Prestige Professional Management
Your Consumer Resource Specialist
Fact: 90% of the world's millionaires made their wealth with Real Estate.
Real estate has been a very lucrative investment for many people. In fact, 90% of our country's wealthiest people has made their wealth from real estate. In addition, it is never too early or too late to begin to put together a plan to build wealth using real estate.
There are challenges, however, in spite of what the "online guru's" are saying about real estate being so easy to purchase even without using any of your own money. The primary challenge is that it takes planning to get started.
Real estate has an excellant income and wealth producing potential, as the appreciation or profit from the property compounds tax deferred during the years that you own it. This means that you will not pay taxes on this profit until you sell it, and even then you can roll over the gain or profit into another investment property and avoid paying the taxes. You can also claim an expense called depreciation, which enables you to reduce your current income tax bill and simultaneously increase your cash flow from your properties.
Another great feature of real estate is something called leverage. With leverage, you can borrow or finance 70 - 90% of the value of the property to be used to start a business, pay off debts, for purchasing more property or for anything that your heart may desire.
Real estate is a great investment because it can produce long term returns in the form of income and profits. Most people that make money investing in real estate do so because they invest in and hold onto the property for many years. If you are unprepared to hold onto the property for the long term, your investment may cost you more than you anticipated when taking the high transaction costs and tax implications of selling into consideration.
For example, if you buy a property and then decide to sell it a year or two later, you may discover that even though it has appreciated in value, the cost of selling, which includes real estate commissions, loan fees, title insurance, repairs and upgrades may amount to about 10 -15% of the purchase price of the property. The tax implications associated with selling property is another item to take into consideration. Therefore you can greatly reduce and minimize your risk investing in real estate through buying and holding property for at least 7 - 10 years.
How to Get Started As a Real Estate Investor
It does not matter if you are new to real estate investing, or you are a pro that has just reached a "plateau" and need some fresh ideas, these reminders will help "jump-start" your real estate investing career and get you back on track. First things first. There a some things that you must do in order to get yourself going.
Ask yourself, "Am I ready to think outside of the box'?
If so, let's get started!
Step One: Surround yourself with people that are of the same mind set as yourself.
"Creative" real estate is non-traditional, which means that most people don't do it in this way. Therefore, most people you speak with will tell you that it can't work. That is because they have not learned the art of negotiation or the many creative techniques that requires on to think "outside of the box".
Attorneys and other professionals will denounce it because it sounds unusual. Keep in mind that these people are either threatened by their own lack of success or are looking to protect their own butts.
The first thing you should do is join a local real estate investment club. Here is a state-by-state listing: Real Estate Investment Clubs. These associations will help you keep your thoughts in the right place and prove to your subconscious that it really does work if you put forth the effort.
If you cannot find a group, form a "mastermind" group that meets for breakfast once a week. If you don't know what a mastermind group is, you should read Think and Grow Rich by Napoleon Hill. If you have read it already--read it again, again and again.
Step Two: Have a Team
You need to have the following players on your team before proceeding into a deal:
An Attorney
Select one who does real estate deals for himself as well as others.
A Title or Escrow Company
Stay away from the big name companies, and find one that caters to investors. Make sure they understand double closings, land contracts etc.
A Insurance Agent
Find one who understands land contracts, landlords, and real estate law
A Certified Public Accountant
Find one who is aggressive and owns real estate themselves
A Contractor or contractors
One who will give you free estimates and has a proven reputation for excellance
A Mortgage Broker
One who is savvy, creative, is experienced with investors, and not afraid to look and think outside of the box
A Partner
You may need one for capital, credit, experience
A Mentor
You will need someone call on to sooth your nerves and help you see the light at the end of the tunnel
Step Three: Don't talk to Unmotivated Sellers!
This is the biggest mistake most beginning investors make. They are so excited and ill prepared that the end up wasting time talking to sellers who are still straddling the fence. They even waste their valuable time by driving by the property looking for comparables without even conversating with the sellers. Never visit a house without interviewing the seller over the phone.
Your time is the most valuable commodity, so please don't waste it!
Step Four: Be Persistent Be Patient.
Anyone who has ever been in sales will tell you that few deals are ever made on the first try. In fact, most deals are made after contacting a prospect regularly.
Be sure to have a follow up system like a salesperson. You can use a program that allow you to schedule follow ups and keep a running history of calls and conversations. Something as simple as Microsoft Works which includes a daily calendar and a database will do well.
Step Five: Continuously Educate Yourself
"If you think education is expensive, try ignorance." You will surely lose more money with a mistake than if you can learn how to avoid one. Even if you have been at this business for years, you need to keep up with current trends and laws as they are ALWAYS changing.
Step Six: Have a Plan
Don't just wait around hoping for great deals to come your way. You must have a plan. If you fail to plan, then plan to fail. Make a predetermined number of phone calls every week. Spend a predetermined amount every month on advertising. Make a predetermined number of offers every week. Pass out a predetermined number of business cards every day.
Step Seven: Treat this as a Business
People are lured to investing in real estate because they think that it is a quick dollar and a over night success story. An "overnight sensation" usually takes about five years and takes hard work, persistence and professionalism. This is a business like any other. It takes months, even years to cultivate customers and develop it so that it has a life of its own. If you treat it like any other business, give it time, effort, attention, and professionalism, and it will flourish and help you create the lifestyle that you seek.
