Far too many new investors are confused as to which step to take next. There are simply too many ways to invest. While some find the freedom beneficial, others are scared at the direction it may take them. To that end, there are seemingly endless ways to conduct a real estate transaction. However, some of these methods may not work for you and your business. Instead of trying to do everything, take a minute to evaluate your situation. There are four basic questions you should ask yourself before moving forward:
What are my investing goals?
What works for one investor may not work for another. Some investors are looking to leave their full-time job and close as many deals as possible. Others are content with closing one deal every six months. Some are looking to build a long-term rental portfolio, while there are some looking to make quick returns with rehabs. There truly is no right or wrong way to invest, only what works for you. Before you make any offer, you should have an idea of where you want your business to go. Your goals will directly determine the types of properties and deals you pursue. Without goals, you will find yourself making offers on properties you don’t really want. This may cause you to miss out on new opportunities because you are focusing on a property you already have. Start out by making a list of where you want your business to be in six months. What are you looking to accomplish, and what do you want to have going on? Make your goals as detailed as possible.
Do I need to pick out a niche?
Along with your goals, a real estate niche will help determine which types of deals to pursue. While you don’t need a niche to get started, it is certainly helpful. Your niche can be any specific area of the business you want to focus on. This can range from focusing on short sales to looking at moderately priced mobile homes. You can be the go-to foreclosure investor in your area, or look strictly at wholesaling. Whatever your niche is, the most important thing is to make sure you enjoy it. After declaring yourself as the authority in an area, you need be prepared to back it up. It should be an area that you enjoy spending time researching and working in. Talk to as many different people as possible, or until you find one area that you like more than others. If you don’t love one area over another, don’t force a niche. You will know where your niche should be as soon as you hear it.
How much education do I really need?
One of the things that gets lost on new investors is how much education is required. Your real estate business is much like any new business you would start. If you opened up a restaurant, you would spend weeks and months researching menu items, food costs and staffing problems. Running an investing business is similar. Instead of food costs, you need to understand rehab costs, after repair values, closing costs and more. This requires you to constantly stay on top of the business, and learn something new every day.
You should dedicate at least one hour a day to learning something new. This could be anything from talking to an experienced investor to reading an article about your market online. You don’t need to be an expert in every area of the business, but you can’t be clueless either. A lack of education will cause you to hesitate before acting or get involved in bad deals. Either way this will set your business back. The better you know your business and the markets you are interested in, the more successful your business will be.
What is my action plan?
Any goals you want to achieve are only good if you are willing to act on them. Along with your goals, you should have a corresponding action plan. This will give you an idea of specifically what you need to do, and who you should do it with. Saying that you want to close ten deals a month is great, but how do you plan on doing it? You may need to reach out to twenty different Realtors a day for two weeks. It could mean sending direct mail to 3,000 buyers in your area. Whatever it is, you need to map it out before you start. From there, you need to be willing to do it regularly until you start to realize success. There is a process in growing a business. It starts with having an action plan and committing to it, regardless of the results, for a predetermined period of time.
One of the things that makes real estate so great is that anyone can be successful at it. There is not much separating you from everyone else in your area. As you are just getting started, use these four questions to help give your business the push it needs.