According to the founding fathers of our great nation, the laws governing basic human behavior and civil conduct were directly based on the Ten Commandments of the Bible.
As real estate investors, I believe we also have laws for basic success behavior and civil profitability. here are my
Ten Commandments for a Successful Real Estate Investing Career
1. Make offers! I must make at least 3 WRITTEN Offers per week. It’s my experience helping thousands of investors and students over the years with their businesses that deals are usually the number 1 reason a business doesn’t explode in profits. If you don’t bid, you don’t make money. I know that sounds simplistic, but it’s a real gem of advice. Remember, it MUST be a written offer – verbal offers are just conversations.
2. Secure financing! I need to talk to at least 3 funding sources per week. These sources of money will come from my “5 Ps of OPM” and they are: 1. Personal money, 2. Partnership money, 3. Professional money, 4. Private money and money from private banks. If you make at least 3 deals per week, you will begin to fill your deal pipeline and you will need funding to close your deals. Until you know you can pick up the phone and contact enough money to buy 3 houses this week ALL CA$H, you will continue to collect funding sources.
3. Attention to detail! I have to be thorough with contracts, agreements and documents. In real estate, IF IT’S NOT IN THE CONTRACT, IT DOESN’T EXIST! It’s the same as our offers, if it’s not in writing, it’s just a conversation. More bad deals have been made because the investor was thinking one thing and the seller or buyer was thinking something else. Make sure you put everything in the contract. Overkill in this area is very good. Follow your “DUMB Enough Deal Checklist” to make sure you’ve covered your assets.
4. Market, market, market! I will continue to MARKET for incoming offers even though I feel like I have too many offers. This is the second most common mistake made by investors, both new and seasoned. We start getting a bunch of offers and feel overwhelmed or scared, so we stop marketing. NO NO NO! That’s when we just adjust the amount of profit we’re willing to work for and start using our buyer list to wholesale deals we can’t handle or don’t interest, BUT YOU NEVER STOP MARKETING!
5. The human touch! I will keep the “Human Touch” in my business by having a human answering my phone. In this age of incredible technology, it’s easy for us to give in to the ease and convenience of gadgets, BUT IT’S SO EXPENSIVE! No, I’m not talking about the cost of the gadget, I’m talking about the cost of missed deals. If you’re using voicemail or even an old answering machine to take calls, you’re wasting money. Blockages in our business are simply too expensive. A missed phone call early in my business cost me $60,000 in profit! It always hurts to think about that one. Use a voicemail service to have a human answer your phone when you’re not available. Voicemail services in today’s economy are cheap, missed deals are not.
6. Know the numbers! I will know perfectly the numbers of the components of my agreement. In the world of real estate investing, there are plenty of “OOPS” waiting with our names on them. If you’re not sure what something is going to cost, don’t guess, find a professional in that field and get a solid number. A repair you didn’t see because you were trying to save a few hundred dollars by not having the property inspected by a professional, is now going to cost several thousand dollars to fix, OOPS! Of course, this applies to all areas of your transaction, not just repairs. Know the numbers to eliminate OOPS!
7. Know the exits! I will have my “exit strategy” in place before entering into a transaction. I fly almost 100,000 miles a year and have heard the flight attendant say “Please locate the 2 exits closest to you” probably 1,000 times. During a flight, I realized what a valuable lesson this was for investors. Before you take off (make a deal), know your exit strategy. Many investors jump on a deal without thinking about it until the property is sold. If you are unclear about the exit (how you are going to be paid), stay away from the trade.
8. Don’t spend it all! We’ve all heard of the need to save for a rainy day, and guess what, it’s ALWAYS raining somewhere! And sooner or later, it’s going to rain on you. Many new investors, seasoned investors, and yes, even myself, have been or are guilty of spending all of the profits from a trade. Please follow this simple cash flow formula for wealth; Tithe 10% and keep 20% in the business. You tithe 10% because you have to give back in life. You keep 20% of every profit dollar in the business because no real estate business can operate completely without some ca$h.
9. Be sure to insure and insure! I will insure a good night’s sleep and I will insure my wealth because I WILL INSURE my business. In our lawsuit-happy country, it would be financially unwise to run a business without general liability insurance. For around $100 a month, many commercial carriers will provide $1 million worth of liability insurance. It’s the same thought process as car or health insurance, you hope you never have to use it and yes, it’s better to have it and not need it than to need it and not have it. ‘to have.
10.INC. Before inking it! I will incorporate (“C” Corp., “S” Corp., LLC or other appropriate entity structure) my business in order to have some protection against frivolous lawsuits. I will not risk my financial well-being or that of my family by not having an entity structure in place. I will seek competent advice regarding this matter and I will NOW!