Report on a real estate investing conference in Columbus Ohio

One of my clients, Mark Evans, is a real estate investor and I’ve been working with him since 2008. We talk frequently via email, text, and phone but I’ve never met him in person.

So when I heard that he was holding a conference in Columbus Ohio (a really cool conference — more on that in a moment), and since my schedule allowed it, I jumped at the chance to go.

EVENT DETAILS

The event was actually two separate “mini-conferences”, scheduled consecutively; and I attended both. I flew in on June 17, stayed until June 21, and the event was held at the Columbus Airport Marriott (nice hotel!).

Here’s a picture of me at an airport enroute…

AaronHoos-airport

June 18 – 19: The first mini-conference, called a Deal-A-Thon, was more like a 2-day workshop/coaching session for 12 real estate investors. We spend both days building our investing businesses and working through the intricacies of doing deals. This was a super-hands-on invitation-only experience among real investors and we actually did some deals while we were there. I don’t have any pictures from it but just imagine a dozen people sitting around a room with notebook and laptop and phone.

June 20 – 21: The second mini-conference had a much larger attendance — approximately 200 people. We spent the first day in a super-long marathon session in the hotel auditorium going through the steps of building a real estate investing business. With the large number of people, the information was useful but at a much basic level. The second day included a bus tour as we drove around Columbus looking at properties and discussing property valuation and exit strategies. On the afternoon of the second day, we went to a house giveaway event, in which my client partnered with former football player, ex-con, Comeback Project founder Maurice Clarett to giveaway a house to a family in need. It was a really cool experience. Here’s a pic from the house giveaway ribbon cutting ceremony…
MEDM-housegiveaway2
By the way, if you ever want to sponsor or donate to this worthy cause, go over to the HouseGiveaway.org.

WHAT DID I LEARN?

I went for a few reasons:

First, I finally wanted to meet my client.

Second, I wanted to participate in the House Giveaway (I’ve been a sponsor for a couple of years and I wanted to go in person).

Third, I wanted to attend a conference for the networking opportunity. I’ve attended a couple but I’m started to ramp it up a bit more.

Fourth, I wanted to fill in some gaps in my knowledge of real estate investing.

I got all of that… and more. It was an insanely good time. Not just because I ate more steak and drank more beer than someone should drink. But more-so because I went totally focused on building my business, as my game-face indicates…
AaronHoos-gameface

… I learned a lot and what I particularly liked about the Deal-A-Thon (the first mini-conference) was how hands-on it was. It’s very common in conferences to get information and to file it away in the “nice-to-know” section of your brain, only to completely ignore implementation. But this Deal-A-Thon was all about implementation. And since it was invitation-only, the people who showed up were high-achievers and were all interested in succeeding in their investing businesses.

I also made some amazing connections with other real estate investors — not just new friends but prospective new joint venture partners for any real estate investing I do, as well as new clients for my Real Estate Investing Copywriter brand.

This was a business-changing event for me. In just a couple of short days, it skyrocketed different parts of my business to a new level that I didn’t even dream of achieving. I’d like to attend other real estate investing conferences in the future but I intend to attend this particular conference again.

9 ways to avoid getting screwed in a business or real estate deal

I’ve had successful deals and not-so-successful ones. I’ve been screwed in deals: Non-payers, joint ventures who disappear, investments that don’t materialize. It’s insanely frustrating when it happens and every time it does happen, I get really angry — as much at myself for not seeing the warning signs as the person or company that screwed me over.

And yet, I do more deals because I know that the majority of deals turn out okay; that a few bad apples shouldn’t spoil the whole bunch; that, on balance and in the long-run, I’ll still be better for having done deals. I also view the bad deals as a type of education, which helps me find better deals in the future.

Note: I should note here that when I talk about getting screwed on a deal, it’s not always the case of a nefarious business partner who wants to win while you lose. Sometimes, and this has been the more frequent situation for me, you can get screwed on a deal when you work with one or more well-meaning business partners who innocently don’t value you or your time or efforts or skill as much as they should. There isn’t a dark purpose here; they just don’t realize what you bring to the table.

If you do deals, or want to do deals but are a little cautious rigtht now, here are a few tips that can help you avoid getting screwed in a deal:

1. DO YOUR DUE DILIGENCE

Don’t just jump blindly into a deal with someone who contacts you. Look into it first. Consider two things: The people involved in doing the deal, and, the upside (and downside) potential of the deal itself. This requires research — the one dreaded, arduous task that most people desperately want to avoid. Fortunately, I enjoy it and have found that a few minutes or hours of research and help to save or even make thousands of dollars. Research will help you understand who you are working with, and it can give you a dose of realism about the project’s potential. Due diligence won’t eliminate every instance of potential screwing but it will help you go into the deal with your eyes wide open to what the real potential is.

