Where do I start? House is from Mars, Investment Property from Venus.

Where do I start? House is from Mars, Investment Property from Venus.

Buying a house to live in and investing in real estate are apples to oranges. Yet making money on a house this is the first experience most new real estate investors are exposed to.

This is what I often hear: “When I was a kid, my parents sold our house and made $150,000, I can do that too.” Or, “I bought a house that needed a ton of work, I moved into it and lived there while I renovated and sold it for $25,000 more than I paid in just six months.”

These are noble efforts, but it’s not going to get a great real estate income stream in place so you can be a full time real estate investor.

Investing in houses as flips or rentals is almost always a distraction and often delays new and eager investors from doing what’s necessary to be financially successful as a real estate investor.

So where do you start?

Like everything, you start with education. Then you get your feet wet working along-side someone with experience or better yet, a group of people. After you feel like you have some experience, complete a transaction that is simple and profitable.

Steps:

• 1)Education
• 2)Experience
• 3)Ownership

Here’s the absolute truth about succeeding as a real estate investor. It all centers around “data use.”

Right now, this very moment, there are thousands of property owners who are willing to sell their property way under market value, just to get rid of it (all property types). Then find the buyers for those properties (they are the same group of people). Keep reading… Nearly all the answers are here.

In the beginning of your career, your main job is to find these property owners, make them an offer, and control the property so you can immediately sell it for more.

Most new investors think the first thing they need to do is find a house in the MLS, buy it, fix it up and rent it or sell it. Most fail and blame real estate investing in general.

Does a surgeon try and fail until she gets it right? A welder? A teacher? A code monkey? Not at all. They all get 1) educated first, 2) learn in some type of apprentice environment second, and 3) go off on their own when they are ready.

Dream up the perfect situation and then put the data to work. You can do this for land, houses, apartment buildings, strip malls, etc. We have chosen land for our niche.

Let’s dream up a situation where you can’t lose and make it happen:

Here is a real example where you can make tons of money at the very beginning of your career and then move on to buying and selling houses (if that’s your niche):

There is a market in Northern Arizona (or just about any state) that is made up of 2.5, 5 and 10 acre properties. There are various types of homes in the area and utilities are present in some places. It’s close to Las Vegas and really beautiful up there. The whole area is made up of about 20,000 properties.

Here is the dream situation:

• 1)Check to see how much the properties are listed for on the internet. Sites were you can like kind properties like landwatch and landandfarm. We want to buy properties for about 75% less than the cheapest one listed (not the average price).
• 2)We only want vacant land (for this situation), zoned properly, with no structure on it and no debt associated with it (so the owner can sell it for whatever he chooses without the bank signing off on the amount).
• 3)We only want owners who are ready to give the property away. We don’t want to negotiate or have long conversations that lead to nothing. Take it or leave it deals.
• 4)In fact, in this case, we want properties that are priced no more than $100 per acre. So a five acre property is $500 and a ten acre property is $1,000 etc. Every area is different with pricing. Step 1 above tells you have to price offers.
• 5)We want the owners to contact us. We don’t want to wake up every day looking for sellers. We are too busy. We don’t drive for dollars or send post cards exploring and wondering if a seller is interested or finding out what the specific situation is with that particular property. We send offers with purchase prices and time frames. Take it or leave it offers.
• 6)We know exactly what we want. We know where to find it and how much we will sell it for before we start looking. We know what we will find: We will get a 5-25% response depending how you scrub your data. A super new person can bank on buying 1 property for every 200 offers you send if they do everything correctly. Our results are much higher because we have been doing this since the early 2000s and purchased more than 15,000 properties.
• 7)Signed offers come back in the mail or your phone starting ringing. We choose the best ones of the bunch.
• 8)We never spend time reviewing the acquisition before the purchase agreement is signed. Most real estate investors review the property to decide if they can justify the price. I’ve never understood this. The price should be so low that you are searching for something wrong with it. When you can’t find anything wrong, then buy it.
• 9)Sell the property really fast for twice or three times what you paid (even if you think you can get way more if you just wait a few months). Investors who try to “maximize price” are missing the big picture in real estate investment. You know how to fill the acquisition pipeline chalk full with mailers all over the county. So double your money over and over and over. Waiting around to maximize price will only cost you more capital in the form of time in the long run.
• 10)Develop an “A-List” of buyers right from the beginning. Statistics show that the most likely investors who buy property, already own property in the area. This is true for all property types. You already have the list because that is who you sent offers to. Here’s a hint: Start reaching entities that are not individuals such as LLCs. They have already made the decision to invest in that area. Because your property is priced lower than any of other properties, they will buy yours without much convincing. If not, move on the next person. We sell 99% of our property this way. It’s almost always sold before we buy it.

So how can this fail? What can you do wrong so this simply does not work?

Every new investor asks themselves this question and many of our members ask me this question directly.

Here’s a few reasons I see people fail (in the order of frequency);

• 1)Cutting corners. Many new investors think they can do it all alone and without spending any money. New investors try to get by on their own without the help of available education and the help of a support group to lend a hand a critical points of success.
• 2)Lack of Commitment. There is no such thing as a “4 Hour Work Week.” The only attitude a new successful investor should have (this goes for accomplishing anything) centers around “I’ll do whatever it takes” to accomplish my goals.
• 3)Taking an a-la-carte approach. Picking and choosing which parts of our education or advice you think apply to you. This may work for seasoned investors but not for new ones. If you are trying to get an “A” in a class, do you pick and choose what you study or the whole course? Trying to get in shape by picking which exercises work best for you? Not the best idea. You get the idea. You make a commitment and learn all parts of the thing. After success, model it for you personally.
• 4)Making a speed bump a road block. We all get stuck somewhere when doing something new. The right support group helps get you past it, whatever it is.
• 5)Failure is your friend. Fail as much as you can. Somewhere along the way, the culture we live in teaches us at a very young age that doing everything perfectly the first time is “success.” And that if you see it on TV or YouTube, then you know how to do it.

Real Estate Investing is a step by step process and can lead to great financial reward in a few short years if approached and executed methodically.