The Power of ‘Next’ for the Novice Investor

Investing in real estate can be very exciting. A single deal can earn you as much as or more than most people make working an entire year at a a regular middle class job. And there are many deals available the will earn you less but still a very handsome ‘paycheck’ for the amount of work invested. And of course there are deals that are bought for cash flow rather than a ‘paycheck.’ Deals that can give you a nice monthly bump in your standard of living.

As a beginning real estate investor, you are pumped - primed for your first deal. And that can be a two edged sword. If you jump too soon, you could get stuck with a deal that sours you on the idea of real estate investing as a way to wealth. And if you are too slow, you can find that good deals were grabbed by competitors while you were thinking about them.

So what do you do? How do you know what deal is going to work out for you?

While there is no way to be 100% sure of any deal, knowledge will help you avoid many of the pitfalls of the typical novice investor. That knowledge can be acquired in many ways:

• Join your local real estate club and network with members
• Meet professionals (realtors, title companies, insurance agents, etc.) and ask them questions about the local market and trends that they are seeing. For an example, just imagine how much you could learn about potential trouble spots if you could tag along with a good home inspector for a day. And if you have to pay for the education, it will be money well spent. Or take some time to talk with a creative mortgage broker to learn what types of financing exist out there and what types of financing packages work for what types of deals.
• Invest in quality courses created by successful people in the field and study them. Learn where they can apply and how the knowledge can be used in your local market.
• Get out and look at a large number of the type of properties you want to buy. Run the numbers on each one for a variety of scenarios that could work for that type of property. Do this without the intent of finding a deal to buy. Just approach it as homework you need to do to get your degree. After you look at enough properties, you will start being able to work the numbers in your head and evaluate the potential of a deal while you are examining the property.

All this pre-investing work may sound hard or even a waste of time, but consider this…

People go to college for four years and in many cases invest 10’s of thousands of dollars for their education. At the end of all this hard work, they graduate and get an entry level job for 30-50K/yr working 40 hours a week or more. All these people understand that you must invest in your education first before getting that job in their chosen career.

And real estate is no different. There is much to learn to become a successful investor. Fortunately for you, it can be done in a much shorter time period, for a lot less money and is a lot more fun - expecially when you get that first check from a successfully concluded deal.

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