2. START SMALL

This is a tactic that I’ve adopted in the past few years: Don’t jump in with both feet, especially when working with someone you’ve never worked with before, or in an industry or business model you’re not familiar with. Rather than going all-in on a huge deal, start small. Work on a small aspect of the deal so that you can measure results and get into a rhythm with the person you are working with. Rather than co-authoring a book or building a massive business with someone, start on an ebook or blog just to test the waters.

3. GET IT IN WRITING

When you work with someone else, it helps to get the details in writing. Even if you forgo more formal, legal documents, it’s still helpful to know what each of your expectations are going in and what goals you have to work toward. On a couple of successful deals (but ones that had the potential to go south), we had information in writing that helped us to evaluate the progress of the deal as well as the expectations of each party and we relied on that to measure how we were doing and to hold each other accountable. When things started to go awry, we had a written document we could go back to and have a positive conversation about.

4. KEEP LINES OF COMMUNICATION OPEN

This one probably shouldn’t need to be said but it is a way to avoid getting screwed in a deal. There are actually two aspects to this: First, open communication between all parties helps to ensure that you are frequently and positively talking about the deal and nothing gets hidden away. Second, the act of communication, itself, is a way to keep a pulse on the deal. If communication suddenly dries up or becomes very one-sided or tense or accusatory, that’s a pretty significant warning sign.

Which leads me to the next point…

5. WATCH FOR WARNING SIGNS

When I look back at some of the earliest deals I’ve been screwed on, I laugh at myself for not seeing the warning signs earlier. There are all kinds of warning signs in a deal but often they are: Delays and rescheduling, actions without explanations, multiple excuses piled on top of each other, inaction, the conversation shifts to accusation, and blaming others. Sure, some of these might pop up once in a while on their own and you need to judge whether they are legitimate (i.e. there really was an unavoidable delay, perhaps because of a technological issue) or whether they are part of a larger problem. One or two of these things, once in a while, is usually okay. But the more these things happen and the more frequent they happen, the more likely you are about to get totally screwed in the deal. The trick is to see that tipping point as quickly as possible — to know when it’s no longer a one-time-problem but before it becomes a persistent problem for you.

6. BE INDISPENSABLE

Deals are done by people who want to succeed together. Implicit in that assertion is that each party believes the other person is a key part of the deal and has something to contribute. As long as you are indispensable to the deal, it’s not likely that you will be screwed. The moment you no longer contribute the value that the other person in the deal believes you offer, you risk becoming pushed out of the deal. In one deal, I bought a website. The person I bought it from was incredibly helpful and proactive… until I released the money from escrow. Once that was done, the project ground to a halt and although I now owned the website, the communication dried up. I still had the asset I purchased (which is why I used escrow) but I was left to do a lot more of the work afterward. That’s just one example using money to illustrate indispensability. You might be indispensable in other ways, such as in your network or the content you create or the way you can rehab a property. As long as the other person sees you as absolutely essential, you’ll probably not be screwed in the deal.

7. IT’S OKAY TO SAY NO TO CUT YOUR LOSSES

A few year ago, I put together a deal with someone in which I would do some consulting for him and his network. In a number of ways, the deal started to go south. I tried to end it once and was talked out of it. But I knew that I was about to get totally screwed on the deal so, even though I had invested some time into it already, I cut my losses and moved on. Saying no can (and should) happen before the deal even starts. But it’s hard to say no when someone is really selling us on a deal and waving promises of untold riches and fame in front of our faces, it can be hard to say no to a deal. And if you agree to a deal but later find out it’s going bad, don’t try to stick to it through to the end. Get out while you can. It will be painful but it’s better in the long-run.

8. TRUST YOUR INSTINCTS

Instinct is that mysterious voice in the back of your head that tells you that something is about to be wrong. I don’t understand why it’s there. I don’t understand how it knows. I don’t understand why it’s so often right. But it is there, it knows, and it’s often right. So if your instinct starts to tingle and nudge you away from the deal, listen to it. I have never ever ever ever regretted following my instincts. I have frequently regretted ignoring them.

9. BUILD CONTROL INTO THE DEAL

This is the one that has the best opportunity of eliminating the chances of you getting screwed in a deal. It’s also (in my opinion) the hardest to do. Not surprisingly, it’s the one I’m the worst at. When you control the deal, you ensure that even if you do get screwed, you come away with a benefit. In a real estate deal, perhaps it’s a contract on the property or ownership of the property itself. In a business deal, perhaps it’s the intellectual property or the patent or the website or the cash flow that you own.

I love doing deals. I love that rush of putting something together with someone else and watching it grow. But once in a while, a deal comes along that goes south. They happen. It’s the cost of putting yourself out there. But if you can implement some of these ideas when you’re first putting a deal together, you’ll be less likely to get screwed.

