New investors can be fearful and very careful… or confident and decisive. But it really doesn’t matter. It comes down to goals, abilities, and resources for all of them. These three words can fill the voids, fix the shortcomings, and enhance the strengths of practically any real estate deal.
Here’s how to put them to work for you…
Key to Investing Success #1: Goals
Before you enter into any real estate deal, ask yourself what your goals are. You don’t need to become an expert in the lingo, investment practices, mathematics, evaluation, negotiation, or any other specifics of the process at this point. Simply decide what you want to accomplish. What do you want to see as a result of your investments? Sure, you want to make a lot of money. But do you want to make that money as a very active and hands-on property manager? Would you prefer the kind of deals that will require very little of your time? Do you want to do your real estate investing on the side, while you continue working at your primary career?
Just jumping in without knowing what they’re after has taken down many an investor. The eager newbie takes on more than he should, and ends up having to hire out management, repair, and maintenance. He finds that his positive cash flow investment has evaporated, and he has to search for a buyer to get himself out of the predicament.
It’s critical to the success of your investment that you sit down and honestly examine why you want to invest in real estate… what you’re willing to do to succeed… and what your expectations are for income and future ROI (return on investment). This will help you determine where to look for investment property… what type of property to buy (single-family homes, multi-unit buildings with hired management, etc.)… and how much time and money you can expect to put into the project.
Once you’ve completed this self-analysis, you will have a plan.
Key to Investing Success #2: Abilities
Once you’ve set your goals, ask yourself another critical question: “What are my abilities?” This is not meant to discourage you from implementing your plan. It is merely a transition step between establishing your goals and the actual act of investing. You can’t do a good job of determining what kind of help you’ll need until you know what you can do for yourself.
Here is a checklist of the skills that are necessary:
If you’ve never lifted a hammer to build so much as a dog house, you would want to prepare for the necessity and expense of selecting, hiring, and dealing with contractors. If you buckle under at the first hint of opposition, you would want to consider working with a real estate professional or trusted associate for the negotiation phase. If you hate math and finances, you would want to find a partner who is good at it or plan to get help from a professional.
And that brings us to the last key to investing success:
Key to Investing Success #3: Resources
You have a goal and a realistic assessment of your abilities. You know what you want to accomplish. And you know what you can and cannot do on your own. Now all you need to do is fill in the gaps. It’s all about resources – where to find them and how to use them.
When it comes to market knowledge, area demographics, and local and national market trends, it used to mean spending hours in the library. But, as with most research these days, now it’s all about the Internet. It’s still worth checking out the library, but the latest and most valuable information will be on the Web. Learn to use the search engines, bookmark useful sites, and build a research database of information.
Two websites for researching your market are homefair.com and reia.org. And I have a free online forum where investors communicate and share information at deangraziosi.com. (I highly recommend getting involved in it.)
As Michael Masterson has said many times in ETR, having a mentor is one of the best ways to speed up your success in any field. As a beginning real estate investor, you can learn the ropes and start making money much faster by enlisting the help of experts. Build your support team early on. Ideally, your team should consist of the following:
When you get into the nitty-gritty of real estate investing, you’ll become aware of tons of tools and techniques that can help you find great deals and make a healthy profit. In fact, you can learn plenty of strategies for investing right here in ETR. But when you’re just starting out – before you’ve made a single offer on a single property – make sure you set your goals, determine your abilities, and line up your resources. You’ll be laying the foundation for a truly successful career in real estate.
[Ed Note: Dean Graziosi is a real estate investing expert, teacher, and author who began investing at 18. His book, Be a Real Estate Millionaire is a New York Times, Wall Street Journal, Amazon.com, and USA Today best-seller. For an ETR-reader-only special on this book, go here. Once you’ve got a solid foundation with Dean’s guidelines for beginners, you’ll be ready to start learning the techniques that will make you rich. You can get some of the biggest secrets to churning out cash from 14 of the world’s experts in wealth – including real estate specialists Dave Lindahl, Marko Rubel, and Jim Fleck. Learn how to take advantage of their proven money-making strategies right here.]