Keys to Real Estate Investing

Upon deciding to leave California, my home state, behind and embark on my own life in a new land, I decided I would focus my efforts on becoming self sufficient. I had an associates degree, and figured that if I focus my free time for the two years while I finish up my bachelors on developing an entrepreneurial plan, I would be able to live my life without ever having to work for another person again. Growing up in California showed me what living outside your means is like, what focused passion can do, and how powerful real estate can be, although my family did not profit greatly from this last boom. I knew that real estate was to play a major role in my path to success, and began researching real estate investing immediately upon my move.

I am going to explain some of the major keys I feel have played an integral role in helping me get to where I am now, with two deals under my belt and my sights set on 20 deals in 2007.

1. Network with local real estate investors. This has single handedly been the most helpful piece of advice that I have followed. I am a part of two real estate investment companies, partnering with multiple other investors who share the same goals as I do. To find real estate meetings near you, check out http://www.reiclub.com/real-estate-clubs.php

2. Developing a team. Just as linking multiple batteries together generates more power, linking brains toward a common goal creates more brain power. Also, if you are the smartest person on your team, your team is in trouble, and that your team is only as strong as your weakest link. Teams should be united from their common goals, values and different knowledge backgrounds.

3. Understand your local market. From the median house price, to the differences in neighborhoods; what someone can expect to pay for a newly developed home on a monthly basis, as well as the larger real estate cycle between strong and weak times for your particular market. All great sales people must intimately know their product, we are no different.

4. Develop and follow your particular strategy: Different market timings and fluctuations can call for slightly different procedures, but you must have an overall focus or strategy. This allows you to have something to reflect upon and measure your success towards that strategy. My strategy focuses on long term wealth, cash flow and short term income. This meets both my specific needs and the current local market conditions, you need to figure out what is best for you.

5. It is a numbers game. Once you have focused in on your segment of the market you are targeting, one must stir up as much traffic as possible. The more "No's" you hear, the closer you are to a "Yes." Many suggest one can expect to contact 100 owners, to find 10 interested and generally land 1 deal. I aim to land 1 deal per 25 contacts.

Real estate investors are salespeople, and we must acknowledge that. We are selling a service which includes our intimate knowledge of the market, and our ability to create win/win situations through alternative means. The more seriously we take our positions as investors offering a valuable service, the more valuable our service becomes.

My current real estate investing set-back

Upon return from my vacation a week and a half ago, my vehicle was pronounced dead upon my arrival home. The battery had died, set off an alarm I was unaware existed, which activated an ignition kill system I could not bypass. Well, I ended up bypassing the alarm when I arc'd the battery with the fender, and shorted out the electrical system. Awesome, vehicle would start now! Welllllll, not quite. The arc welding experiment also took out my alternator which I have now replaced twice, and the vehicle is still not charging. Finally, I took the vehicle to a shop this morning. I am going to let them deal with it as my time is more valuable focusing on real estate.

I illustrate this frustrating episode of my life to illustrate one of the many problems one runs into when embarking on their own. Desire, as I briefly touched on two posts ago serves to aid one in enduring these types of problems. Any self made individual has endured countless hurdles, heart aches, and losses. It is inevitable. Successful people are the ones who never give up. Perseverance leads us to those breakthroughs that make us into stronger and more educated people.

I have been very frustrated recently due to my lack of transportation, but simply see this as the necessary step back before I move forward towards my goals. Just as an up trending stock has its ups and downs, our paths to success will similarly have theirs as well. We just have to keep ourselves focused in the right direction and ride out all of the struggles we endure... Pretty sure we can all get rich someday.

My current real estate investing strategy

Here it goes... a little bit of the bean spillage for my non-existent readership. While the interest rate has yet to make any significant moves, the housing industry as a whole is slowing. The bubble may or may not be bursting, but we have reached a plateau, or shift in the real estate cycle. Prices are being reduced, inventory is not moving as quickly, and real estate investing itself has become significantly more trendy creating more competition in the marketplace.

First, I would like to make sure everyone is excited about this! One of my investment partners said he has been waiting for 5 years for the market to make its way back to this point. This is a great time for investors as long as you have a solid investing strategy, and I feel that my current strategy is pretty damn good.

That being said, lets look at the strategy. There are two specific sides to this strategy, one to build capital and the other to build wealth. One fear of mine is to become real estate rich, but cash poor, so we developed a two channel system. Accompanying a buy and hold strategy with a wholesaling strategy has offered us the diversity to overcome this fear. The buy and hold deals will offer us long term (3-5+ years) cash flow and equity while the wholesale deals will offer short term cash gain (2-6 months).

