You've heard of the potential payoff from real estate investing.
The good news is, it's true! The bad news is, it won't happen
for most people. Why? They have unrealistic expectations. Real
estate investing isn't a "get rich quick" endeavor, although it
sometimes happens. No real business is. So, prepare to make a
serious time commitment. Would you expect to become extremely
wealthy at anything in just a few months? Know that you'll have
to keep learning, keep getting contracts, and keep putting time
into it.
Still in? Great, you're a realist! Your first step is to choose
an area to focus on. Do you want to purchase run-down properties
and repair them to sell for profit (rehabilitate, or rehab
them)? Do you want to buy properties and turn them quickly
(flipping)? Maybe you want to buy properties, then lease them to
potential buyers with an option for them to purchase them later,
while you accumulate equity. There are pros and cons to each of
these, depending on your financial position, your location, your
available time, and other considerations. We'll be going over
them all in future issues of the newsletter. You'll find the
possibilities exciting.
Once you know what you're looking at draft your plan IN WRITING.
People who do this get three times as much done in the same
amount of time. Set long-term goals for 3, 5 and 10 years out
for what you want your cash, equity, and cash flow to be. Then,
you can work backwards from there to set 1-year, 6-month, and
3-month goals. Without this, you'll be driving without a map,
taking or skipping deals without regard to how they fit into
your big picture. Leaves lots of room for "Wish I'da's...."
Don't do it! You can always adjust your plan as you go along.
Keep your day job for as long as possible. If and when it seems
time to go, before you do, get some of those low- to no-interest
credit cards that are out there. It could really ease some cash
flow worries to be able to tap on a $10,000 line if you're doing
a fixer-upper and run into an unforeseen problem with no
additional bank draw in sight.
Get an attorney who knows and understands the creative options
of real estate. Some banks just don't understand simultaneous
closings, for example; you'll want your lawyer to know how to
smooth things so that there aren't any snags that cost you time
and money. Some even have their own title companies. A good
place to ask for a referral is to ask a mid- to large-sized
developer. This is one place not to haggle about price; he or
she will be worth their weight in gold when they can get your
deals done and you know that you can sleep at night because it's
been done quickly and right.
As soon as you decide to get into real estate investing, begin
building your list of buyers. We'll be covering more on this
later; but, when you meet them, learn as much as you can about
the kinds of deals they do, how long it takes them to conclude a
deal, and so on. Most people love to talk about how they became
successful, if you ask respectfully and don't waste their time.
Warning, warning! Think very long and hard before taking on a
partner. If you do, it should be somebody who brings something
to the party that you don't have, and it should be for one deal
only until you see how things go.
Which brings us to how to set up your company. You should set up
a separate corporate entity for each deal. An LLC is cheap and
easy to set up. Land trusts are even better, because your name
isn't personally in the public records, inviting some chump to
sue you. The idea is to keep your personal assets off the table
if something goes wrong. Talk with your attorney about it; he
has forms that can have you done in a few minutes.
Finally, if you've made your plan, you have to work it to get
anywhere. If you're not out there making any offers, you're
never going to close any deals. No deals closed, no profits. If
you're not making any profits, you're not in business, you're
dreaming. Set a number of deals you're going to bid on per week
and per month, and then get out there. Make it happen!
About the author:
Lynn Stonebraker has worked all sides of the real estate
industry, from construction and supply wholesaling to investment
banking. Her ability to simplify finance and marketing keep her
busy consulting. You can profit from her training by subscribing
to her weekly newsletter, "Successful Real Estate Investing,"
available at Real">www.realestateinvestinginformation.com.">Real Estate
Info.
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