Real Estate Investing - Have A Plan

If you’re going to venture into the world of real estate investing, you have to have a plan. Otherwise, you are just grasping at straws in the dark. There is really no one plan that is either right or wrong. As they say, there is more than one way to skin a catfish. But you have to have some plan, regardless of what it is. In this article, we’ll point out a few things that you’ll have to take into consideration and keep in mind when making your plan. Hopefully, this will keep you from floundering in a maze of confusion and failure.

The first thing you have to do with your plan is decide what it is that you want to accomplish and in what time frame, whether it be 30 days, 6 months or a year. It doesn’t matter what the time frame is. Just pick one. Otherwise, you will be drifting aimlessly for months and possibly years without getting anywhere. So even if you make your plan as simple as to sell your first home in 30 days, fine. Make it and stick to it.

After you have decided on what you want to accomplish and the timeline you want to accomplish it in, the next step is to actually begin putting that plan into action. Let’s say, for argument sake, that your plan is to buy a home for the purpose of fixing it up and reselling it at a later date, preferably within 6 months. The first thing you need to do is go out looking for a fixer upper. It’s not going to come to you. You have to go out and find it. This means looking for homes that people are selling cheap that need work. That of course has to be part of your plan. How much work, in both time and dollars, are you going to put into this fixer upper? You have to have this firmly written down before you begin, otherwise you’ll end up spending heaven knows what on the worst piece of property standing on this planet.

The important thing about making a plan before you even do anything is that it allows you to spend your time constructively. By having everything laid out as to how you want to proceed, you don’t have to sit and think about what you’re going to do next. Everything is laid out in step by step fashion, or at least it should be. Every minute that you spend thinking “What do I do next?” is another minute wasted. And time is money, any way you want to slice it. The reason that most people fail in real estate is because they don’t have a plan.

At the very least, your monthly plan should include how much you want to make in total. This figure should be based on how many deals you plan to close each month, which in turn should be based on how many leads you expect to get each month. One thing affects the other. Without leads, you can’t close deals and without deals there is no monthly income.

So if you’re thinking of getting into real estate investing, have a plan.

Your bank account will be glad that you did.

Real Estate Investing And Goal Setting

What is the primary reason for success most people have that seems to elude unsuccessful people? Goal setting is the primary reason for success. Lack of proper planning is the number one reason for failure. Proper goal setting involves setting a business plan in place for your life. Too many people this doesn?t sound fun or sounds tedious. In practice though, goal setters have more time freedom, more money, and more success in all areas of their lives than those who don?t. Well it?s no different with real estate investing. Real Estate Investing must be treated as a business and it requires planning that anyone can do. Much like an airplane pilot who goes through a pre-flight checklist, the real estate investor must go through many steps for every real estate deal. You must market to find the deal, do your research on the property to establish a value, have your contracts ready, make your offer, schedule a closing, have title work done, prepare your financing, get property insurance, etc.

The reason the doers make money is because so many people aren?t ready to make money. Real estate investing seems like pie in the sky until you put your plan down on paper and it starts to crystallize. The planning process itself should give you renewed energy. Before I daily setup my plan I didn?t want to get out of bed each day, but now I get up ready to work on knocking out my plan every day. Set your plan up into baby steps that you can review and knock out every single day. Your daily plan must include marketing to get motivated sellers to contact you. Regardless of the deals you have in the works, if your marketing stops, you will go through long dry spells. Even with consistent marketing you will have periods with few leads and periods where you are just swamped with sellers offering you great deals.

Constant daily review of your goals is critical. This is why so many suggest taping your goals on your bathroom mirror so you see it when you wake up and again before you go to bed. You can even buy giant poster sized post it notes that you can write your goals on and stick them on your wall. Reviewing your goals before going to sleep at night causes your brain to dream about your goals and program them into memory. So put your goals down on paper and start putting your real estate investing plan into action.

