Easy Action Steps to a Successful Start in Real Estate Investing

If you happen to watch cable or satellite television on the weekends, you can find between 20 and 30 channels early in the day with get rich quick infomercials hawking everything from books, tapes, seminars and even personal coaching services. Most are centered around real estate and I am not sure they are worth the time it would take you to order them by phone. I have spent thousands of dollars on real estate home study courses through the years and will continue into the future. I am always looking to further my education and understanding of what is really working in the investment real estate world.

Because of the time, energy and dollars that I have spent in the past, I have a pretty good idea of what a real estate investor wants to avoid as well as the best steps to take for a successful start. Education definitely plays a role in the success of a real estate investor as well as business savvy, attitude and at times, luck!

Here are a few detailed steps that an investor can take to improve the chances for success.

– Learn the basics of real estate in general.

As with any investment strategy or business, real estate comes with its’ very own lingo. There are terms and phrases that many of us have heard in the past, yet may not know the exact meaning. It is very important from the get go to do the research and learn the basics such as the meaning of the terms and phrases that are used in the real estate industry every day. You can start by using a search engine and searching the phrase “real estate definitions”.

– Begin home study education.

There are great benefits to home study and I do not mean the courses we eluded to on weekend cable T.V. At your local library, in the real estate investing section, there will be multiple titles recently written by authors with experience in their topic. Check out as many titles as you can read in a week and o to work reading. Write down sentences and topics that come up in the books that interest you and that fit into your reasoning for starting to invest in real estate. This will be the start of your plan for getting started.

– Develop a game plan.

By this point, you have an idea of the general terms and phrases for the property investing world and have begun to grow your interest and understanding of the specific strategies for real estate investing. It is time to formally develop your plan and start taking action. Each of the real estate investing books that you will be reading give specific advice about team building. It is a crucial step for your success and the best books offer advice about who to put on your team, where to find them and how important they are to your over-all success. Before you can start investing, you must have a plan for where you are going and how you are going to get there.

– Join local organizations for investors.

In every city, county and state there are multiple organizations whose missions are to assist real estate investors. Each of these organizations holds monthly meetings and some of the best even hold weekly meetings, where investors can network and learn. These meetings are crucial to a beginner investor because they offer the opportunity to build your team with experienced members. They also are fantastic groups to attend for tips, tricks and education. Join a group close to you and make your attendance mandatory. Attend as many meetings as possible each month. Often times, the simple step of surrounding yourself with like-minded individuals who are positive and re-enforce your determination to succeed, can have the biggest benefit on your future success.

– Find partners & Do not fall for get rich quick!

One mistake that is easy to make in the beginning is to set off on the path of “go it alone”. Another is to believe that just around the corner is a pot of gold if I can just find a deal like those guys on T.V.! One thing that is seldom talked about is the fact that most real estate investors have used partnerships in the past if they are not using them now. Partnerships are a great way to spread the risk of investing while learning the ropes. Those risks include using less of your available capital, credit and time. Partnerships can also be structured to be a simple 50/50 partnership splitting all costs and profits or a slightly more complicated partnership with one partner providing money and the other providing the deals, follow through and managing the investments. Either way, going it alone can be a lonely, long and expensive way to get started investing.

– Do not quit your day job!

This is a biggie and is a MAJOR mistake made by some first time real estate investors. Investing in real estate requires a total commitment – a “burning of the boats” mentality. There is no turning back when you decide to go all in. And in that statement lies the problem with leaving your day job first. Take time to develop your team, to build cash reserves, to learn the ropes. Take time to make small mistakes before you leave your full time employment and make a big mistake! Investing in real estate is a big picture endeavor and as an investor you have to be able to clearly see your future and plan accordingly.

These last two tips really go to the heart of why some investors not only fail, but fail miserably. Many times you can overcome the mistakes with the first few tips here by perseverance and a little luck. If you make one of the following two mistakes, they can quickly break a new investor and sour the experience for a good long time. Then again, if you follow all the previous tips, chances are you will have the team around you to guide you right past these last two tips and onto smooth investing.

