There are really only a handful of building blocks that form the foundation for success in real estate investing. That being said, young or old, grizzled trooper or newbie, it’s surprising how many investors are unfamiliar with these essential building blocks. In fact, even if you’re a seasoned veteran of the real estate battles you may be unfamiliar with these key stepping stones to a successful business.
Although this is not a complete list, following are a couple of basics for building a thriving real estate investment business.
- Optimizing the Process
- Private Lenders
- The Right Attitude
- Optimizing the Process
If you’re an experienced real estate pro, or even if you’re new to the game, you probably know some of the essential techniques for running a successful real estate investment business. However, optimizing the process means accelerating and implementing what you already know. Optimization is re-thinking, re-hearing and re-learning the same thing over and over and over again. It’s not about the next new shinny thing. Truth is, you can become darn near a genius at something by doing it over and over again.
For example, to become a master at karate your instructor doesn’t teach you a thousand moves to use one time. They teach you one move to practice a thousand times. The same principle applies here. When you optimize the process you’re simply learning to do exactly the same thing thousands of times.
Over and over and over.
Fix and Flip
Let’s say you’ve decided to focus your efforts on buying, rehabbing and flipping houses. If that’s the case, there are a small number of steps you should take to insure and maximize your success. There are not a thousand steps that change every time you flip a house. There are a handful of steps that remain the same for a thousand flips.
Following is a quick overview of some of the major steps you would follow in flipping a house. This is certainly not everything you need to know by any stretch, but it highlights some of the important points.
Find a hot property
You should talk with people who can show you the techniques the pros use to find hot properties to flip. They may be realtors or they may be professional real estate coaches that will teach you, for a fee, the best ways to find hot properties.
For example, you should talk to wholesalers because they usually have a solid supply of good houses to buy and flip. In addition, you need to decide on a specific geographic area for establishing your business.
Get the Funding
You will need to have funding in place before you can move ahead very far with flipping a house. If you don’t have funding, how are you going to buy the house? You should have a system in place for funding your deals. Typical funding resources include the following:
- Private lenders
- Credit Unions and other Institutional Lenders
Work with a Reliable Rehab Contractor
You should establish a relationship with a trusted contractor. Remember, your job is not to rehab the property yourself. Your time is too valuable to spend it painting walls and tearing up flooring. Your job is to find hot deals, not fix the plumbing. You should form a relationship with a contractor that is dependable and trustworthy. The contractor you select will be a critical part of your business.
Work with a Trustworthy Title Company
It is essential you establish a relationship with a title company that is reliable and trustworthy, just like your contractor. And like your contractor, your title company will form an essential part of your business.
You will need to learn how to establish relationships with private lenders. These are people who are willing to fund your deals with their money, and they are a much better alternative than banks and other institutional lenders for real estate investment deals. Essentially, you create your own personal bank buy establishing professional relationships with private lenders. They lend you the funds for your deal, and in return you provide them with a higher interest rate on their funds, and sometimes even a piece of the profits from the deal. This is not pie-in-the-sky; there really are wealthy people out there who will lend money to you if your deal is solid.
You need to know how best to establish relationships with private lenders. Not only that, but you also need to understand the law. There are strict laws in place for how and when you can approach private lenders.
Once again, this is an instance when having a relationship with a professional real estate investor who has the skills to provide mentoring or paid coaching can be a career-saver.
The Right Attitude
Everybody wants a magic bullet. But life is not about magic bullets. It’s not about the one thing that’s going to make you rich. It’s not about the one move in the stock market that’s going to go up or down and make you rich or poor. It’s about the long-term optimization, and the long-term execution of a business model that works. For example, flipping houses works, if you know what you’re doing. The secret is all about learning and executing, and learning and executing. Over and over. It’s not just about learning. It’s easy to learn, but
sometimes it’s scary to execute.
Live Up to Your Abilities
It is disappointing to see talented people who are living below their talent level, who are not trying things and executing things and daring to go out and make things happen. Most people have the smarts and inherent talents to become successful real estate investors. You simply have to go out and make it happen – just go out and do it.
It’s Okay to Fail – Just Keep Trying
Sometimes that means failing. Trying some things and having them not work. But you should get out there and make a lot of offers. You should have a mentor or professional coach in place to help. That way, if you have a deal and want to get their feedback before you proceed, you should be able to submit it to your coach for their feedback. They should be able to look at that deal and tell you if it’s a good deal or not. And then they should coach you through it.
The Bottom Line
You can be successful in real estate. It’s not brain surgery. But you must dedicate yourself and do the homework so you understand the basics. Then you must optimize what you’ve learned. You need to know what you want and you have to go make offers and take action. The success you deserve is sure to follow.
Derrick is a Memphis native specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 8 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com