June 12, 2007

7 Tips for Starting Out in Real Estate Successfully

Just starting out in real estate? Get ready, because along the way you’ll encounter many schools of thought and all kinds of ideas, from crafty to conservative to incredibly risky. No matter which direction you decide to go, follow these seven fundamental tips and you’ll be building your real estate portfolio on a rock solid foundation.

1. Do Your Research.

Due diligence is absolutely required in the real estate business. When considering a deal, investigate every single angle from as many perspectives as you can manage. Ask questions. Make sure the property’s value is a right match for the neighborhood. If a listing has been on the market for a long time, find out why.

Does the deal seem too good to be true? If that’s the case, then it probably is. Also, be skeptical and realize that some tools are not always accurate 100% of the time. By compiling impeccable research, you’re dramatically improving your chances of success.

2. Make A Plan and Stick With It.

If you’re using a certain system, stick to its guidelines. Set your goals, write them down, and review them daily. Write a simple business plan. If you tend to be easily distracted, find an experienced mentor or consult with a success coach to keep you moving on track.

The worst possible thing that can happen when you start with real estate is getting caught up in a cycle of inaction, sometimes referred to as “ready-aim, ready-aim.” Don’t forget fire.

3. Be Realistic.

Starting out in real estate is a time consuming learning process in itself, but as you get even more involved, the time you must invest to be successful will increase exponentially. Surely you’ve seen all the late night “get rich with real estate” infomercials. Well, they make it look way easier than it really is.

Your chances of getting ultra rich while working just one hour a week are about one in a million. Don’t be discouraged, but it does take a lot more work than that. Remember the four P’s of real estate – Prepare, Pursue, Persist, and Patience.

4. Build a Circle of Trust.

Remember the old adage that says you shouldn’t ever trust a person that says “trust me?” Those two words alone shouldn’t scare you away altogether, but whether you’re trying to build a real estate empire or just trying to put together a rock solid deal on your next family home, you must be able to rely on trustworthy partners.

You need an honest and experienced real estate agent who has your best interests in mind. When working with finance people, make sure they understand your unique circumstances. Ask around to find good home inspectors and appraisers. And be sure to ask for recommendations and proof. Surround yourself with the best of the best.

5. Play It Safe.

How much risk do you want to expose yourself to? Don’t stretch your finances or your time and energy too thin. Really bad things tend to happen when you are over leveraged. The key is to take things at a steady pace and to not grow too fast. Growing pains happen, but they don’t need to lead to bankruptcy. Use common sense and play it safe.

6. Be Ready for Resale.

Sometimes life just happens and for a variety of reasons, you might find it necessary to sell immediately. What happens if you’re forced to sell a property before you planned? Will you come out ahead or at least even in this scenario? Factor resale options into the purchase and you’ll usually avoid being caught on the wrong side of a shaky deal.

7. Expect the Unexpected.

You’ve seen the flipping shows on television, right? Even though the flips they show are filled with plenty of drama and seemingly endless mini catastrophes, they almost always have a happy ending. The same holds true in the real world… Surprises happen, but plan properly and stick to your plan and you’ll have good results most of the time.

However, you must realize it’s never as quite perfect as it looks on the T.V. show. Murphy’s Law assures us that the unexpected will usually take place at the worst possible time. Prepare for the best, but expect the unexpected.

Real estate is serious business. You can either make a fortune or you can lose your shirt. However, if you’ll just keep these seven tips in mind as you’re starting out in real estate, you will at least be off on the right foot.