Prescription For Newbie Investing Success, A must read!

General Real Estate Investing
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:deal

Many newbies get caught in a paralyzing trap while attempting to become “Real Estate Investors”, Instead they end up being an “InfoInvestors”. Infoinvestors are newbies who never end up doing any real estate investing. Instead they invest all of their money into information about real estate investing. This would be similar to a person trying to travel across the America, but instead of buying a car with their $5,000, they buy $5,000 worth of maps. If this is you, your not alone in your struggle to find the “Answer” that will finally bring everything together for you. :banghead

My first suggestion would be to start with a business plan that lays out exactly what direction you would like your real estate investing business to go. Real estate investing is such a broad topic, that confusion is a 100% guarantee if you don’t narrow down exactly what it is that you want to do.

1.I would start by first accessing what tools you have at your disposal (Good credit, plenty of money, hard worker, great networker, etc). If your cash strapped and credit strapped then I would suggest starting out as a bird dog, or a real estate wholesaler. If you have plenty of money and great credit then long term holding properties may be for you. I would recommend that all investors start as wholesalers or bird dogs simply because neither require credit, cash, or risk. Perceived risk is what holds many newbies back from achieving anything great.

2.Find out where you would like to end up in the next 1, 2, 3, 5, 10 years with your investing business. You can change from 1 type of investing to another, but it is much easier to change PRIOR to buying homes that may not be a fit with your investing plans.

3.Break down your plan into small easily achievable steps. How do you eat an elephant? One bite at a time! Break down your large scale ten year plan into pieces starting with your 1st year plan, then 12 one month plans, then take your first month and break it into weekly plans, then take your first week plan and break it into daily goals. By breaking down your real estate investing plan into very small, easily achievable steps you can begin building momentum right from the start. Forward momentum is essential if you plan on achieveing success at any venture in life. Up until this point many of you have been using backward momentum. Backward momentum occurs when you build up a task or dutie in your head so big that eventually it feels like it’s rolling backwards right after you.

4.Learn all you can for 1 week on the niche (exit strategy of your choice) that you choose to start in. Focus all of your effort on learning what to do at the beginning, and try to gain broad knowledge about the niche of your choice. By the end of the week you should have your first month in your specific niche laid out day by day.

5.Go cold turkey, your information diet should start the day after your first week of study has ended. Stay off the INTERNET unless you are reading ONLY on topics that are specific to the niche that you have chose to pursue. Give yourself at least the next 30 days to pursue your selected niche wholeheartedly. Don’t be distracted by all the other money making opportunities that you come across. If you haven’t learned by now, too many options can and will leave you paralyzed doing nothing.

I would study the forums as well. Forums such as this one are invaluable tools to get you on the fast track to investing success. Locate the people here who know about investing from first hand experience. Take advice from non investors with a grain of salt. I would say that about 70%-80% of the people in the RE forums have never done anything with real estate investing. Yes they know a lot about investing, but there is a huge gap between those “Who Know what to do, and those who do what they know”.

I can’t say whether you would be smart to buy investing courses or not. I can tell you that I have bought thousands of dollars in real estate investing courses and I don’t regret a single purchase.

Many of the “Guru’s” have completely lost touch with the current state of real estate investing. Nevertheless, there is a ton of high quality information out there for well below $100.00. The low cost courses are hard to go wrong on and most offer a money back guarantee, so its next to impossible to lose. Just do your home work. Ebay is another great spot to find low cost investing courses. I have personally invested in quite a few courses that I picked up on ebay.

Lastly I will share with you 3 letters to keep in mind that I have shared with many of my coaching students. Those 3 letters are ACT.

Action
Compensates
Tremendously

Taking action will compensate for just about anything in your life that is burdening you or that you would like to achieve. More than likely if you don’t achieve any level of success as an investor it will not be because of a lack of information, it will be because of a lack of action.

I would encourage other’s who have achieved success in the investing world to add your own advice to my post.

Good luck

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Eric - great post. One of the reasons I scalled back on my postings here is because I realized that most of the stuff I was writing about were things I had learned from others, but I hadn’t experienced. Once I noticed I was sounding like an expert, I decided to reduce my postings and refocused them to ask questions relevant to my situation.

