“Don’t Fall for Schemers’ Lines” - Advice to a real estate investor
Us as real estate investors really need to get back to the basics and see real estate investing for what it is… and more importantly… WHAT IT IS NOT.
I was recently reading the RealEstateJournal and found a great article written by David Crook. This article isn’t the same ol’ “doom and gloom”… the real estate world is falling… type article. It is more of an article to help new real estate investors get grounded and to see what real estate investing is… and what it isn’t.
After reading the article I began to think… (I know, sometimes I get myself in trouble when I think :).
Over the past couple years the real estate investing world has transformed (or so the guru’s want you to think) into a “get rich” quick haven where anyone can jump in and make a quick million. These same guru’s, some who actively invest in real estate and some who do not, are profiting big time on the “education” of hungry new investors.
First off, let me put this out there. I am in full support of the real estate investing education industry (that’s what I’m doing here) and do not want to knock it. The industry as a whole is a great business that benefits the new green investors immensely. However, there are some less than honest and less than experienced “gurus” out there who are repackaging the exact same material as the next guru and reselling it without first being successful in real estate investing themselves. If they can sell it and make a profit… go for it. The pretenders will weed themselves out and will not be around this time next year.
Over the past couple years all of this real estate investing education hysteria has actually made finding good, simple, and effective investing information very difficult… rather than made it better. Every guru comes out with a new technique… “step-by-step” plan… or new system. All of these new ideas have just confused new investors and actually hurt their chances of success.
When I was reading the article it struck me that what people need to revert back to is the basics. Get away from the newest coolest loophole and the complicated “step-by-step” “how to be rich” crap that does nothing but to confuse you and leave you knowing just enough to know that you don’t know anything about real estate investing…
… and go back to the basics. In everything there is a basic form that is much easier to master and understand than the complicated and commercialized “in-depth” form. Sure, the complicated “in-depth” form may teach you more cool techniques and give you endless formulas to analyze absolutely everything… but I have found that most of this stuff just confuses the hell out of people and leads them on an endless journey to know every detail possible about real estate investing… ending in PARALYSIS ANALYSIS.
So… us as investors… and especially the new real estate investors… need to get back to the basics and understand real estate investing for what it is. Here is the layout that David Crook uses to help investors get on the right track.
What is the basic form of real estate investing? Here it is in my opinion… (it’s no secret!)
- Sell it higher than you buy it for. Simple huh? The secret to making a profit in real estate investing is to sell for higher than you paid for it. How do you do this? Simply know what you can sell the property for before you put in an offer… decide how much profit you want… decide how much in repairs and expenses… formulate an offer that enables you to make your desired profit after repairs and expenses… and buy it. So… basically the main part that you need to know before anything is your market and property values.
Generate qualified leads… generate profits. The second basic aspect of real estate investing is finding qualified leads, funneling a lot of them through, and weeding out the deals. Many people call this marketing… which it is. But, once again, break it down to the basics. What is marketing? Simply finding qualified leads for your business… nothing more.
To find qualified leads for your business go where your target market is. Is your target investment rental properties? Who might have rental properties that you can buy? How about current landlords? Even better current landlords who have recently evicted someone. How about people in foreclosure? Where do you find them? Banks. Banks know who is going through foreclosure and who isn’t. Buy a list. The county courthouse. They have every single recorded foreclosure notice. Where do these people frequent? Many people down in the dumps will go to church for guidance. Post a flyer in church aiming to help people in foreclosure. How about the unemployment office? … etc. You get the idea.
Break it down to the basics for finding leads. Determine what types of real estate you want to buy… who might want to sell this type of real estate… where you can find these people… and how you can give them what they need and still enable you to make a profit.
Basics of business. This is one of the biggest areas where people over complicate things. What is the purpose of a business? To offer a good or service to people who need it in exchange for something of value. How do you run a successful business? To bring in more than what goes out… to keep track of the income and outgo in detail… and to pinpoint ways that you can optimize the income and minimize the outgo.
Business is very simply when at its basic form. You head up your business and do what you do best. Then, find people and/or other companies who can do the rest for you. I know, you are probably saying that you can’t afford to hire people or pay for professionals. But… in reality… you can’t afford not to. To make business simple, you need to oversee the operations and send others out to do the work that doesn’t directly make the company money.
Think about it in its simplest form by looking at bees. The queen bee (you) runs the whole operation and does what she does best… make more bees. She knows that in order for her to do what she does best (make more bees) she must spend as much time as possible doing only that. So… she sends out her worker bees to gather her food, build the bee hive, protect the colony, etc. That is a company in its simplest and most efficient form. Imagine if the queen bee had to get her own food and build her own hive… NOTHING WOULD GET DONE! Break it down to the basics and become the queen bee rather than the worker bee.
Overall basics. To be successful in real estate investing all you need to know is that you need to sell higher than you buy for… you need to find qualified leads in masses… you need to make offers on every qualified lead that comes through… you need to get the money to do the deal by going where the money is (banks or private lenders who have money but don’t want to actively invest in real estate themselves).
So… break it down to the basics and forget about all of the confusing minute details. Once you learn to break everything down to its basic form you will be much more efficient and much more profitable. Quit fretting over what you don’t know and start working with what you do know.
I know absolutely none of what I just wrote is new… is a secret… or is even unique. But… I just thought that it is time for people to get back down to the basics. When you concentrate on all of the detail, you actually become blinded by the detail and realize just how much you don’t know. When you concentrate on the basics your mind opens up and becomes more creative and efficient.
Get after it and put the age old basics to work!
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Hey, my name is Trevor and I'm the founder of The REI Brain and a real estate investor since the age of 21. Right now, my focus in real estate investing is multi-family income properties and I have plans on moving more into the commercial real estate investment world in 2008 and beyond. 
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