Tuesday, May 02, 2006

My Top 10 Things that a Newbie Should Do to get Started in the Real Estate Business

Buyer Beware: There are more than 10 top things.

However, here is MY Top 10 list of things a newbie should do to get started in this business:

1) Read EVERYTHING available to you that is free at the library about Creative Real Estate investing, even if the book is old.

2) Read AS MUCH AS YOU CAN while drinking coffee at Barnes & Noble. Buy what interests you and you can afford.

3) Find and join a local (or as local as you can get) Real Estate Investment Club. Look at http://www.nationalreia.com/ to help find one.

4) Call every one of the "We Buy Houses" ads in you local newspapers and talk to the investor. Offer to buy him/her lunch for 30-60 minutes of their time while you pick their brain and explain your current situation.

5) Do an in depth analysis of your current and short term (1 year) financial situation. You need to know a) how much cash you have available immediately to help you find and close deals. This is money that you DO NOT NEED to help pay your bills or feed your face. What is your borrowing capacity, ie Credit score, non-liquid assets that have equity to use as collateral, etc.

6) Using what you have learned above, cultivate relationships with one or two mortgage brokers, bankers, real estate agents.

7) Start a basic business plan targeting only one or two areas of investing, it rehabs, wholesales, flips, subject to's, whatever floats your boat. You'll know what these mean after you do steps 1-4.

My advice to newbies that don't have great credit and large cash reserves: start by flipping (wholesaling). This is where you get a property under contract and "flip" or assign it to another investor.
Advantages: Fast payday, little risk, gets you in the game while you learn more.

Get Bill Bronchick's course "Flipping". It has everything you need to get started. How to do the business, some marketing ideas, all the contracts and forms you'll need. Other than Flipping, make sure you spend significant time on your exit strategies - this is where you realize the profit. Have this in place. Are you going to be a long term hold landlord, or a 3 months rehab and sell flipper, or a wholesaler that never takes title, or.... You get the picture. While you make your profit when you buy, you don't realize it until you sell.

8) Develope a marketing plan. Of all 10 items I list, this is one of the most important. You can spend all kinds of time learning about creative real estate and
how to structure deals, but if you can't find a deal, you are just swimming in acedemia. It must be a 2-sided plan. First part on how to FIND deals, Part Two on Exit Strategy Marketing.

I suggest Ben Innes-Ker's course, "Motivated Seller Magnet". It is inexpensive, and contains truly valuable materials so you don't have to start from scratch, especially if you don't have a marketing degree.

9) Start calling and visiting prospective sellers. Don't worry about making mistakes. Learn from them. If you think you've got a hot one, call on one or more
of your new friends from Step 6.

10) Do your first Deal! Now your hooked like a meth addict. Welcome to the Club.


Helping Homeowners in Central Oklahoma
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1 comment:

Anonymous said...

I just found your Abundant Success blog from the RD Insiders forum. It's awesome! I hope to create assets with raw land in the future. Maybe I can join you playing the cashflow game someday?

Alex Katsanos