In this week's episode we dive into how to develop a simple yet effective strategy for real estate investing, focusing on narrowing down your goals, understanding your target market, and sticking to your strengths and zeroing in on a business model that fits your profile.

Crafting an intentional acquisition strategy in real estate is essential for success, particularly as investors reflect on their goals at the close of the year. The podcast provides listeners with a structured approach to developing a personalized investment strategy, emphasizing the importance of understanding one's unique strengths and skills. The discussion highlights various business models within real estate, such as flipping, the BRRRR method (Buy, Renovate, Rent, Repeat), and short-term rentals, each with their own set of advantages and challenges. By evaluating personal skills against these models, investors can tailor their strategies to fit their experiences and market conditions.

The episode delves into the necessity of narrowing down target markets based on price points and the feasibility of specific business models. Listeners are encouraged to assess their local market conditions, regulatory environments, and potential profitability, especially for models like short-term rentals that rely on tourism and local demand. The podcast stresses that effective networking and leveraging existing relationships can be instrumental in gaining insights and opportunities within chosen markets. By the end, the listener is equipped with actionable steps to refine their real estate investment approach, making informed decisions that align with their personal and professional goals.

Terrie Schauer’s LinkedIn: https://www.linkedin.com/in/terrieschauer/ 

Terrie Schauer’s Instagram: https://www.instagram.com/terrieschauer/

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Real Estate Fan, how would you like to build a clear intentional real estate acquisition strategy?

In this week's episode, we dive into how to develop a simple yet effective strategy for real estate investing, focusing on narrowing down your goals, understanding your target market, stay sticking to your strengths, and zeroing in on a business model that fits you like a glove.

Welcome to the Real Escape Investing podcast where we guide you to escape the constraints of time, geography and finance through real estate.

And now, here's your host, Terry Schauer.

Hey real estate fans, I have exciting news to share with you.

Our monthly in person networking events are back.

If you're in the Montreal area and even if you're not, go ahead and grab a ticket for our next event@equitybuildersclub.com events.

I would love to see you out.

Hey real estate fan, thank you for tuning into the Real Escape Investing show this week.

I got a really interesting topic for us today and this is how to build a intentional acquisition strategy.

That said, if you haven't had a chance to check out our goal Equity Builders Club goal setting webinar, please go ahead and reach out to me and I will be happy to share the recording of that with you.

Our next recording is actually going to be our next webinar is going to be done by the time the show airs on Wednesday.

But you can still get those recordings if you go ahead and reach out to me individually.

But so sidebars aside, you know, the.

Importance or the way in which you're.

Going to be able to execute on some of those goals is just really contingent on having a strategy that makes sense.

And I know that this is a.

Place where a lot of people struggle.

Because, you know, we talk about real estate investing as if it were one monolithic thing, but in fact, it's many small, small business models, many different markets, many different things that get lumped in.

And you know, for people who are looking to start or to scale, one of the challenges is really to kind.

Of pick a lane in terms of.

Picking the right market, picking the right business model, and then exploiting that and understanding, you know, how you can know.

Enough in that specific niche that you're.

In in order to make effective decisions and grow in that specific area.

So that's really the topic of today's episode.

And I want to just dive in away and, you know, demystify some of this for you so that if you're struggling to position your next move, it's going to be easier once you just understand kind of how to go through that decision making process in a strategic and intentional way.

So I mean, I think the real first thing is to consider different business models.

And you know, when people talk about real estate investing, they make it sound like it's just one thing, but in fact it's a whole bunch of different things.

And in evaluating there's a few different things to evaluate.

So there are your skills and your particular passion.

There is the market that you want to operate in.

And that is going to in a way dictate what kind of business model.

Is going to function there.

And we'll get into that in a little bit more detail over the course of the episode.

But if we're talking, we need to start somewhere.

So let's start with just talking about.

The different business models in real estate.

And from there it's going to become.

Clear, you know, how to intentionally form a plan around a specific business model.

