Investing in real estate can be very exciting and profitable….or cause you to lose your savings and your mind. The tricks are being very organized, moving with speed only when you have identified a property, and never underestimating your costs. If you can stick to these rules, you’re on your way to making good money by investing in real estate.
The library is the place to start. The material you need is available for the cost of a library card and will provide you more information than you can handle. One of the big mistakes new investors make is investing in a “can’t lose” program that promises to make you a millionaire in a year and costs you a small fortune. It just doesn’t happen…no matter who the author is! Go to the library and get Carlton Sheets’ tapes and books and you have all you need. His method is proven, pragmatic and conservative…Just what the new investor needs. Spending thousands of dollars on tapes or books just puts more pressure on you in the beginning, and it’s good money spent on hype. They are not there to save your life because they love helping people. They are there to sell very expensive programs. Try getting a refund during their “If you’re not happy” timeframe. I used Carlton’s method to learn and be successful and bought it online for $50.
Don’t boast about what you’re going to do or accomplish. Stealth will keep pressure off you and save your dignity in case you decide investing is not your thing. You never know until you try, but many people out there enjoy other people’s failures. Keep it to yourself!
Following is a list of Commandments, mistakes to avoid, and what you should expect to accomplish in your first month.
- Do not buy the wrong property
- Always understand the numbers, they don’t lie
- Never overpay for the property
- Do not over-extend yourself or over-improve the property
- Always understand the paperwork, Your contract should be in your favor
- Never invest without a clear financial picture in place
- Know your limits of negotiation; Don’t let your emotions cause you to overpay
- Control your emotions
Mistakes to Avoid
- When investing, don’t take too long or you’ll lose the property
- Don’t trust the sellers’ appraisals
- Don’t do math in pencil
- Don’t over estimate market possibilities
- Don’t over estimate “as is” value
- Don’t get bogged down in the process, buying and selling is the job
- Overestimate time to fix and sell, use a 6 month basis
- Don’t be afraid to ask questions about anything
- Don’t use emotion or quick decision making
Getting Started: Month 1
- Get familiar with a Title Company. Find out how they operate and get to know a little more about their business.
- Title companies will play an important role in your investing activities. Since you should obtain title purchase on every product you purchase, they will provide the insurance and handle all the details at the closing. Using the same title company regularly will lower your costs and speed up their response time to your requests.
- Before you enter into contact for deed or buy a property that is nearing foreclosure, you will want to have a preliminary title search done. Your title company will do this investigating for you.
- If you need a copy of a deed, mortgage, or other document that is recorded in the public records, a title company can obtain this for you at a nominal cost.
- Select three or four neighborhoods and become thoroughly acquainted with them.
Become familiar with nearby schools, transportation, and places of employment.
Cultivating a neighborhood like this is known as farming in the real estate brokerage community.
You could create great wealth for yourself by just farming three to four neighborhoods of some two to four hundred homes each.
- Spend 30 minutes a night, a minimum of three nights a week, reading the real estate classified ads.
- If you don’t have a credit card, initiate the process to get one. If you have them, write letters to these companies asking for an increased credit line
- Negotiate a credit line and/or overdraft protection at a bank
- Take four hours off of work and spend them in the courthouse. Visit the recorder’s office, the tax assessor’s office, and the office that handles tax and mortgage foreclosures.
- Make at least four offers on a property
- Set aside time to accurately identify your current credit standing
- Have business cards printed that will identify you as an investor
You are now ready to begin your investing career. Now is the time to start using what you’ve learned. Learn more about negotiating and contracts. If you have completed all this and need more direction, email me at [email protected].