Do you want to start a real estate business worthy of praise?
There will never be a perfect time to start investing in real estate. There is no such thing as the perfect deal, nor is there a perfect market to get started in. Having as much education about the market and your business is a plus, but it can also hurt at times. Instead of gathering as much knowledge as possible, there are times when you need stop and simply take action. Things will not always go your way, but unless you start – you will never know. Taking that first step into the business is never easy, but if you follow these four points it will be much easier:
1. Access your goals: When you are just starting out, it is easy to get spun around in a dozen different directions. One day you want to invest in single-family properties, and the next you are looking at condos. The types of deals and properties you entertain should be a direct reflection of your goals. Before you do anything else, you should write down exactly what you want out of the business. Some investors are looking to make it a career, while others are only looking to close a few deals a year. Only after you fully know and understand your goals can you move forward with your investing. Knowing what you want leads you to making more assertive decisions when deals come your way.
2. Accept the grind: There is no such thing as an overnight success. Many of the investors and rehabbers you see on TV have been in the business for years. They have gone through numerous ups and downs and faced many challenges. One of the main reasons that investors do not take action is because they are afraid of the consequences. There is no better way to learn the business than by doing it. Prepare yourself to make offers on many properties that are rejected. Not everything you do will be a success. There will most likely be many days when you wonder why you are in the business. It is those investors that fight through these periods that are most successful. Once you accept that the journey of an investor is the fun part, you begin acting on impulse. If the business was easy, everyone would do it. Accepting that not everything will be perfect will help you take action.
3. Evaluate risk vs. reward: There is no such thing as a risk free investment. There are some financial instruments that offer low risk yield on your money, but those are more savings vehicles rather than investments. In the world of real estate, there are many deals that contain a certain level of inherent risk. Buying at auctions without seeing the interior of the property is just one example. Tax liens sales, out of market investing and foreclosed purchases also contain risk that may make you uncomfortable. Many investors avoid these deals – not necessarily because of the financial loss, but because they don’t want to say they got involved in a bad deal. You need to know the risks associated with any deal you entertain.
Know that there will be something on every property or every contract that you may not be totally comfortable with. At some point, you need to accept some risk if you are willing to reap the rewards. There are many other places to spend your money if you are looking to keep it in a safe place. Real estate doesn’t have to be a zero sum game, but there are plenty of risks associated. Evaluate as much as you can on every deal, understand the risks and be ready to act.
4. Review your actions: The actions you take are the most valuable learning tool you have. You can read how to do the business in a book, but you will remember it more when you do it yourself. It is especially important to log your actions at the beginning of your investing career. Write down every offer you make, property you look at and attorney you talk to. It may seem a little childish, but if you do this for a month you will be shocked at what you learn. Making mistakes is part of the business, but you can’t afford to make the same mistake twice. Set a time on your calendar every week when you can review what you have done over the past seven days. This is an important learning exercise that will help you make decisions in the future. Once you have an idea of what works and what doesn’t, you can act without thinking. It is important to take a look back before you can look forward.
It is never easy taking a step into uncharted territory. While it may be uncomfortable, it is a necessary part of the real estate business. The key to any successful business is the ability to make quick decisions and have the conviction to act on them. As an investor, this is especially the case given the time sensitive nature of many deals. The longer you wait to take action, the more difficult the business becomes. The sooner you can stop procrastinating and start taking action, the better investor you will be. Following these four steps will help you in your journey.
