In this interview we are discussing how to get rich with real estate with Simon George, who is running his real estate wholesaling business including rehabs, new builds, and a portfolio of income properties, all before the age of 30.
You started investing in real estate very young. There are millions of people in their 20s wondering whether they should do the same. What would you say to encourage them?
Well, ultimately it boils down to what the individual wants from their life and what their “why” is. I’m a big advocate of not living by accident but living with purpose, so whatever path somebody takes, they need to make sure they begin with an end in mind. That being said, generally speaking I would say people need to start saving a percentage of their income, investing that money in assets, and creating passive income for themselves as soon as possible. If they think that it’s impossible for them given their current means, then their first steps would be to educate themselves as much as possible (everything seems more daunting when you’re ignorant about it), and to take a look at their lifestyle and attempt to minimize (it’s very difficult to become wealthy if you’re focused on appearing wealthy). It’s a cliché, but where there’s a will, there’s almost certainly a way.
When you are young and haven’t built your career yet, it’s hard to find the money to buy an investment property. How did you finance your first real estate purchase?
I purchased my first duplex from another investor I had a relationship with who owner financed the property to me. We both approached the negotiation for the sale with an investor’s mindset and were both able to come away with some terms in our favor. I wanted low cash down and a high cash on cash return; he wanted a high interest rate and a certain sales price. In that, the deal was actually a perfect example of the fact that it’s not always an excess of capital that makes things happen, but it’s often the relationships you build along the way in addition to your knowledge of different financing techniques (again, you have to EDUCATE yourself).
Too many young people are worried about buying their own home before going for an investment property. What’s your advice to them? Is homeownership a prerequisite for investing in real estate?
I would say this comes back to two things: understanding the difference between an asset and a liability, and appearing wealthy vs. being wealthy. A single family home that an owner occupies is, by definition, a liability. In that, if an individual’s first “investment” is a nice single family home that they occupy, they are ultimately focused more on appearing wealthy than being wealthy. If they are genuinely committed to building true wealth for themselves in the long term, then house hacking is a great option starting out. House hacking is when you buy a multifamily home and live in one of the apartments. In this way the individual has a place to live in, but is also stimulating cash flow from his other doors, allowing him to minimize living costs and start saving for that next investment. It also generally allows the individual to reap a high cash on cash return when he does move on from occupying the multifamily residence.
What are the three most important characteristics of a successful real estate investor?
Persistence, perseverance, and an addiction to continual self-education.
You are from Tennessee and currently live there. How is the local real estate market doing? Is now a good time to invest in a property in Tennessee?
It largely depends on which city you’re trying to invest in (and I’m certainly not overly familiar with all of them). Nashville is essentially a small city that functions as a larger city. It’s highly competitive, and deals are extremely hard to find right now whether you’re wholesaling, rehabbing, building, or acquiring cash flow properties. In a city like Chattanooga there’s still a lot of competition, but if you’re willing to compete, you can still find solid rehab deals and rentals that offer around a 20% return. I’m not as familiar with Memphis, but to my knowledge, while there’s definitely a lot of opportunity, the typical draw backs of big city life (like crime rates, etc.) certainly apply.
Speaking of location, we’ve all heard one too many times that location is the key to success in real estate. What are the three most important features of a location to look at when buying an investment property?
Well, I would have to think that the first is rentability. Nothing will cut into your return like vacancy, so you need to know if the area will offer you a large enough tenant pool to keep your property in frequent high demand. Secondly, if you’re buying a long term/cash flow property, you want to buy in an area where the prices allow you to get a high cash on cash return. Lastly, ideally you’d also be buying somewhere that should offer a lot of appreciation. In a nut shell, its more about the numbers than “Location, location, location.”
What’s your take on out of state real estate investing? How important for success is it to be close to your investment property?
I think in the beginning it’s definitely a good idea to be in the same city as your business/properties. That being said, I always suggest beginning with an end in mind, and I’ve tried to create a business that is very mobile from the beginning. Once you know what you’re doing and you have solid management systems in place (and the people in place to make those systems work), I think investing out of area is not only a good idea, but makes a lot of sense. In that way you can invest where the numbers work best.
One of the greatest features of real estate investment is the numerous options you have. What’s your personal favorite strategy?
There’s a lot to love about wholesaling and buying rentals. Wholesaling is largely risk free, and rentals create a great source of largely passive income. That being said, it can be very hard to make a living wholesaling in today’s market, so if you’re in real estate investment full time, you’re probably going to have to find your way into some rehabs and new builds. As far as that goes, I think a lot of investors would concur that new builds have significantly fewer unknown variables than rehabs.
You’ve recently published The Get Rich Scheme: The Secrets to Making Fast Real Estate Cash in Any Economy. So, what’s the ultimate secret to becoming rich fast with real estate?
For the record: one of the focuses of the book is that real estate is NOT a get rich QUICK scheme, but it is a get rich scheme. In that, the secrets shared in the book are more about how to start making money quickly and how to transition that over time into wealth and a life worth living. The path I chose, and the path I have a lot of faith in, is to learn the business and your market by wholesaling. Eventually once you’re coming across a lot of great deals in your wholesaling business, start picking and choosing your best rehab/new build deals and start taking them on yourself to increase your annual income, financing the projects through the connections you’ve made up until that point. Then re-invest the profits into you’re wholesaling business and into cash flow properties. As they say, it’s simple, it’s just not easy. But nobody said it would be easy, only worth it.
You specialize in wholesaling real estate. Why is this the best strategy in your opinion?
As I mentioned earlier, I love wholesaling because it’s low risk and a great way to start out. That being said, I also love it because of another point I made earlier: when you have your systems and people in place, it’s a very mobile business. I can ultimately be anywhere in the world and still make deals happen. Again, it ultimately boils down to what you want from life, and one of my biggest values is freedom.
What’s your long-term goal as a real estate investor?
Short-long-term (5 years): is to be truly financially free in my own right by the time I’m 35.
Long-long-term: $100 million portfolio of income producing properties, 7 figure annual income from real estate.
Simon George is a real estate investor, musician, author, and serial entrepreneur from Nashville, TN. He started his real estate wholesaling business Grassland Home Services, LLC in 2015, and with the help of his partners has since expanded into residential buy and holds, rehabs, and new builds. He published his first book The Get Rich Scheme: The Secrets To Making Fast Real Estate Cash In Any Economy in 2018.
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