Few weeks ago I had a conversation with a fellow investor. He contacted in order to provide me with leads for the area that he was not investing on. Luckily he had no plan, for now, to buy houses in the Worcester / Framingham area, so he offered to send my way all the leads he has for these cities. I basically spent a good 20 minutes interviewing him on the quality of his leads (I didn’t want MLS leads), amount of information he plans to provide with the leads and so on. After that 20 minutes I was ready to start working him. The timing was perfect because lately I am experiencing an increase number of request from rehabbers and cash buyers for more properties. So the extra leads or deals would be very helpful. However, before committing myself to these new endeavor, I had to ask one of the question that a lot of Rookie investor are nervous to ask: “How much would I be charged per lead I end up buying?” His answered was not only a chock and also reminded me a quote from one of my mentors: “you better know and understand your market.”
Ok let’s get back to his answer. The investor wanted me to commit, by signing a contract, to pay him $25K per leads that I would end up buying. Yes, I had to admit that the $25K finder’s fee took me by surprise. I want to be clear that my reaction was not because I did not want to pay top dollar for his services. However, at this point I had to ask myself if our investor had an idea of the neighborhoods we were talking about. Adding 25K finder’s fee to the Wholesaler fee and the rehabber profit would kill most of the deals considering the after repair value of the properties in these neighborhoods. In addition I had to ask myself why would I pay 25K for just a name and an address when the competition is currently charging way less while, sometime, providing me with more than just a name and an address.
At the end I had to explain to the investor that he will need would need to review his fee to a more realistic number in order for us to work together. This conversation had reinforced my belief to research and understand the market where I am investing in. At least, it would prevent me to create any unrealistic and false expectation.
Yes it’s there. The Rookie investor’s blog is live. I finally have the gut to publish it. The other day, a friend who knew about this project asked me why now? Why did I finally decide to publish the blog now? I just answered him it just happen that I ran out of excuses. I was honest with him as I am promise you to be frank and honest in my articles.
Another question that I am sure some of you will want to ask at this point is why name that Blog “the Rookie investor’s blog”. There are 3 main reasons. The first is that, in the world of real estate investing, I am rookies. Whether one considers the amount of time I’ve being investing or the few results I already have, I am a rookie. So this blog will talk about real estate investing from a rookie investor point of view. So if as a reader, feel free to correct me when I write things that are not too accurate. I know it will happen because rookie makes mistake.
The second reason for naming the blog “The Rookie investor’s Blog” is also simple. For the past couple years, I had the chance meet and observe some successful investors. All of them are well established in the New England area. I was fortunate enough to spend time and work with some of them and also to count them as my advisors (I promise to interview them and share some of their tips with you guys). During my time working with them, I realized that even though they are very successful investors, they get as excited as a rookie every time they are about to learn something ( a tip, a new technique etc.) that can make them become more efficient in their field. If those successful investors can keep that rookies spirit through those years and their success, I better do the same and get exited every time I getting closer to my goals.
The third reason is The Rookie investor’s Blog is just to focus on the rookie state of mind. As a Rookies, I have to be excited about playing the real estate investor game (it’s the same in sport) if I want to last in this game. Being at the bottom of the investor ladder, I (the rookies) only have one choice: to grow and to become better. To do so I will have to not only learn from my mistakes (unfortunately rookie makes mistake) but from the mistakes and the success stories of those who are more successful than me.
So the “Rookie investor’s blog” will be forum where I will share and discuss my journey and what I have learned from other investors: mistakes, my horror stories (unfortunately) but also my successes. I am looking forward for your comments and suggestion.