I’m often asked how to get started in real estate investing, how did I do it, what do I do and what is the next hot market.
What I have learned over the years, is these questions are less about me and more about the person can learn how THEY can do it… They want to know if there are any secrets or short cuts.
Since you are interested in real estate investing, I thought it would be a good chance to give you the seven life changing real estate lessons that I have learned from my experience. Especially as I recently told you about the traps in real estate flipping television shows.
Overwhelmed? You’re Not Alone
I remember when I was new. EVERYTHING felt scary. Man, it was overwhelming, paralyzing even, to think about all the things I didn’t know. On top of that, I was constantly being told “be careful”, “it’s not for everyone”, “don’t get greedy”, and other ambition killing comments.
When you combined my inherent fear from what I didn’t know with the external fear of those giving me “advice,” it is very easy to see why I started slowly…
And there is nothing wrong with that, in fact I think you should start slowly.
There is a lot to learn in real estate investing…
There are so many different strategies for how to pick the right area to invest. Many schools of thought on how to maximize returns and minimize risk. Then there is the issue of financing real estate!
It is my assumption that you may believe you need to know a lot more that you really do in order to get started in real estate investing. Am I right?
So to help alleviate that feeling, here are the seven life-changing real estate lessons to get you started.
7 Life-Changing Real Estate Investing Lessons to Get You Started
You don’t need the perfect mentality — or the perfect deal.
Remember that school term paper you knew you needed to write but you kept putting off because you wanted to make sure you wrote something amazing and weren’t quite ready?
That paper never got written until the last minute.
Perfection leads to procrastination. Sometimes it’s better to just get it done than to present a flawless product. Sometimes trying to be perfect just results in procrastination.
Real estate investing can be this way, too. I remember having no idea what a fair price for a property was, so I would just offer significantly under asking price because I mistakenly believed that meant I got a “good deal”.
Also, I remember not knowing what a “good” return on investment (ROI) was. I once held out for two months and missing out on $2,000 in rent to get an extra $10 a week because I thought it made my investment more financially sound.
Pretty foolish in hindsight.
My pursuit of perfection, handled incorrectly, caused me to stand on the sidelines instead of playing because I wasn’t in Olympic shape yet.
I didn’t understand that actually playing the game is what gets you in shape! Had I understood that on my first few deals — the real value is in learning, not earning — I would have shortened my learning curve considerably.
Focus on acquiring good, solid, cash flow properties in good neighbourhoods and school districts at below market value. If you round up enough of these, you will find yourself much wealthier, much sooner than you thought.
Don’t undervalue the importance of relationships.
When I was new, I was a little naive.
People, not your own brilliance, are going to be what bring you the majority of your deals. Especially when you are new.
We all love to talk about strategy because it makes us feel in control of the whole thing. We control our own destiny through our hard work and ingenuity. I’ve been there, too. I thought that’s what it took.
What I’ve learned however, is it is ten times easier when someone just calls me and says, “Hey Andrew, looking to flip a house right now? I’ve got one you’ll like.”
Sometimes it’s really that easy.
If people like you, they will want to help you. If people know how they can help you, they will…
Make it a priority to help others. Make sure they get paid, give referrals and ensure they feel appreciated. If you do, more often than not, the deals will find you.
It’s less scary than you think.
Many people don’t get started because they don’t know what to expect. All they can think about is what they stand to lose.
While it’s very important to measure risk (very important), one of the risks people fail to measure is what you stand to lose by not investing. We call this “opportunity cost”, and it’s real.
Truth is, you’ll never know everything. I’ll never know everything, but I have the confidence to keep investing, and you can too…
Because I know there are very few problems I will come across that someone else hasn’t before me.
I know that the internet makes it pretty easy to find information, and it won’t be too hard for me to find someone who has faced any issue and solved it.
Let go of thinking you need to know it all. You will find yourself learning at an exponential rate once you get some skin in the game and own a property.
So find something small if you’re worried, run it by a few others you trust, and if it sounds good, buy it and rent it out.
That’s how you’re going to learn.
Don’t think you’re an investor when you’re an analyser.
So many people love to talk about the real estate game and think that means they play it. They understand all the acronyms, love to estimate returns, read all the articles, scour the internet, and know what the experts say.
They are totally immersed in real estate. But don’t own any.
Don’t be that person…
Real estate investing is about making money. You aren’t going to make money by talking about it.
Knowledge gained without implementation is useless and a waste of your time.
Real estate isn’t reality television. You don’t get paid for watching others playing and winning.
You don’t have to know where the market is going.
This one is tough, I’ll admit. I spend a fair amount of time thinking about if I should be buying, selling, waiting, or spending.
None of us really knows. It’s easy to see how this can cause a lot of people to hesitate. But let me tell you why it’s ridiculous to constantly use this as an excuse.
When I started buying in 2000, the market was already rising. When people look back, they often say, “I wish I had bought back then. I would have made a killing. It’s just too late now, prices have risen too far now.”
The problem with this is, back in 2000, everyone was saying the economy would collapse and we were fools to buy! Prices were rising too fast, they had to fall, apparently. It felt like a huge risk. Like things were going to get worse or possibly never recover.
Now, I’ll admit, a great market correction might be coming again. Or it might not. I don’t know. You don’t know. Nobody knows.
It might come and be followed by a huge comeback. It might not come at all, and prices might just creep up forever. None of us knows! So talking about how you would have done something before does you no good now.
Cash flow is the great equalizer in real estate. If the market goes up, I can make a bunch of money and sell. If the market goes down, I don’t lose anything unless I sell.
I can just let the cash flow pay for my mortgage until the market turns around again. It’s an amazing hedge against bad markets. My renters are assuming a lot of my risk for me. That is one of the powerful benefits of real estate investing.
I don’t know what the market is going to do, but I know people are likely going to need a place to live.
You CAN overcome lack of sufficient cash reserves.
Honestly, this is the one reason I usually agree why not to get started. Having healthy cash reserves is crucial.
When I first started, I was hesitant to buy until I had a significant amount of cash built up. The problem was, I didn’t know what was healthy. I thought I needed a lot more than you actually do.
It certainly pays to have some cash reserves for when properties are in between renters, but this does not need to be large amounts of money and shouldn’t be another reason to procrastinate.
What good reason can you have for not saving up enough money?
Real estate investing is still investing. It is putting your money to work for you and assuming some risk while doing so. If you want to play in this space, you need to be saving money. Not having reserves is not an excuse. Start saving reserves today.
Find a support system.
When I first started, I think this was a legitimate concern. Today, however, it’s not.
We have the internet, books, blogs (like this one J), articles, paid real estate websites, free real estate websites, and coaching. You want it? It’s out there.
I agree a support system is necessary, but if you’re reading this, you have access to one. I’m here for you.
Not getting started because you don’t have a support system is just silly. Start reaching out and finding one. I wish I had.
If you are still unsure what to do to get the ball rolling, leave me a message below. I love to help, and I remember what it was like being new and feeling alone and scared.
If I had known of all the resources available when I started, I honestly believe I would have twice as many properties right now.
I know it’s hard to believe when you’re new, but real estate isn’t rocket science. You are likely much, much closer than you think to getting started and putting together a portfolio of cash flow generating property to support you in retirement.
Your future financial self is dependent on you taking action now. What you do today matters. From little things, big things grow!