I wish I had a solid mentor when I first started investing in real estate. I can’t imagine all the pitfalls that kind of relationship would have helped me avoid. So, if you’ve got someone who is experienced enough in real estate investing to come alongside you, donate their time, and give you solid advice, cling to that person like a drowning man grasping a life raft.
Real estate investors are busy people (aren’t we all), so whatever time your mentor is willing to give you, make sure you get the most out of it. If you’re newer to real estate investing, you may not even know what questions you should be asking. In this blog post, I’m going to give you 5 questions to ask your mentor. Let’s get started.
Question #1: What investment strategy have you had the most success with?
I feel this is the best question to start with because you want to make sure your mentor has the same real estate investing strategy you do. There are three main real estate investing strategies: buy & hold (rental properties), buy & sell (flipping) and wholesaling.
Each of these strategies also looks different depending on the type of real estate. For instance, some real estate investors focus solely on residential properties while others pursue commercial buildings. Some investors are only interested in acquiring land. You get the idea.
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So, if your aim is to build a real estate portfolio of apartment buildings, a mentor who only has experience flipping land deals may not be the best fit for you. That’s not to say that such a mentor wouldn’t be able to give you any sound advice, but ideally you want to find a mentor who has knowledge with the REI strategy you’re interested in pursuing.
Question #2: What are some of the biggest mistakes you made in your first year as a real estate investor?
When I was first starting out in real estate investing, I heard someone say that surviving the first year is the hardest part of a real estate investing career. It wasn’t until I got through my first year that I truly realized how right they were. This isn’t to say that mistakes aren’t made even after the first year, but the first year is tough. Learn from the mistakes of others.
In my experience, my most costly mistakes can be tied to making bad hiring decisions and underestimating rehab costs, so you’ll want to dig into these topics with your mentor.
Question #3: What are specific things you look for when touring a property?
When you’re just starting out, every cheap distressed property looks like a winner. After all, don’t “fixer uppers” make the best deals?
The reality is it takes a keen eye and experience to determine if renovation costs will exceed any potential profit. Your biggest expenses will likely be tied to the following: roof, electrical, plumbing & HVAC. With this being said, you still need to know what the rough estimates will be for these items + other repairs. Ask your mentor if you can tag along next time he/she tours a property to get a better understanding on how they work through determining rehab estimates and other items that may or may not make the property a wise purchase.
Question #4: What REI technology do you use?
“Time is money”, someone once said. The more you can leverage technology to automate tasks, save you time and make the overall REI experience more enjoyable – do it.
If you’re looking to get into the rental business, I strongly recommend you look into Rently lockboxes and Buildium property management software, but there are certainly other apps and software on the market that can add tremendous value to your business depending on your strategy and the type of real estate you’re pursuing. Ask your mentor about REI technology & software they recommend.
Question $5: What is your exit strategy?
Real estate investing is a means to an end: wealth building. Your exit strategy is basically how you will sell off your investments and turn your equity into cash. There are a number of different ways you can do this. You can work with a local real estate agent to put your properties on the market, you can sell your properties directly to your tenants using lease options or you could wholesale your properties to other investors.
I’m not going to break down each kind of REI exit strategy in this post, but it’s an important question to ask your mentor. A REI exit strategy is something you’ll want to think about up front as you never know when you will want to exit the real estate game.
Having a real estate investing mentor in place even prior to day one will certainly help you avoid mistakes and potentially even a financial crises. In this post I’ve given you 5 questions to present to your mentor.