Just knowing where to get started in real estate can be one of the biggest reason people don’t get started. These 5 steps will get you on the fast track to a great start in real estate and help you keep the momentum.
- What are you looking for?
Knowing exactly what type, size, and price, real estate deal you are trying to do is the most important first step. I understand that everyone wants to go big quickly when it comes to doing deals but trying to go too big too soon is the best way to burn yourself out early. The first step here is to figure out what you can borrow. Simply put you can borrow about what your net worth is. Now we use the old 80/20 rule. 80% of your time should be spent looking at deals that you can qualify for a mortgage to buy. Example- if you have net worth of $100,000 then you could roughly borrow $80,000-$100,000.
The key is to now look at deals in your market that are selling for $100,000 or less. This gives you the best chance of closing. The second reason I say look at your starting deal size in this manner is because values for real estate can change from city to city. The same $100,000 can buy more or less depending on the area. If you are just getting started in real estate and you don’t already have any net worth…that’s ok. You just need to find some partners with the needed balance sheet and it just so happens I have some tips for that too. Read on!
- Deal flow-
Now that you know what size deal you are looking for you need to start looking at deals on a regular basis. I suggest looking at 2-5 deals a week (every week). To do this you need to establish a regular source of deal flow. Techniques vary depending on what type of deal you are looking for. Direct mail works very well if you are looking at single family deals and even small multifamily deals but has a much less response rate on larger commercial deals. Realtors are always a good source of deal flow. However you source your deals, the object is to analyze at least 2 -5 deals each week. This will keep you current in your markets as far as price/values go. This will also help you not make the biggest mistake I see people make when getting started in real estate. That is to not look at enough deals, get bored or desperate and then buy a bad deal. If you look at deals on a regular basis you will avoid becoming bored and anxious which leads to a bad purchase.
- Always Be Networking
Even if you have your own money now you will likely need partners to be able to grow your business and buy bigger deals in the future. The majority of the real estate deals you will do will have a loan involved at some point. This comes with the need to be able to qualify for larger and larger loans as well as the need to put 20%-30% down on each loan. That where networking comes in. You need to be consistently building your network of potential investors and partners (even if you don’t need them today).
With social media and the digital age, it’s easy to forget the old-fashioned art of meeting people but there is no replacement for face to face networking. I do suggest that you have an online presence and utilize social media to the fullest extent when you are networking and getting started in real estate but don’t forget to show up in person every now and again. I suggest going to 1-2 live events each week to get out and meet other people in your area that are interested in real estate too. Look to see what type of meeting are available in your area and show up! If you don’t have any real estate groups that meet on a regular basis in your area…start one. Whether you have your own group or you go to existing ones the key is consistency. People do business with people they know and like. Be seen regularly.
A business card is not a relationship. A stack of business cards is not a network.
You must follow up, follow up, then follow up some more. Don’t think because you got a business card or email from someone that they will remember you in a week. Follow up.
- Education is the Key
Always be valuable. If you want to be successful in real estate (or any business) you need to be valuable to others and be able to continue to bring value. An education in real estate is the fastest (and cheapest) way to become valuable to others that you will want to work with. This is not just about being valuable to potential partners but sellers, realtors, lenders, and investors. When you are getting started people may be reluctant to work with you due to your lack of experience. If this is the case then an education in the business is the best value you can bring. If you don’t have any experience and don’t know what your doing- why would anyone want to work with you? They won’t! Simple as that.
Education leads to experience and helps you get past the objection about not having any yet. I started my company with a duplex in a tough neighborhood. I had no experience, no money but I did get my education in place. I read every book I could get my hands on an attended every class I could find. When I did find that first great deal, I was ready to take it down. One small problem was I didn’t have any money. I was able to get a money partners to help out because I had the expertise. I brought value (you can too) to this partner because I studied. Easy!
- Weekly Checklist for Success
Below is my weekly checklist for success. The idea is that you check off each day that you have accomplished the task at the left. This check list will help you to visualize your week and the action goals you have set for the week. Remember these action items reset each week. Create and customize your own success work sheet and print it out. Put this some where near your usual workspace so you see it every day. This low-tech way of keeping up with your week really works. Try it!
| Weekly Checklist | Sunday | Tuesday | Wednesday | Thursday | Friday | Saturday | Monday |
| Analyze Deals X2 | |||||||
| Contact New Realtors X2 | |||||||
| Tour a Property X1 | |||||||
| Go Networking X2 | |||||||
| Study Real Estate X2 | |||||||
| Follow Up with New Contacts | |||||||
For more information like this check out my free resources at www.realestateraw.com.
Best of luck!
Bill Ham