– Once started, DO NOT under estimate repairs.

When you are estimating the repairs to a property for investment, unless you have an experienced contractor and trusted advisor on your team, you can miss the mark wildly. Even the best home study courses are not able to provide you with an accurate ability to estimate costs. It takes experience and time before you can accurately guesstimate repair costs. Missing the mark on estimated repairs can quickly break a bank account and take a property from profitable to money pit quickly!

– Do not purchase investment property for equity or appreciation

There is no bigger mistake an real estate investor can make today than to purchase property for its equity holding or future appreciation. Long-term investing today is centered around the ability of a property to perform with a positive monthly cash flow. In my home city for investing, Memphis, real estate investors purchase properties at extreme discounts, but over look those discounts if the property does not provide a high enough monthly cash flow. Equity and expectations of future home values are not good reasons to purchase investment property.

Many individuals will purchase their first investment property in 2010. Some will view their purchase as strictly an investment and others will look for real estate to provide a new profession. Either way, it is extremely important that first-time investors seek all of the help, advice and experience they can get from other investors.

The Myth of Real Estate Investing and 7 Ways to Make the Most Money From Your Property Investment

Investing in Real Estate has become urban legend the myths abound about how much you can increase your wealth by investing in real estate and in particular residential real estate, so much so that the average Joe believes that making money and creating wealth when it comes to real estate is a given and in alienable right so to speak.

Average mums and dads are jumping onto the real estate bandwagon with no knowledge or training in the fundamentals of investing. These folks are fed the myth that using their equity from their family home will miraculously make them into real estate tycoons, all to often these poor misguided souls end up losing the home and everything else in their pursuit of real estate’s Eldorado.

To perpetuate the myth these naive investors are advised to hold on to their real estate investments for ten years or longer, this is great in theory if you are in your twenties and do not need the profits in the immediate sh rt term to help fund a decent retirement, unfortunately when you look at the demographics of these investors they are in their fifties with plenty of equity in their family homes most usually own their family home and have neglected doing any thing for their retirement till now and in horror discover that they will not be able to have their current lifestyle on the pension.

Little wonder real estate investment seminars are packed with these late bloomers all hoping to make a fortune by investing in residential real estate, the seminar presenters ensure that is all these folks here, after all this is a valuable gravy train.

Try this little trick next time a telemarketer calls and asks you to attend a real estate investment seminar, and the telemarketer asks you if you own your own home and how much equity you have in it, reply by saying that you have none, I will guarantee that before the word none leaves your mouth they have hung up on you, interesting isn’t it?

Tragically no one is told when a real estate investment has gone bad or failed to perform as happens on a daily basis with the stock market, why is this so? One of the major reasons are the volumes of money that Governments, Banks and marketers make from selling the residential investment myth, that is also the reason why Governments have been loathe to legislate that investors under go an investment training program before they can invest, as once the myth is busted the gravy train will not be as plentiful and the flow on effect into allied industries would be catastrophic.

This myth is well and truly busted as you can loose everything from a failed real estate investment and there are no such things as guaranteed growth with out doing some work for it.

Here are 7 simple ways to maximize your money from real estate investment

1. Know your profit before you buy

Do your due diligence and find out if the price you are paying is below market value, a simple rule is can you resell this property today for a profit and if so how much.

2. Type of Neighborhood?

The community surrounding the property can change in a variety of ways that can adversely affect your real estate income property. Increasing vacancy, for instance, can lead to reduced rents, which in turn means reduced maintenance causing building deterioration, This can cause a roll on effect if more properties start to decline in the whole neighborhood,compounding the problem.