Because if you have not picked a business model, it's very difficult to then start to crunch deals and to focus in on a market and to understand what kind of deal is actually going to work for you.

Because if you're trying to, you know, flip between doing flips and doing brrrs and doing management optimizes and you don't.

Know exactly which of those you're looking.

At, I can be pretty dizzying to know exactly what kind of properties you should be looking at.

So if we just really quickly go over some of the most simple business models, there are wild and crazy things like notes, investing and lending and all kinds of stuff.

I don't want to get into that today.

I really want to talk about the acquisition side of this.

And so if we're talking about how you can make money by possessing, like acquiring, possessing and then either operating, refinancing or selling, that's really what we're going to get into in the episode.

So the first, you know, I guess thing that people think about often when.

They think about real estate investing, just.

As real beginners is, is flipping.

So this would be, you know, acquiring some kind of property that's dilapidated or that needs some love, putting some renovation money into it, and then you Know, putting it back on the market in order to have, you know, take the profits from that.

And so, you know, just very quickly, in order to understand whether flipping is.

A good choice for you, there are a few things that are associated with that.

So the first thing is, what's the.

Price point of some of those properties.

In the markets that you're looking at?

Because the reality is that if you.

Need to buy a million dollar house.

And then put $3,000 into it as a flip, that is the price point of that is, can be pretty difficult.

And so that's one thing to consider.

The other thing is the risk factor.

Of flipping, because to hold an asset.

For a specific time period, put a.

Whole bunch of money in it, and then hope to turn a profit by.

Selling it in a short time period.

That depends on there not being any major market wobbles.

And it also means that you're carrying costs in terms of what you're going.

To have to get into as far as carrying that property, as far as holding that property and not living some kind of a financial stress as a result of the fact that you have to put money in and presumably debt service until you can turn the property around.

That needs to be something that goes into the equation.

The next thing is the BRRRR model.

So buy, renovate, rent, repeat.

And this is like, not exactly like flipping, but it has a higher construction percentage.

So in this case you would be looking presumably to get a property that needs a little bit of love.

You probably will have some rent coming in and then you're not going to be looking at flipping it.

You're going to be looking at renting those units for a higher amount of money.

And so this also needs to work in the specific market that you're looking at.

And the rents and the rent growth.

For a renovated unit needs to be able to be supported by whatever your market is doing.

And so if, for example, you're considering putting, you know, 20, $30,000 worth of.

Renovation money into a unit, are you.

Actually going to be able to rent it for an amount of money that justifies that investment?

So that's something, you know, to consider.

And then you also need to consider your own personal skills and desires and the capacity to operate that.

The next strategy is Airbnb or short term rental.

And so this, obviously there's a regulatory environment to this.

And of course there's also a market.

Environment to this because not every market is going to work very well for short term rentals and Airbnbs, whether it's.

Because there's regulations that are maybe preventing.

You from doing it or because you're just not in an area where there are a lot of people coming through, whether it's tourists or, you know, people relocating or whoever might be the target market for short term rentals.

Then there is the midterm rental sphere.

Which is typically furnished units with a.

Bunch of inclusions for people who are staying for more than 30 days.

And again that will be, you know, the, how interesting that business model is, is going to be dictated by the.

Number of people that are coming through.

In that specific market who are staying.

For short time periods and who are.

Willing to pay that rental premium that.

Typically is associated with a medium term rental because there are all sorts of inclusions.

Then there's my personal favorite, which is the management optimize, which means that you're.

Looking at poorly managed buildings and seeing.

Where your superior organizational skills and knowledge of tenancy laws and stuff like that is going to allow you increased revenue and decrease expenses with exceptional property management.

So, you know, that's, that's my favorite business model.

And then there is of course prospecting and wholesaling, which, you know, people I feel like in the real estate industry don't give this its due.

Like very often, you know, experienced investors will talk as if everybody should be prospecting.

And I think this is actually really like a fallacy.

