There are a lot of reasons to get into real estate investing, whether it’s the flexible lifestyle, exciting opportunities, or ongoing learning and development. And while these are all amazing benefits to real estate, most people get into it because of the unlimited earning potential. You can make a lot of money with real estate investing. That’s kind of what we’re all about here at The Executive REI Show—building generational wealth through real estate investing.
So, we want to hear from people who have been successful in real estate and learn from them. That’s why we invited Jorge Abreu onto the show. During our interview with him (Episode 32), we talked about his businesses, how he creates systems and processes, and why doing your due diligence matters so much for real estate investing.
There is no one formula to follow for real estate investing success, but if there were, we think it would be pretty close to Jorge’s: become an expert in something, scale up through systems, and do your due diligence.
Become an expert in an asset class
Like a lot of real estate investors, Jorge’s story is one of trying a bunch of different things. He has been in real estate for the last 15 years and has tried his hand at a number of different things, including single family homes, wholesales, rental units, fix and flips, and ground-up developments.
This variety of experience gave him the understanding and knowledge to be successful in real estate. By trying different things, he could see what works and what doesn’t, and what he is personally and professionally interested in. Today, he is basically exclusively invested in multi-family real estate with 100+ units. He likes this asset class because it is more stable than others, as he went through the 2008-09 recession and saw how they fared better. Ultimately, people always need somewhere to live, and the high prices of single-family homes mean that more people are turning to rentals over purchasing homes.
But every real estate investor is going to favor a different kind of asset class, and they need to find out what works for them. The key here is to pick an asset and become an expert in that area. Invest time and truly learn everything you can about it. Jorge’s advice to new investors is to dig deep and put in the work to learn as much as possible about the asset.
Scale up through systems
Once a real estate investor knows the direction they want to go, scaling up is the strategy for growth. Jorge is a big fan of creating systems and a team to support scaling so that he is not running around trying to do everything himself. Systems are important because they help you grow your business and allow you to focus on your interests and expertise.
Here are a few ways that you can consider scaling a business through systems:
- Utilize a CRM (Customer Relationship Management) System: Finding a CRM that works for you is essential, as it will help you stay on top of all important information related to clients.
- Build an Investor Portal: If you are a sponsor that pulls together syndication deals, then you have a lot of information to provide to investors. Keep track of it in the investor portal so that all the important information stays organized and transactions can easily be done through the portal.
- Build Your Team: Real estate investing is not a solo sport! Bring on team members who can help you build your business. Key positions may include market analysts, acquisitions managers, and investor relations professionals.
Another way that Jorge and other real estate investors are able to scale is by being involved on both the investment and the construction side. Jorge has two companies, one of which manages the investments and one that manages construction. While this is not something a beginner can jump right into, it provides him the control over all aspects of real estate development and investing, ultimately creating more opportunities for wealth generation.
Do your due diligence
Real estate investing has the potential to earn you a lot of money, but it also has a level of risk to it. You are investing money into projects and, depending on the investment, there are so many factors that will influence the returns you can achieve from it. For this reason, it is so important that you do your due diligence before getting involved in any project, whether you are the sponsor or an active or passive investor.
Due diligence is really just about doing your homework and ensuring you fully understand all the details of a deal before signing on. Here are a few things to consider:
- Don’t assume anything. While “rule-of-thumb” assumptions can be helpful to get a quick snapshot, it’s important to deal with hard numbers and projections whenever possible. Try to be as specific and accurate with the math as possible.
- Do your market research. This is where team members can really help you in your business. Market research can be a specialized skillset, and it’s important to accurately research and understand the market you are getting into.
- Check out the sponsor. Always spend time researching the sponsor of a project to ensure they are trustworthy. This means you need to look into their background and past deals, talk to them, and get your questions answered.
Due diligence is about being prepared, which is so important in real estate. Don’t skip this step, but invest time in learning about what you are involved in and make wise decisions.
Conclusion
The path to wealth generation is not always the same for everyone. Real estate investing is diverse, so it will look a bit different for every investor. However, there is universal advice that will help every real estate investor be successful: become an expert, scale up through systems, and do your due diligence.
If you want to check out our episode with Jorge Abreu or others, head on over to www.executivereishow.com. You can also connect directly with Jorge on his website, www.elevatecig.com, or via email at jorge@elevatecig.com. He’s even offered some free resources to listeners of The Executive REI Show, so make sure to reach out today!
