If you watch cable or satellite TV on the weekends, you can find 20 to 30 channels early in the day with fast-paced, rich infomercials selling everything, books, tapes, seminars, and even streaming services. Personal training. Most focus on real estate and I’m not sure they are worth the time it would take to order over the phone. I have spent thousands of dollars on home study on real estate over the years and will continue to do so in the future. I am still looking to deepen my studies and my understanding of what really works in the world of real estate investing.
Due to the time, energy, and dollars I’ve spent in the past, I have a pretty good idea of what a real estate investor wants to avoid, as well as the best steps to get off to a successful start. Education certainly plays a role in a real estate investor’s success, as well as in the business sense, attitude, and sometimes luck!
Here are some detailed steps an investor can take to improve their chances of success.
– Learn the basics of real estate in general.
As with any investment or business strategy, real estate has its own jargon. There are terms and phrases that many of us have heard in the past, but may not know the exact meaning. It is very important from the beginning to do your research and learn the basics, such as the meaning of the terms and expressions that are used in the real estate industry every day. You can start using a search engine and search for the term “real estate definitions”.
– Start studying at home.
Studying at home has great advantages and I am not talking about the courses we missed on the weekend on cable television. In your local library, in the real estate investment section, there will be several titles recently written by authors with experience in their field. Discover as many titles as you can read in a week and where to work reading. Write sentences and themes that come up in the books that interest you and match your thinking to start investing in real estate. This will be the beginning of your startup plan.
– Develop a game plan.
At this point, you have an idea of the general terms and expressions for the world of real estate investment and have started to develop your interest and understanding of specific strategies for real estate investment. It’s time to formally develop your plan and start taking action. Each of the real estate investing books you will read offers specific advice on team building. It’s a crucial step to your success, and the best books offer advice on who to put on your team, where to find them, and how important they are to your overall success. Before you can start investing, you must have a plan to know where you are going and how you are going to get there.
– Join local investor organizations.
In every city, county, and state, there are several organizations whose missions are to assist real estate investors. Each of these organizations holds monthly meetings, and some of the best even hold weekly meetings, where investors can network and learn. These meetings are crucial for a beginning investor because they offer the possibility to form their team with experienced members. These are also great groups to attend for tips, advice and education. Join a group close to you and make their presence mandatory. Attend as many meetings as possible each month. Often the simple step of surrounding yourself with like-minded people who are positive and reinforce your determination to succeed can have the greatest advantage for your future success.
– Find partners and do not fall to get rich quickly!
One mistake that is easy to make at first is to embark on the “go it alone” path. Another is to believe that around the corner is a pot of gold if I can find a deal like these guys at T.V.! One thing that is rarely talked about is the fact that most real estate investors have used partnerships in the past if they don’t use them now. Alliances are a great way to spread the risk of investing while learning the ropes. These risks include using less of your available capital, credit, and time. Partnerships can also be structured to be a simple 50/50 partnership that distributes all costs and benefits, or a slightly more complicated partnership with one partner providing money and the other providing transaction, monitoring, and investment management. Either way, doing it alone can be a lonely, slow, and expensive way to start investing.
– Don’t quit your daily job!
This is a major problem and is a serious mistake made by some of the earliest real estate investors. Investing in real estate requires a total commitment: a “burn the boats” mentality. There is no going back when you decide to carpet. And therein lies the problem of quitting your daily job first. Take the time to build your team, accumulate cash reserves, learn the ropes. Take the time to make small mistakes before quitting your full-time job and making a big mistake! Investing in real estate is big business and as an investor you must be able to see your future clearly and plan accordingly.
These last two tips really explain why some investors not only fail, but fail miserably. Often times you can get past mistakes with the first few tips here with persistence and a little luck. If you make one of the following two mistakes, they can quickly break a new investor and embitter the experience for a long time. Again, if you follow all the tips above, chances are you have the team around you to guide you right after these last two tips and in a hassle-free investment.
– Once started, DO NOT underestimate the repairs.
When you evaluate repairs on a property to invest in, unless you have an experienced contractor and a trusted advisor on your team, you may lose the mark. Even the best home study courses cannot provide you with an accurate ability to estimate costs. Experience and time are needed before you can accurately assess repair costs. Losing the mark on estimated repairs can quickly break a bank account and quickly turn profitable property into a money pit!
– Do not buy investment properties for equity or appreciation
There is no greater mistake a real estate investor can make today than buying a property for his or her shareholding or future appreciation. Today’s long-term investment focuses on the ability of a property to function with a positive monthly cash flow. In my hometown to invest, Memphis, real estate investors buy properties with extreme discounts, but watch these discounts if the property does not provide a high enough monthly cash flow. Equity and expectations about the future value of the home are not good reasons to buy investment properties.
Many people will buy their first investment property in 2010. Some will view their purchase as strictly an investment and others will look to real estate to offer a new profession. Either way, it is extremely important for new investors to seek all the help, advice and experience they can get from other investors.