Whenever you get started in a new business, it is easy to get caught up in everything you don’t know. Fear and anxiety can quickly take hold of you if you let them. It is human nature to wait to make your move until everything is lined up perfectly.
In reality, however, there will never be a perfect time to enter a new business. You will never know enough or have everything line up as perfectly as you would like. Instead of worrying about having your website up and running or having enough money, you just need to get started taking action. Before you do, here are a few of the essential things you must have in place:
1. A firm plan:
Ok, so you are going to be a real estate investor. How are you going to do it?
There is too much at stake to simply say that you are going to figure it out as you go. You don’t need a website or even business cards to get started, but you do need a plan.
What is your investing strategy? Are you looking for wholesale, rehab or rental properties? Are you looking for probate, short sale, pre-foreclosure, fire-damaged, or divorce properties? How are you going to finance deals that come your way? What markets and specific areas are you looking in?
There are at least a dozen core questions that you must answer before you do anything else. You don’t need to know every step you will take on every deal, but you need to have a clear vision for what your real estate goals are. These goals will help you to choose the best team and what properties you will make offers on. Instead of worrying about the minutia of the business, start by developing a plan for how you want to get there.
2. A solid team:
Real estate is a people business. Every transaction requires a working rapport with several individuals to transpire smoothly and working with a good team is in your best interest.
Are you looking to build a business with family, friends, or business partners? When we built CT Homes, we did! It’s extremely appealing to be able to divide and conquer responsibility, but make sure before you get in business that every one on board is clear with their goals and responsibilities. Being open and honest with each other about what you’d like to get out of the real estate business and how much time you can put in can save thousands of dollars of your time and effort before you even look at a property.
In assembling your team, find a real estate agent who is investor friendly and is knowledgeable about your target area. They will help you find the properties that match your goals. The clearer you are with your plan, the easier it will be for them to do their job. How many properties are you looking to acquire this year? Can you take on a full gut or adding an addition, or are you just looking for properties that need cosmetic work? These questions will help a real estate agent best help you and your business.
You will also need a good mortgage broker or lender to finance your deals. What you want to do may not be in line with what you are approved for. A good lender knows the best programs for you and can get your deals done as quickly as possible. You can also use private money lenders by building relationships with people looking to lend.
If your strategy is to focus on rehabs and flips, you need the help of a solid contractor. They will have a direct impact on the quality of work and whether or not you stay under budget.
Finding this team before your first deal is not as difficult as it may appear. If you know what you want, a good team will help make it happen.
3. Reserve funds:
It is quite possible to fund deals without much, or any, of your own capital. Even though this is the case, you still need some money to get your business started. You don’t need tens of thousands of dollars, but you should have some help to be able to start marketing.
Little things like business cards, investment club fees, updated phones or computers and marketing money is needed. There are many free sites and resources, such as Craigslist, available to help you get started. You can also utilize email campaigns and reach out to friends and family to see if they have any interest in either funding deals or know someone interested in selling.
That being said, you don’t want to get going and immediately run into obstacles. Even if it is a few thousand dollars, you should have some reserves to help you start marketing when you are starting out.
As much as you would like to believe, deals will not just fall into your lap. New investors, in particular, will find this to be even more true.
Real estate is not an “easy” business. It takes tenacity, persistence, discipline, and the will to succeed no matter what. Regardless of how experienced you are, deals take work. This could mean stepping out of your comfort zone and calling 100 new contacts a day. It could mean knocking on every door just to get one new lead. Most new deals typically go to who has the most drive and works the hardest to get them. When you are just getting going, it can be the most frustrating time in the business. There will be days where you are working hard, but not seeing anything for it.
The successful investors are those that fight through those days and commit to work even harder. If you have only one attribute, you must have the drive to succeed. In time, and with the right mindset, everything else will eventually fall in place. Without drive and determination, nothing else matters.
Not everything is going to be perfect in your first couple of months. This doesn’t mean you shouldn’t get started. Every investor in a meeting has been in the same position you are. Those that have been in the business for some time managed to get to where they are by being persistent and fighting through the tough days. The longer you wait to get started, the more difficult it becomes.