Real Estate
2008-04-01 11:13:00
Investing in real estate - the right way
Question: My wife and I have just begun investing in real estate. We both have other jobs but are thinking about doing real estate investing full time. What are some of the most common mistakes people make when just entering the business?
Answer: There are many, but some of the biggest are:
• Lack of Education- You will bring in the big bucks quicker and easier. You’ll save time and lots of money when you get educated. I have been educated by some of the best that this business has to offer. And after all that education I still find myself needing to learn more. One thing I truly love about this business is that you can earn while you learn.
• Lack of Planning- Some one taught me a long time ago, “If you fail to plan, then you plan to fail.” Some new investors come into this business with the attitude to just buy low and sell high. They don’t take into consideration what to buy or sell, when to buy or sell, where to buy or sell, and how to buy or sell. First you need to find out what strategies you are going to implement.
• No Joy- I hear it all the time how someone hates their job. You gotta love what you do or you are not going to stick with it. Some get into real estate investing thinking of the money they are going to have without thinking of the pitfalls of land lording. That 2 AM call from the tenant telling you that a water pipe busted and the house is flooding. It could be that deal you have been working and waiting on when another driving force comes into the mix and spoils the whole arrangement. You really have to enjoy real estate investing to carry you through any difficulty you may come up against.
• Not using a tried and true system- Wealthy people will always use a system to acquire their wealth. I am not talking about the late night TV real estate investing gurus. I’m talking about the system that is not advertised. While you are finding out how to get educated, you will also be researching for a system on how to acquire wealth from real estate.
• Not being involved with a community of like-minded investors- New investors think they will have to stand alone and compete with other maybe even more experienced investors. That is not necessarily true. Not all real estate investors are greedy, back stabbing liars. Some are actually pleasant to be around. When you find another investor or investors that have been educated by the same people you have been, instead of competing against them you can partner up with them on some of your real estate deals creating a win/win scenario. You can both walk away with money in your pocket.
• Not knowing when to walk away from a deal- No matter how you slice it or dice it, some deals are just not going to come together to make a profit. You determine what your profit should be on any given contract before you even start making arrangements. Look, if you make $10,000 on a contract with less time involved than you could on a deal that’s only going to profit you $5,000, with more time involved, gee, I’d walk away from the $5,000, deal. Did I just lose $5,000? Absolutely not, I actually gained the time to put on another deal that’s going to make me a better profit. You might let the nickel and dimes slip away, but you get to keep the dollars.
Before you start into real estate investing, seek out the advice of an attorney that specializes in real estate. Your investment in time and money will be well worth it. Next month, we will talk the exact steps to follow on your very first deal.
