Get With the Plan
Figure out what your short and long term real estate goals are then create a profitable plan. Determine what steps you need to take to get started. Some of the steps include; setting up your business entity, determining your market, and building a team to help put the plan into action.
Find a good analysis tool or spreadsheet to determine the numbers that will make the deal work for you. Once you have that in place, analyzing property transactions is pretty simple. If you plan on selling, calculate what the property will be worth when it is done, and then subtract how much is needed for repairs and resale. Once you discount those two items, include your desired profit and you will know what to offer. If you plan on holding the property calculate how much is needed for repairs, taxes, insurance, etc. Next determine what properties of this type are renting for. We like to use a 10% margin or better. Make offers based on your calculations and if the deal isn’t going to work move on and keep looking. Do not reduce your profit to get a deal accepted and run the risk of losing money if something goes wrong.
Be a Problem Solver
Getting great deals is often a result of solving a problem, whether the seller is dealing with a foreclosure, a new inheritance or a landlord who is fed up with tenants. When you are able to solve problems that few people have the answer to, not only can you get a great deal, but you also create a win-win situation where you become the hero.
Become a Numbers Ninja
Real estate is a finance and numbers game. You must learn understand the concepts of leverage, financing, interest rates and various types of lending programs. You must know how to negotiate your deals, including terms and financing to property profit when you buy and sell your properties. Make sure your offers are based on your required profit and don’t get emotionally attached to a deal.
Find Your Specialty
Determine what your niche will be. The more focused you are the more successful you will be. You cannot be all things to everyone, nor can you be a master of all markets. Determine what you’re good at – for example, if you love negotiating, you might be good at coordinating short sales or bank notes. If you love fixing homes, you may be a good rehabber or property manager. Whatever you choose to do, stay true to your specialty, you’ll be most successful if you focus your time doing something you enjoy and are good at and hire or become partners with someone who has skills you need to be successful.
Stick with the Plan
Many people get wide-eyed about the millions you can make in real estate; however, generating wealth in real estate is not typically something that can be accomplished by taking a weekend course or purchasing a DVD program. Creating wealth with real estate is done over time and is mastered the quickest when you have a mentor who has been successful in investing in real estate. You’ve got to create a plan and stick to it to grow your wealth. You must also invest time in education and learning new skills, strategies and tips that will keep you on top of your game through different cycles of the market.