This particular buy and hold strategy focuses on situations where the seller offers us financing and keeps the current mortgage in tact. We, in essence, assume the loan by negotiating a cash out price for the seller, and pay their mortgage through escrow monthly. Our exit strategy is to offer these properties as lease to own opportunities to families who may not have the credit necessary to obtain conventional financing. Being able to avoid the banks due on sale clause allows my company to purchase houses with minimal cash out of pocket and without the use of our own credit, allowing us to repeat the process indefinitely without problems. Our minimum requirements for these types of deals are less than $10,000 out of pocket and a minimum of 100$ cash flow per month. Wash, rinse, repeat.

Simultaneously, with the deals that don't particularly match up with our strategy, we have the option of wholesaling these properties. This essentially means that when I find a fixer-upper, or other distressed property that I am not interested in investing in myself, I am able to take this property under contract and sell or assign that contract to another investor who is interested in the deal. We have also been known to purchase these types of properties outright and reselling them to investors in certain situations. I am not a contractor, don't like to physically work on houses, so I use wholesaling to help other investors who may not like the business side of things.

As this stream of consciousness runs through my fingertips and onto my journal, I cannot help but feel I am being too vague. For this, I would like to apologize and reassure you that I will continue to explain, in greater detail, these systems as I personally work through them. Also, you must realize that investing in real estate is similar to playing a musical instrument. The more chords, riffs, or chops you know, the better a musician you will be, and similarly, the more strategies you know in investing, the more opportunity you have.

The entrepreneurial mindset

Looking back over the title, I may have bitten off a bit more than I can chew, but considering this is my journal, I am going to break it down how I have come to know it. All of my businesses will be extensions of myself in one way shape or form, therefore it is my mindset that truly decides the outcome. In what I sought out as a shortcut to retirement, it seems that I have embarked on a long journey through my socio-economic life.

As opposed to trading my time to another entity in exchange of money, I am choosing to directly apply my time to generating and investing money. In every community, large or small there is a sea of money. In metropolitan areas, there are oceans of money just waiting to be tapped into in some new creative or unique fashion. I have friends who are very talented artists, musicians, and action sport athletes. I am building a promotions company to assist them in this process while developing a brand for a clothing line. I am an avid snowboarder and have dreams of snowboarding internationally in countries such as Japan, New Zealand, South Africa, etc. I recently purchased the domain name snowboardbums.com, and leave tomorrow for a 2 day business trip in Colorado. Write off a mid-week boarding trip? Ummmmm.... shure. I will be developing a self moderating community for snowboarders on that website, and continue to take business trips to powder filled destinations. Another example is this blog, and getrichsomeday.com. These are all simple ideas that I have developed through my free time and hobbies which will be turned into large, prosperous companies over time. I will personally see to the creation and success of these ideas.

This is an example of how I have experienced the entrepreneurial mindset. It seems to revolve around offering value with your time. By offering a valuable item or service to someone, they will gladly pay. Within an entrepreneurial mindset one is constantly refining the processes in which they currently use to bring value to the market place as well as developing new ones. Fuel this mindset with a burning desire to succeed, and you are only limited by your own imagination.

Evolution of an entrepreneur

Continuing on the goal setting topic, I have set a goal for myself to earn $100,000 in 2007. I believe that this will show my grasp of the concepts and theories I have been studying, as well as be a good step towards my ultimate goal to reach a million before I'm thirty.

I have not posted in a while, and have felt guilty about that. After finishing up my first senior semester with 21 units and developing my first two real estate deals, a vacation was necessary. I spent three weeks with friends and family while expressing freely and vocally these goals I have set for myself. I have been refining my ideas and building my mastermind. My goals have been set, the year has begun therefore we shall see the evolution of an entrepreneur.

Currently, I am in possession of two properties, one fix and flip which is completed, but not yet sold. The other is a short sale we purchased just before Thanksgiving which we are scheduled to close on in a week. My priorities for the beginning of 2007 are to unload the stock on hand and free up our capital to focus on buy and hold strategies. A great investment strategy for this down-swing in the real estate market.

A 25 year old college senior with $50,000 in student loan debt, a burning desire to avoid the 9-5ers anthem, and to strike out on my own after graduation. This desire is so intense that snowboarding trips have become necessary to maintain my sanity. I have no money, it has taken me 4 schools, and 6 years to be entering my last semester for my bachelors, and I am going to make $100,000 in 2007.