In 2002, brothers Kelly and Chris Edwards bought their first house in Raleigh, North Carolina. They were both in their 20s at the time and had both noticed a trend that the people with the hihest net worth owned real estate. They bought the house for $88,000 and in the next years bought another four or five properties. Today, they own nearly $8 million in assetts and work with investors through The Edwards Companies.
Here are the Kelly’s nine best tips for people who want to get into real estate.
Recognize that your investments are a business, and plan for it.
“If you’re going to get into real estate, whether you like it or not, it’s going to be a business,” Kelly explains. “If you buy even one property it will take up part of your life so you have to take it seriously and plan for the future.”
Find someone who knows more than you do
When the brothers began investing, they spoke with a local residential real estate investor. They invited him to dinner and he accepted.
“Ultimately we went to work for him for two years and saw everything there is to know for what our area of real estate, from fires to new construction to tear downs,” Chris said. “One of our favorite books is “Rich Dad Poor Dad”, and he’s that guy to us: the rich dad, if you will. If there’s a problem, we still call him. That definitely has been the most important thing contributing to our success
Invest for cash flow
“No matter what you read on the Internet, our mentor told us one thing: Buy where the numbers work,” Kelly explains. “You buy property for cash flow, not speculating, ‘This will appreciate 6% over the next 10 years.’”
After the market crash in 2008, their friends in banking would ask if they were OK. “We told them as long as our cash flow is working, we could care less what the market is doing,” Kelly says. “Over the long, long, term we’ll see that appreciation. If you’re flipping homes, that’s great, but to be a property manager you have to buy where the numbers work.
Invest in your own knowledge
“There’s so much information on the internet today,” Kelly – who read books and spoke to experienced businesspeople instead of taking an actual class – says. “You’re going to see books, blogs, classes, gurus…. You need to start reading and learning. That goes back to taking it seriously. Our bookshelves are filled with real estate books, from Trump to Kiyosaki. We’re big believers in reading.”
“We have a lot of peers and friends who come to us and say, ‘I want to do this, will you sit down with us?’” says Chris. “We do it and then a year later they call us back up and say they’re still considering making an investment. Finally, we get to a point where we’re like, ‘When you’re serious about it and need help, let us know.”
Find your niche
As Kelly says “the riches are in the niches. Don’t try to be all things to all people. When the brothers noticed Raleigh climbing the list of the best places to live in the US, they started buying up its property in areas they foresaw would appreciate.
“We now own a big portfolio of rental properties that we classify as high-end rentals,” Kelly says. The average client pays $1200 a month for 800 square feet. We found a real sweet spot with those millennial tenants.”
High-end millennial housing isn’t the only niche the Edwards have grown. On the other end of the spectrum, they’ve invested in affordable housing to diversify their interest. They turn properties into upscale rooming houses.
Expect problems along the way
“I like to say, ‘If you’re not having major problems, you’re probably not doing something major,” Kelly says. “It’s a business and you’re going to have problems with it from the time you buy to the time you sell.”
Don’t expect to get rich too quickly
“We always use the analogy of the tortoise and the hair,” Kelly says. “Jump on the Internet and it says get rich quick, everyone is wealthy. But it ain’t that way – its just not. The book is childish but we have copies sitting on our office shelves reminding us of why we do what we do It’s kind of a “get rich slow.”
Keep your eye on the prize
“One of the biggest things you have to understand is that you have to keep your eye on the prize. It sounds cheesy but there’s truth in the idea that you get to design your own destiny. If you work hard enough and hang in there, you can have a lifestyle where you get to do what you want to do. It’s not rocket science – anyone who can use a calculator can do it,” says Chris.
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