Investing in real estate can be a daunting task, especially if you are new to the industry. Where should you start and how can you tell if you are really getting a good deal? In such a highly competitive market, good decisions based on sound advice and expertise can make or break your dreams of building your very own property empire. So where should you start and who should you trust for guidance?
We met with the co founders of Legacy Builders Global, Jennifer and Jan-Marc Pickhan from Germany and asked them why they are so passionate in helping people invest in Real Estate.
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Jennifer: First, we love Real Estate and we know the benefits it provides but also the challenges people have – getting started and growing their portfolios.
Jan-Marc: Yes; we know from our own experience because we have been there too. Getting started is the hardest; as always in life, your first steps are the most difficult, after that it gets easier. Just like learning how to walk, somebody helped you till you could do it by yourself.
Jennifer: As a mother I know from my own experience how it feels. But I’m there for our little boy, to catch him when necessary, to explain to what he must pay attention, to help him to get up and make sure he tries again and again. It’s no different with our investors.
You dedicate a lot of your time to teaching others how to invest, some may wonder if it wouldn’t be easier (and more profitable) to simply focus on your own portfolio instead of helping others build their.
Jennifer: Maybe it would, maybe not – I don’t know. I must tell you a story, so you and the readers understand why I do what I do: A couple of years ago, I believe it was 2013, I just finished my real estate appraiser certification. I was approached by a young couple, they had a young child and they just bought their first home off plan. The property was never finished, the construction company stopped the work after digging the hole, and they were forced to move in with the parents, took on debts and a lawsuit. I had to help them, and so I did, and they avoided bankruptcy and are on their way to recovery, but it took precious years from their lives.
Truly amazing work, I can see why you would feel a great sense of accomplishment and meaningfulness in what you do. At the same time, I suppose it also highlights that things can go very wrong with property investment. Would you say this can be a dangerous field to get into?
Jan-Marc: I neither agree, nor disagree. It is as dangerous if you jump out of an airplane with a parachute for the first time without prior training or an instructor. We did it last summer and since we know investing, but have zero experience with parachuting, we made sure the one doing it with us knows what he was doing.
Jennifer: That’s right, and the story I mentioned wasn’t about investing in real estate. They bought their home which is a different matter entirely!
People tend to buy their home with their heart and not their head. It’s all about how you feel inside, in the neighbourhood. Can you imagine raising your kids there – is it an escape from the outside world, a cosy place, is it representative, what will your friends say and on and on. If you invest, you ask different questions: What will the area develop into? What’s the monthly cash flow? How much rent can I charge and will it increase? Do I have to renovate or is it OK to rent out like it is? Will the value increase and by how much? With this in mind, you can look at the same piece of real estate and see two very different outcomes.
Jan-Marc: Another important aspect is who is paying for the loan on the property; and there lies another important difference.
If the loan is serviced by the tenant you, the investor, have money left over to use as residual income or to invest in your next acquisition and this is just the start.
For example, we purchased an apartment for 73,000 Euros and increased its value to £126,000. Now the smart part is that we raised the finance from investors, meaning the property was purchased with no money down and this is what we teach others to do. Its a win-win situation for everyone. The investor gets a great return, you earn and build a growing portfolio and at the other end renters have access to more properties.
Jennifer: I know what your readers will think at this point “It is not possible!” “If this would be possible, then everybody would be doing it!”
Do you find that many people have this reaction and by extension is your biggest challenge to change their mindset?
Jennifer: It’s a mindset people have and the way most of us were raised and educated. If you can not imagine that it is possible you will never ever try. Look at the bumblebee – it’s the perfect example…
Jan-Marc: Physics says it is not possible for the bumblebee to fly and yet it does! The bumble bee doesn’t ask if its possible or not, it simply does. Mindset is key if you want to be successful in life – and it’s the same in property investing.
Jennifer: That’s why we open the mind of our investors. Regardless if people invest with us or if we coach them so they can do it on their own. There is an African proverb that says: “If you want to go fast – go alone. If you want to go far – go together.” And we want our investors go as far as they can imagine, and even further.
Who do you work with, is there a criteria for taking on new investors or students?
Jennifer: We are working with people who want to start investing in real estate or grow their portfolio. A lot of people who want it, don’t have the time to get started or too much to do to focus on it properly. That’s were we help our investors.
Jan-Marc: Also, not only do we train people to invest, but we also source deals which we offer to our investors and as Jennifer said, we are on their side and make sure they understand every step in the process for as long as they need us – we love to see people succeed. Together we can all achieve much more.
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