Case study: Revamping a sales funnel incrementally

When your business is struggling with making profitable sales, sometimes what you need to do is revamp the sales funnel — basically take everything apart and rebuild your business from the sales funnel, up.

The benefit of doing this is that (if you plan correctly) you can do it fairly quickly, without a lot of disruption. However, it can be costly and it can be potentially disruptive… especially if you rely on the income you generate week-to-week. So the other option is to rebuild your sales funnel incrementally: To identify all the areas of your business that need to change and then to develop a plan to slowly switch over to a new sales funnel in a way that doesn’t diminish your ability to market and sell to the people in your existing sales funnel. It’s more time consuming and potentially more costly, and sometimes it can feel like you’re juggling A LOT of balls at once, but the benefit is that you don’t cut out a week or month of sales.

One of my clients, a real estate investor, was facing this very dilemma. His business was suffering because of a change in the economy and he needed to make some dramatic changes in his sales funnel. However, he didn’t want to be too disruptive to the people who were in his existing sales funnel. So we put together a plan to switch him over slowly. (Actually, he came to me with part of a plan in place already, as well as a website redesign already underway).

We laid out the plan step-by-step:

  1. First we would create content for his new website.
  2. Then we would create an autoresponder series.
  3. Then we would offer a free report to entice subscribers.
  4. Then we would start creating passive income products to extend his income-earning opportunities.
  5. After that, we would look at additional marketing plans to boost his marketing, once he had a more automated marketing/selling system in place.

As I write this, we haven’t finished yet. We’ve implemented someone of these things and the rollout is going smoothly. However, we haven’t finished creating and implementing everything just yet. As I said, it’s a long-term plan so it takes some commitment but building your sales funnel incrementally can keep your business running while you transition.

How to overcome your fear in real estate investing… and start doing deals!

I know a lot of people who WANT to be real estate investors but aren’t. And the reason is: They’re scared. Some will admit it, some won’t, and some will blame it on an external factor or restate it with words like “unquantifiable risks” but it almost always boils down to fear.

For example…

  • There’s the fear of trying to find the money in the first place to do a deal (either the fear of asking at the bank and potentially blowing up your credit if a deal goes bad or the fear of rejecting when you ask other investors for the money).
  • There’s the fear that you’ll get totally hosed on a deal by someone, perhaps paying too much for a property that isn’t worth it.
  • There’s the fear that you’ll do the deal only to get totally hosed on the other side of the deal — by evil tenants or by a housing market that turns south when you are trying to flip the property.

Not to mention, the fear of liability, the fear of succeeding and having to make big changes in your life, the fear of spending money you don’t have right now, the fear of telling your friends that you are doing something only to have to face them later when it fails… I could go on and on.

So how can you overcome your fears in real estate investing? Well one of the reasons we feel fear is because of the unknown. It’s wired into our DNA to fear the unknown and to stick close to things that are familiar and comfortable. So the system I developed to overcome fear (which I’ve used when doing real estate deals, investing in equities, investing in businesses, or working through a tricky client assignment) illuminates the unknown, helping you move forward confidently.

It’s a surprisingly simple method that I call “sequencing” and it’s a system I developed while being a technical writer for an insurance company.

SEQUENCING YOUR WAY OUT OF FEAR

Sequencing is basically creating a detailed step-by-step list of the entire process or procedure or system or business model that you’re going to do. And it works for any kind of real estate investing.

Start by listing the steps of the process from start to finish, as best as you can. For example, if you want to be a landlord, then your initial sequencing effort might look like this:

  1. Get prequalified for a second mortgage
  2. Find a good property
  3. Buy the property
  4. Rent it out

You’ve created a really simple, basic list (or sequence) of the steps you need to take to become a landlord. But as you look over that list, you realize that there are many steps in there that you didn’t actually cover. So you go back and add a few more detailed steps.

  1. Find out how much downpayment is required for a second property
  2. Look for ways to access that money (i.e. Line of credit, savings, etc.)
  3. Check credit to ensure that it is optimized for the best possible mortgage
  4. Find a mortgage broker who can help find the best rates
  5. Get prequalified for a second mortgage
  6. Identify what qualities make a good rental property
  7. Find a real estate agent to work with
  8. Look for properties that fit the criteria identified earlier
  9. Put an offer in on the property
  10. Close the deal
  11. Advertise for a tenant
  12. Review tenant applications
  13. Sign a lease

Okay, this is a little closer to what the landlord sequence probably looks like. See? Already you’ve started to shed light on the process.

