4 Imperative Steps Real Estate Success
(If you are Starting Out)
You are Not Alone in Your Real Estate Ambition.
Every single person in real estate completed their first deal with huge trepidation.
Over the years, I’ve asked many real estate pros about their 1st deal experience.
More than half go into great detail about everything they did wrong.
So here is what I’ve learned and I’m sharing with you. You can avoid all the frustration.
If you’ve have made it this far, there is a pretty good chance you will succeed.
There are no roadblocks, only speed bumps.
Remember in the Karate Kid where Mr. Miyage made the kid “wax on” and “wax off” for weeks before he actually began to teach him martial arts? That’s what this is. You will thank me forever.
Forget about the deal you are looking at right now.
STEP 1: Get the acquisition pipeline moving. You can’t truly win in real estate investment (any property type) until you have an established acquisition pipeline. The deals come to you. Don’t wake up in the morning looking for deals (like everyone else). Your time is not scalable.
PROBLEM: DO NOT buy a property that is listed “for sale” from any source including the MLS, a Bank, your mother-in-law, or any other source. It’s too late. Someone got there first. Find your own acquisition directly from the seller. No exceptions here. Properties are “for sale” for a reason.
Nearly all of the problems in real estate investment come from “not buying the property right.”
SOLUTION: Spend the next 60 days researching how to use direct mail to establish deal flow. You want to put yourself in a position where you sit down at your desk and review several new acquisition candidates directly from the seller each day. Direct mail will get you there on ANY real estate product type.
STEP 2: Never pick up a hammer. Decide what you want to spend your time on (what you want to be when you grow up). I mean nearly all of your time during your typical day and consequently your career.
PROBLEM: Many beginners in real estate believe that they can do it all. They can buy a house cheaply, finance it, renovate it, and sell it and everything in between on their own. When they fail or it takes several years to complete, they get down on themselves.
In reality, they expected way too much from themselves right from the beginning.
SOLUTION: Here are your specialization options (choose one and be great at it):
Acquisitions – Finding undervalued property (Private Investor).
Sales – Finding buyers for the property you control (Private Investor).
Managing – Looking after your property or other people’s property (Property Manager).
Representing – Helping others buy and sell their property (Licensed Real Estate Agent).
Renovating – Fixing up your property or other people’s property (Contractor)
Financing – Helping people get financing for their property (Mortgage Broker)
Lending – Loaning people money to buy property (Lender)
Orchestrating – Directing all of the above to build / renovate property (Developer)
I chose acquisitions a long time ago.
Everyone needs the undervalued property you find. Without it there is nothing to Sell, Manage, Represent, Renovate, Lend on, or Orchestrate.
That’s great, Steve. “How the hell do I do that? I don’t have time to knock on doors or call property owners all day just to see if they are interested in selling.”
Develop a well thought-out direct mail campaign targeting owners who don’t want their property any longer.
“Does that even exist? Why would anyone no longer want real estate?”
The tax bill comes. They have two choices. Pay or get paid. Pay the $2,000 in taxes or get a check from you for $4,000.00
5-25% of the people who get our letters choose the $4K way.
Step 3: Don’t buy the unwanted, undervalued property you find (in the beginning). Get someone else to do it and pay you for finding it.
PROBLEM: New real estate buyers make inexperienced decisions. It’s not their fault.
Here’s several things I failed at the first time I tried them: Kissing a girl, changing a diaper, painting a house, pouring a glass of milk, changing a car tire, doing a podcast, buying a property, taking a math test, talking, walking and eating. You get the idea.
You will fail at some significant part of your first real estate deal as sure as I’m writing this.
SOLUTION: Your first deal will suck. Get someone else to do it and pay you for finding it.
Look for a few entities (5 – 8) in your geographic area who buy your property type. If it’s houses, find successful flippers or renovators. Look for dumpsters, check craigslist, put a posting in craigslist etc…
How many times have you see some version of this advisement: “We buy houses – any condition – any size – we make cash offers.” Make a big list. If you are buying land, put me at the top of your list.
Find a property for a great price by sending an organized direct mail campaign. Find one and add $10,000 (for yourself) and contact the people on this list. They will say “Yes, the deal rocks” or “no, you have a lot to learn,” or something in between. No matter what, you win. Keep moving forward.
“That’s great Steve.” “I don’t know where to start.” “You are leaving all the details out.” “I don’t know what to say when they call me.” And on and on…
First of all, you have already started your real estate career by reading this. If it scares or confuses you, then keep your day job and work for someone for the rest of your life. (A full list of what to do is at the end of this posting.)
Like my mother always said when I came home with a report card “Well Steven, the world needs ditch diggers, too.”
By now, the people you are wholesaling properties to, can’t live without you. They stare at the phone all day. They beg you to tell them where you finding these deals.
After several deals, start buying your own property. Not every single one. Only the best ones. Let’s say the ones you know you can make twice as much on. Rent those out.
What will happen is this: A deal comes in. You review it and because of its attributes (this one only need paint), it’s perfect for your buyer “Fred.” The next one needs a full renovation, its perfect for “Joyce.” The next one needs nothing. It’s owned by the daughter of the recently deceased mom and she is a super busy attorney who lives in Maine. She just wants to close the estate. She will take nearly any price you offer her. You keep that one and rent it out.
Step 4: You have tons of money coming in, decide what you really want to do in Real Estate.
Now take a step back. You have all the control. You are able to find undervalued real estate. Apply what you have learned to apartments, strip centers, land, houses, etc..
People will line up to buy undervalued property from you.
www.corelogic.com is where you get the best data.