5 Key Steps To A Becoming a Successful Real Estate Investor

5 Key Steps To A Becoming a Successful Real Estate Investor

5 Key Steps To Becoming A Successful Real Estate Investor

Success in Real Estate is not based on luck, family connections, or natural talent. There are no genetic or biological factors that will guarantee success in this business. BUT! You CAN be successful. Here’s the good news:

8194946521_bd69d6f517_b

What Are You Already Good At And How Did You Get That Way?

We all grow and profit as investors in much the same way we would become successful in any other industry. When leading skill development workshops on Negotiating Skills, Deal Structuring, Creative Financing or any of our Investor Quick Start programs I often ask the attendees to think about something they have been good at or had success with in the past, be it a talent like playing the guitar, a sport or a hobby.

What made you good? What separated you from others?

The responses are always similar. They understand the specifics of what they were good at, they were focused, had a good plan, executed it, surrounded themselves with like-minded individuals who shared a similar passion, and were coached by a successful, experienced person.

As a youngster, I learned to play the trumpet. I took lessons in school with all the other kids. What helped me to excel and eventually play professionally were the hour and a half weekly private lessons with a professional musician. He helped me see the music differently; develop practice drills and a plan for effective practice.

Enjoying a successful business in Real Estate is no different. Virtually every successful, wealthy agent, broker and investor I know became wealthy because they took the time to educate themselves on different options and opportunities, have laser sharp focus, execute a well thought out marketing plan, surround themselves with a strong, experienced team, and have a coach or mentor.

Feel free to use this image, just link to www.SeniorLiving.Org This microstock required lots of post processing to get the blue tint. I also needed a bounce card to get more detail in the glasses.

1. Understanding Requires Core Knowledge

What is going on with the market now? What will the market be like a year from now?

In order to have a long, profitable career, you will need to be familiar with multiple ways to purchase properties and multiple ways to sell.

The strategy you utilize in a sellers’ market will most likely be different than the strategy you utilize in a buyer’s market. If you aren’t flexible and prepared to adapt to the changing market conditions, then you will be left behind. When the market changed from red-hot to ice-cold a few years ago, many agents and investors stubbornly kept the same marketing plan. They simply failed to respond to new conditions. After all, it had worked well in the past, so why change? Many of those folks are no longer in the business.

Rehabbers who failed to adapt have since lost their jobs had to find new careers. Recognizing when to focus on short sales, lease options, subject to, selling with owner financing, or buy and hold strategies is important.  Mastering the different strategies required to adapt to a changing market will allow you to maximize your profits.

2. Possessing Laser Sharp Focus Is The Secret

archery-660632_960_720

Mastery of anything has a number of requirements but none is more important than one’s ability to focus. When are you at your professional best? It’s when you know exactly what you want and exactly what you are required to do in order to achieve your goal.

When do most mistakes occur? When uncertainty exists. Uncertainty is the opposite of focus. When you are focused, you complete tasks. People who lack focus tend to procrastinate and/or make unnecessary and sometimes costly mistakes.

There is no doubt that knowledge, or lack thereof, plays an important role in focus, as does our next step; having a detailed plan.

326182675_efa3b24d67_b

3. Your Marketing Plan

You can have all the knowledge necessary to close any real estate transaction, but if no one knows what you do, then how will you close any deals? If you are not generating leads and connecting with people, you will not have any opportunities for transactions.

So how do you attract motivate sellers? A good marketing plan will identify a number of different strategies. I recommend a minimum of 3.

Note – if 3 is good more are better!

When planning out your marketing strategies remember to budget your time as well as the financial requirements. It does you no good to have a goal mailing 500 letters a week or distributing 1000 flyers if you don’t budget time for this activity as well.

So what works best for attracting motivated sellers? When done properly, a targeted direct mail campaign is the most successful form of advertising. Incorrectly implemented is can also be a great waste of money. It is important that you work with an experienced company that has a solid track record and the right mailing list.

If you have no marketing dollars then you have to make marketing time to spread the word. Whether it is door knocking, gum-flapping or handing out business cards or flyers in front of a supermarket (I don’t recommend this) you must get the word out! Sometimes other people can help with this.

6133591974_3033bcabc8_b

4. Build Your Dream Team

We’ve all heard the expression, “No man is an island.” It is true and you cannot do this business alone! Even if you are an extremely capable person that doesn’t require assistance from anyone else to buy, fix and a house, you will still require the services of another contractor, a lender, a title agent and attorney, CPA or other professional.

