Real Estate Investment
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[edit] Real Estate Investment
Real Estate Investment refers to buying and selling real estate with an intention to profit in the process. While it’s never too late to get started in real estate investing, it is a mistake to keep putting it off because you think the time isn’t right. If you are serious about building a portfolio that will allow you to maintain some financial independence and possibly retire with a comfortable nest egg or even retire early, it’s important that you get started now.
As for start-up funds, there are plenty of ways that you can get involved in real estate investing with very little to no down payment. Furthermore, you don’t even really need great credit. This usually comes as quite a surprise to most would-be investors who assume they must have an A+ credit rating and a small fortune socked away in a savings account. Nothing could be further from the truth.
[edit] Private Investment
Many would-be investors feel they are unable to get started in real estate investing because they are unable to obtain the financing; usually because of a poor credit history.
So, instead of getting off their duff and making something happen, they sit around and think “What if…?” Using private investors can solve this problem quite easily. Many people, some of whom you may already know, are quite willing to fund such a deal in exchange for a return on their investment. There are plenty of people around who are willing to help back you in your first deal because they recognize the safety of real estate investing and know that by investing in real estate, they can earn a larger return on their investment in a shorter period of time than if they put that same amount of money in another type of investment vehicle.
While you will have to share part of your profits - that’s a small price to pay for getting started on your first deal, and it’s certainly better than making nothing at all. Besides ready availability, there are numerous other advantages when working with private investors. Unlike traditional lending institutions, you generally won’t have to go through tons of red tape with a private investor and you also usually won’t have to worry about credit approval. These two factors alone make private investors a gold mine of an opportunity.
Also, due to the fact that you won’t have to complete mounds of paperwork, you can also generally have your money in hand far sooner than if you took the conventional loan route.
[edit] Self-Confidence
An untold number of people never even begin in real estate investing because they are afraid of failure and simply do not believe in themselves. They listen to other people who have nothing positive to say; whose only goal seems to be to steal the dreams of others and crush them into dust. Much of your success will come from believing that you can actually do this. There will be plenty of “nay sayers” along the way. There will be plenty of people who will flat out tell you that you’re nuts and that your plan will not succeed. You’ll need to learn to tune them out and develop a positive mindset to succeed. Keep saying, “I think I can; I think I can…” until you DO!
Remember that you do not need to be super intelligent in order for this to succeed. You must develop a positive, success-oriented mindset and think like a winner. Finding a positive minded mentor can go a long way towards helping you develop the right mindset and keep it there.
[edit] The ‘Real’ Real Estate Investment
Many people never move forward in this business because they are afraid to take a leap of faith; afraid that it just won’t work it out. You’ll never know unless you try, and sitting on the sidelines wishing never got anyone anywhere. The only solution for this one is to simply do it. Don’t even think about it; don’t try to justify it; don’t try to rationalize it, just do it.
[edit] Listening & Feedback
There are plenty of people out there who seem to have an opinion on everything. You’ve run across the type. No matter which direction your conversation heads; they either know something about it or have experienced it and just love to share their miserable experiences and depressing knowledge with everyone around them. If you believe everything you hear in life, you would spend it hiding under a rock. Learn to sort out what’s true, what’s probable and what is pure and simple untruth. Take the time to find a mentor who can steer you in the right direction when you don’t know which road to take.
[edit] Meeting & Researching Competitors
Some new investors seek to isolate themselves from other investors for one of two reasons: either they are afraid that their lack of experience will be revealed and they will be embarrassed or else they are afraid of the competition and so they keep their distance.
Most investors are more than happy to take a new investor under their wing and show them the ropes. We’ve all been there; we know how tough it is and like to take the opportunity to give back whenever possible. This is business; not kindergarten. Unless you run across a real jerk, no one is going to laugh at you because you are less than experienced. If you do run across that occasional jerk; just ignore him because he’s the one that’s an idiot, not you.
And while, yes, this is a competitive business; it’s a mistake not to get involved with other real estate investors or take advantage of a real estate investors association membership because you are concerned that you will somehow lose out on a great deal by networking with others.
Not only will you gain valuable insight and education but you will also be able to rely on the strength of those who have been where you are when you are starting out. They can keep your courage bolstered.Finally; believe me; there is plenty of business to go around.
[edit] Relevant Education
Very few people go into real estate investing already armed with all the knowledge they need to succeed. Many learn as they go, pick up tips from experts in the field or educate themselves through a variety of other resources. You are not going to know everything going in; it’s that simple, but there is no excuse not to attain the knowledge you need to succeed. The more you know, especially about your particular area, the more chance that your ventures will be successful.
Make this a priority. Set goals for yourself to attain the knowledge you need. Even after years of activity in this industry, I still try to read at least one book per month on the subject. Not only does this strategy aid me in learning things I still don’t know, but it also helps me to keep my finger on the pulse of this business.
You should put some time into pounding the pavement, eyeballing properties which are on offer and following through to view the actual prices they sell for and what is selling in which areas, etc.
[edit] Proper Partnerships & Pitfalls
There’s nothing wrong with having partners when investing in real estate; in fact it’s a great idea. This is especially true if you are short on cash and need some assistance in funding your first few deals. The problem comes in when you have the wrong partners. Remember that this is a business and must be treated as such. If you wouldn’t trust an individual with your personal checking account, don’t trust them with your real estate investment; regardless of your relationship. Think about how the people you consider as prospective partners handle other aspects of their business. Check out references. You must be diligent in this aspect of your business. When you work with someone who has a bad reputation; it reflects poorly on you as well. In the instance that you discover you are working with someone who is less than desirable, don’t hesitate to cut them loose.
[edit] No Cash Investments & Possible Risks
One of the biggest stumbling blocks preventing many people from becoming involved in the lucrative opportunities available through real estate is by simply believing that they can’t become involved because they have either no or little cash to fund the deal. The truth is that you do not need a lot of cash to fund your first real estate deal. Numerous financing options can turn your dream into a reality.
Earlier, I mentioned working with private investors to obtain the funds you need to get started in your first real estate deal. While this is a great method, it is by far not the only way to access the money you need to fund your first deal. Personally, I prefer a method known as bird-dogging.
Basically, a bird dog is nothing more than a real estate scout. Real estate bird dogs are the people who search the real estate market for potential renovation properties for real estate investors to buy and eventually re-sell. This type of service can be quite valuable to a seasoned investor who simply does not have the time go out looking for such deals. You provide the leads to investors and they pay you a referral fee. So, how much money can you make in a bird-dogging business?
It really depends on the income potential of the prospective property along with the amount and value of the information that you provide. With that said, however; it’s safe to say that anywhere from $500 to $1,000 is an average fee. To start your bird dogging venture, you need to learn as much as you can about the Real Estate market in your area at a professional level. To find investors that you can link up with and offer suitable properties too, check the classifieds in your newspaper and scan the Internet. Private investors and real estate companies sometimes place advertisements for bird dogs though they might use other terms.
It’s important to have a clear, written agreement with the investor(s) to whom you offer the leads which you’ve hunted down.
