A lot of people are jumping into real estate again. Realtors are cleaning up on commissions, wholesaler fee’s are the highest they have ever been and flippers are making it look easier than HGTV.
One big hurdle that everyone has to get over before jumping into today’s market is FEAR. It is a dirty four-letter word that holds back action and success for many people.
8 Commons Fears
1. Total FEAR the market is going to shift and crumble like a cookie… again
2. The best Deals were last year, not this year
3. Tenants trash houses and cash flow
4. My wholesale buyer won’t close and I will be stuck
5. My banker says I don’t show enough income on my taxes
6. My credit is challenged
7. It did not work out well for me in 2007
8. My first flip was a complete disaster
All of these fears are really just your excuses for not taking action. Don’t be the typical person who has an excuse for ever opportunity encountered.
Here are success tips that today real estate entrepreneurs are using to succeed massively.
Here’s your roadmap for success.
1. Find your “Why” and ditch your “fear”
One reason investors fail isn’t just because they make a technical mistake and buy the wrong house, hire the wrong contractor or lease up the wrong tenant. These things happen to all investors. What separates investors in the success and fail category is the length of time it takes to recover, learn and try again. This really comes down to risk tolerance and how strong you’re “why” is. Are you doing it just to make money? That won’t be strong enough when things go sideways. “Wealth building” not where near strong enough. “So I can be home for my kids” now that is getting stronger. “So I can stop living life on my employers terms and spend more time with my family.” Now you are approaching it. You need to ask your “why” 5-7 times to really drill down deep enough to see if it will sustain you to look fear in the face and overcome the obstacles real estate will test you with!
2. Kiss your excuse to use banks goodbye
Bank financing is a major pain to use. Yes, I do like Brrr (buy-rehab-rent-refi) when it makes sense. But you have to go through a huge pile of documentation, loan applications, provide copies of your leases, and practically offer blood out of your right arm to get the final loan approved.
You will be asked to put about a 25% down payment on your acquisitions.
How many houses can you buy if you have to keep pulling money out of your checking account for BIG down payments? NOT MANY!
Besides the tough under-writing on loans, the big down payments, there are more problems with bank financing associated with risk. Risk with banks comes in the form of full-recourse loans and personal guarantees that can put all your future investment at risk.
Kiss your bank goodbye this year and learn to be creative buying houses subject to, with lease options, seller financing or joint ventures.
3. Buy Houses with OPM (Other People’s Money)
Buying houses is capital intensive. If you use your own money, you will eventually run out of funds and that is not fun!
What does it take to eliminate bank financing? There are two ways to do it.
First you can get some seller financing. The good news on seller financing is that it is easier then ever before. Did you know you can structure your seller financing to provide you with zero interest loans? How good would your monthly rental cash flow be if you did NOT have to pay any interest?
The second way to eliminate the need for bank financing to leverage OPM (other people’s money) by jumping into the world of private lending.
Millions of people are struggling to figure out what to do with their investment accounts. They are tired of losing in the stock market and tired of earning less than inflation in Certificates of Deposit (CDs).
As real estate investors, we have the best solution to offer, which is investing in local real estate assets using joint ventures. It’s the ultimate winning combination.
4. Invest for the Long-Term
Everyone has choices to make with their time. You can work for income with a job or even earn a high self-employed income as a paid professional (Attorney, Physician, etc).
The other option is to invest for the long-term in assets. Would you invest your time now for many future paydays in the form of net worth, equity and monthly cash flow?
Another characteristic of highly successful real estate investors is that they invest for the long term buying rental properties. Buying and holding rental properties creates a nice positive monthly cash flow, while tenants pay down the debt on the purchase.
5. Buy Houses Based on Numbers, Not Emotions
A lot of new investors get caught up in the emotions of a house. They see the property with elements such as historic charm and character and then they know they can restore it to its former glory. That’s an emotional approach.
Don’t go there.
This is not HGTV and the cash is real, so use it wisely!!!
There are four must-know numbers before you buy houses:
- Price – This is calculated once you know the other numbers
- After repair value (ARV) – How much is it worth once all fixed up?
- Cost for repairs – Estimate based on the ARV above, estimate high for real-life scenarios.
- Market rent – What can you rent the house for if needed. Does it exceed the 1% rule ($100,000 investment rents for $1,000/month minimum).
If you focus on these numbers, you will find success by leaving your emotional ties to a house or neighborhood behind you. Think and act like an investor, not as a homeowner, when buying investment real estate. Focus your efforts on executing an acquisition that will lead to success for your exit strategy.
6. Be a Lifetime Learner
Are you tracking with me on these first 4 characteristics of highly successful real estate investors?
I hope you are ready to move forward with your own plan to create cash flow and build your long-term net worth. A lot of investors fail because they do not invest in themselves.
Personally, I have a Masters in Engineering Management, but I am a lifetime learner, and that is the 5th trait of being highly successful. You need to commit to invest in yourself first. Take time to read as many real estate investing books as you can, take time to participate in the in my facebook group Real estate Investor Success and take time to invest in your real estate investing training.
It takes time and commitment to succeed. Invest in yourself.
What is your biggest fear and concern? Let’s break it and succeed massively. What is your “WHY?” Leave me your comments and thanks for sharing this with others!
