There are seven simple truths in the world of the real estate investor. Just seven. Learn about them, understand them, and you’ll start out head and shoulders above every other seminar graduate on the planet. Make them a part of you. Observe them in action. Understand them, so they become the basis from which every deal you do flows.
The alternative is almost certain failure because if you fail to learn and understand these simple truths, you’re destined to take the same path I started down and, between you and me, we really don’t want to go there.
Simple Truth #1: Real estate investing is serious stuff
The business of real estate is a serious business. It doesn’t work well as someone’s “hobby” or as something to “dabble” in. It is serious stuff and must at all times be treated that way. If you don’t, it’ll come back to bite you–and that’s a promise.
The reason is simple: Big dollars. Virtually everything real estate related deals in big dollars, and you don’t want to screw something up when big dollars are on the line. So, whenever we talk in terms of real estate, pay particular attention. When you find yourself getting casual with big dollars in the balance, it’s time to snap back to attention.
Simple Truth #2: There’s no reason to rush things
What’s the rush? It’ll happen soon enough, and it’s rarely a good idea to try to force things. Begin sloooooowly and make a steady effort instead of taking on too much too soon. Think slow and steady, pay attention and, for goodness sake, let’s be careful.
The last thing you want to be doing as a new guy is banging around in your local marketplace and causing a commotion. Yes, I’ve watched the infomercials, too, and I know that guy says he bought twelve house in the first two weeks after he finished the course, but that’s not going to happen to you, and there’s no sense in trying to make that happen.
If you’re sitting here today thinking about building a real estate empire within the next year or two, I suggest you wipe that from your slate, and let’s start with a realistic goal. What’s realistic? It’ll be different for everyone, but I’d say completing one house deal within the next ninety days is a pretty decent place to start.
One? you ask. Yes, one. I know that’s not as exciting as the guys on television, but that, friend, is reality. And oh, by the way, it’s highly unlikely that you can retire in two years. I don’t care what they say, that’s just not going to happen.
Simple Truth #3: It takes money to buy real estate
Nothing down is a misnomer. Sure, it’s great to buy real estate with no cash out of pocket, but it’s silly to think a seller will accept that sort of proposal from you. It happens, but not very often, and even when it does happen, it likely isn’t such a great deal in the first place.
Buying real estate takes money, lots of money, and it has to come from somewhere.
I buy real estate all the time with no money out of my pocket. How? It’s embarrassingly simple. I have a million dollar line of credit and, whenever I want to buy something, I just write a check. And do you know what…that’s a nothing down deal. Sure, I pay cash to the seller, but it’s someone else’s money more often than not.
Let’s again add to that slate. “It takes money to buy real estate.”
Now we’re cooking. You already know and understand in ten minutes more than I knew or understood in my first five years as a real estate investor. You see, I thought you not only had to force things to make them happen. I also thought that if the seller got any money out of me, I’d screwed up.
You, on the other hand, know and understand that there’s no reason to hurry, and that nothing down deals happen all the time, just differently than what most people imagine.
Simple Truth #4: Straightforward deals close
Newbie investors all seem to want to do wild and crazy deals like the ones they talk about on television. Those infomercial shills can’t wait to describe their latest “cash back at closing” deal. Do you really think you need to do cash back at closing deals right off the bat? You don’t.
You want simple, straightforward deals that close, not fancy, crazy deals that require the planets to align before anyone gets paid.
Seminar gurus like to talk about deals that include strategies like “subordination” or “substitution of collateral” or “owner carryback notes discounted for cash at closing.” Who needs that? Not you, I can assure you. All that stuff is great, but it’s for some other time. Today we want to focus on deals that make sense. Buy low, sell higher and get paid.
Simple Truth #5: Profit matters
It makes little sense to invest the time and energy this business demands, only to do marginal deals that don’t show immediate profits. Profit matters. This is a business, not a fascinating study of the likely aftermath resulting from the controlling of oodles of real estate with little or no cash out of pocket.
The point here is NOT to own real estate. The point is to get paid. See the difference? Don’t fall into the trap of thinking that simply owning real estate will in time suffice, or that property values will increase in value so that someday your profits will materialize. There are better plans, friend.
Every deal you do today should have as it’s exit strategy: GET PAID.
Simple Truth #6: A fast nickel is better than a slow dime
The difference? Owning real estate is easy. Actually getting paid is a little trickier.
Simple Truth #7: Buying is easy, holding on is the tough part
Soon enough you’ll have mastered a technique or two and will have figured out how to buy real estate. That’s great, and that’s how it worked for me. I bought and bought and bought. But then I noticed a strange thing: I tended to forget about the properties I’d already bought and, instead of spending my time tending to my properties, I spent it looking for more.
Owning real estate is a huge responsibility that requires a considerable investment of your personal resources. Owning real estate takes money! If you are unwilling to make that investment, then you shouldn’t be in the business of owning real estate.
Knock out the nonsense
There you have it. Seven simple truths designed to knock all that other nonsense out of your head and set you off on the right foot on your path to real estate riches.
Do you understand that I just saved you five years of frustration, oppressive debt, and legal turmoil? Maybe you don’t.
Had I understood the seven simple truths when I initially started out as a real estate investor, there is zero possibility that I would have had the early misfortunes I experienced. No possibility whatsoever, and that alone would have saved me countless years, fears and tears, not to mention all the money I had in the world.
Before making a single move as a new investor, study the seven simple truths and understand them completely. Make them the foundation of what you believe being a real estate investor means.
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