In a card game, the dealer gets to shuffle and deal the cards to each of the players. Once all the players have enough cards, that’s when they start to play a game of chance. Just when you thought knowing the rules of the game is enough, you’ll be surprised that it actually takes more than that. Just like in real estate investing, being a newbie with baby steps is just the initial stage. But what really happens when you get there and start?
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We have collated for you, the best pieces of advice plus best practices that will be very essential keys to possess to ace the early stages of real estate investing business. Also, we incorporated some useful tricks that can boost your strategy and bring out your A-game.
Topping our list is “The Secret”. Shockingly, there are no secrets. Real estate fortunes are built on a foundation of “existing art”, a set of standard practices that have proven valuable to real estate investors and entrepreneurs since time immemorial. Techniques such as ‘flipping,’ the lease-option, or dealing in foreclosures, touted as new or unique or even ‘trade secrets,’ are simply well-established approaches to the business that underwent the process of rebranding to hype books or seminar sales.
TRICK: FIX AND FLIP
Truly a box office in our strategy list, flipping a house means you purchase it, make updates and improvements, and then sell it—all within a fairly quick amount of time. House flipping is appealing because it’s a quicker process than renting out a property for years. In a matter of months, you could get the house back on the market and hopefully turn a nice profit. But just like other investments, there’s a risk you won’t make money on it—matter-of-factly, you could even lose money. When flipping a house, remember that the key is to buy low. In most cases, you can’t expect to make a decent profit unless you’re really getting a great deal on the front end.
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Trade Secret: Self-Evaluation.
This is a tough one because you have to be willing to take an honest look at yourself. Where are your strengths and weaknesses? Once you know where you’re weak, hire out for those areas. Delegating responsibly is key to growing a business with a good foundation. Know why you’re in or going into the real estate investing business. To be successful, your business life should be only one dimension of your personal life, an extension of your personal values.
Define your goals. More often than not, we all get into real estate investing at least in part for the freedom it can provide. But what does that look like for you? How large or small of an organization do you want to build? What is the end goal you are hoping to achieve? Real estate is often just the vehicle to get us to a bigger life goal, so make sure you are casting a vision for your company or yourself that aligns with your goals.
You will need a clear understanding of what benefits you will be offering to the table or bringing to others in the marketplace. Finally, it is important that you truly enjoy the tangible and intangible aspects of the product real property and the milieu or the social environment – the people with whom you will be dealing with. Every business, every industry, has its unique culture. It will be important to your success that you relate to that culture and identify with it in corroborative ways.
TRICK: HOME OWNERSHIP
Home ownership is the first step in real estate investing, and it’s a huge part of achieving financial peace. As long as you keep paying taxes and insurance on your property, you don’t have to worry about ever losing your house. You can stay calm regardless of the ups and downs of the real estate market, and it also frees up your budget to start saving for other types of investments.
TRADE SECRET: EDUCATION.
As you become a successful investor, you must learn to evaluate risk and reward. Take advantage of real estate classes online and leverage on free online real estate courses. Watch real estate webinars and meet real estate trainers. Many people sit on the sidelines spending way too much time educating themselves to the point where they are overloaded with information and become too afraid to take action for fear of making a mistake. While it’s always important to evaluate risk, it’s also important to take action on what you’ve learned from your mistakes. It’s also worth mentioning that taking action on too many things can be detrimental, because you may end up chasing shiny objects and never accomplishing anything of real value.
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BEST PRACTICE: MENTORSHIP.
It’s a no brainer. Having a mentor whenever you venture into any undertaking is tantamount to having a good education. Utilizing the benefit of someone else’s experience greatly reduces your learning curve. Build a network and attend real estate events. This is how you will recruit your team of the best and brightest. Cast a wider net to the sea. You will need professionals related to the business: lawyers, brokers, contractors, and tradesmen, and, importantly, other investors who share your interest in real estate. You should seek out a mentor, someone who combines experience with a genuine interest in you as a person.
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BEST PRACTICE: MARKETING.
Effective Marketing is the No. 1 expense when getting started in real estate investing. By tracking your marketing expenditures and return on investment (ROI), you can see how effective your marketing is. This also allows you to make informed decisions about where and how to spend your marketing dollars, and understand how well your message is being received. You need to secure a foolproof marketing plan. Generally a part of your business plan, a written marketing plan will spell out a coordinated ongoing and sustainable program of advertising and public relations designed to keep your message and your brand before the public eye. It is important that marketing is understood as an investment, not pursued randomly or on a case-to-case basis. Keep in mind: You haven’t made any money until you’ve sold something.
TRICK: RENTAL PROPERTIES
Owning rental properties is a great way to create additional revenue—it could easily add thousands of dollars to your yearly income. Then, if you decide to sell, you could earn a nice profit. It all depends on what type of property you buy and how you manage it. The key is to always buy in a good location that has potential for growth. While rental properties are a great investment option, being a landlord has its challenges. You’ll face seasons when someone doesn’t pay rent or you’re in between renters. You also have to consider the additional expenses of maintenance, repairs, and insurance.
BEST PRACTICE: START SMALL, and BUILD A STRONG FOUNDATION.
There are a lot of gurus out there preaching about growing and scaling a real estate investing business, but remember, bigger isn’t always better. Scaling an operation that doesn’t have the proper foundation will only lead to problems down the road. Formulating systems and processes, Getting the right people on board who are a good fit for your organization, and keeping a finger on the pulse of your business will lead to an operation that is efficient and successful. Trust in the goodwill of others. Don’t be too quick to judge. What appears to be thievery may be simple ineptitude or sometimes negligence–know the difference. Work to understand other people’s issues (whether employee or clients). By and large, we are all guided by the same aspirations and concerns.
As it may be true, most of these games are based on luck and chances, but there will definitely be advantages when you know the tricks of the trade and the best practices. Whether you’re playing board games like chess and Game of the Generals or card games like Baccarat and Poker, it all boils down to a winning strategy. In the real estate industry, a handful of trade secrets will always be a delight to possess. To enter the world of real estate investing with confidence equipped with the necessary skills, check our website Real Estate IQ.
While we may all argue if all it takes to win is luck, maybe the best any of us can do is to not quit, play the hands we have been dealt and try to win your game before anyone else calls it “checkmate”.
