Reader question: I am a young person who inherited money. I've been looking at different career options, and I have decided to invest in real estate, but I have little knowledge about it. Where do I find people with money who are looking for attractive real estate deals with a partner?
Monty's answer: Real estate is a high-risk investment for individuals like yourself. While your thought on the surface is logical, there are many people already in real estate who are looking for someone like you as well. They would love to unload one of their sour investments on you. While honest people in real estate far outnumber the unscrupulous players, when large sums of money are involved, the temptation to cheat is too much for some to resist. There is no correlation between honesty and wealth in real estate. This link on investing http://bit.ly/2NJg1qP may be helpful.
A career for a young person
Consider obtaining a real estate license. Learning how real estate works from the inside is far different from any textbook, but textbooks are essential because you can cover subjects that are not part of your real estate training. As an example, understanding how to evaluate real estate using the appraisal method will serve you well, but it is not part of mandatory pre-license education or most post-license training courses offered by real estate companies.
Keep your practice separate from your investing
As an active licensee, you would have an advantage over others looking to find suitable partners. As a real estate agent, people come to you looking to buy and sell property. Every person looking to buy an investment property is a potential candidate. Many people selling are also potential candidates unless they are cashing out of real estate. Just remember to keep their interests ahead of your own. If a customer is squeezed to sell below market, expose it to your customers instead of buying it yourself. Find your investments outside of your practice.
Pick your partners carefully
Being in real estate allows you to observe how your customers and clients operate. Witnessing their actions in real estate transactions is superior to interviewing candidates as a potential partner. You have no obligation to share that you are looking for a partner. "Watch their feet; not their lips" is an essential observation in life. You observe them negotiating. Do they keep promises? Are they skillful? There is no rush, so take your time.
Richard Montgomery is the author of "House Money - An Insider’s Secrets to Saving Thousands When You Buy or Sell a Home." He advocates industry reform and offers readers unbiased real estate advice. Follow him on Twitter at @dearmonty.