I think prospecting, when it comes to sending all kinds of letters, doing cold calls, having that engine that creates those off market deals, that is a business in and of itself.

And it's a business that often works.

Best with wholesaling because it means that if you are getting all these leads.

Presumably you're not going to be able.

To do all those deals yourself.

And so to be able to get some of those interesting deals under contract or if you're real estate broker, to get them to sign a, you know, a, like a, something to, in order.

To, for you to be able to.

Offer it for other people.

That kind of prospecting goes well with somebody who wants to do acquisitions, but who also has the network to be able to wholesale or else list the property and then offer it to other investors so that you know, you're actually getting paid for that prospecting engine that you've built.

But I really would encourage you to think of that as its own business model.

And each of these things that I've described is really, you're running a different kind of business.

And if we were to compare this to running a restaurant, like it's a bit silly to say oh, like I'm in the restaurant business, right?

Like, are you, do you have a cafe?

Do you have fine dining?

Do you have, you know, a fast food place?

Do you have a food truck?

Every single one of those businesses is actually like, has a different business model.

And I think that in real estate investing, we really do people a disservice when we don't pull apart each one of those business models and talk about them separately.

So, you know, because in business we.

Say not everyone can be your client.

And you're going to be looking at.

Building out a business for your specific.

Client market in a specific market segment.

And real estate is no different.

And so when you're weighing and building your strategy, you really want to think like, what is my business model?

Because that's the first thing that you need to ask yourself in the same way that if you were going to ask yourself a restaurant, you're going to say, do I want to open a fast food joint, Do I want to open a cafe?

Do I want to have a caterer, Do I want to do wedding parties?

And so that's really the first thing that you need, the first decision that you need to make.

And then there are two other related.

Factors through which you need to factor that decision making.

And I would say that the first one really has to do with your own strengths and skills.

And, you know, it might be at.

The beginning of your journey or when you're at that inflection point, when you're.

Scaling, it might be, you know, almost difficult to ask yourself this question.

But I think, you know, a good day or two spent in reflection and thinking about what are the roles that you've had so far in your life and what are those unique skills that are going to allow you to operate that business model?

Because that's what you're doing.

You're starting an investing business model, and what's going to allow you to operate that business investing model with your skills that you have acquired so far in everything else that you've done.

And I want to just kind of go through these a little bit because I think this is not something that gets talked about very often.

And so, you know, if you're looking at how to match your skills to some of those business models, this might be one of the ways that you go about doing it.

So what I have seen is that people who become really great prospectors, anybody who's involved in data, has a real leg up when it comes to setting.

Up those prospecting engines.

And very often that ends up being when I have those conversations at investor events.

The guys who end up doing building these great prospecting engines are people who have some kind of background in software, in data, in some kind of mass marketing, mass mailing, and that they then transfer those skills into prospecting.

The other thing that works really well.

With prospecting is having an awesome network.

And very often some of the real estate brokers who I have seen do this, have this great like off market business going are people that have a lot of experience and they have really invested a lot of time into building their network and that that ends up being a prospecting engine.

And so if you are really a.

Gifted networker and you have, you know, a lot of contacts of people who own buildings, this can be a great way to transform that, trans that into a prospecting engine and then learn to wholesale or else leverage a real estate.

Broker'S license in order to be able.

To flip some of those deals that.

You can't close on.

So those might be skills that transfer really well into a prospecting and wholesaling business.

The next thing.

And again, my personal favorite is the.

Management and organizational skills.

And if you, you know, like myself, have this kind of a mind that allows you to set up systems and really see efficiencies and understand how to hack systems in order to get them running in a better way, you might want to consider this managing an organization, then that looks more like a management optimize, in which case you're really looking at, you know, a building that's running as a system and you're thinking, where can I find those efficiencies?

And then to have the character, so the patience and I guess also the ability to, you know, communicate with tenants and you know, effectively be able to manage the building and then optimize it that way.

So those like, you know, management skills, organizational skills can transfer pretty well into managing a building or multiple investments in an effective way.

