As with many aspects of life – real estate can be a real jungle. For many of us, it’s exceedingly easy to lose focus, make bad decisions and get sidetracked along the way - often times without even knowing it.
If you could only give 3 recommendations to a new real estate investor (based on your own experience in the business), what would be your Top 3 most important pieces of advice?
Not surprisingly – there were a few common themes that seemed to come up again and again throughout this list… can you spot what they are?
1.Collaborate. Find great team members to help you pull off your overall vision. One person alone can only handle so much (and it limits your education).
2. Know your numbers. It is easy to get emotional about a deal, no matter how experienced you are. If you know your numbers and stick to them, it takes the emotion out of the equation. This can save your wallet, big-time.
3. Be fanatical about due diligence. Try to obtain and confirm every bit of information you can about an investment — not just the physical property but the history and potential future of revenue, operating expenses, and capital costs.
4. Be a Closer Not a Poser. It only takes a moment to tarnish your reputation. You can’t fake it till you make it. If you can’t close, don’t make an offer.
5. Model your business after those who have already done it. There’s no need to recreate the wheel – just follow the blueprint that others have created.
6. Always put it in writing – leases, addendums, amendments, notices, and the most basic of promises, should all be put in writing. Leases are best served as a written contractual document that both parties sign, but email saves time for things like general communication and notices to enter.
7. Don’t try to learn everything. Gain as much general knowledge as you need to discover what makes you most excited, then focus on that one thing. For example, if you like the idea of small multifamily properties, focus on that and don’t get distracted by flipping, wholesaling, and other cool strategies.
8. Understand how location relates to home values. I have seen numerous buyers purchase properties without understanding the value of various locations. They think they are paying a good price based on square footage, bedroom and bath count, etc. without having a grip on how an area can have a dramatic effect on value.
9. Have a clear vision of why you want to be a successful real estate investor, and what your investing business needs to do for you.
10.Take action. We all have fear when we doing something that pushes us out of our comfort zone. The only way around fear is to take action and find out there was not much really to be afraid of. It will be uncomfortable at first, but like anything else, you will become used to it and will most likely get excited about it. I know it did. You couldn’t shut me up when it came to seeing houses and making offers.
11. Avoid penny-pinching and the scarcity mentality. But definitely set a realistic budget and add to it every chance you get. Outsource as much as possible to maximize your time. Always shoot for a high return on your investment, but please don’t ever expect something for nothing (…ain’t gonna happen).
12. When you pull comps, think in terms of an “apples to apples” approach. If the subject property was not available, would a buyer realistically consider purchasing the comps instead? Moreover, be careful to not choose a random price per sq ft figure and use that to establish your value since the figure might not fit your property.
13. Choose one investing strategy and master it before moving on to another one. It’s really easy to get distracted by “shiny object syndrome” and lose your focus. Don’t be tempted to “dabble” in a whole bunch of different strategies when you are just getting started.
14. Don’t get emotional. Don’t pass up good deals just because you can’t picture living in them and don’t buy something that you adore if the math doesn’t work.
15. Set actionable goals and activities. How many offers will I make each day, week, month? That will equate to how many deals I will close each month. Track your work flow. Whatever gets measured gets managed.
16. Do NOT start out investing with a plan you constructed on your own. This includes deciding what/when/why/how to buy your first investment property(s). It’s not that you don’t know the answers.It’s that you don’t know all the questions.
17. When it comes to saving on taxes and setting up your entities, make sure you get the facts instead of falling victim to some of the common myths that are out there on the internet.
18. Sit down with someone who invests in real estate (hopefully your own realtor) and ask them questions like, “How many homes have you purchased?” and “What is your primary goal – Buy and Hold or Buy and flip?” Ask them how many times they’ve failed as well.