There is a lot that goes into completing a successful real estate transaction. Not only do you need to have the right property in the right location, but you also need to do the right work and sell at just the right amount. All of these steps, and many more, can have pitfalls and problems along the way. Even the most experienced investors can have trouble from time to time. Imagine how overwhelming it is if you are new to the business. Fortunately, there are steps you can take that will get you to that first deal.
The first step in any business, but particularly real estate, is knowing exactly what you are getting into. If you are lacking education, you will not get very far. There are specific steps and practices that you must know for every step of the transaction. From acquiring the property to knowing how to estimate repairs, each step can be a real challenge. Before you look for a property, you need to arm yourself with tales from fellow investors as well as knowledge of the market you are looking to buy in. Investment club meetings, informational websites, investing books and talking to local realtors, attorneys and mortgage brokers can give your education a jump-start. You may be able to close a deal or two without knowing the business, but eventually it will catch up with you and can prove costly down the road.
Only after you know the business can you move forward. From there, you should take inventory of your resources and your goals. You may have desires to buy six houses a month but the bankroll for one. Take the time to access what you are approved for, what capital you have access to, what type of investor you want to be and how long you want to hold each property for. House flipping shows on TV make the process look much easier than it really is. If you are just starting out, you may want to lean towards wholesaling deals or finding a partner to flip houses with. Getting the property isn’t the hard part. It is doing the right work at the right price that can make or break the deal. With every purchase, you should have defined goals, budgets and exit strategies before you buy. If you just buy with the idea that you will figure it out after, you are setting yourself up for trouble.
Once you have your goals and resources in place, you can begin to assemble a team to achieve them. Your realtor, attorney, mortgage broker and contractor will do more for your business when you are just starting out than anyone else. Lean on these people for advice and suggestions, but know that you are the final decision maker. Take the time to talk to your realtor to make sure you are both on the same page with what you can afford, what you want and where you want it. Developing a relationship with your realtor, or anyone else on your team, will take some time and a few deals, but it starts with your first deal. If your realtor knows exactly what you are looking for, they can find deals that fit your goals, whatever they may be. Some realtors won’t want to work with new investors that are looking for properties under $75,000. If you put this on the table in your first meeting, they will know what to expect of you and you will know if they are a good fit for you. Without a good team around you, the business can be intimidating.
Once your team is in place, you can begin looking for deals. Here is where your education will come in handy, helping you break down the numbers to determine if you should make an offer or pass. This can be a very frustrating time, as you will find very few slam dunk, home run deals. Every property will carry some level of risk and there will be something you don’t like with it. While you do need to take action at some point. you also don’t want to take wrong action. It could be months before you find a good deal that fits the parameters with what you are looking for. Once you see a good opportunity you need to be ready and go after it with all your vigor. If you aren’t sold with the deals you are presented with. it is ok to pass and wait for the right deal to come along. It is easier to wait than it is to recover from a bad deal.
Closing real estate deals should give you a rush that will want to make you close your next deal tomorrow. Getting to that point is a process. If you take shortcuts or try to go too fast you can end up doing real damage to your business. If you treat investing as a business and strive to only get involved in good deals, you can survive any ups and downs and will enjoy investing much more. Leaving the closing table after acquiring your first property is a good feeling, but the goal is not to only close one deal. If you take baby steps you can build a sustainable business that can recapture that feeling many times throughout the year.
