Goals, goals, goals.
Before you go into real estate, you really need to define exactly what your goals will be, and how you plan to accomplish them. Are you looking for a part time income, full time income, or to become a millionaire? Be realistic. Understand if you really want to make big money, it is going to take lots of time, resources, and strategic planning. The main thing is, know what you want to achieve when getting into your real estate business.
Don’t Make the Same Mistakes I Did!
I want to give you the anti-example from my own life. I started off in real estate back in 2003, reaching for the stars, and getting in way over my head. I made the mistake of biting off way more than I could chew. I invested in a fixer upper that ended up costing well over $100,000 for acquisition and repair costs, and the house still wasn’t really in shape to be called a “retail” house. On top of this, I had a partner in the deal, and we did not have firm, written goals/plans for the property. We had talked about what we wanted to do with the property, what we wanted to spend on it, but in the end, my interpretation of what was discussed did not align with what he thought, and we ended up some $30,000-$40,000 in the hole, and 2 years wasted on the deal. Don’t let this happen to you!
Here’s the Better Approach to Success in Real Estate
If you want to succeed long term in real estate, you need to have a set of written goals, a path of action items to those goals, knowledgeable real estate people on your team, and start your first deal yourself. Don’t take any partners until you have a little experience. This might be a slightly slower path to success, but trust me, you don’t want to start off in real estate by burning bridges. Luckily, the ex-parnter I was involved with doesn’t really have any great contacts in real estate, and my name hasn’t been hurt because of that bad deal.
A Knowledgeable Team
I mentioned having a knowledgeable team of real estate people behind you. This is really critical to getting started right. Spend a little time and money on finding a good real estate agent or broker (preferably a broker), a quality banker, and if you can, an experienced real estate investor. Probably the most valuable of this group is the real estate investor, as they probably already have a network of quality people, and if you schmooze them a little, and maybe throw them a little piece of one of your deals, they may put you into their network. This kind of intellectual capital can be extremely explosive to your business. So get out there, make some calls, take some people to lunch, and establish some relationships. If you want to get anywhere business, realize it all starts with relationships. This core network is worth 100 times over any single deal you might do. Trust, when a deal goes south, you’ll want to be able to make calls to get help through the hard time.
To sum it up, before you get into your first real estate deal, spend some time writing down your goals in the industry. Once you are done with that, seek out your initial relationships, find a fellow real estate investor, and link to some quality realtors, bankers, insurance people etc. that can help bolster your business. Get the foundation set before you start building your house (definite pun intended there! 🙂 ).