Upon announcing your arrival into the world of real estate, you may expect everything to go your way. In reality, real estate investing is much more difficult than it may appear on TV. Deals will not fall in your lap and there will be times that you question what you are doing. The first year in the business will go a long way in determining how long you stay in the business and just how successful you are. The decisions you make and the approach you take when you are starting out can make all the difference.
There is so much information, and misinformation, out there that it is easy to get pulled in ten different directions. There may be an area of the business that you saw a fellow investor experience success in, but every investor is different. You can certainly try to emulate successful investors in your area, but you need to invest in the way that you feel comfortable. This may mean not following the path that everyone is telling you. If you aren’t really into rehabs, there are many other ways to make money in real estate. If you aren’t passionate about how you are investing, sooner or later you will sour on the business.
There is a lot that goes into closing a successful transaction. It typically takes a team of people around you to make it happen. If you are just starting out, you may not have people to lean on that you can trust. It is critical that you find a mentor or a community of people that you can ask questions, or just bounce an idea off of. There are many investors that get stuck at some point in the process and have a difficult time getting going again. You can’t be afraid to ask questions or to find the answers you are looking for. This may mean reaching out to an attorney, accountant, relator or mortgage broker before you are established and build a relationship from the ground up.
Even the most successful investors will get involved in a bad transaction from time to time. There really is no such thing as a risk free investment. If you are afraid to fail or to lose money, there aren’t too many deals that you will get started with. You should always spend some time researching the property and make sure you are comfortable with the process, but at some point you need to take a leap of faith and get started. You can analyze all the numbers and look for dings on the property until you end up talking yourself out of the deal. There will be some apprehension and even a little fear until you get a few deals under your belt, but you need to get over that initial hump. If you are on the fence, you can look to find a partner until your are confident that you know what you are looking for and know how to do it. There is no such thing as a risk free investment. If you want to invest, you need to find a property and a situation you like and go with it.
Before you even start evaluating your first deal, you should have an idea of what it is that you want out of it. If you don’t have clearly defined goals, you will end up being disappointed with the results. Doing deals just two do deals should not be what you are after. You should have an idea of whether or not you are looking to grow your rental portfolio, wholesale or look to rehab the property. If you are forced to make the best of a property after you take ownership, you will end up with only bad options. If you do enough of these deals, you will end up wondering what went wrong.
You also need to know all the numbers. It is easy to bend figures and scenarios to make them look more appealing than they really are. If you are basing your transaction on multiple things going right, you are taking on a risky investment that could very easily go south. You need to have a system for evaluating a property that calls for contingencies and be as confident in the numbers as possible. Don’t just rely on a listing sheet or a seller’s estimate when your investing money is at stake. It is easy to get excited and want to close your first deal, but it is better to wait for the right deal to come along than to speculate on the numbers.
The first year in any new business is always the most important. It will set a precedent and give you an idea of how things will be moving forward. The decisions you make and the time you spend on each property will have an impact on every future deal. If your expectations aren’t realistic or you haven’t thought things through, it will lead you to question your place in the business. On the flip side, if you taste success, you will want to taste it again on every deal. Your first year in real estate can be a make or break period, but ultimately your success lies with you.