Getting the Foundation Right:  Starting Your Real Estate Business, Part Three

Setting Goals

What gets you out of the bed each day? Do you have short- and long-term goals? Is the fact that you will be out on the streets if you don’t make next month’s rent or mortgage payment what motivates you? I say this to prove a point. Some people are pleasure motivated and some people are pain motivated. I think it’s important to find out which type you are. If you are pain motivated, I suggest that you find something to excite you. Even if your goal is not for you but for a family member, it can still motivate you. Setting goals is very simple. Anyone can do it.

Here’s what you have to do to set a goal:

Decide what you want and write it down.

That’s it! Just the fact that you wrote it down increases your chances of obtaining your goal. You also need to set a deadline for achieving your goal. A goal without a deadline is just a conversation. This is worth repeating: A goal without a deadline is just a conversation.

You need to consider balance in your life when goal setting. You should have different types of goals. You need financial, physical, personal development, family, and spiritual goals. Can you see that if you set goals in all of these areas you will have balance in your life?

Once you have your goals set, you need to determine the activities required to achieve your goals. Just remember, do not confuse activity with productivity. You must produce to achieve your goals.

How do you apply this to your real estate investing business? You need to set your investing goals to include cash, cash flow, and equity. Each time you purchase a home, you need to run the numbers on these 3 items for the property:

  • How much cash can you get out in the refinance?
  • What will the cash flow be?
  • How much will your net worth increase after you purchase the property?

You could even use a spreadsheet to keep track. You also will need to keep track of your return on the equity in your property. For example, if you have $20,000 equity in a property and your cash flow is break even, what is your return on equity? Zero! This is a property you should sell and invest the equity somewhere else to get a return on your money.

The last thing I want to do is give you some questions to ask yourself before you set your goals.

  1. Am I reading the books that will take me where I want to be?
  2. Who am I around and what are they doing to me?
  3. Do I have a coach or mentor I can call on?
  4. How do I feel physically?
  5. If I get what I want, will I be happy with what I have?

These questions sound simple, but you need to ask them of yourself. After all, you don’t want to work your entire career to find that you have been going in the wrong direction.

Getting Started as a Real Estate Entrepreneur

Whether you are new to real estate or have reached a “plateau”, the following will help “jump-start” your real estate investing career.

Surround Yourself with Like-minded People

“Creative” real estate is non-traditional, which means that most people don’t do it this way. Thus, most people you speak with will tell you it won’t work. If you tell them you heard it in a seminar or a course you bought from a late-night television “guru”, they will laugh and call you “gullible”. Attorneys and other professionals will denounce it because it sounds unusual. Keep in mind that these people either are threatened by their own lack of success or are looking to protect their own butts.

The first thing you should do its join a local real estate association. These associations will help you keep your thoughts in the right place and prove to your subconscious mind that it really does work. If you cannot find a group, then form a group.

Form Your Power Team

Don’t wait until you have a deal in place to find your team. You need to find the following members of your team:

  • Attorney – Preferably one who does real estate deals for himself and others.
  • Title or Escrow Company – Stay away from the big-name companies; find one that caters to investors. Make sure they understand double closings, land contract, etc.
  • Insurance Agent – One who understands land contracts, property owners, etc.
  • CPA – One who is aggressive and owns real estate.
  • Contractor – One who will give you free estimates and knows how to “cut corners” in the right places.
  • Mortgage Broker – One who is savvy, creative, and experienced with real estate investors.
  • Partner – In case you need it for money or particular experience.
  • Mentor – Someone you can call to talk through and smooth out the rough spots.

Don’t Talk to Unmotivated Sellers

This is the biggest mistake I see beginning investors make. They waste time talking to sellers who are marginally motivated. Even worse, they drive by houses and look for comps without even talking to the sellers first! Never visit a house before speaking with the seller over the phone. Be persistent.

Anyone who has ever been in sales will tell you that few deals are ever made on the first try. In fact, most deals are made after contacting a prospect for the fourth or fifth time.

Maintain a follow-up system similar to a salesperson. Keep a record of contacts, items discussed, and schedule of follow-up contacts.

Keep Educated

“If you think education is expensive, try ignorance.”

I am not sure who first said it, but I give him credit. You can lose more money with a mistake than you can in learning how to avoid one. Even if you have been at this business for years, you need to keep up with current trends and laws. As an attorney, I have to go to seminars every year. Some are boring, but I always learn something that either makes me more income or prevents a lawsuit.

Have a Plan

Don’t just wander around looking for deals. Have a plan. Make X number of phone calls a week. Spend $X a month on advertising. Make X number of offers per week. Pass out X number of business cards each day. Eventually, you start to get “lucky”. I mean that facetiously because luck always happens to those who are at the right place at the right time. If you plan and persist, you get lucky. Luck is when preparation meets opportunity.

Treat This as a Business

Real estate lures people because of the quick buck that it promises. Don’t hold your breath; you won’t get rich quick. An “overnight sensation” usually takes about 5 years. I would guess that 90% of the people who take a seminar on real estate investing quit after 3 months. This is a business like any other. It takes months, even years to cultivate customers and to create a life of its own. You need to treat it like any other business. Give it time, effort, attention, and professionalism, and it will flourish. Be patient.

The key to being successful as a real estate investor is PLANNING. Successful investors always have a game plan. Educated investors only know how to do deals. They don’t know why they are doing deals or where they are going; they just aimlessly pursue opportunities.

Be successful – get your foundation right.

 

Thomas

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