#1 Know that you can do it too!
Have you ever stopped to think about who owns all the downtown buildings? Or how about all those apartment complexes you see everywhere? When you see a “For Rent” Sign on a house do you wonder how many more rental houses that guy owns.
Well, the point to these questions is to say that you can be one of the millions of people that own rental real estate too? That actually comes as a surprise to some people and that is why the title above says KNOW that you can do it too! You can and you should. Let me repeat that. You can and you should.
There are plenty of excuses people use to say; “well, I can’t do that” and as the saying goes – “You either can or you can’t, either way you are right!” Here’s what I want you to do. Just below write out the first few “I can’t” reasons. I’ll even get you started…
What if you could turn it around so there were no excuses, no more “I can’t”? Wouldn’t that allow you to achieve your goal of financial freedom? Wouldn’t that allow you to create the result of buying properties below market value so you could make money time after time?
What we intend to do is what we will ultimately get. The more clear the intention, the better chance we will do the things necessary to get it. For instance, if you say; “I want to invest in real estate”, that intention is very vague and not easily acted upon. However if you can describe what kind of real estate you want it becomes much clearer and much more likely to happen.
As an example, if you say; “I want to own a rental duplex in the hospital district with each side being 3 bedrooms and 2 baths and it needs to cash flow at least $150 per side and I don’t want to pay more than $10,000 down and would love owner financing”, you are much more likely to find what you are looking for.
Is it easier to believe that you can own a duplex in the hospital district or that someday you want to be rich? Your mind will help you be successful if you truly believe and articulate what you want in detail.
#2 Begin with the end in mind
In Stephen Covey’s book “The Seven Habits of Highly Effective People”, habit number one is “Be Proactive”. You’re being proactive just by reading this article. You’re taking action. Habit number 2 is “Begin with the end in mind”. Set a goal. Know what you want and plan how to get there.
So many would be investors don’t have a road map to where they want to end up so they don’t end up anywhere. THIS IS A CRITICAL STEP!!
There is a major difference between investing in real estate and being a real estate investor. By inheriting a property or buying a house that pays you $2 per month, you are an owner of an investment property. (Many people actually loose money each month because they didn’t buy right but that is another story). Technically, they are invested in real estate.
But they are not real estate investors. They don’t have a plan of accumulating wealth with strategies and tactics that get them there over time. (Sorry, this is not a get rich quick opportunity…lottery tickets sold elsewhere).
A plan should have realistic goals. For instance, if your desire is to retire wealthy, what do you mean by “retire wealthy”. Be very specific. I have one client that defines it as “I want my wife to be able to stay home and I don’t want to have to work. I need about $6,000 to pay my bills and I want to be able to do some traveling so I want $10,000 per month”
You should have a long term goal of 10 – 15 years or more; medium term goals in the 5 – 10 year time horizon and shorter term goals in the 2 – 5 year range and immediate goals that define what you are going to do this year. Let’s take a look at a sample of this…
A 52 yr. old working male with a wife that works as a teacher might start with basic goals as follows:
10 year goal
retire at 62 with no reduction in lifestyle [so they need to replace $82,000/year income ($6,834 per month) which might take 10-12 free and clear houses generating cash flow in the $500 – $600/month range]
5 year goalOwn 15 housing units (could be apartment or duplex generating at least $150/unit in free cash flow ($2,250) to retire my wife to be looking for real estate full time).
Own Real Estate in my self Directed IRA – grows tax deferred or even tax free if using a ROTH
Join the local REIA – Real Estate Investors Association.
Understand my financial situation – set a household budget, savings & Investment plan, income statement and balance sheet (which you will need for loans anyway).
Develop a buying criteria – (what do you want to buy, where, how much, what condition, how big, etc).
Find an investor friendly real estate agent (to help me find property that fits my criteria).
NOTE: this is just a summary of goals while a real plan is more in depth & detailed.
#3 Model success – Another way to say this is “don’t recreate the wheel”. If 8,000,000 people have already done something and hundreds of thousands are currently doing it too, DON’T TRY TO MAKE IT UP AS YOU GO!
There are many real estate investors that are happy to share their experience over a cup of coffee or lunch (you buy of course). The investors I have been privileged to know are a caring, sharing group of people that want to give back and help people. That’s how I got interested.
Now let’s talk specifics. If you were going to go into the hamburger business would your chance of success be better if you were starting your own burger place or buying into a big name franchise?
Assuming all things were equal, you wouldn’t have to develop all the systems and training for your own business if you went the franchise way. You would have the expertise of people that have been there and made mistakes and refined their systems and processes to improve the business. You would have the help of other franchise owners in your area to let help you get started and to talk with about local business trends and situations and on and on….
The point of this is to find out what other successful people are doing and model them. Don’t recreate the wheel. If your advertising isn’t working to generate leads, find someone that has a “lead generation machine” and copy what they are doing. (Please don’t infringe on copyrights, etc). But if they have a web page driving lead traffic, you should consider it. If they are putting signs out, you should consider it. If they are doing direct mail, you might give it a try. I think you get the point.
Look at every process as you find, fund, fix and flip real estate and break down the components to business processes and then put a system around the process to help you make it more efficient and more manageable.
#4 Focus, Focus, Focus
Lack of focus is probably the single biggest cause of new investor failure that I have seen. Every month people are buying new books and tapes from the circuit guru that flies into town for the REIA meeting or some big name putting on their own event. I’m not saying that you shouldn’t expose yourself to different techniques to buying and/or selling property but most people have a “flavor of the month” investing technique that they get excited about and don’t ever focus creating a business (being a real estate investor).
Look at your resources, network of people and resources, time you have and level of difficulty and commitment to do a specific type of transaction. You should pick one that considers your time and resources and then get really good at it.
#5 Take action
You don’t have to be good to begin, but you have to begin to be good. This is the shortest section here. TAKE ACTION! Do something. One of my bible study teachers used to say to me after I asked so many questions was; “Larry, Just get a mitt and get into the game!” Translation for real estate investors….”Just get out there and make offers”. You can’t make money until you get a contract that is signed by the seller, right?
#6 Build a team of experts
#7 Make offers!
You can learn a lot and not make money. You can plan a lot and not make money. You can network with hundreds of people and not make money. You can attend meeting after meeting and conference call after conference call and not make money.
Start making offers and start making some money. How many? How about 1 a day to start and then get up to 50-100 per month? Believe it or not, at some point someone will accept one of your offers and you’ll be “off to the races”.