I get asked this quite often and it’s a great place to start as my first blog entry. My disclaimer for you as the reader is to keep in mind that I’m just one individual, with one set of experiences. I believe in the idea that there are “different strokes for different folks”, so this isn’t intended to be the one best answer on how to get started, but rather it’s the best advice I can share with you based on my own set of experiences. For a very brief bio see my About page. If I were to sit down with a family member, the following is what I would tell them. Feel free to pick and choose those ideas that work for you and leave the rest.
I’ve distilled my experiences down to 5 Steps that I believe will best set you up for success on your first real estate investment.
Step 1: Define Your Goals
Now you may be thinking, how the heck do I set a goal when I don’t even know what’s involved? True, it’s a bit of a chicken and egg dilemma, but there’s nothing that says you can’t periodically change or modify your goal as your real estate knowledge and experience grows.
You’ll want to list the reasons why you are investing in the first place, so that as other things come up (as they always do), you can prioritize your time accordingly. The stronger your reasons, the more likely you’ll follow through on your goal. Said another way, the reason people don’t accomplish goals they set for themselves is simply because their reasons were not strong enough. Set aside the time to give this some real thought and attention, this will pay huge dividends in the future in the form of real world results.
I can tell you, staying focused and managing my time are two things I’m still working on improving. By having a clear goal, with the reasons why it’s important for you written down (hint: write them down!), you’ll be more motivated to take action on a continuous basis. And with action, comes results.
Your goals should be S.M.A.R.T, that is Specific, Measurable, Actionable, Realistic, and Time-based. For example a bad goal would be “to invest in real estate”. There’s no deadline and it’s not specific nor measurable. A better goal might be “Invest in 2 brand new single family homes by December 31st, 2007 that generate at least $1000/month in rent that have a conservative appreciation level of at least 5% annually.”
Let me recommend for all you perfectionists out there (which I still occassionally fall under) not to spend too much time hung up on this step. It is important to take the time to think about what’s important in your life and what you want to achieve, but don’t let the absence of a perfect set of goals for you get in your way of proceeding to Step 2.
Step 2: Create a Plan
As Brian Tracy says, “Failing to plan, is planning to fail.” Now that you have a target you are trying to achieve, you need to come up with a list of tasks and set aside time on a regular basis for you to work towards your goal. I would recommend setting aside some time each week, preferably the same time of day or same time of week, so that it becomes a habit. Build good, supporting habits. And do what’s best for you or your schedule. Your goal(s) fit into your strategy, your plan consists of the tactical steps you’re going to take to achieve your goal. The rest of this article will help you add details to your Getting Started Plan.
Step 3: Get Educated
T. Harv Eker, one of my favorite authors & trainers says, “Where attention goes, energy flows, results show.” Focus your attention on learning about real estate investing. Take real estate courses at your local community college, read books on real estate investing, go to real estate clubs and talk with other investors and find out what classes and books they’ve found particularly useful.
I keep my schedule packed with real estate classes and networking events. The way I look at is, if you get just 1 good idea you can implement or meet just 1 good contact, that class or event was a success. Often times you will be able to do much better than just the 1 idea or contact.
If time is a challenge for you, do what you can in your allotted amount of time. Taking small steps is good, just make sure you keep taking those small steps. Once you get started, you may find that learning about real estate and talking with other like-minded people is actually a lot of fun and the time flies by quicker than you realize.
Step 4: Build a Team
There are really two types of teams that I believe are important for your success. The first is your local “Support Team”, i.e. people whom will give you words of encouragement and an unbiased opinion when you need it. Try to find people whom have similar goals as you, with ideally a bit more experience than you. Your support team could be just one other person, or perhaps 4 or 5 people that you’ve met at a local investment club. I’d suggest having a regular call with your Support Team. As an agenda, I recommend each person think about their goals in advance, where on the call each person shares their goal(s), talks about the progress they have made since the last call, and then asks for the type of feedback they are looking for from the other team members. It is a simple but powerful tool to keeping everyone motivated and focused on achieving their goals. It may only be 1 hr every other week, but you’ll find it to be a very productive, empowering hour.
The second team is your “Acquisition Team”. After you have picked an area where you are interested in investing, you’ll need good, trustworthy people around you to draw from their experience and expertise. People you will need on your team are property managers, real estate agents/brokers, loan brokers, insurance brokers, local property inspectors and ideally other investors whom have already invested in that market. Depending on the size and complexity of your transaction you may also want to consult with a CPA, lawyer, and appraiser. As Robert Kiyosaki likes to point out, “Business is a team sport.” Accept the fact that you could learn everything yourself, but know that with a strong team in place up-front, you will be able to achieve a lot more, faster, and with less effort.
Step 5: Take Action
Do you know what is the one common trait all successful people have in common? That’s right, they are all action-oriented people. Even a lotto winner, has to at least get out of bed, log on to the computer, go to a website, select numbers and purchase a lotto ticket. Of course, real estate investors need to take a lot more action, but the expected payout is also much higher.
Now that you have a) your goal(s) defined, b) specific, actionable tasks to take in the time you have alloted, c) steps to take to get yourself educated, and d) your teams in place, keep the momentum going by continuing to take action. Action is the key.
Revisit these 5 steps from time to time, and make modifications as you feel necessary. Your first time through, do not feel obligated to hit all 5 of these steps 100%, if you can great, but I would suggest using these steps more as a checklist or framework, to ensure you are thinking about these things.
By doing these 5 Steps well, I guarantee you will be better prepared and feel a lot more confident about making that first investment than 90% of first time investors out there. I can say this with sincerity, because looking back on my own experience, I wish I had done these things myself. With the benefit of hindsight I know the quality of my investments would be higher if I took this advice I’m sharing with you now.
These steps may seem overly simple, but the goal of this article after all is How to Get Started. If you follow these simple steps, you will be off to a fantastic start!
“Whatever you do or dream you can, begin it. Boldness has genius, power and magic in it.”
-Johann Wolfgang von Goethe