If someone came to you and wanted to eventually be a full time investor but knew they had a to work in a similar field in real estate, which direction would you point them in?
I have a friend thats asked me just that and don’t know what field within real estate would give them the best experience until transitioning to full time investing. They have some experience building and investing already.
Thanks for any advice!
Believe it or not I’m going on a lark and say a real estate lawyer just to learn the real estate laws and learn how to properly draft contracts according to said laws. That would take some time but you would have advantages over competition.
You can also say Realtor for market knowledge as well.
Large banks are using AMCs to supplement their QC departments for reviewing appraisals and BPOs. We have appraisers doing this review work making 100K+ without leaving their homes. A saver can easily accumulate seed capital quickly. They would just have to get their license and become part of an AMC network.
AMC — as in appraisal management company?
Yes
Construction. Even if you don’t do any of the work on your investment properties you’ll want to understand what your hired help is doing and what it should cost.
Thanks for all the feedback. He hadn’t considered the option of a real estate attorney due to the amount of time needed in school but had considered both R.E. appraisal and Commercial brokerage.
Does anyone know how much time would be needed to get started in either of these career paths before getting established? Also, if pursuing appraisals on the commercial side, is there a more certification, etc involved over residential?
I’ve heard it can take 12-24 months to get yourself going in that part of the industry
Thanks
I agree it’s definitely important to be knowledgeable about what is involved in construction and repairs when investing. As a licensed GC, I know first hand how much this area affects the bottom line profits in a deal.
Were you recommending my friend get involved in a superintendent/construction manager position? Here in Charlotte, there is steep competition both residentially and commercially even though the industry here is still active.
Thanks
I assume best means chances of success. I gather you want to make a lot of money and get a head. All of these paths can lead to great success.
In Real estate field- A saver can easily accumulate seed capital quickly. They would just have to get their license and become part of an AMC network.
“real estate investing” is kind of a blanket term, therefore you can’t say what carreer would make the best investor. There are tons of different strategies to real estate investment. Are we talking…
-building/development? if so is it residential? commercial? develop and sell, or be a developer/owner?
-flipping/rehabbing?
-cashflow?
-investing in notes/tax liens?
each investment strategy requires (maybe the same general knowledge) but different specialized knowledge. Would a real estate attorney be especially good at flipping/rehabbing because of his knowledge of law? Sure it couldn’t hurt, but I don’t see it helping that much either. Would someone with a construction background do particularly well with tax liens? No. Would someone with a financial investment background be exceptionally good at residential development? No. He could run the numbers, but he wouldnt know the rafters from the foundation.
arguments could be made for any career related to real estate. from a general perspective though, I’m inclined to say Broker or Agent becaues of the general real estate courses required to get licensed.
In CA, it’s required to take:
-Real Estate Principles
-Real Estate Practice
-Real Estate Finance
-Real Estate Law
-Real Estate Economics
-Real Estate Appraisal
and there are certain electives like Property Management, and advanced coursed for the ones listed above. It’s also pretty nice to have access to the MLS and represent yourself during purchases–you’d get 2.5-3% cash back :cool
Thanks for the post Investrix… I will pass along the info. My friend is looking to be a long time investor mainly in residential and apt buildings (rehabbing, flipping, & renting as well).
So it probably would be a good option for him to become an agent. Though I’m thinking he would prefer to focus on working with investors instead of homebuyers mainly due to his analytic side of looking at properties. I guess a commercial broker could be an option as well though I’ve heard it takes longer to get established in the community.
Thanks for the advice! I should have been more specific in my original post…
I would say RE Agent because if you are smart and ambitious you do/can get some official training and mentorship for free once you are licensed and start working for a broker.
If he is more interested in working with investors then this is the field he would learn about and specialize in as a real estate agent, and work with investors…He could be a buyers agent for a savvy investor and kick back a commision percentage to his investor in exchange for not only the opportunity to do business, but some education from that investor.
I am an agent myself, however only do leasing, but am interested in investing…The only downfall I think to being a licensed agent and investing in the field at the same time is (at least in Texas) you have to disclose that you are a real estate agent when doing any deals buying or selling…this means a potential seller might re-think their property or price or the deal once they find this out and start negotiations. Just a thought though.
No problem man. The Agent to Broker path is the one I’m on now, although I’m not very active as an agent because I have a full time job that keeps me pretty busy. I’m really just doing it for my own, independent, access to the MLS and when I buy something I want to represent myself and save a little.
Even with investments in multifamily, there a lot of ways your friend can go. Do you know if they want to be hands on? Some investors want to do everything themselves–property management, maintenance, etc… Other investors want a property management company to control everything so they can just receive a check at the end of the day. If your friend is the hands on type then general “how-to” knowledge of maintenance would be good. If they’ll be doing major rehabbing or even some development of multifamily apartments then I would highly recommend some kind of background in construction, either just the manual labor, or a PE, or even a PM if they want to stick with it for a while. Keep in mind though that this is a business and a background in some facet of business (whether schooling or actual experience) would be beneficial.
I’ve been looking to get into a small multifamily investment for a while. While I’m getting my finances in order I’ve been running numbers on listings for the past few months, just to see what’s out there and available. In school I majored in Business and Entrepreneurial Finance, and I can’t tell you how valuable my finance knowledge has been when analyzing properties. A lot of people use pretty simple rules of thumb like the 1% rule, 2% rule, 50% rule to analyze properties (at least a quick analysis). I’m not saying those are bad rules, but when you do your due diligence the analysis has to be much more indepth than that. From my knowledge of finance I knew how to do a Net After-Tax Cashflow analysis that calculates the debt-service ratio, cash-on-cash return, IRR, NPV (using the cost of capital as the discount rate). There are templates of decent NATCFs, but understanding them from a conceptual standpoint is huge. Also, economics plays a huge part in this as well. People who invested in multifamily in 06 and 07 probably did so expecting huge returns, but when the market crashed so did they. Meanwhile smart investors, the ones who saw this coming, were sitting and waiting. They were cash heavy and just waiting for all of these guys to fail so that they could step in and take it over at its lowest point.
Sorry, I’m rambling now. My point is, no matter what background your friend has–he can never stop learning. There’s always some knowledge that can be gained. I have a background in finance, but eventually I want to develop, so what do i do? volunteer at habitat for humanity and network with my PE friends so I can understand that angle of the business.
Anyway, I’m only 23 and have limited real world experience and this is all just my 2 cents.
Good luck, keep us updated :beer
Thanks for all the advice… Will keep you posted!
Does this person have a job now? If so, why not stick with that and start out investing part-time. Seems to me the thing to do if you want to become a full-time investor is start out as a part-time investor.