I definitively agree that anyone reading the postings here should consider whether or not the person posting has any real experience or not.

Very well said!

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Great post, thanks.

Eric, it would be helpful to know what the exit strategies are. I think a lot of the information about REI talks about the strategies to invest in properties, but I dont’ know of 1 source that talks (specifically) about the exit strategies and when it would be appropriate to use them.

For example, lease option is an REI option, but also an exit strategy.

Wholesaling, again, a REI option, but also an exit strategy.

You hit it right on the head with perceived risk, and this may go hand in hand with exit strategies and goals…

Because one of my perceived risks is getting stuck with a property I can’t cover, I am very leery of investing without a cash reserve. Granted, I’m going about things in something of a slow or backwards manner - saving first, then investing, but this is what I’m comfortable with because I don’t know exit strategies as yet.

Knowledge is power. Power feeds confidence; confidence fuels action.

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Great post, not only that it is informative and enlightening, it is also well written. :slight_smile: Nice analogies btw.

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The best advice I ever got was from people who had nothing to sell or gain from me.

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Eric- You read my mind.

I think I may start by “bird dogging” that way I get a good feel for the road ahead. Any Ideas on the best way to start doing that?

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This is far better than some of the real estate ebooks I’ve read! I think you should make an ebook. :slight_smile:

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So… what where those exit strategies again?

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You know, some of you people can come up with some great, inspiring posts!

The whole thing, is this market and everything people are saying about it. The more and more I hear about it, I feel like any move in real estate is a bad move, but what do I know? It just sucks.

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Wow, that’s great Eric. As a novice investor that’s just what I needed to see. I’m new to the forum and if this is the type of quality information it contains I can’t wait to dive in. Thanks.

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This is the very reason i frequent forums, there are a lot of free, informative and useful posts coming from a lot of people. :slight_smile:

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Keep in mind that if growing wealth through real estate wasn’t “Perceived” as difficult then everyone would be doing it. When the market changes you simply need to change your strategy.

If there is only one person in your market making money in real estate then that should be enough proof that you can to. Just do your homework, then do your legwork.

good luck!

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This should be required reading for any beginner. I know so many people get distracted by the next new shinny object. Someone might start out looking at foreclosures and then all of a sudden they get an email about probate stuff and then all of sudden they switch. A few weeks later they switch to the next new flavor of the week. And nothing ever gets done. :banghead

Find an area and STICK to it. Learn it well enough to teach and TAKE action and success will find you .

It’s really not more difficult than that :shocked

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ericmedem,

Great post. Hope you new investors print it and stick it on your refrigerator door.

Here’s my 2 cents from someone who who has been buying, selling, renting and fixing for a number of years…(and also furnishing):

!. First look to your own roof. Where are YOU living? If you are paying rent figure out how to cut that cost so you can save for a downpayment. If you are living for free with family, you can use your money to save for buying real estate.

  1. When you buy a home, buy 2 or 3 units. Let your tenants help pay the mortgage. This will also teach you landlording skills like how to pick tenants, collect rent, etc.

  2. You don’t need a McMansion. Don’t ever be house-poor just so you can have vaulted ceilings and 4 bathrooms. Houses eat money. Big houses eat LOTS of money. Use your money to invest in real estate instead. If you have a McMansion now, make an escape plan. You don’t need it unless you have eight children.

  3. Keep moving forward. Buy a house. Maybe it’s the wrong house, but study on it and then ACT. You will learn a lot more from your mistakes than you will in a class.

  4. When you have a piece of rental property, do something with it! I know several friends and family members who are “real estate investors”. But their properties have been vacant for months! They never seem to get them cleaned, mowed, rented! They don’t even hammer a “For Rent” sign in the yard. They are waiting for the perfect tenant, at the perfect price, and any profit is lost to vacancies.

  5. Be sure. Owning rental property is not for everyone. If you would rather watch sports in your recliner, that’s ok. Just know that houses are going to use up your free-time, nights and weekends. When you are affluent someday you can farm them out to management, but otherwise it’s just hard work.

Furnishedowner