Have you ever thought about becoming a real estate investor but weren’t sure where to start? You have company. People just like you have bought millions of Robert Kiyosaki, Carlton Sheets, and Robert Allen books, tapes, and videos from around the world in search of the keys to the investment puzzle. However, very few actually start and even fewer make any money at it. You may still feel like there are too many obstacles in your way.
Let me cheer you up. Just because you may lack a large cash balance, have a great credit rating, or have years of experience as a trader doesn’t mean you can’t enjoy success as a real estate investor. I am a walking test. I’ve helped real estate investors obtain millions of dollars in financing for their projects, and along the way, I think I’ve seen every type of investor possible.
In my job, I have had the benefit of seeing many people succeed and many others lose thousands of dollars almost overnight. Here are some ideas that, in my experience, will lead to greater success:
1. Determine your goals. Where do you want the real estate agency to take you? Approach your real estate career as you would any other business by deciding where you want to be a year, three years, or more in the future. Knowing where you want to end up helps you choose the right path.
2. Choose the best path for you. What level of profitability do you want to achieve? How much risk can you tolerate? One thing I love about real estate is that there are at least 100 different ways to make money. For example, you might consider
Rehabilitation and resale of single-family homes
Buy houses and keep them as rental properties
Become a real estate agent
Brokerage or ownership of office and commercial properties
Invest through limited partnerships or become a private money lender
What matters most is that you find a path that is in line with your lifestyle in terms of how much you want to participate in various investment vehicles.
3. Do your homework. You can lose a lot of money quickly if you don’t exercise the discipline to educate yourself and get good advisors. Talk to people about various loan programs, rates, and terms on the market. Read some trade magazines or subscribe to wonderful newsletters like Peter Pike’s Dispatch (http://www.pikenet.com/) to reinforce your understanding of real estate trends.
4. Rent, rent, rent. Learn the composition of your local market. Buy rentals. You can change everything about a property except where it is located. I haven’t seen many people make money by having the market bail them out of a bad situation. It usually doesn’t happen that way.
5. Ask questions. When you find a property or project, talk to the neighbors. They will tell you everything you want to know and more… even why the owner is really selling. Interview with real estate agents. Some have worked in certain neighborhoods long enough to have traded the same property multiple times over the years.
6. Appraisals and inspections are your friends. Unless you’re already a millionaire real estate investor, stop listening to your “gut gut.” If you are a millionaire real estate investor, you are probably not reading this article. Therefore, I feel safe in recommending that you always have a second and third set of eyes to watch every investment you are considering. It’s better to spend a few dollars to save thousands, right?
7. Form your professional team. Ask for references and check them out. Be willing to fire them and move on if they are not performing. You will want to establish a relationship with a good attorney, real estate broker, mortgage broker, accountant, inspector, appraiser, and a title company along with others that you may work with from time to time.
8. Know your numbers and stick to them. You’re probably not that much brighter than everyone else to be able to rewrite the rules. (Not yet). Take the time to learn how to analyze debt coverage ratios, local days on the market, property rental rates, average occupancy, etc. Respect what your research tells you and…
9. Always be ready to walk away from a deal. It is your money and your time that is at stake. You are assuming all of the ongoing commitments and assuming much of the risk. Don’t let anyone pressure you. Nobody gets paid until they start signing papers; so wait until you’re ready before moving on. Once you’re ready…
10. Start and never give up. You could make a bad deal or two. Alright. It’s better to learn early in your career, right? There is a way to move forward and achieve all your dreams. You just have to hold on until you find it.
In most cases, people lose because they violated one or more of the above keys. The more you guide your real estate investing career by these rules, the better off you’ll be. Maybe one day you’ll send me a testimonial telling of your latest success? I hope so.
In the meantime, if you need help identifying your goals, locating consultants, evaluating opportunities, or financing your projects, contact me today for help. In fact, I have a free “Bid Evaluator” in Microsoft Excel format that I’ll send you for free when you email me. No matter where you start, the exciting and wealth-generating world of real estate investing is not closed to you.
I wish you much success.