The nearby construction of facilities such as prisons, sewer treatment plants, and airports will also likely have an adverse effect on the area. Also, perhaps more subtle and slower in coming, is a decline due to increased crime, perhaps resulting from an adjoining neighborhood spill over. If you still want to invest here find out what it is that makes it special that everyone else has over seen, often gems are discovered with a little digging,

3. Impact of poor or neglected Infrastructure

The impact of being directly under the flight path of airplanes, construction of a major highway or intersection can limit access to the property, cause noise and dirt by the construction and all this can have a negative impact on the property’s ability to attract and keep tenants. The end result may be an increase in your investment real estate value, but construction and major works can take up to a year or more and during that time you could expect your real estate investment value to drop. Or worse still the infrastructure is neglected and the local authority does not have the Tax base to start remedial works to bring it up to standard,

4.Controls

Governmental controls and regulatory changes to zoning can adversely impact real estate investment properties. Real Estate investors that purchase raw land for development, for instance, can see their plans grind to a halt because of a building moratorium or anti-development sentiment. All of which results in downturn in value.

5. Finance

Difficulty obtaining finance or the lenders require more of your capital to top up your borrowings,yers for your rental property if you decide to sell, This type of condition is prevalent at the moment as lenders are devaluing the amount that they are willing to lend against real estate, in most instances I have seen lenders valuations or real estate down by up to 30% to 40% of the contract price depending on the region this could be higher again, this trend should alert the investor that the deal they think is great may not be so great after all, unfortunately marketers have this covered as they are dealing with naive and unsophisticated investors by saying that the lenders always value the property for less, if that is what some one lending you money says about your intended investment wouldn’t it be prudent to listen and renegotiate or if that is not possible walk away from the deal.

6. Lack of or no maintenance.

If your property is the run down, get it brought back up to a good condition. This will make it more appealing to prospective tenants

7. Pressure to sell

Highly motivated sellers may reduce a property to a bargain basement price and smart investors watch for property owners who must sell to take advantage of the owner’s strong motivation to quit the property. Always try to avoid ever reaching the moment when you are forced to sell.

These are just of many tips I use to maximize my profits from my real estate investments and so can you.

Questions To Ask Before Enrolling In A Real Estate Investment Education And/Or Coaching Program

If you are like me, then you have an interest in real estate investment and want to do the right thing by educating yourself so that you can obtain your first real estate investment cheque. I have spent thousands of dollars over the years trying to find the company that would help me accomplish this goal. So what did I do? I watched various infomercials on the television with amazing testimonials of real estate investment success. I quickly found that once I registered to attend, my information was sold to various marketing companies, and I was in receipt of invitations to other investment opportunities that I didn’t even know about. Okay. Now I have sifted through all the invitations and I am on my way to a one-day seminar.

For the most part, the information delivered is tantalizing and I am hungry for more knowledge and the opportunity to start working on my first deal. I also find that the information delivered in the one-day seminar is in bits – for a beginner investor, it is not enough material to be useful. But what do I hear? I now have to register for a weekend workshop to learn more. Full of excitement and determination, I pay the $1500 to $2500 cost for the workshop and off I go. Again, the information presented is titillating and at least one of the presented methods is immediately implementable. The other participants and I followed the instructions given, but no results – we could not find a property matching the given search criteria. Therefore, the audience was not taught what the next steps would have been had we done so. Still filled with hope, I took careful notes and listened intently for the remainder of the workshop. What’s this I hear? I can have advanced training if I want, a coach to work with me one-on-one, and the almost guarantee that I would make money at that level? What’s the cost? Oh, only between $10 000 to $100 000. This is where I hit the proverbial brick wall. Where was I to find all that money, and for some of the workshops, the money had to be paid the very weekend! The long and short of the model is this; one has to spend anywhere from $1500 to about $100 000 without even doing your first real estate deal! It didn’t make sense.