But you’re only getting warmed up! Now it’s time to go deeper. This is where you start to read, research, ask questions, get educated, and get mentored to fill in an even longer list. Look at each step in your sequence and ask yourself…

  • Can I narrow it down even more (perhaps by turning one step into several smaller steps)? If you can narrow it down, do so. In the 13-step sequence I listed above, each step could theoretically be narrowed down to even more, creating a list of dozens of steps. For example “advertise for a tenant” could be several more steps, including “identify the qualities of a good tenant”, “find the most effective locations for rental advertising”, “sign up at 5 rental advertising websites”, “create the copy for my tenant advertisement”, etc.
  • Do I know everything about that step or is there more I can learn? If you’re not sure how to get from one step to the next or how something works behind-the-scenes, make a note and go research that thing.
  • Do I feel comfortable acting on this step? This is a huge question to answer. Perhaps you can narrow difficult steps down into several easier, smaller steps (and you should try to do that) or perhaps you realize that one aspect of the effort is simply too difficult for you (in which case you need to find some kind of work-around).

Expect to create a list of dozens or even hundreds of steps.

“Hundreds?” you ask. Yes. Hundreds of steps. That’s okay. Another reason that people don’t become real estate investors is because they don’t know where to start and everything seems overwhelming. But by creating a sequence of hundreds of steps, you make it easy and obvious what you need to do next.

Keep going until you have created an amazingly detailed sequence that you can act on. Once you have the sequence, you have a step-by-step checklist that will take you through the entire process, with nothing scary or unknown.

That’s it! It’s almost so simple that you might wonder why you never did it before or you might wonder if it works. Trust me, it works. Build a sequence, act on that sequence.

Remember reading in Robert Kiyosaki’s Rich Dad Poor Dad book about finding a formula that works for him? That’s basically all this is. You’re building a formula in a numerical sequence.

BEST SEQUENCING PRACTICES

There will be times when you learn something that doesn’t seem to fit in your sequence. That’s when you need to ask yourself if you missed something (and add it in) or if there is a reason why this step might not be included in your sequence (i.e. it’s a step that is only done in certain areas but you don’t have to do it in yours).

Once you’ve done the sequence once, you may find that you can make it even better next time. Some steps can be eliminated, streamlined, or done concurrently with other steps. You’ll go faster (and probably more profitably) the next time.

And here are the two most important sequencing best practices (they work in tandem)…

  1. You can never be too detailed. You can create any sequence that is thousands upon thousands of steps, even for the simplest deal. If you need to do that, do so. The more detailed you get, the more knowledgeable you become… and the less fear you’ll have about doing the deal.
  2. A sequence is only useful if you act on it. A lot of aspiring real estate investors mistake research and learning for action. You should learn how to become a better investor but at some point you need to act. This sequencing exercise is designed to empower you to act but it is possible to still use it as an excuse for inaction (i.e. “My sequence isn’t complete yet”). So get as detailed as you can (see the tip above) but don’t get so detailed that you simply don’t move forward.

Bonus tip: Your sequence becomes an asset in your real estate investing business. It’s an asset that you can use over and over… and perhaps even sell to others.

Aaron Hoos’ weekly reading list: ‘Business models, prospecting, and social media’ edition

Aaron Hoos: Weekly reading list

Here are a few of the things that caught my attention this week:

  • How to turn your business idea into a business model: I’m totally a sucker for any article that contains the word “business model” in the title. It’s Pavlov’s bell to me. This article by Entrepreneur does a great job of highlighting the difference between a business idea and a business model and then connects the dots to help you turn your great idea into an actual enterprise. This article is a must-read for any entrepreneur who thinks they’ve created a better mousetrap.
  • Live to prospect or prospect to live?: This is a blog post by my friend Mark McLean. Like so many of his blog posts, it contains really practical advice for real estate professionals who want to grow their practice. In this blog posts (which contains video and text — be sure to watch the video!), Mark talks about running (he’s an avid runner) and draws some parallels to prospecting — possibly the most important activity any real estate pro can do.
  • Downtowns: This article by The Economist explores the consequences (both good and bad) of cities. Cities have some advantages, like diminished transportation costs and improved competitiveness (if you’re a Michael Porter fan, you’ll think this stuff is gold!). Cities also have disadvantages, primarily short-term economic thinking that can lead to downturns and even amplify their impact. I live this type of macroeconomic thinking (although I recognize that it’s not going to compel anyone to abolish cities anytime soon). What’s interesting about this article, to me, is that you could exchange the word “city” for “nation” and the article preserves a lot of truth. Many of the opportunities and challenges created by a city are also created, on a larger scale by a nation. This article won’t interest everyone but it’s well worth a read if you love economics as much as I do.
  • 20 astonishing social media statistics for financial advisors: I often hear from financial professionals that social media is not a place where they can do business. It’s hard to target geographically, people don’t want to talk about finances on social media, and there are (of course) regulatory considerations as well. But this article from the Financial Social Media blog, does a great job of presenting a number of social media statistics that should jolt these professionals into taking a second look at social media. I’m not saying it will be easy but it’s definitely worth considering how your financial practice can use social media. If you’re not sure how, start by developing your social presence map.