Building a team, understanding the systems that will allow you to create those economies of scale and then just find those drags on the system in order to optimize buildings and create appreciation in that way.

The next thing is, you know, if.

You have construction skills or if you're.

Really handy, that is a really wonderful way of leveraging skills and being able to force appreciation.

Because lord knows, as somebody who has very little construction skills and very little patience for project managing construction, somebody who is more at ease in that environment and is able to put some of their own either elbow grease or connections to work in order to run construction projects that can be A really great way to cut costs and to take on potential investments that other people would shy away from.

Because let's be honest, a lot of people who are looking at those investment properties maybe don't have the construction skills or if they have to hire full price trades people to do the renovation work as opposed to involving their own contacts or doing some of the work themselves, that can really push up the cost associated with turning a profit on a rental building.

And so if you have some construction skills or are handy or are, you know, have connections that allow you to.

Get some of that construction work done.

At a lower cost, that can be like a real leg up and an advantage and a way to seek out deals that play to that particular skill of yours, which would be, you know, being handy and cutting some of those maintenance and renovation costs.

The other thing that I encounter, which.

Is a really cool skill that I.

Don'T have whatsoever, is the esthetics.

And so that is like really that kind of design eye that allows you to renovate and create really unique spaces.

Because no matter what segment of the market you're working in, if you're able to, with relatively, you know, cheap and uncomplicated ways, add value by making a unit.

Making units look super nice, whether it's.

By putting some renovation money in or.

With decoration like this is a skill where you can really optimize and make the most of what could be a humdrum property just by adding your aesthetic skill.

And like, you know, typically this is going to work on, you know, higher end assets or assets that are like a little bit more unusual.

Because if you're working in, you know, D level properties, the maybe design and decoration skills are not going to be the best way to make money.

But those that aesthetic eye, that capacity to see past something that might be ugly and turn it into something beautiful.

If you can combine that with being able to do it in a way that's cost effective, that's really going to allow you to get the most out of your units and, you know, force appreciation just with your own esthetic sites.

Then the other thing is those famous customer service skills.

And where I have seen people with impeccable customer service skills do really well is in short term rentals and you know, in looking at business models that various people should be operating like.

Again, I definitely don't have those skills, that attention to detail, that, you know, chirpy cheerfulness on the phone and just making sure that your clients are having an awesome experience from start to finish.

People who have really good skills at that, no matter where they can transfer them from, if you know that that's an area where you really excel, perhaps short term rental or Airbnb type rentals are for you.

The same goes a little bit for.

Medium term rentals because again, the degree to which you can, you know, be thoughtful in terms of how you set up the services that are available to your medium term rental people like, is going to make your units more appealing than someone else.

And the other thing that I have seen make people very successful in that particular business model are very specific connections or knowledge about, you know, people will.

Be staying for a medium term.

So that would be student rentals, nurses, insurance claims, particular, you know, business people who are relocating.

Any kind of insight or connection that you have into those, you know, higher value people who are willing to pay a bit more to stay in a medium term rental, coupled with some good customer service experience that's really going to allow you to succeed in that medium term rental space and to make your assets really be worth a bit more.

Because let's face it, if you're doing long term rentals, the amount of rent that you can make with a specific unit is going to be lower than if you're operating medium term rentals.

And so that can really be a market segment where if you have some of those skills to understanding the student market or understanding insurance claims, or understanding a certain business segment of people who might be renting medium term in an area that's going to be really great for that business model.

So, and you know, this is kind of something that happens naturally, like as you go out and think about what are my unique skills, where am I really able to add value and how might that map itself onto a business model in the investing sphere that really works for me.

And you know, I think generally speaking, we gravitate towards some of those investment strategies without even really understanding where that comes from.

And I think to spend a little.

Bit of time in your own mind.

Mapping that out for yourself and thinking like, okay, what investment strategy, what business model am I really attracted to?

Because it's also false to say that, oh, you know, one strategy is better for making money than something else.

