This is Part 2 of a 7 part series designed to help real estate investors grow their acquisition skills to build successful long-term businesses.
If your plan is good, it builds your confidence.
Most stooges aren’t very confident. Some of them are cocky, pretending that they know what they’re doing… while secretly, they’re terrified that someone will realize that they don’t have a clue.
When there’s no good plan, you don’t really know how to negotiate on a particular piece of property. Even if it sounds like a great deal, it might be a bad fit for your portfolio.
If you don’t know what you’re doing on a rehab, you can easily over improve (or just overspend) past the point the market will bear. If you analyze the cash flow wrong, or your anticipated rental rates don’t actually work out… little things like that start to bleed cash and lose money… that most starting investors just don’t have to spare.
So how do you avoid being a stooge?
You don’t really want to know the answer… because it’s not easy. It takes a long time. It’s not a get rich quick scheme. There’s no magic pill you can swallow.
But… it works. There’s a lot of examples of people who have used this strategy to create huge wealth for themselves – as investors, brokers, business owners, and more.
Wanna know what you have to do?
You must become an Expert Community Resource.
There are 3 words to that phrase – Expert Community Resource – and understanding each one is key to learning why this strategy is so effective.
- Expert – You have comprehensive and authoritative knowledge. This is the hardest part to gain, and it takes the longest. You must know everything about the area where you’re investing. You should know the stats on how the market has performed (broken down by categories like single family, condo, apartment buildings, land) over the past 10 years. You should know the biggest drivers of your local economy – who are the people creating jobs and making major investments? Knowing the drivers of your market, learning their motivations, and understanding how the complex pieces of the economic puzzle fit together will help you make much better investment decisions.
- Community – What’s the single biggest factor in real estate value? Location, location, location! But why? Every market has “good” parts of town and “bad” parts of town, but that’s such a shallow and limited perspective. Have you ever really thought in-depth about how buyers are valuing the communities where you invest? Most of the value people give to neighborhoods is really unconscious – they drive around, they look at things like how groomed the lawns are, who they see shopping at stores, how well buildings are maintained… and they get a feel for the neighborhood. It’s completely emotional… and yet, once you know a community really well, you can analyze which areas are going to increase in value… and which will go down. You need to be an Expert on your Community in order to be a Resource.
- Resource - This is where you start to provide a true service to your community… by giving away your expertise. Now, truthfully – this is a huge content marketing strategy. If you’re out there blogging a couple times a week about economic factors in your community and what’s driving investment (in a way that gets you found on search engines), you’ll start to gather traffic to your site… and if you create the right content, you’ll have an audience for your content, buyers for your properties, investors who give you cash, sellers who let you know when they need to unload property… and much more. Being a resource to your community is about offering up your expertise in a way that benefits other people – not just you. Being a resource is about creating value for people way before they even meet you – and because you can anticipate their needs, solve their problems, and make their lives easier… they want to do business with you again and again.
Coming up next week… Part 3 will tell you how to use the Expert Community Resource strategy to market yourself in ways that bring you incredible deals… Part 4 will tell you how to negotiate and win… and in the rest of this series we’ll drill down in to the best practices of property acquisition, how to communicate in a way that gets you a great deal, how to build trust and credibility, and much much more.
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