Why do you need all this help? What would you do if while you’re working on a project and another great deal falls in your lap? Leveraging others allows you to focus on your business and build your wealth faster. The assistance of others will lead to more transactions and more profits.

2020027649-780x0

5. Leverage a Coach or Mentor

Think of one well known, highly successful person who is at the top of their field. It doesn’t matter if they are an athlete, actor, business tycoon or famous personality, they have one thing in common: a coach.

Coaches have experience in areas that you do not, can guide you, help you avoid major blunders, and drive you to do more than you ever thought possible.

It doesn’t matter how many books you’ve read or cds you’ve listened to; your first few deals will throw something at you that you’ve not seen before or even anticipated. When this unexpected and sometimes frightening situation occurs, it’s good to have someone who’s been through these situations before guiding you through the transaction.

To summarize, while virtually anyone can have success in the real estate business, not everyone will have success. If you seriously wish to be wealthy, then do what other wealthy real estate professionals do. They commit themselves to being life-long learners and never stop expanding their knowledge base.Screen Shot 2016-03-04 at 2.26.32 PM

Successful investors are extremely focused; they plan and execute diligently. They surround themselves with other successful professionals, and are coached by someone who will help them continually achieve more and do it in less time.

We are now accepting applications for our new and improved 12 month Personal Action Coaching and Transformation Program (PACT). This session starts in January! Learn more from our information and videos at www.PACTProsperity.com. To your success…..

New EPA Lead Paint Laws Effect Remodeling Projects

The rules for renovating pre-1978 homes are changing and failure to comply can carry stiff penalties.  My friend Ron Deviney of R & J Properties, LLC in Volusia County Florida shared it and I  want to share it with our readers.  If you’re a rehabber, flipper, or landlord this may affect your business.

The US Environmental Protection Agency (EPA) has new lead paint laws going into effect on April 22, 2010. The new lead paint laws require any renovation work performed on houses built before 1978 to be performed by a certified contractor. Obviously his new law is causing some serious moans and groans from both home owners and contractors. Contractors will be required to provide home owners the Renovate Right Brochure which contains useful information about the new law.

Lead Renovation, Repair and Painting Law

The new lead paint laws that goes into effect on April 22 involves training and certification of remodelers, safe work-site practices, verification and record keeping. It’s very important to understand that the new law pertains to projects on any house built before 1978 with a few exceptions as follows:

  • The home or child occupied facility was built after 1978.
  • The repairs are minor, with interior work disturbing less than six sq. ft. or exteriors disturbing less than 20 sq. ft.
  • The homeowner may also opt out by signing a waiver if there are no children under age six frequently visiting the property, no one in the home is pregnant, or the property is not a child-occupied facility.
  • If the house or components test lead free by a Certified Risk Assessor, Lead Inspector, or Certified Renovator.

What Does The New Law Mean To You?

You’re probably wondering what this new law might mean to you and your next remodeling project. The obvious answer is a healthier home for you, your family and people that perform renovations to your home. The other obvious answer is an increased cost for contractors to adhere to the new rules which ultimately means an increased cost to you.

Over the last few months I’ve heard several small contractors say they will steer clear of and avoid older home renovations. A significant amount of small replacement window contractors will most likely go out of business and stop providing inexpensive window replacement services. While we think the new law is important in protecting public safety we also know it will result in much higher prices for consumers and less competition for consumers.

If you hire a contractor to do a renovation in your home that was built prior to 1978 be sure you hire a certified contractor. You should ask to see your contractors RRP certification prior to hiring them. Contractors performing work without the certification face penalties of $37,500 per day!

New Law Will Take Time To Work Effectively

With over 38 million homes containing lead paint in the US no one can argue the importance of good lead paint laws. However, from the few meetings and conversations I’ve had it’s clear to me that this is going to take some time before it’s very effective. Most of the literature and training has left contractors confused, upset and frustrated. However, with time these new laws will become part of everyday routines for contractors and ultimately help save lives. We certainly hope the EPA works quickly to fill in the blanks and help contractors implement this new law.

Thanks Ron!

