You have plenty of resources at your fingertips, what should be your first step of action in the real estate game? If you don’t have your own home yet, then I strongly recommend you acquire one. My first home purchase was a small two-bedroom, one-bath that I paid $50,000 for back in 1989. I thought I paid $5,000 too much for that home but we still own it today. It’s currently worth $100,000, so that $5,000 was well spent because it got me in the game.
Naturally, the more research, education, support, advice, and understanding you can acquire before you jump in, the better off you’ll be. Some experienced investors suggest taking 12 to 18 months to read and gain the knowledge before you buy anything. You are not at college, you can't just find someone and ask "write my essay now and I'll pay you later" - you need to do all by your own. I think three to six months is more realistic as long as you read some good books, ask lots of questions, square away your finances, understand market values, and have a solid game plan. I encourage you to go slow at first and not overextend yourself by trying to buy things that are beyond your skill level and monetary means.
I strongly recommend that in addition to reading books, you attend a free homebuyer’s class, listen to tapes or CDs when you drive, and stay in tune with local and national news. Hit the web to do research and ask questions on bulletin boards, chat groups, and forums while looking at the many properties that are offered for sale in your area. This will help you begin to understand how the world of real estate works — and help you develop a keen eye for buying the right properties.
In a nutshell, when looking at a potential property to purchase, you want to check the plumbing, electrical system, foundation, and structure and roof. Keep in mind the importance of the property’s proximity to schools, shopping, transportation routes, police, fire, hospitals, employment, restaurants, office supply stores, pharmacies, and so forth. Don’t forget to investigate the economic outlook for that specific type of investment.
Set your initial goal of acquiring just one property within six months and then acquiring another within another six months. If you stick to that schedule, you can have 20 properties in 10 years! That’s the slow and sure method — or rather the “buy and hold” strategy — but it makes millionaires of ordinary people all the time. Using the above strategy, however, will force you to determine whether you can handle property management and being a landlord. I guarantee to show you the tricks of the trade in “landlording,” so don’t let this bother you. Just know that you can do it. Another surefire way to do well in real estate is to stay put! When you move, all your friends, networks, service providers, and contacts go right out the window, not to mention you can’t actively manage your assets effectively and you will lose control and pay others good money to do the things you could be doing for pennies if you were there to manage the process. So find a place on this earth and decide that you will never move farther than 30 minutes away from your properties.
Let’s say you’ve decided that landlording is not for you. In that case, you might consider retailing or fixing and selling homes that need help. In doing this, many of the same skills apply, things like doing the research, finding, evaluating, negotiating, contracting, financing, closing, repairing, marketing, showing, and then selling the property to achieve your desired profit margin. The “fix and sell” method doesn’t give you any long-term appreciation or tax advantages, but it can offer you some immediate cash returns allowing you to build up your reserves to do more or acquire better deals using all cash. No doubt you’ve heard about no-money-down deals, short sales, lease options, tax sales and certificates, attending auctions — and 100 different ways to creatively finance them all. Many of the programs will work to the degree that you apply yourself to become an expert at understanding and using these methods. Just remember not to believe all the hype. Investigate the purveyors of the “sounds to good to be true” program by going back to John Reed’s site and looking them up.
You are going to need to understand how to read and fill out sales contracts, learn the terminology used in real estate, and understand basic finance, loan guidelines, applications, and qualifying procedures. You can’t very well persuade reluctant sellers and lenders into believing you’re able to solve complex problems unless you’re prepared to do so.