About the Author: David Neese is a real estate investing author who offers a free course for real estate investors delivered by email, audio and Tele-seminar which you can get for free at: http://www.FreeRealEstateInvestingCourses.com You can find more information about David at http://www.DigitalSuccessCoach.com

Real Estate Investing And Goal Setting

What is the primary reason for success most people have that seems to elude unsuccessful people? Goal setting is the primary reason for success. Lack of proper planning is the number one reason for failure. Proper goal setting involves setting a business plan in place for your life. Too many people this doesn?t sound fun or sounds tedious. In practice though, goal setters have more time freedom, more money, and more success in all areas of their lives than those who don?t. Well it?s no different with real estate investing. Real Estate Investing must be treated as a business and it requires planning that anyone can do. Much like an airplane pilot who goes through a pre-flight checklist, the real estate investor must go through many steps for every real estate deal. You must market to find the deal, do your research on the property to establish a value, have your contracts ready, make your offer, schedule a closing, have title work done, prepare your financing, get property insurance, etc.

The reason the doers make money is because so many people aren?t ready to make money. Real estate investing seems like pie in the sky until you put your plan down on paper and it starts to crystallize. The planning process itself should give you renewed energy. Before I daily setup my plan I didn?t want to get out of bed each day, but now I get up ready to work on knocking out my plan every day. Set your plan up into baby steps that you can review and knock out every single day. Your daily plan must include marketing to get motivated sellers to contact you. Regardless of the deals you have in the works, if your marketing stops, you will go through long dry spells. Even with consistent marketing you will have periods with few leads and periods where you are just swamped with sellers offering you great deals.

Constant daily review of your goals is critical. This is why so many suggest taping your goals on your bathroom mirror so you see it when you wake up and again before you go to bed. You can even buy giant poster sized post it notes that you can write your goals on and stick them on your wall. Reviewing your goals before going to sleep at night causes your brain to dream about your goals and program them into memory. So put your goals down on paper and start putting your real estate investing plan into action.

About the Author: David Neese is a real estate investing author who offers a free course for real estate investors delivered by email, audio and Tele-seminar which you can get for free at: http://www.FreeRealEstateInvestingCourses.com You can find more information about David at http://www.DigitalSuccessCoach.com

Real Estate Investing - Is There One Magic Rule?

If you’ve spent much time around people who invest in Real Estate you know they all have their favorite rules. In Investment Club meetings, online chat rooms, even at the corner coffee shop, you catch snippets of conversations including phrases like,

?Location, location, location,?

?Buy low, sell high,?

?Invest in what you know,?

and many others.

While these are all important, in my experience (and that of many other seasoned investors) there is one rule that, if followed consistently, will save you from almost all of the potential pitfalls investors commonly encounter. What is this pearl of wisdom?

Simply this: YOU MAKE YOUR MONEY WHEN YOU BUY.

?What?s that,? you say? ?Everybody knows you make your money when you sell.?

?Not so fast,? I reply.

Think very carefully through what I?m about to say. Etch it into your mind and heart. Follow it faithfully and you will come close to guaranteeing your investing success. Forget it at your peril.

YOU MAKE YOUR MONEY WHEN YOU BUY. Very simply, this means that your profit is literally created at the time you purchase a property, through the price you choose to pay and the terms you negotiate in your purchase offer. There is no other time in the life cycle of an investment when you will exercise such tremendous control over your potential profit.

There is no other time when you can come so close to guaranteeing your success, and also no time when you can virtually guarantee your failure.

Buy right, for the right price and terms, and you will be able to weather virtually any unforeseen or unknown defect in the property. Sure, some of your profit may be eaten up correcting the problems, but there will still be something left for you- something to allow you to move on to your next project.

Buy wrong, spending too much on the property, and even if you do everything else right you will be hard-pressed to make money.

This Rule Almost Makes The Others Obsolete

Even if you?ve broken most or all of the other so-called ?rules? of Real Estate investing, if you follow this one magic rule, you can emerge victorious, a little wiser but unscathed by crippling losses. Let me illustrate.

Recently I purchased a single family home, and in so doing I broke many of my own rules. I bought a house nearly an hour from my home, I bought a house for the wrong reasons (I really, really liked it), and I bought a high end house in a low end neighborhood (a classic no-no). I also bought it without having a clearly defined exit strategy (another classic blunder). I just knew I could do something with this house.