I think all strategies can really be financially very interesting.

But it has to be something that works in your market and that fits your particular skills and the value that you bring to the table based on your character and the previous experiences that you've had.

So I would encourage you to really, you know, take some time and think about what are those investment strategies that you really Vibe with.

And how do your skills really match a particular business model?

In the same way as if you were, you know, thinking about opening a cafe versus a caterer versus a pastry shop, you would think, you know, as a chef or as a business owner, what are my unique skills that I should be catering to in what I'm doing?

And you know, to make this personal, right, like there's no way I should be opening like a luxury dining establishment because I'm just not that kind of person who has that, those customer service skills and who naturally gravitates towards that luxury environment.

If I was to open a restaurant, I would probably open either a fast food chain or a cafe, something that's relatively low end and doesn't require a lot of that fancy customer service experience.

And I think that like, naturally we will gravitate towards specific types of business models because of how our character is and where our skills are really able to produce, to add value.

And, you know, then the next thing is to map that skill business model onto specific markets.

And this is another place where I really see people who are starting out or people who are looking to scale get kind of dough in the headlights because it's false to say that everything is your market.

And the extent to which you're looking in too many places at the same time is the extent to which you.

Will just overwhelm yourself with possibilities and then also get a little bit confused as far as those business models go.

And here what I would encourage you.

To do is once you've kind of.

Zeroed in on one or two business strategies, one or two particular ways of investing in real estate that makes sense to you, you need to then map that onto markets in which that strategy works.

And if we take for example, you know, Short Term Rental or Airbnb, the markets in which that strategy is going to work from a regulatory point of.

View and also from a financial point.

Of view, might be very different from the kind of markets in which you can do a hardcore management optimization in the way that I've built my business or, you know, a medium term rental might not work in the same place as, you know, really heavy flipping.

And so as you begin to understand what kind of business model you want to be operating, that is then going to map onto specific markets and what you know, there are different ways in which you can do that.

Obviously trolling the MLS is one way.

To see in terms of price points.

It's going to be clear to you, can I operate this building as like long term rentals or Is this more a place where I need to be considering flipping or short term rentals or some other kind of thing?

The other way that you might go.

About doing this is just by talking to real estate brokers and investors who are already active in the markets that you're interested in.

And if we're putting this, you know, into the Montreal context, which is obviously a market that I know very well, you know, if you're looking at the type of business model that's going to work in the Plateau or in Westmount, which are, you know, kind of the higher priced neighborhoods in the city where you have a lot of owner occupant, owner occupants and the price points of properties are extremely high, the kind of.

Business model that's going to work, there.

Might be more, you know, a short term rental, a medium term rental or a flip.

Whereas if you look at some of the more outlying areas that are, you know, perhaps more affordable and like, let's less glitzy, that might be the kind of place where a management optimize or.

A burr strategy would make more sense.

And so, you know, really zeroing in on the markets that actually make sense for the type of business model that you are going to be operating.

And you know, the other things that come into making that market choice is also price point.

And I mentioned earlier on in the episode the, you know, fact that if you want to do flipping and the average house price is $1 million, that's going to be very different from flipping houses that are in the $200,000 range.

And as you're making those decisions about which market to involve yourself in, you're also going to have to match that to your financial resources and the type of business strategy that you're going to look at operating.

So definitely the price point of those markets is going to then dictate the type of the type of business model that's going to work there.

And if we're back to talking about our restaurant, like, you know, opening a fast food joint on a very high end luxury street might not be the best decision.

That location might decide for you the type of restaurant that you should be opening.

Same thing if you're looking at like.

Being in a residential neighborhood where there's.

Like just a lot of, you know, single family homes or a lot of families.

Like if you're in that kind of area, maybe you're thinking of opening a cafe instead of opening like some kind of luxury high end, you know, eating establishment.

And so really understanding that like the location is going to dictate the kind of business model that you're going to be able to operate, that's super important.