Wait a minute. I now found that most of the real estate investors, who were calling themselves and each other gurus, were doing a massive on-line marketing campaign during the market’s downturn, only this time downplaying the ‘guru’ title. They were all offering one-on-one coaching. Why? No one was attending the conventions and workshops as before. The personal coaching idea sounded good. I decided to check out a few of them and tried one of them. I tell you the truth, because I was a rookie, I didn’t know what to ask for or what to expect from this coaching. As you can imagine, I did not get my money’s worth. By the way, the coaching was through e-mail and sometimes instant messaging only, at a cost of USD $1000 per month. Now, I could have allowed all these disappointments to derail my vision and cause me to be bitter. I refuse. Instead, I decided to use the experience to help others in similar situations make better decisions, spend less, and actually make money in real estate investment.

The sum of it all is this: not having the right real estate investment education will cost you money and just as truly; obtaining the right real estate investment education will cost you money. However, obtaining the right education is an investment, not a liability. What should one look for in a real estate investment coach/coaching program? What questions should be asked? Here are a few to consider:

• Before any money exchange hands, an outline should be provided to the student to ensure that both parties/sides understand what will be offered.

• Costs should be clearly defined and explained.

• Discuss funding. Will the coach/organization provide funding for your real estate deals? If not, will the coach/organization provide you with information that will allow you to access funding? What type of funding can you expect? Will it be transactional funding, hard money, private money, other?

• Discuss if there will be or is there an option to partner on deals. Will the coach/organization put up the funding for the real estate deal while the student does the ‘ground’ work? If partnership is an option, discuss and agree on the split. Will it be a fifty-fifty split?

• Discuss availability of the coach: Does the student have telephone, e-mail, and/or text access? What response time might the student expect? Does the student have to pay the fees for services like Skype or is it included in the coaching fee?

• What are all the things included in the coaching fee?

• If the coach is not available, is there a mentor or someone else that will be available?

• Is this a stand-alone coach or is there a professional team available to the student? Is there a lawyer, accountant, contractor, et cetera that are a part of the team? If the coach is a one-man-band, then this might not be a good option for you.

• Is there creative financing for property acquisition?

• What are the payment options for the coaching costs? What are the financing terms?

• How will the education be delivered? Will it be delivered through webinars, CDs, mp3’s, other? For how long does the student have access to the education?

• How current are the strategies being taught? Is there proof?

• Relative to the cost, how long is the coaching? How many hours of one-on-one coaching?

• Will the student be provided with a virtual assistant?

• What peripheral costs are entailed in the program? For example, LLC, websites, 800 numbers, et cetera. What other additional costs might the student expect to pay/cover?

• What real estate investment qualifications does the coach have? If the coach is reticent to discuss this, then that might be a cue to not sign up with that particular coach/organization. Also, if the coach has a bad attitude, then you should reconsider using him/her.

• Research the coach on-line. Look at reviews. Check out Facebook, MySpace, YouTube, LinkedIn, et cetera. Also use these sources to review his/her profile. Hint: If the coach has less than five hundred contacts in their profile, then that could be proof of inexperience.

• What is the approximate turn-around time from the time the student signs up and follows all coaching instructions, to the time the student does his/her first deal?

• How many hours per day/week is the student required to invest?

• How are deals analyzed? Does the coach personally review them? How many exit strategies does the coach utilize per deal?

• What is the coach’s real estate investment specialty: wholesaling, fix and flip, buy and hold, et cetera?

• What real estate strategy are you expected to start with? Will this complement or go against your current financial situation?

• How much money is the student expected to have on hand to do his/her first real estate deal?

• If student does not make any money in say the first three months of the coaching, what is the next step? Will the current real estate investment strategy be changed or adjusted?

• What guarantees does the coach/organization provide?

• Is there a rescission period? What is it?

• Can the student do the coaching with his/her spouse or business partner at no additional cost?

With these points to consider, you should be well on your way to making the right decision as to your real estate investment education and coaching. I am sure that as you read through the points, they caused you to think of other questions that you might ask. Good.