Who can you call an expert?
And how do you find them?
This week two separate incidents reminded us of several crazy experiences we’ve had ourselves trying to track down “experts” over the years that would help us make money.
About ten years ago, after some real estate training courses that we had taken, we were all jacked up to “go make some easy money” flipping properties.
Nick somehow found some guy who promised he could find us great real estate deals that we could “fix-n-flip” for some huge returns.
So we go down to this guys office and warning #1 pops up.
The office is on the second floor of a two storey strip mall that was extremely run down.
Not exactly the kind of place that instilled confidence.
The hallway carpet was oozing some sort of strange gooey substance as we walked on it.
When we make it inside the office there’s very little furniture and the guy Nick spoke with is sitting behind a very old and very bare wooden desk.
He had a ton of gold bracelets on and huge gold chains around his neck.
And I swear, if memory serves me correctly, he even had a gold tooth.
He could have been cast as the gangster in any Scorsese flick.
When we told him we were super eager to buy real estate, fix it up and sell it quickly for big cash he kinda chuckled to himself and then abruptly threw a print out of a property at us.
Apparently, this was some property that he was involved in somehow. The actual Seller wasn’t him but we could get it for a deal and make a killing.
He really didn’t offer any more detail than that.
And even with all these obvious warning signs we still got excited enough to drive by and check out the property.
I can’t exactly recall what happened next but we must have not liked the place because we didn’t proceed.
About five or six months later I was driving by that same strip mall and decided to stop in.
Not sure why.
By then I had decided the guy behind the desk didn’t care for our best interests but for some reason, I couldn’t resist stopping by.
And to my surprise, the office was completely empty.
Even the old furniture was gone.
The door wasn’t even locked so perhaps they had just made their quick escape minutes earlier, who knows.
Since that time we’ve had many run-ins with so-called “experts”.
And just this week these two situations came up:
#1 A very good guy from Ottawa, Ontario, who is about to get started investing, emailed us for our opinion on how to find a good Realtor that knew how to work with investors.
One of the agents he was considering had told him, “he could make them more money than anyone!”
In our books, that’s red flag number one.
And I’m not 100% certain of the exact words that were used but that type of talk scares us.
Any “expert” who thinks he is the best and “only one” usually turns out to be a dud.
#2 Another investor from north of Toronto officially got word that his super complicated condo-conversion project finally blew up. The mortgages got called in (Power of Sale) and he lost $150,000.
He had done his due diligence and had believed that he was working with someone who knew what they were doing.
People To Work With?
Here’s what we have found to be pretty universal traits of real experts:
1. True experts are focused on PRINCIPLES and NOT TECHNIQUES.
After years of watching and being involved with our father’s construction business and generally be surrounded by different investors and owners of property, it’s amazing that we didn’t figure this out earlier.
Embarrassing I guess.
But now we finally get it.
True experts focus on principles.
Real Estate beginners are almost always focused on techniques.
“I can make $45,000 easy with this new investment strategy thingy … all you do is use these fancy dancy clauses in this agreement with a special closing date that I can change anytime with my super duper power of attorney control over a corporation where I own Special B Class shares.”
We know this type of thinking because we’ve been there!
Instead, you should be focusing on the details of the property.
What condition is it in? Where is it?
And more importantly, how will this type of investment look if the worst happens and the tenants leave, the economy turns, unemployment skyrockets and/or interest rates go up by 5%?
Before making any investment double check your fundamentals.
Are you focused on the techniques, the “sexiness” of the deal or the fundamentals?
If it’s the former, get an objective opinion from someone with experience.
And that brings us to our next point…
2. True experts have seen the Good, the Bad and the Ugly.
They have enough war scars and have fought enough battles that they know what “could” happen and they plan accordingly.
They don’t get pulled into the latest condo conversion project around the corner because although prolonged appreciation has carried the last five projects successfully (and made them look easy) the sixth could be the one that bombs.
And because of that, they’re extra hard on the numbers. And while hoping for the best they are planning for the worst.
They ask that one question about the deal that no one else could.
And they can only do that because of their experience.
They could only do that because they’ve likely suffered losses themselves.
3. True experts know that they don’t know it all.
Have you ever spoken with someone who claims to know all the answers? Or gives the impression they do?
And they almost get insulted if you disagree with them about anything.
They instantly doubt your loyalty to them and even flash you a bit of cold shoulder.
Yeah, we’ve come across many of those.
They scare us. We run from them. Fast.
But every once in a while you come across someone with a wealth of experience but is humble enough to welcome new ideas.
They value their own experience and can back up their claims with facts but recognize it’s impossible to know everything.
They’re the gems.
Keep those ones close.
So how do you find these people? The good ones.
Well, for us, it’s like dating.
You keep your eyes open for good candidates at all times!
Then you get to know them a little bit.
And it’s better if you work by referral.
By getting all your experts by referral you’re saving yourself time and money.
And you let the relationship begin slowly.
You get to know each other.
You do a little deal together. Nothing major.
You value their time. You pay them what they’re asking. If they’re good, they’re worth it.
Over time you’ll begin to develop some rapport with them and eventually, you’ll earn each other’s TRUST.
Once you have that type of relationship you’re set.
You’ve found a key member of your team that you’ll be able to lean on for advice over and over again.
They will save you tens of thousands of dollars, even hundreds of thousands.
They’ll save you a lot of grief too.
You may not even realize how much they’re saving you.
And once you develop this trust with a real expert you end up moving a lot faster. Accomplishing more in less time than you ever had before.
You begin to find that big deals don’t scare you anymore and you can sleep easy – even if they have a gold tooth. 😉