EP251: If You Want To Make Millions In Business, Don’t Make These Mistakes

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There has never been a time in human history where it’s easier to create wealth than it is right now, but it may not feel like it.

And because it doesn’t feel like it.

People think it’s hard, but it’s not really that it’s hard, it’s just that it’s hard for you.

Today we’re going to show you why it feels so hard to you (at one point we felt it too). 🤯🤯

And we’re going to discuss why many real estate entrepreneurs and those switching careers to real estate often fail and if you don’t make these mistakes, your real estate investing business will succeed.

We just had a coaching session earlier last week with someone who is in our program—a highly successful business owner before she joined our program she felt like she wasn’t as far along financially as she had hoped.

She has been exploring real estate, specifically working with apartments, but she hasn’t yet found success in being part of a team.

Okay, make sure to write down these mistakes you need to avoid if you want to grow your real estate investing business.

Having been in this industry for five years and acquiring nine large multifamily apartments worth over $300 million, let’s just say we don’t wish these mistakes on any of you.

Mistake #1: Clueless about your values.

When we first entered the real estate scene, we brainstormed ideas among ourselves about what we could do.

We lacked the net worth and the network of investors needed to raise millions, and we found it difficult to build relationships with brokers. Brokers, being busy people, weren’t keen on hanging out at Starbucks with newcomers like us.

Additionally, living in a non-landlord-friendly state meant we couldn’t be directly on the ground to manage properties, so we thought the easiest way for us to secure a deal was to focus on underwriting.

And it’s true, that approach still holds: if you secure a deal, you gain more control – you name your own price.

However, what we initially overlooked was the importance of partnering with seasoned pros.

It wasn’t that we didn’t want to; we either didn’t know our value or we didn’t have what they were looking for.

Honestly, we actually avoided this step. 🥺🥺

But as we became adept at underwriting and consistently submitted offers, we discovered that people didn’t take our offers seriously because we lacked a proven track record.

Especially for the larger deals we were going after.

Now that we’ve been in the game for some time, we realized it’s because underwriting it’s both art and science.

There are many smart people who excel at the science part, but mastering the art piece takes a long time to become an expert.

This expertise is crucial and often missing in newcomers, which leads to experienced general partners being hesitant to partner with newcomers.

Here is the key reason why experienced general partners often don’t partner with new people when they bring deals: Newcomers often lack detailed knowledge of underwriting, market intelligence AKA localized market knowledge, etc., similar to how babies are unsteady when they first learn to walk.

Just as babies frequently fall, new real estate underwriters are just beginning to understand the basics.

Partnering with them often means starting from the ground up.

This isn’t something that we don’t do.

But of course, we do this with some of our Key Principles and passive investors – 📝 reviewing their underwriting and advising them on practical steps like obtaining insurance quotes or giving them our rolodex of attorneys, and our go-to cost segregation specialists.

However, as you can imagine, this is very time-intensive and we reserve such detailed support for those who trust us with their investments and with whom we have a mutual respect.

Okay we digress a little. So, we had to shift our approach because we were focused on what we wanted to do, but not on learning how to add value to the team, especially to the seasoned pros.

That shift was crucial in landing our first deal.

We met our first partners at an event, and one of them asked if we could raise a certain amount of money while performing some investor relations duties.

Knowing that this was what they were looking for, we confidently said yes.

And that led to mistake number 2.

Mistake #2: Operating from the “The Duct-Taped Approach”

Duct-taped may be amazing from MacGyver and his escapades, but not so much when it comes to making lots of money.

Not having a system in place and lacking guidance will crush your real estate investing dreams faster than any killer can.

You see when we started out, we had no guidance on how to raise capital and thus had to piecemeal together information – “the duct-taped approach” from various sources. 😖

This approach happens when the real estate investor is reactionary, instead of planning ahead, you react once you have a deal under contract and thus there’s no thought, logic, or system already set up so that you make this process effortless.

So what were our “the duct-taped” moments, well not even knowing how to communicate with our investors, using CRM – Customer Relationship Management, it could have been IBM for all we knew.

Our first try at sending a “blast email” to tell our investors (our tiny email list) about an exciting investment opportunity was a total flop.

We innocently loaded all our investor contacts into our Gmail and hit ‘send all’. And bam!

Undeliverable 💌 email messages started pinging back faster than ping-pong balls in a tournament. Can you picture our panic?

Then we were stuck, not knowing our next move. Talk about a classic newbie blunder!

This mistake wasn’t just a facepalm moment; it really stressed us out.

We were trying to get people excited about joining a webinar to dive into this investment opportunity.

No email means no invites, which in turn means no investors.

As you might know, we take our commitments seriously.

For us, integrity is key, and our word is as good as gold. The idea of letting our team down after making promises to them was absolutely agonizing.

We were invited to join a team to raise money and handle investor relations tasks, and we couldn’t even notify them properly.

As you might be aware, you could have a contract for the best deal, one that’s very conservative and could potentially make a lot of money for everyone involved. However, without the necessary funding, there simply is no deal.

And that was our first deal, we had no idea what capital raising is really about.

We knew some people, but we didn’t have a system or process in place for effectively managing it.

Beyond the email mishap we shared earlier, we still had mishaps about how to set up a 🖥️ webinar, how to get people to sign up, how to make sure they actually showed up, what to say in the webinar, what to do after a webinar, how to get people to watch the replays, how to follow up, how to bridge any gaps in our capital raising efforts.

And even how to track investors along the journey.

Let’s just say it was nearly a miracle that we completed the fundraising at all.

👉 We ended up raising $3.9 million on our first deal.

We did it, but it wasn’t easy, and definitely way harder than we had anticipated.

Just so you know, in multifamily apartment syndication, we’re usually on a tight schedule when it comes to raising capital.

After we enter into a contract, we typically have about two months to secure the necessary funds.

We can sometimes get up to two extensions, which brings our total time to about two and a half months. If we don’t manage to raise all the capital by this deadline, there’s a significant risk: we could lose our deposit to the seller.

Okay, moving on to mistake #3

Mistake #3: “Til Sell Do Us Part”

We hear this all the time, “Palm, Nancy, I’m in a deal!”  😵😵

But when we ask who the lead general partners are and who will manage the property, the typical response is, “Let me check.”

To be frank, that’s a red flag. Just as it’s unwise to marry someone before really getting to know them, entering a deal without clear knowledge of key players and their roles is similarly risky.

If you’re serious about transitioning into multifamily apartment investing and potentially making millions, it’s essential to treat it as a long-term commitment rather than just a hobby. This venture could have significant implications for you and your family, so being selective and cautious is crucial.

You wouldn’t want to risk your future by partnering with just anyone.

In 2023, we turned down deals involving assets valued at a quarter of a billion dollars.

It was a significant decision, but we are committed to long-term success rather than quick gains.

For instance, there was one deal we decided to pass on, which closed in Q3 of 2023. We won’t specify the deal by name, but according to an investor involved, it has already required two capital calls.

We don’t know the details, but we’re glad we’re not involved right?

Are you picking up what we’re putting down? 🤓🤓

If you avoid these mistakes, your real estate investing business might face challenges for other reasons, but it won’t be because of these issues.

Now if you’re ready to supercharge your capital-raising game and grow your wealth through real estate, all by leveraging other people’s money, watch this video.