Additionally the house had one of the most investor-unfriendly features I have ever had the misery to run across- an indoor swimming pool. When I wasn?t busy finding and repairing leaks in the liner, I was struggling to refill the pool using the property?s seriously overtaxed well, which I had to keep waiting for to recover. I still have nightmares about it.

This house took me three times longer to sell than I first imagined, and holding costs were eating me alive.

But? I owned this house right because I had bought it for the right price. I had foreseen that this house, with all it?s beauty and features, could also be a very difficult house to rehab, hold, and sell. Based on that, I structured my offer with plenty of room, which is a good thing, because much of that ?room? was eaten up before I was finally able to sell.

Much, but not all.

Why was I able to withstand all of those expensive problems and still walk away with a tidy profit, and some hard-won wisdom? Because I recognized and applied the first and most important rule of Real Estate investing- YOU MAKE YOUR MONEY WHEN YOU BUY.

I believe that if you will etch this principle forever in your mind, and think of it always when making your offers, you will safeguard yourself from almost all potential investing disasters (acts of God excluded).

Two Things You Must Know

To put this principle into practice, you absolutely must acquire knowledge in two key areas- market values and repair costs. While each of these is worth an article on it?s own, I will cover them briefly here.

First, market values. You must thoroughly understand the market values in the neighborhood where the property is located, so that you can project an accurate After Repair Market Value (ARMV). In other words, how much will this property sell for after all needed repairs and upgrades have been completed. While it is beyond the scope of this article to cover market value in-depth, I will simply note that the one best way to determine the ARMV of a residential property is to compare similar properties in the neighborhood which have sold recently (called comparables or ?comps?).

If you don?t know the values in the neighborhood, STOP! Don?t invest there until you have come to understand the values by looking at lots and lots of properties, and talking with Realtors and others who know the neighborhood. Then you can proceed from a position of strength, certain that you know what you are doing.

Second, repair costs.

Once you know the ARMV, you need to be able to work backwards to arrive at an offer that makes sense. To do this, you must know what any needed repairs and upgrades will cost you. You don?t need to know to the penny, but you must come reasonably close, and you can only learn to do this with experience. If you don?t have this experience, and you?re not an expert, hire one.

You will need to befriend a contractor you trust, or partner with one on a few deals. Either way, let someone who knows this stuff bring you up to speed. Get a contractor on your team.

It shouldn?t take you more than a few deals before you can walk into a home in a neighborhood you?re familiar with and, after spending no more than 10 minutes or so, know what it will cost to repair and what it will sell for after you repair it. Knowing you can do that equates to freedom and power.

How To Structure Your Offers

Armed with that kind of specialized knowledge, you will be able to confidently structure offers that others can?t, because they just don?t know what you know. Once I have this knowledge (ARMV and repair costs) I use a very simple formula to structure almost all of my offers on residential rehabs. Feel free to use this formula for your offers.

ARMV ? Repair Costs ? 30% = My Offer

Here?s an illustration. I recently looked at a single family, split level foreclosure in a middle class neighborhood I am very familiar with. Knowing the values for similar homes in that neighborhood were around $90,000, I next walked through the house and estimated repair costs to be about $12000. Here?s how I structured my offer:

ARMV ($90,000) ? Repair Costs ($12,000) = $78,000

$78,000 ? 30% ($23,400) = My Offer ($54,600)

Did it matter to me that the asking price of the house was $84,000? Not in the least. My offer (and therefore my profit) has absolutely nothing to do with how much the sellers are asking, or how much someone else might offer. My offers are based on my specialized knowledge of market values and repair costs.

If someone else wants to offer more, that?s fine by me. Their circumstances might be much different than mine. Perhaps they are going to live in the house while they repair it. Maybe they are ignorant of market values or repair costs, or both. It doesn?t matter. I won?t let their mistakes become mine, and you shouldn?t either. There are plenty of houses out there.

You?ll get plenty of offers accepted, because you know what most others don?t. You know that- YOU MAKE YOUR MONEY WHEN YOU BUY.

Now, go make more offers!

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