Lower Real Estate Investment Tax with a Real Estate Accountant

Tax time is upon us again and the rules, they are a’changin!  Do you know how to lower your real estate investing tax liabilities and maximize your current retirement plan?  What is the best way account for capital improvements to your investment property?  Is there a tax benefit to paying off a mortgage early?  What would the financial and tax implications be if I sell and rent properties in the same entity?  Am I better off selling and closing in December or January?  Do you need a Real Estate Accountant?

If you are new to private enterprise, entrepreneurship or real estate investing, I strongly encourage you, if you haven’t done so already, to add a competent Certified Public Accountant (CPA) to your dream team.  Some investors I’ve spoken with think a professional accountant is a costly luxury.  I couldn’t disagree more.  A well informed CPA is worth their fee for both consultation and tax preparation.  They can save you many times their fee in avoiding unnecessary taxes.  They can make sure you receive the maximum benefit provided by the IRS code.  More importantly, they can provide guidance on how to manage your business in the most tax efficient manner.  This alone can save you thousands of dollars in taxes every year, not to mention, avoiding IRS fees and penalties in the future.

When considering who you will select for your tax advisor you need to think about it just like you would when considering a doctor.  I don’t know about you, but I wouldn’t go to a podiatrist for brain surgery, even if he gave me a discount any more than I’d want my neighbor’s cousin who sets up shop for 2 to 3 months a year to make a few hundred dollars preparing returns for his friends.  I want a CPA who is also a real estate investor, a landlord, an entrepreneur and a person of high ethical standards and character.  I want someone who faces the same challenges and opportunities as me.  If they need the same benefits and deductions as I do, then they will be focused on the areas of the tax code that will serve my needs and grant me the protections I want.

When it comes to choosing your CPA, here are some interview questions you might consider asking.  I’m always looking for advice on entity structuring, tax planning and retirement planning.  These are my Top Twenty CPA Questions:

The CPA Top Twenty

  1. I’m a new investor, if you were my CPA, in what particular areas can you add value?
  2. Why are entities important and when is the best time to set up an entity?
  3. What is the best way to maximize deductions if I am still working a J.O.B.?
  4. I take a lot of seminars and buy CDs, are these deductible?
  5. What goes into deciding whether or not I should elect a C Corporation or S Corporation
  6. Can an LLC also be a C Corporation?
  7. How can a CPA help me to deal more effectively with lenders?
  8. How often should I meet with my CPA to discuss tax planning
  9. How should I prepare for this meeting?
  10. What’s the best way to keep track of my business for things like mileage, meals, and other expenses?
  11. Why shouldn’t I do my own taxes?
  12. Why shouldn’t I just go to H & R block?
  13. What is the biggest problem you have dealing with your investor clients?
  14. What is the biggest mistake you’ve seen an investor make and how could they have prevented it?
  15. What happens in an audit?
  16. What does a CPA do when his client is audited?
  17. Does an accountant get involved in their clients keeping of corporate records, minutes and such?
  18. What are the best things we can do to minimize being audited?
  19. What is your tax deduction philosophy, aggressive, conservative, or somewhere in between?
  20. Is there anything else I should be aware of to help my business be more tax efficient?

Feel free to add anything else you feel is important to the interview.  You might ask for references or the number of real estate investors they have for clients. Year-end doesn’t have to be a problem for you or your CPA.  With proper planning and ongoing communication you can have a very productive and profitable relationship.

One final note – The best time to schedule a CPA interview is usually mid-year because they should be through with the majority of filings for their current clients.

I hope this can get you started. Look out for future posts on Building Your Real Estate Investing Team.

3 More Things to Look for in a Home Inspector

In my last post about things to look for in a home inspector, I covered 3 common items to consider, but elements of uncertainty and risk still remain. It is sometimes helpful to call several real estate offices and ask who are the most thorough inspectors in the area, but those recommendations may not be entirely objective. The unfortunate bottom line is this: There are no absolutes when selecting a qualified home inspector. The old adage still applies: “Buyer beware!”

Either way, here are 3 more things to look for in a home inspector.

1. Do they carry errors and omissions insurance: The importance of E&O insurance is often stressed as an important consideration when hiring a home inspector. If an inspector fails to report a major defect, the deep pocket of an insurance company may be the only recourse. On the other hand, some of the most qualified home inspectors forego this insurance because deep pockets can be an attraction to litigious attorneys.

