When Julian got kicked out of college and fired from his job at a call center, he never would have thought in a million years he would go from being a tenant in a $300/month cat infested apartment to being one of the youngest real estate investors in south florida.
In 2019 Julian was able to purchase a 10 Unit apartment in West Palm Beach and has consistently invested in projects and built multiple businesses over the last 9 years.
Today He wants to break down 5 things he did to avoid mistakes and hopefully you can learn from what he did to get your first deal done!
1) SEEK OUT GREAT REPRESENTATION
One of the most important things you can do to start is know who is representing you and what kind of experience they have in real estate. Everything from negotiating, to communication, to helping you structure deal correctly, all plays a big part on getting a good deal. The success of a real estate transactions can depend heavily on having a good agent that can do the right due diligence and ask the right questions. You do not want any unturned stones. If you represent yourself as a realtor, Julian believes it’s important to really understand the area, the comps (Comparables), and have an understanding process of duplex/quad residential deals, as well as deals that will be commercial if they are 5+ units.
2) SEARCH OUT THE RIGHT DEALS
The last thing you want is to be surprised by things after you purchase because you did not do the due dillegence. You should check for zoning issues and liens on property. This could be a lot more money out of your pocket if you don’t. Follow the 1% rule for a property – The income property should rent out for at least 1% of the purchase price to yield positive cash flow. Check out the cap rate! Cap Rate (The price/earnings ratio) is a great signal for analyzing the property in an specific area. Cap rate is accessed for their profitability and return potential. Don’t overlook this number! make sure to also to double check the numbers and make sure the earnings stated are accurate and not hyped up.
3) INSPECTION INSPECTION!
Ask for a longer inspection period if needed so you can do a thorough inspection with a professional. They will look at structural damages, mold, electrical issues, and other specifics that could end up costing you thousands and tens of thousands if not taken seriously.
4) THE APPEAL
If a property has very few pictures online and not a great curb appeal, you can go in there and offer quite a bit lower than asking. They don’t feel confident enough with the property and probably want to get rid of it since they have not taken the time to really invest into pictures or appeal. If they did not spice the property up, think about going in there and improving the curb appeal to make it more valuable! My personal property did not have the best curb appeal so one of my first focuses was to put a plan together to spice up the outside and make it look great to future investors & the current tenants.
5) NEGOTIATE THE RATE
Negotiations with a lender can work in your favor if you have all your ducks in line! Credit is important as well as history with commercial or personal real estate. If you have a personal property, that can help as collateral that a bank needs just in case. They will give you better rates if you have that. Even if you don’t you still have lots of negotiating power! Contact smaller banks direct and try to stay away from brokers. They will typically add on %s for connecting a bank to your deal. Could be unnecessary if you can just make a few calls yourself instead. Everyone is trying to get a piece of the DEAL so you don’t want or need extra % tacked on because you did not take a few extra minutes to make some calls. If you can lock a no interest rate in as well go for it! That will give you a lot more cash flow to make improvements if you want, and you will just end up paying the principle down later on.
There are a lot more factors when it comes to making a good deal in the real estate game, but I truly believe if you have the right guidance and you do your due diligence you will be able to make a deal. The right guidance is important from realtor as well as real estate attorneys that can examine the legal jargon and sort through it!
Do NOT leave it up to someone else to know everything about the deal for you and do not leave it up to someone else to understand the basic terminology. This will end up that you look like an amateur and that is when people are taken advantage of.
Even if you are not ready to do your first deal, Start listening to podcasts and videos that will help you understand the art of the deal! Things that helped Julian were “Biggest pockets podcast” and free videos on YouTube. As well as, seeking out mentorship and advice from those who have done many deals in the past helped me immensely too.
One of Julian’s favorite quotes by Andrew Carnegie that got me interested in real estate investing is “Ninety percent of all millionaires become so through owning real estate.” Julian says learning this was mind blowing!
Getting your first deal done is very exciting and in my experience once your first deal is done it will be easier to get into more deals. Banks look at your as more reliable and you build more connections within the real estate community and investor community both local and global.
Enjoy the art of the deal and enjoy the process of real estate investing!