Real estate investing is always presented in the best
light. You know, "fast cash", "huge wealth" ... all that.
And even though the sensible, mature part of us is urging
caution, we can find ourselves at a real estate investing
seminar breathlessly offering our credit card at the back
of the room spending money we don't have to buy a course on
how to make a million dollars in real estate.
Don't feel bad. These are marketers wielding finely honed
weapons of influence. You are supposed to make a rash
decision. That's how it's all been designed. The problems
begin though when you continue making rash decisions
outside the hotel ballroom.
You know, it's exciting making $20,000 on a deal, and it is
relatively easy to make those profits once you know how.
But to think it will be easy first starting out because
some guru who has sold you a course tells you so ... is a
TRAP!
Don't get me wrong, real estate IS an incredible
opportunity to generate cash to make you completely debt
free and then build substantial wealth, but all in good
time. Right now, the pixie dust sprinkled during the
seminar has made you a little confused.
Beginning real estate investors are given a lot of
selective how-to advice, but little information about the
traps to avoid. There are many, but here are the main six:
1) Quit your job: You may hate your job. You may despise
your boss, but when it is providing the money you need to
put food on the table and keep a roof over your head, your
job is your best friend. Especially if you have been bitten
by the real estate bug and are now addicted to buying real
estate courses. Your job will support your habit.
2) First deal delusions: If you are tempted to quit your
job your rationale for doing it probably has something to
do with all the money you feel certain is going to be
coming in soon. There is a softening effect real estate
seminar pixie dust has on your powers of reasoning.
Entertaining this delusion is merely the first sign. Don't
fall into this TRAP! Your first deal will be the hardest
deal you ever do, not the easiest. Let's face it, you don't
know what's coming, you don't yet know how hard you have to
try, you don't know the numbers involved, whether "no"
really means 'no', whether private lenders really will hand
over their cash for your deal, you don't know the nature of
everyone in the business and how to deal with them. Most of
all, you don't know whether it will pay off if you give it
everything you have. Getting through all these unknowns
make the first deal the hardest, indeed, it's what weeds
out the 98% who try. How long it takes you depends on many
things, it may take a month, it may take a year. In the
meantime, keep your job.
3) Underestimating the effort required: In it's essence,
putting together profitable deals is pretty simple, and it
can be easy, after you know how. But on your first deal you
don't have the benefit of experience, it's all new and you
have to pay retail for every bit of progress you achieve.
If you're still under the spell of the cool-aid you drank
at the seminar the first thing you realize is that deals
aren't just sitting somewhere waiting for you to pick them
up, they must be detected and then created. Sellers shade
the truth about their property, brokers give you pro-forma
numbers and make access difficult, lenders want miles of
paperwork, closing agents can be wonderfully self-involved
and 'forget' to tell you important things. If you can be
objective through all this (and not take it personally) you
realize that no-one cares about making anything easy for
you. In fact, everyone is looking to you to create value
for them. The deal happens or falls apart to the extent
that you cast yourself in the role of ring leader and take
responsibility for making sure everything happens. It
requires a lot of effort the first time through, and the
"best you" has to show up.
4) Not using the tools you have: Not all real estate
courses are hype. In fact, there are many high quality,
authoritative courses available, usually through your local
REIA, that give you the tools and guidance you need for
success. When you buy a great course that passes along to
you the tools and hard won lessons earned by the author,
there is a tendency to slack off. This is a trap, and avoid
it like the plague. You have done a lot of work and
invested your hard-earned cash sorting through the dross to
find some authoritative instruction. Capitalize on your
good fortune and take action immediately. The tools of real
estate investing are incredibly powerful. Direct response
marketing for lead generation, positioning, developing
lead-flow, negotiating, creating more demand for you than
there is supply, understanding "next", are all tools and
processes that will change your life and how other people
see you. You need to get familiar with and master them your
earliest opportunity.
5) Playing the skeptical victim: Real estate investing
gurus like to showcase the elements of doing deals that
make audiences gasp in shock. Things like buying with none
of your own money, or selling the property before I even
buy it! The thing about these sizzle points is they are all
true. Only after you gain a little experience you realize
doing these things is just the most effective way to do
business. Yes, you may feel manipulated by marketing hype
but it's a trap to think of yourself as a victim because of
that. First, because if you allow cheap skepticism to
protect you from "risk" you'll never learn how the business
works. There IS unlimited money available to fund your
deals. You CAN close on deals before you buy them, it's
just how a simultaneous close works. You CAN buy a 100 unit
apartment building without a dollar of your own money
invested ... it's just the most effective way to buy income
property. Second, if you see yourself as a victim you will
never make it through your first deal. You must take full
control of your efforts and try as hard as is required to
put your first deal through. See yourself as the one at the
center who is making everything happen. You are the
difference-maker.
6) Not taking full responsibility for your success: Take
careful note of the internal dialogue going on in your
head. If there is any kind of self-pity, rationalization
going on it's a sign you haven't yet taken complete
responsibility. Another sign is that you are always looking
for shortcuts. Sadly, there are no shortcuts in real
estate. You may have previous business experience that
speeds up your learning curve, but in the end you won't
receive the money you are looking for until you create
value for all the players in a real estate transaction.
Learning the game, the rules, the strategy, the mindset,
takes time. You'll know you have taken responsibility for
your success in real estate when, a) you see your current
job as an asset, not only to provide income but also as an
opportunity for personal development. b) when you are
thinking in terms of taking a full year to get thoroughly
educated and put into practice everything you learn. You
may buy a property before the year goes by, but there is no
pressure. This is your learning phase. c) you start being a
serious student. You focus on one type of real estate and
cease being a connoisseur of real estate courses and
seminars. You do as much as you can with what you have at
any given time. i.e. try as hard as you can. 90% of "smart"
is work. And be very selective with who you listen to.
There is nothing quite as valuable as good information on a
specialized subject. It gives a unique leverage. The
opposite is also true.
Many of us jump unthinkingly into real estate investing
through fear. Skillful marketers tell us that we must act
now or the opportunity will be lost. Well, real estate will
always be around, and no matter what market phase real
estate is in there will always be the opportunity for a lot
of money to be made.
We must be adult about it though and take our education and
investing seriously. Keep your job and provide for you and
your family's immediate financial needs first, then start
your exciting journey into real estate wealth.
----------------------------------------------------
Ben Innes-Ker is a real estate investing warrior and author
of the SMART Guide To Apartment Investing. He is constantly
refining his systems to make his investing more profitable
with less effort. He shares how to create a huge passive
income buying large apartment buildings with none of your
own money with his subscribers. To receive your Free SMART
Guide To Apartment Investing, go to
http://www.apartmenthouseprofitmachine.com .
