How to Make Creative Investing Work For You

How to Make Creative Investing Work For You

Here’s how you can make certain that creative real estate will work for you. You’re taking a step that will move you from the sidelines out onto the playing field. You’re making the change because you’re tired of working a traditional job. Besides, you want some more excitement in your life. As a comparison let’s say you’ve decided to take a shot at becoming a professional baseball player because you love baseball and the money players are making today seems… well, good enough to pay your bills with.

To prepare you go down to the batting cages and hit balls for two weekends. To make sure you’re in shape you run a few miles each day. After three weeks of this preparation you’re ready for the majors… right? Of course you aren’t. Becoming a success in any endeavor requires a long term commitment, a solid game plan, and a willingness to strike out a few times.

As I travel across the country, I’m suprised at the number of people who are looking to get into the majors in real estate investing by trying out a new method for a few weeks to see if it will work right away for them. The bad news is that I haven’t yet found a way to “get rich overnight” in real estate.

The good news is that you can become a successful real estate investor much easier and quicker than you could make the majors in baseball. The only talents you’ll need are desire and a determination to succeed. There are three steps that if applied will guarantee your success.

Step one – Gaining Knowledge.

You’re off to a good start by reading what you have in your hands right now, one of the best sources of informative articles anywhere. Read and listen to everything else you can. There are free offers for audio tapes and special reports everywhere.

Call or send away for these free offers. There are numerous ways to make money in real estate and you’ll get enough information from these free offers to know which area of real estate investing seems like it would be a good fit for you. After you’ve chosen the method you are going to pursue, get your hands on every book, audio tape or course that you can so that you can establish a good foundation of knowledge for your investing career.

Next, attend a few seminars that go into greater detail so that you can fully understand how to make a living as an investor. Being able to ask questions as you’re learning will allow you to learn faster and easier.

Step two is – Doing.

Go out and start talking to sellers to find out the difference between a motivated seller and a “I’ll wait until I get everything I’m asking for” seller. Make offers on property using an agreement that has a clause that will allow you out of the deal if you need to get out. (This is called a weasel clause or “subject to” clause)

It is only by getting out into the marketplace and making real offers that you will move into a position where you are gaining the experience and confidence that will sustain you for the rest of your investing life.

Step three – Get Feedback.

If you don’t know what you did right and what could be done better, then you’re not increasing your investing skills. The best critique of your deals is going to come from either a mentor or another experienced investor.

Find a way to hang out with other investors. Either go to your local real estate investing group, or call up some of the other investors in your area. To find other investors just look at the “real estate wanted” section of your paper. The ads that say “I Buy Houses” will lead you to other investors.

If you’re worried that the other investors won’t want to help you, I think you’ll be suprised. There is so much opportunity out there that it is rare for two investors to be going after the same deal at the same time. To eliminate this worry completely, simply choose another nearby city, perhaps a city that’s an hour or two away. Call some investors there and explain that you’re just getting started in your nearby (non-competing) city. Offer to take them to lunch anywhere they choose in exchange for feedback on your deals and advice on getting started as a real estate investor.

One of my best students has had people spend up to four hours with him just for the cost of lunch and a quick drive to meet them.

This is an excellent technique and works great as long as you’re up-front with the investor about explaining exactly why you want to meet with them.

By taking these three steps, you’ll be on your way to certain success if and only if you are willing to apply one final secret formula. This secret is behind the success of every single person who has ever achieved anything worth writing home about. The secret formula is this:

Be willing to fail. Expect to fail. Learn from your failures.

If the first deal you do doesn’t work out avoid the temptation to exclaim “This just won’t work for me.” Or “This method must not work in my city.” Is it possible that because you’re just getting started perhaps you just didn’t have the experience yet to keep your deal in place? The only way to get experience is by following the three steps I’ve explained here.

Each time you “fail” you’ll actually “win” as long as you ask these two questions. What did you like best about this? What can you do better next time? By consistently using these three steps multiplied by the power of this formula you’ll achieve so much success as a real estate investor that people will want to know how you did it.

How to Get Your First Deal Done

How to Get Your First Deal Done
 
One of the messages I am constantly sharing with my students is the need to get out there and do whatever it takes to get that first property under their belts. It is scary and intimidating, but it is also a magical threshold.

Once you get that first deal done you will find a liberating courage that will make you many times more effective in every aspect of your investing. It is all based on the power of belief. After your first deal you will have a growing sense of belief in your ability to put these deals together. Because of this belief you will be more persuasive with both motivated sellers and hungry buyers.

I’d like to share with you the story of one of our coaches, Gary. It comes from his first purchase option deal. As my students who work with Gary know, he’s quite a sharp investor. But believe it or not he made lots of mistakes on his first deals too! And because he survived them and went on to be quite successful you know that you can do the exact same thing.

Here, in Gary’s own words, is the story of his first deal:

A while back Continental Airlines was moving its base out of the city I was living in. This meant a lot of employees of the airline had to relocate.