2. Does the inspector carry any building code certification(s): Although code certification is not a professional requirement for home inspectors, some inspectors acquire code credentials to increase their knowledge of potential building defects. This knowledge is unquestionably beneficial. On the other hand, increased knowledge is not related to the inherent ability to observe and evaluate defects. It is possible to know the code yet fail to recognize an apparent problem.

3. You should always ask for a sample report: Sample reports provide clues as to the thoroughness of a home inspector. On the other hand, anyone can purchase a high-tech report writing system. The report may look great, but this does not mean there is a qualified inspector behind the printed page. Furthermore, sample reports only show the problems that were found by the inspector, not the ones that were missed.

So, now we have 6 Things to Look for in a Home Inspector.  If you missed the last 3, check out my last post: 3 Things to Look for in a Home Inspector.

Need for info?  Here is an article I found on the Internet called 10 Home Inspection Tips for Real Estate Agents.

Can you think of any other things to look for in a Home Inspector?  Let me know.  Leave me a comment.

3 Things to Look for in a Home Inspector

Although there are guidelines for finding qualified home inspectors, there are no reliable standards that guaranty professional competence.

To illustrate this, below are three criteria or questions frequently cited as essential elements in selecting a qualified inspector.

1. Do they possess professional affiliations: Membership in a recognized association of home inspectors, such as the American Society of Home Inspectors (ASHI) or the National Association of Home Inspectors (NAHI), is commonly held to be a measure of professionalism among home inspectors. Membership requires adherence to standards of practice, codes of ethics, and ongoing education. On the other hand, no governing body can mandate competent performance or ethical conduct. Regrettably, not all association members are truly qualified inspectors.

2. What is their level of inspection experience: Years of dedicated practice can produce home inspectors with the ability to discover defects that would be missed by inspectors with less experience. On the other hand, shortcomings in talent or integrity can diminish the benefits of accumulated experience.  Some folks like to use contractors to do their home inspections.  You should note that contractors do not always make the best home inspectors.  Contractors look at what needs to be fixed and may skip something that may be nearing the end of its useful life in order to keep their bid low enough to win the contract.  An inspector provides an objective status of the property in its current state.

3. Have they had any formal home inspection training?: A common mistake among new home inspectors is to rely on past construction experience, rather than on specific home inspection training. Those who have attended a qualified school or served an apprenticeship are better prepared to commence their careers as inspectors. On the other hand, there is no amount of schooling that truly prepares one for the complexities of inspecting homes. Schooling merely provides a foundation on which to build experience.

So, those are the first three that come to mind.  Can you think of any more?  Let me know by leaving a comment.

How to Find a Real Estate Lawyer

Finding a real estate lawyer can be a challenge for the new investor. If you are serious about this business then your team needs an attorney that understands real estate law. The old family retainer just won’t cut it. I’ve spoken with many attorneys and have found that most are not themselves real estate investors, nor are they familiar with creative real estate investments. I want an lawyer that will protect me, but just as important, I want one to advise me. There is always more than one way to complete a transaction, so it is good to have wise counsel. Should I owner finance with a mortgage and note? Am I better with a Wrap or an Agreement for Deed? Should I use an individual or corporate trustee? The answers to these and other questions can affect your profits, security, privacy and asset protection.

I’m not saying they should run your business; that’s your job, but your attorney should be someone with whom you can discuss options. A good real estate lawyer is one who advises you of the risks, suggests alternative ways of doing a transaction and charges a reasonable fee for their services.

One of the best ways to find a good real estate attorney is to ask other investors in your area who they use. Many are members of local real estate investor associations. I hate hearing the words “you can’t” from almost anyone. I prefer to know the answer to the question, “How can I?” Real estate brokers and agents can also be a a source of referrals, one word of caution is that you still have to interview the attorney because realtors tend to do fairly straight-forward transaction rather than the more creative transactions of the transaction engineering investor.

Once you have a referral or two you might ask the following questions:

  • How many transactions have you closed in a Land Trust?
  • Do you own rental or other investment property?
  • How many closings do you do per year?
  • What kind of non-standard or creative transactions have you done recently?
  • Have you done any evictions? Foreclosures? Condo conversions?
  • Can you explain to me the following concepts: lease/option, wraparound mortgage, installment land contract, agreement for deed, all inclusive trust deed?

I hope this can get you started.  Look out for future posts on Building Your Real Estate Investing Team.