Real Estate Investing tips from Tarl Yarber
The following information is sourced and summarized from a SJREIA webinar by Tarl Yarber on 9/2/2020. For the full conversation, visit the resources tab at www.SJREIA.org.
Whether you’re just starting out in real estate investing or you’re looking to expand your current portfolio, having systems in place is one of the most critical components to a thriving business. Mistakes are part of any learning curve, real estate investing included. Tarl Yarber offers his insight and experience on how to learn from mistakes, create systems, and ultimately thrive in the real estate investment world.
Learn From Your Mistakes
“Crap will always happen in this business.” Take the time to be self-analytical, self introspective, and take responsibility for your problems. Everything is your fault. Every decision you make for your business is up to you. You hire the contractors, choose the properties, select the design, and so on. When you accept that everything is up to you, you then have the power to change what is happening. From structural mistakes to contractor mistakes, it is the real estate investor’s responsibility to take ownership of the good, the bad, and the ugly.
Book recommendation: Extreme Ownership by Jocko Wilink
When mistakes happen, which they inevitably do, remember these four bullet points:
- See it
- Deal with it
- Learn from it
- Document it
Real Estate Investing is Simple
Real estate investing can be broken down into three basic elements:
- People. Like most businesses, real estate investing is a people business. You need to work well with wholesalers, contractors, sellers, buyers, title companies, lenders, and more.
- Numbers. This is a math business. Remove emotion and focus on becoming an objective investor. You can’t just know the numbers, you need to know what to do with them.
- Pieces of paper. Whether physical pieces of paper or digital, everything needs to be documented appropriately
Reasons why people don’t have systems
We all know what systems are necessary so why don’t many investors have systems in place?
Most of the time, investors never stop long enough to reflect on how they got to where they are. They have so many moving parts that there doesn’t seem to be enough time to slow down and understand the steps that they took. In order to outsource and scale effectively, it’s important to document and plan so that you can focus on the tasks that you personally do best and outsource the rest.
Book recommendations for productivity:
The One Thing by Gary Keller
The 4-Hour Work Week by Timothy Ferris
The Checklist Manifesto by Atul Gawande
Ask yourself the following question:
“If it were simple, what would it look like?”
Focus on efficiency first. Every task will cost time and/or money. It is either going to cost your time or somebody else’s time OR your money or somebody else’s money. You get to decide where you want to put your time, money, energy, and effort.
The Investment Process
The following image is a summary of all the steps in the investment process.
Marketing: You have to find a deal somewhere. Whether you’re working with a wholesaler, using an MLS, Driving for Dollars, or some other method, marketing is how you find properties.
Property analysis: Know your buying criteria. Know what you want but also, know what you won’t buy. How fast can you say “no” to a deal?
Funding/Purchase: How are you going to finance and close? Hard Money, private lending, etc.
Planning/Design: Spending quality time on the planning and design stage in advance will help avoid mistakes throughout the process.
Contractors/Bid: Get multiple offers from various contractors. The lowest price does not always mean the best. Ask for referrals, previous projects completed, and work out a schedule of work and payments ahead of time.
Rehab Management: Have a plan. Will you be overseeing the project? Will you be hiring a project manager? How will you ensure the work is completed on time and as expected?
Bookkeeping: A lot of people skip this step. You can’t track what you can’t measure.
Listing/Refi/Rent (Disposition): Have a plan ahead of time. If you are listing, do you have a real estate agent lined up? Will you presell the property before completion? If you’re renting, how will you find tenants?
Simplifying further
Tarl and his team wanted to simplify the investment process further. The following image is his basic steps that streamline their investment process.
Enhance the underwriting process by being very specific about what you want and don’t want in an investment property. The faster you can say “no” to a property, the quicker you can move on to deals that better fit your desired outcome.
Tarl explained, “We learned our life would be a billion times easier if we didn’t touch the house at all right away and just spent a time planning the project out. If it takes us a month to plan out the house, that’s okay with me. I’d rather spend $3,000 in holding costs than an extra $10,000 because I didn’t plan correctly.”
Leverage Technology
Tarl recommends Dropbox, Smartsheet, and Asana as the top three software programs for a streamlined real estate investment business.
Dropbox: Dropbox is a way to document everything in the cloud. Phones and laptops break all the time. Have everything backed up to a cloud including analysis, before photos, rehab photos, bids from contractors, signed documents, addresses, and more.
Pro tip: Have a specific process for taking photos. Take photos of every property in the same manner. Not only does this offer consistency in your portfolio, but it also opens up the opportunity to outsource the photo-taking process and therefore, lighten your personal workload so you can focus on the things that you are best at.
Asana: Asana is a project management system that allows you to assign tasks to various team members, set goals, and track your project from start to finish.
Smartsheet: Smartsheet is similar in nature that serves as a project management system that allows project sharing, work collaboration, and more.
Other recommended software programs include Google Drive, Podio, Base Camp, Call Rail, and Ring Central.
Overwhelm Happens
Overwhelm happens to everyone. When you’re feeling overwhelmed in this business, don’t ask yourself HOW?
Instead, ask yourself WHAT and WHY.
What do you want to accomplish? What do you need to do to get there?
Why do you want to do it? What is the purpose?
The answers to these questions will better serve you and help you to power through when things feel overwhelming, as they sometimes will.
Final tips from Tarl:
- Chunk it down and simplify
- What could someone else do better than me?
- You can’t manage something you can’t measure
- No value in just knowing your numbers - know what to do about them
- Money doesn’t respond to emotions. Money responds to a plan.
- You get what you tolerate.
These tips and more can be found at www.SJREIA.org.
Follow Tarl @TarlYarber on Instagram or FixatedRE on Facebook.
Disclaimer: The information and news presented in SJREIA publications and at group meetings should not be construed as legal advice, which should be obtained through a qualified real estate attorney only. SJREIA does not exist to render and does not give legal, tax, economic, investment or financial advice and disclaims all liability for the actions or inaction taken or not as a result of communications from or to its members, officers, directors and employees. Each individual should consult his/her own counsel, accountant and other advisors as to legal, tax, economic, investment, financial and related matters concerning real estate and other investments.
The opinions expressed by the members are not those of SJREIA. SJREIA does not endorse any person or organization. Its programs are designed to be educational, motivational and enjoyable. Remember, speakers primarily discuss techniques and methods that work for them but may not be appropriate for you. Whenever actions involving purchases, sales, or tenant relations are being considered, rely upon the advice of your real estate professionals.