As the stock market continues having its ups and downs, more and more investors are looking for alternatives. Often they turn to real estate investing, the "safe" place to invest their money.
But not so fast! Sadly, the majority of real estate investors have received little useful information and/or bad real estate investment advice. They jump right in and work extremely hard, only to lose most or all of their huge investment.
"Real estate investing isn't a one-size-fits-all proposition, so it's wise to lay a good foundation before laying down your cash," explains Vena Jones-Cox, also known as the "Reliable Real Estate Expert".
Over the years, she has compiled this series of steps that every real estate investor should follow:
The more quickly you take the steps above, even if you aren't sure you know what you're doing, the faster you'll move from a wannabe to a real-life real estate investor!
- Join a Real Estate Investment Association
There is no book you can read, no course you can take, and no experience you can acquire on your own that can even come close to the real estate education you'll get by spending time around people who are already buying, selling, and managing properties.
The successes and failures of real-life real estate investors will teach you more (and motivate you more) than even the most complete classroom education you can find.
- Decide what you want in regards to your real estate investing
No, that doesn't simply mean "I want to buy properties." Buying properties is simply a way to achieve your actual goals: quick cash, increased cash flow, retirement income, tax advantages, etc.
Setting realistic goals for your real estate business at the outset allows you to concentrate on the properties, areas, sellers, and exit strategies that are most likely to meet those goals.
- Decide which real estate investment strategies will get you there most efficiently
There are only five basic real estate exit strategies to choose from: retail, wholesale, lease/option, sell with owner financing, and rent. Once you have decided what you want to do (refer to step 2), your choice of exit strategies will suddenly be pretty limited.
For instance, if your goal is wealth building or passive income, the retail and wholesale strategies won't work for you. If you need fast cash to pay off consumer debt or build capital for long-term investments, renting properties is the wrong way to achieve this goal.
Your available real estate strategies will also be limited by your education, personality, and available assets. By the time you closely examine your goals, assets, and liabilities, you should be able to decide upon a single strategy for buying and making money from real estate properties.
- Determine and acquire the knowledge and skills you'll need to make your real estate investment strategies work
Any basic book on a particular real estate investment strategy will show you the skill set you'll need in order to make money using that strategy. You don't need to know how tenant-landlord law works or how to manage properties if you plan to retail or wholesale, but if your strategy is to rent or lease/option, these are extremely important to know.
On the other hand, some skills are vital no matter which real estate investment strategy you use. These skills include the ability to determine the value of properties, find motivated sellers, negotiate with sellers, and put your offer together.
Make a list of the things you'll need to learn in order to make your strategy work, then figure out how you're going to get that information.
There are endless books, workshops, home-study courses, and videotapes about virtually any real estate related topic you can imagine. Once you know what information you need, finding it will be no problem.
- Make lots of offers, even before you're really sure you know what you're doing
Vena has taught a lot of classes to lots of new real estate investors, and she's discovered something interesting: those who haven't spent some time actually practicing looking at properties, evaluating them, and making real offers have very unrealistic ideas about what's going to happen when they do.
Most beginners have preconceived ideas about the objections sellers will pose to their offers that bear no actual relationship to the objections they ultimately end up raising.
They have fears about not being able to find or evaluate comparable properties. They think they'll miss the repairs the properties need when in fact they are usually fairly obvious.
In a nutshell, until you've actually gotten your feet wet in the real estate market, you simply don't know what you don't know.
You can't make money in real estate without making real offers, and you'll never acquire the knowledge you need to become a successful real estate investor until you get the real-life experience that only comes from making offers.
About the author:
Vena Jones-Cox, also known as the "Reliable Real Estate Expert," is a frequent lecturer at real estate investment groups throughout the country. She also hosts the popular weekly call-in public radio program "Real Life Real Estate Investing." Visit her at www.REGoddess.com.
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