I’ve mentioned this before, but I have to say it again; one of the amazing things about being involved with the Rich Dad Education organization is that I get to rub elbows with some remarkably talented and caring people. One of them reached out to me last week. Her name is Kathryn Butler and like me she occasionally takes time off from her busy investment business to teach others to do what she does. Kathryn asked me if I was up to date on the parts of the Dodd-Frank law that came into effect this month on January 10. I had almost no idea of what she was talking about. I did know that the Dodd–Frank Wall Street Reform and Consumer Protection Act had been signed into federal law by President Obama in the summer of 2010. But, like the health care law, Dodd-Frank had seen so much political kickback after it was signed that I was sure that Congress would find a way to cancel or seriously modify the law before now. So, I put the whole thing out of my mind … until Kathryn contacted me.
In a nutshell, the law is trying to prevent the type of financial crisis that this country experienced a few years ago. But, the truth is that the law has made significant changes in the country’s financial regulatory systems that affect all federal financial regulatory agencies and just about anything that is a part of the financial industry … including real estate investors.
For instance, if you are going to ever get another real estate loan, create any type of real estate loan (such as seller-financing), or buy/sell/trade real estate loans, then you need to understand this law. Unfortunately, I’ve seen a lot of misinformation on the internet regarding Dodd-Frank. And most attorneys are still trying to get their hands around how this law is going to be implemented and overseen. So, make sure you talk to a good real estate attorney who specializes in working with real estate investors. And, don’t be surprised if your attorney replies, “I don’t know.” to most of your questions. Because what is written in the law is one thing … how the government will choose to follow it is something completely different. In fact, back in 2010 Sen. Christopher Dodd, one of the law’s authors, famously said, “”No one will know until this is actually in place how it works.”
Additional Comments by Keith Gensor
Director of Education & Student Development
Being a successful Real Estate Investor is simple but hard. There are four primary steps that an REI must do again and again.
1. Marketing – you have to get your phone to ring (or you can make outbound calls); but you always have to be marketing, generating leads, letting people know what it is that you do and how you can help them.
2. Analyze Deals – you must be capable to analyze a deal over the phone, and if it has potential, visit the property to visually inspect it and complete your due diligence to determine if it is worth pursuing as a good deal.
3. Make a presentation and get the property under contract – this is the crux of real estate investing; and when we say that it is a “people business”; you have to get out, get in front of people, develop a rapport, make sure they know that you are the solution to their problems, and make an offer on the property (aka get a signed contract).
4. Finally, run the final numbers to determine if this particular property does indeed fit your criteria and get the contract & property to closing.
Rinse & repeat. Do this again & again. In fact, this simple outline of what it takes to be a successful real estate investor is what you will concentrate on for the life of your Real Estate investing career..
Oh yeah! There’s one more step that needs to be completed when you first being your career in real estate investing: create a Power Team. This can be overwhelming when you are new as there are so many things that need to be completed, so much to learn, so many people to meet & speak with, that you seem to run out of hours in a day.
However, you must ensure that you have competent professionals that you like & trust on your Power Team. Because once you have picked a Power Team you pretty much can leave it is as is.
You should have a Realtor, a mortgage broker, home inspector, accountant, title person, appraiser, & so forth. But one of the most important is a very good real estate attorney who is well-versed in real estate law and contracts too.
For the most part your Power Team is hand-picked by you for their skills & expertise, and from there you operate under the “Aces in their places” mentality. Which means you let those who are the best at their job, do their job. It is important to know a little bit about everything, but you do not have to be the expert in those particular fields where you are relying on your power team, particularly real estate law.
If you’re not an attorney, don’t pretend to be one, and don’t study to become one. Focus on being a real estate investor, acting & playing the part, and have a little common knowledge, but be sure that your attorney is up-to-date on the Dodd-Frank Act and how it directly affects your investing goals. Specifically, what can and what can’t you do? Leave that to the experts. And then work within those boundaries.
Your job is to do steps 1 – 4 again & again until you have momentum, a pipeline, and a system. Free up your time by delegating those specialty areas to your power team, particularly those in real estate law.
Get going & get investing!