Getting Started in Real Estate Investing - Planning
| | Wednesday, January 26, 2005 @ 03:42 PM EST
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Contributed by: Steve Cook
Steve Cook Properties
Read more archived articles about Managing
I am often asked by people “How do you get started in real estate investing?” My answer to this question is becoming clearer to me the more I give an answer. However, before I tell you my answer, let me share some observations that I have made over the course of my investing career.
The Lord has truly blessed me in my real estate investing endeavors and, as a result, I have had the opportunity to meet other successful investors throughout the country. First, let me clarify what I consider successful. Success is not measured in the amount of money that one possesses, but on the lifestyle that one lives. There are those who are authentically successful
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and there are those who fake it. When I refer to successful people, I’m talking about the authentic ones - the people who have “arrived.” To be honest, I feel sorry for those that feel the need to fake success.
My successful friends all love to talk about their war stories - “What life used to be like.” After attentively listening to them, I have observed a common theme they all share. Most not even realizing it themselves. Do you think the common thread is education? While I can’t stress the importance of real estate education enough, that’s not it. (There are many educated investors, but few successful investors. Real estate education is relatively cheap and easy to find. In fact, there are some people out there who are so educated about the techniques, they skip investing and decide to write courses and teach classes about the subject. But it has been said that if you want to be successful, you need to learn from someone more successful than yourself.)
The key to being successful as a real estate investor is PLANNING. Successful investors always have a game plan. Educated investors only know how to do deals. They don’t know why they are doing deals or where they are going. They just aimlessly pursue opportunities.
I aimlessly invested for two years before I put a plan into place. I did 100 deals in my first two years and was basically starting from scratch when I stopped. After evaluating what I had done in two years, I came up with a plan on how I was going to get to where I wanted to be. My life has changed tremendously since coming up with my plan! It is not because I have done more deals, but because I have done less. Often the mindset of the investor is, “If I could only do more deals, I’d get ahead.” Do you remember when you were an employee? Did you ever think, “If only there were more hours in a day, then I could work another 10 hours and make more money.” Some of you reading this article may still be in this frame of mind.
The answer to these thoughts is planning. You have to take responsibility for your life, your finances, your spending, and your actions. There are important actions that successful investors can make plans for, such as:
1) They control their debt. You need to control your debt (i.e. pay it off). If you have it, debt will be your master. It will cause you to lose sleep at night, force you to hold on to your job, and keep you doing things that you don’t want to do. All of my successful friends stopped accumulating debt. They no longer buy cars and other consumer items, eat out or spent anything unless they have the cash to do it. Many of them even scaled back their lifestyles. I personally moved into an apartment, which is a common theme among many of my friends. They were willing to give up the “glamorous lifestyle” for a little while in order to live a lifestyle that would allow them to live out their dreams. They came up with a plan to pay off their debt and vowed not to accumulate any more.
2) They know what they want out of life. Not everyone really knows what he or she wants out of life. In fact, most people do not. When I talk to others about their goals, most will say something along the lines of, “I want to make $250,000 per year” or “I want to have $5 million in the bank.” When I ask them why, they can’t answer the question. They normally respond, “Because I want it.” Then that dream dies the moment they want something else. Often people think that making or having a lot of money will cure everything and give them the life that they want. This is a lie that society wants us to believe. If you don’t know what you are doing, money will make you miserable. However, money and a plan can set you free.
3) They are able to focus. In order to be successful at anything, you need to become good at it. The mindset of a real estate investor is to be successful quickly. No one sits down and makes up a plan to be financially free in 40 years! It’s more like two to three years, though some people will actually give five to ten years a shot, but that is rare. The good news is that two to three years can change your life if you have a plan and direction. Without these tools, these years could ruin your life. Investors who focus normally find a niche in real estate investing and go after it. They are not pursuing all different types of investing. (People who sell “the full toolbox” of courses may be angry at me for saying this because they will sell less if you believe that you only need one method of investing. But I just tell it how I see it.)
Some of these concepts and steps seem so simple and, in actuality, they really are. However, most people who I talk to believe they are already doing this. But the likelihood is that their “plan” is really not a plan. They don’t know where they are going, how they are going to get there, what method they are going to use to get there, how long it is going to take to get there, or what to do along the way if they get lost. Usually they just run in circles until they get tired and then bow out along with many of the others who have bowed out of the real estate investing game over the years. Very few make it, because very few plan.
Successful people don’t achieve their dreams by accident. You shouldn’t either.
Blessed Investing!
Note: Stephen Cook is an author and active investor in Baltimore, MD. He has bought and sold over 180 properties. Steve pursues many avenues of investing and specializes in the wholesaling and rehabbing of properties for profit. For more information on rehabbing properties for profit, including how to find and qualify a good contractor, please see his new course:
Rehabbing Properties for Big Cash: A Real Life Guide to Retailing Homes
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