have to be in it for the long term, because real estate is not a get-rich-quick scheme. If you understand that, then you’re much more likely to be successful.”
EDUCATION SHOULDN’T COST A FORTUNE
“There are way too many real estate ‘gurus’ out there teaching outdated or irrelevant information and charging tens of thousands of dollars for it,” says Kathy Fettke, co-CEO of Real Wealth Network. “The gimmick today is upselling. You pay for an event where you think you’re getting information, only to find that you are being sold something else the entire time.”
A good network, mentor or investment club won’t charge you huge sums of money to tell you where to buy now. Instead, they will help you learn how to identify hot markets, read a pro forma and calculate ROI for yourself. After attending an event or speaking with an adviser, you should feel empowered to make the best investment for you—and you shouldn’t have to spend a small fortune for their help.
BE PATIENT AND ASK QUESTIONS
Maybe you’ve stumbled upon an amazing deal, and you want to buy quickly before someone else also stumbles on—and snags—it.
Before you do, ask yourself: Do you really know what you’re getting yourself into?
Buying property can be straightforward—if you’ve really done your homework, and you have a good real estate professional guiding you through the process.
That being said, investing can get confusing. This is why it’s important to always take things slowly and make sure to educate yourself.
If you don’t feel 100 percent confident about making a purchase, take a step back and get help from people in your trusted network.
TRUST YOURSELF FIRST
Most successful real estate investors will tell you that they couldn’t have made it to where they are if they had tried to do it alone. Creating a trusted network can open the door to new opportunities and help you avoid a lot of the common mistakes investors make. But it’s not always that easy.
Your best bet, according to Rich Fettke, co-CEO of Real Wealth Network, is to really do your homework. “Ask yourself, what are the values of the person—or company or group—that you’re looking to connect with? If you can’t tell their values, you have to really investigate. (The easiest thing to do) is to straight up ask them: ‘What are your values? What’s important to you? What are you guys about?’
“If their answer is that they just want to make a lot of money, that could be a big warning sign.”
At the end of the day, as Kathy Fettke says, “you should always trust yourself first.” The key is to not get caught up in the hype but instead to follow your heart. And cultivate a network of like-minded, trustworthy investors to help you.
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