I had a friend who worked for Continental at the time. He helped me get flyers into all the flight attendant’s mail boxes. Basically all the flyer said was that if they needed to sell their home I could help them do it quickly and easily.

I got this one call from one of the flight attendants who was being transferred to another base city. She needed to sell her property. She had tried to get a property management company to rent out the place but they were going to charge her 10 percent of the rents collected PLUS maintenance on top of that. Besides, do you think some big property anagement company with hundreds of units to rent out really cares about a single house?

By putting myself in the sellers position I realized that she just wanted out. She didn’t care about making a profit, only that she came out even. We went back and forth for a little while and finally agreed on a price of $41,000 –$4,000 BELOW the value of the home.

I also gave her $800 option money to lock in the right to buy the condo at anytime over the next 6 years (this is called a “lease purchase”.) Now I know better than paying any up-front option money if I can work it out that way. But I learned so much from this deal that it was OK that I made that mistake.

I was renting the place from the seller for $550 a month and I got a $50 a month credit. (That little $50 a month gave me an extra $1,800 at closing which was a nice little treat.)

I found a tenant who also wanted to buy the property on a 3 year purchase option contract. He paid me $1,500 up-front option money (meaning after I subtracted the $800 I paid up-front gave me an immediate $700 profit.) He also agreed to buy the condo for $49,000. He paid $650 a month in rent. That gave me a $100 a month positive cashflow on the property.

He moved out after a year (he decided they didn’t want the place) so I found another tenant-buyer and collected another $1,500 option payment. Again this person left after a year. So I found my third tenant-buyer and collected my third $1,500 option payment, and this buyer ended up buying the place. (By this time I was charging $725 a month in rent which gave me a positive cash-flow of $175 a month.)

The bottom line was I made $12,000 from a tiny deal on a $45,000 property over three years. The seller loved me. The buyer loved me (she actually cried at closing! She thought she would never be able to own her own home.) And I learned so many valuable lessons just by getting out there and doing my first deal.

It only took me a few hours to sign the deal up, and several more to find a tenant-buyer each year. I had to spend less then five minutes time keeping the deal going each year after I had my tenant-buyers. I collected and deposited one check each month from the tenant-buyer, and wrote out a separate check to the seller each month. It was just so easy. That’s why I love purchase option real estate so much.

So get out there and do whatever it takes to get that first deal done. It will give you the confidence and the skills to go on and make a ton more money.

How to Get Started Buying Homes With No Down Payment

How to Get Started Buying Homes With No Down Payment

It’s late at night and the television is showering you with visions of riches and freedom. Story after story is played out on the screen of average people, some of them just like you, who went on to make a fortune investing in real estate.

And after the show is over you’re left wondering what you need to do to get started on the road to wealth.

This article is my answer to your search. It is the three-step action plan I recommend to help you get successfully started investing in real estate.

Step One: Making a decision.

You have a decision to make. Are you prepared to persist in your investing until you win? No matter how “easy” late night television makes it seem, getting started investing in real estate takes work. And don’t listen to anyone who tells you otherwise. But without question, real estate is still the most accessible pathway to financial success for the average person.

Are you prepared to stick it out for the three to six months it’s going to take you to serve your investing apprenticeship? Because if you invest 5-15 hours a week over this period of time, you can change your financial future. They key is to never quit. Commit to six months of effort, with a good attitude and a mind open to learning, and you’re well on your way to success.

Step Two: Invest in your real estate education.

Earlier this week I was talking with a MBA graduate from a prestigious business school. He told me that he spent two years of his life and over $75,000 for tuition to earn his advanced degree. Why did he do it? To secure a solid, high paying job.

The good news for you the beginning investor is that it isn’t going to cost you $75,000 (or even $10,000 for that matter.) But you are going to have to budget some of your time and money into your real estate education. There is no faster way to learn what you need to learn so that you can earn what you need to earn than through the wealth of information you have available for you on real estate investing.

There are three specific areas you need to learn about to help you on your way. First you have to gain a good, general investment understanding. This means learning how properties are valued, how title is transferred, what title insurance is (and is not), as well as other general real estate terms and concepts. You’ve taken a good first step by consistently reading this magazine. Now expand your learning by reading every book on investing you can get your hands on.

Next you need to learn about creative financing techniques because they let you buy and control property with a minimum of risk and with a large profit potential. You need to especially learn all you can about lease-options. In my opinion, lease-options are the best way for you to begin investing in real estate. They offer you the easiest way to do nothing down deals no matter what your credit is like.

Third, you need to learn how to find motivated sellers. A motivated seller is someone who because of some personal situation or circumstance is willing to sell you his property at a substantial discount or on very flexible terms. When you’re investing, it all begins with finding a motivated seller. It’s almost never about the property itself. Rather, you make money (a ton of money) by dealing with a highly motivated seller. Every technique you learn about finding motivated sellers will repay you a hundred times over.

To be successful you need to invest the time and money to learn. As the saying goes, you can either pay now or pay later… but sooner or later you’re going to pay. Why not pay pennies on the dollar for someone else’s life experiences than have to learn the painful lessons yourself?