Then the last factor in this, how to choose a market is deciding whether.

Or not you want to self manage.

And this then becomes that question of location of, you know, the reality of a lot of us today is that the places that we live might be.

Too expensive to run specific business models.

And then if we want to operate, you know, a kind of that kind of business model, we then need to ask ourselves, does it really make sense for me to be doing that in a self managing way or do I need to do it with some kind of external management?

And again, if we're talking about, you know, Airbnbs, like this is something that a lot of people do with vacation property.

And it just might be that the location that you live is not really either from a, there's just too much.

Regulation and you can't open new Airbnbs.

Or perhaps you're not in a major.

Tourist destination where it's going to be.

Easy to fill that short term rental on a yearly basis in a way that's going to be interesting.

And so if that's the kind of business you want to run, you really need to ask yourself, you know, what is it going to look like if.

I have to hire a manager, if.

I have to hire a concierge because I'm not going to be able to self manage and go to that vacation unit on a regular basis, or if I'm looking at, you know, investing in an area in a long term rental where I'm able to at least get to cash flow neutral or generate a little bit of positive cash flow, that's then going to mean that I'm going to need a property manager with boots on the ground.

And then how do I feel about that?

You know, because if you're really kind of emotionally psychologically attached to wanting to.

Self manage your properties and that means.

That it's going to have to be somewhere geographically near where you are, that is then also the dictate the type of business model that you can operate based on the market that you live in.

So, you know, those are all the kind of things that you need to be considering when you are zeroing in on those, you know, three things that are going to help you build that intentional strategy.

So if we just go over them again, it is, the first thing is to understand the different business models and pick ones that then match your unique personality and your skills that you have acquired so far.

Because there's going to be a match between specific business models and your skills, and then to map that onto a market based on the price point, based on, you know, what kind of things make sense in that location, and then based on the cash flow that your specific business model can generate in the market that you're talking about.

And just in case you thought we.

Were finished, we're actually not finished.

Because the next piece of building this.

Intentional strategy is you need to crunch deals.

And just because you've zeroed in on a business model and you've zeroed in on a market, the way in which you test whether or not this is going to work for you is you need to be crunching those deals.

And so that looks like, you know, getting onto the MLS and setting yourself a goal, setting yourself an objective that every week you're going to crunch.

You know, if it's five deals, if it's 10 deals, if you really want to accelerate things.

And that is going to then be.

The way that you check whether or.

Not your business model works in that particular market.

Because as you go through doing those.

Financial projections for the properties that you.

See on the market, it's going to.

Very quickly become evident whether or not.

The business model that you are trying to run in that market even really makes any sense.

And, you know, the degree to which you can then bounce some of those ideas off of experienced Realtors or other, you know, more experienced investors, they're going to be able to let you know whether those deal crunches that you've done and whether the business model that you're trying to operate in that submarket actually makes sense from a financial standpoint and whether or not you're, you know, kind of barking up the wrong tree.

So, you know, hopefully this has demystified the process a little bit of how to build an intentional real estate investing strategy.

Obviously, if you want to go beyond what we've covered in this episode and get a little bit more guidance, have a little bit more information about that, you can head over to EquityBuildersClub.com and this is precisely the kind of thing that we help people with in our coaching programs to really look that and troubleshoot.

Does your investing strategy make sense?

And, you know, are you going about crunching those deals and really matching your unique investor profile to the correct business model and then to the correct market for the business model that you're trying to operate in?

The second exciting thing is that we still have a few more coaching spots available in our next cohort if you would like to have a little bit more help closing on that next property.

Please go ahead and fill out the contact form on equitybuildersclub.com and we would be happy to jump on a call and explain to you a little bit more about what we do.

Thank you for listening to the Real Escape Investing Podcast.

I'm your host, Terri Schauer.

If you find that this show has been useful to you, if you've enjoyed the content, if it's done anything move the needle for you, please go ahead and share it with one person who you think could profit from listening to it.

Until next time, real estate fans.