Step Three: Get started immediately!

The biggest challenge most new investors make is waiting until they know it all. They feel if they just spent more time learning before they get started, then they’ll get to their financial goals that much faster.

But unless you are willing to start learning by doing you’ll never enjoy the security and freedom that could have been yours. By all means study and learn, but make sure you also are out there learning by doing. You will be amazed at how much faster you will integrate and internalize the investing information you are studying when you conscientiously work to apply it.

Each week spend a half hour getting clear on what you have learned. Also, take a few minutes and ask yourself what you still need to learn and focus on to make maximum progress next week. Find another investor you can network with so that the two of you can talk through your common experiences and support each other.

Ultimately you can strike it rich with real estate. It’s all up to you. You’re at the front end of a journey. Just follow these steps and you will be well along the road to wealth.

What I Wished I Knew When I Got Started Investing

What I Wished I Knew When I Got Started Investing

One of the questions I repeatedly get asked by other investors is if I had the chance to start over again, knowing what I know now, what would I do differently the second time through?

What a great question. It cuts to the core of what are the essential lessons of a lifetime of investing. Here is my six part answer to this question.

First: Realize it is never about the property, it’s always about the motivation of the seller.

One of the biggest misconceptions about investing is that the most critical thing is the property itself-it’s condition and location. The truth is that both of this considerations are secondary to the motivation of the seller. If the seller is NOT motivated then no matter what the condition or the location of the property you still are not going to get a great deal. But if you have a motivated seller, then you have a great chance of turning a handsome profit no matter what the condition or location.

When this really sinks in it revolutionizes how you prioritize your search for finding great deals. No longer do you waste time doing due diligence and inspecting the house UNTIL you have made sure you’ve found a motivated seller. Finding this motivated seller becomes the most important activity you can ever engage in. This is what you must focus your time, efforts, and creativity on searching for.

Second: Understand that if you never ask you’ll never get.

When I first got started investing in real estate I was scared to death to actually make an offer to a seller. The root cause of this was my fear of them rejecting me and my offer (in my mind the two were the one and the same thing.) Over time I came to realize that this one mistake kept me from making offers that in retrospect I feel the seller would have said yes to. This ended up costing me hundreds of thousands of dollars in lost profits.

Today I see many other investors falling for this same trap. Sometimes it comes guised in the clothing of disbelief a seller would ever accept a nothing down offer. Sometimes it comes in the form of walking away from a seller with a promise to “get back with them” with an offer (rather than making the offer on the spot.) The clothing may be different but the cost is still the same.

The most important lesson I learned from these experiences is that NOT asking is an automatic no, and asking is never so painful as I might have imagined.

Third: Always maintain walk away power.

Looking back at all the properties I have bought, flipped, and lease optioned the one thing that is the common denominator for all the borderline deals is that at some point in the negotiation I had crossed over to the point where I felt I “had to” do the deal.

If ever you hear yourself saying these words, even if it is merely to yourself, push back you chair, get up from the negotiating table, and walk away. I’m serious about this. If the deal is that good, a small break while you take a moment by yourself won’t stop the deal. And by taking this time you might just keep your ego and your emotions from pushing you to make a deal that means lots of work and risk for little real profit.

Remember, good deals are like buses-even if you miss one, there will always be another one along before too long.

Fourth: Beware the “rehab” trap.

Have you ever caught the bug? “Fabulous wealth can be yours if you buy junkers and turn them into palaces” There are millions to be made in rehab projects, but before you go off and dive into this type of investing you need to do some serious soul searching. This type of investing isn’t right for everyone.

As for me, I’ve discovered that rehabs aren’t for me. In my opinion they all to often take too much money up front, too much energy to complete, and too much time to turn them when you sell. The first causes you to have too much risk. The second cuts in on your efforts to find more deals. And the third eats into your margins and cash flow and turns many an investor into a motivated seller!

Knowing this and how I feel about rehab projects I’ve come up with rule that I follow: if it needs more than minor cosmetic work then flip the deal to another party.

Fifth: Collecting money from a buyer can cause you to confront deeply hidden pitfalls from your past with respect to self worth and what it means to be wealthy.

This one might be hard to accept but in my opinion, one of the biggest road blocks to making a fortune in real estate are old limiting beliefs about self worth and money. I’ve went through this myself. When I got started investing I would have trouble selling the properties I picked up. Why? Because on one level or another I didn’t feel good enough about myself to think it was OK for me to be making that much money with so little effort. It was alien to me. Also, my beliefs about money and what it meant to be “rich” made making money a dirty thing for me. It took several years to clear out this garbage and be comfortable with the wealth that was flowing into my life.

This lesson deserves your attention and honest self evaluation.

Sixth: You’ll never know it all, but you can learn enough.

I was probably just like you when you got your start investing. I kept learning more and more but never felt like I knew enough. But then one day I realized when a person really knew enough… A person knows enough when they step out and take action knowing that they’ll never know it all. This leap of faith is the final ingredient of success.