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I always
have question asked of me , such as, I've
recently started going to meetings of my local
Property Owner's Association, and I think
they're great. The problem is, there's so much
information that I don't know what to pay
attention to! Every month, there's another
speaker with another opinion on the "best"
strategy for this or that. I'm overwhelmed, and
can't seem to get out and actually do anything.
Please recommend a course of study that will
help a new investor make a nice, simple
deal.
Here's my answer.
I'll go you one better than that; I'll tell you
the absolute best strategy for buying and
selling property...or would that be less than
helpful?
New investors who
attend real estate association meetings often
come away with the same "paralysis of analysis"
that you describe. There's so much information
available, and so much of it appears to be
contradictory (buy foreclosures...don't bother
with foreclosures...buy to hold...buy and sell)
that one wonders how anyone ever figures it all
out. And adding to the problem, every
successful investor is willing to defend to the
death their strategy as the best strategy.
Although they're trying to be helpful, they
often add to the confusion experienced by
newbies trying to make sense of it all. In my
experience, new investors that don't start
making offers in the first 2 to 3 months never
get around to doing it at all. The fear of
doing deals only fades with the actual doing of
deals; no amount of "book-larnin" will ever
give you the confidence you want. So stop
trying to learn everything, and focus on what
you need to make the first offers. Those things
are:
1) Some idea of
what you want your real estate to do for you.
Know this, and you'll have a good idea of the
exit strategy and the type, condition, areas,
and price range of properties you should be
looking at. Want quick cash? You'll need to
wholesale properties. Looking at anything other
than 1-family junkers is a waste of time.
Eliminate other properties and from your
thinking and move on.
2) A working
knowledge of how your one exit strategy works.
Building on the last example, once you know
that wholesale deals are sold to cash buyers
for 60%-70% of as-is value, you know a) how to
calculate an offer and b) that you need to
start finding buyers now.
3) Two or three
strategies for finding the types of properties
you want. Whatever your chosen strategy,
finding the good deals will consume most of
your time and energy. So try 2-3 methods all at
once for a few weeks. Discard those that fail
and amplify those that work, but always use
more than one way at a time.
4) The ability to
evaluate the properties you're viewing. In the
case of junkers, you'll need to know how to
find the after-repaired value and the cost of
the repairs. Don't worry about figuring out
what the property will rent for; it's not
important to your plan. Conversely, if your
plan is to buy and hold multis, you'll need to
learn how to calculate the return on
investment.
5) A team and a
contract that will keep you out of trouble. Why
do you need to know how to do a title search
when there are folks who do it for a living?
Sure, it might be good to know later, but it
isn't crucial for you to know right now. And if
you have a well-written purchase contract that
allows you to get out of a bad deal before it
closes and an experienced mentor that will help
you through your first few deals, how can you
lose?
There. Now instead
of a billion things to learn, you have 5. Now
get out there and make some deals.
Vena Jones-Cox’s
real estate business focuses on finding great
deals on 1-3 family homes, then lease/optioning
them to homeowners or wholesaling them to
investors and renovators. All told, she buys
and sells about 50 properties per
year.
Vena is a frequent
guest lecturer at real estate
investment groups throughout the country,
and particularly enjoys working with new
investors. Vena frequently authors articles on
real estate investment and the regulatory
environment for various newsletters and
publications, including The Real Deal, her own
monthly newsletter. She has been a guest
speaker at the Cato Institute in Washington,
D.C., lecturing on the effects of lead-based
paint regulation on small investors. And in her
spare time, Vena hosts a popular weekly call-in
radio program on public radio. Real Life Real
Estate Investing can be heard throughout the
Midwest and throughout the world on the
Internet (WNKU.org) Wednesdays from 5:00-6:00
PM EDT.
Vena Jones-Cox is
a past president of the Real Estate Investor’s
Association of Cincinnati, the Ohio Real Estate
Investor’s Association, and the National Real
Estate Investor’s Association. She intends to
form the International and, eventually,
Pan-Galactic Real Estate Investors Associations
so she can be president of those, too. Vena
Jones-Cox has been featured in publications
such as The Cincinnati Enquirer, Smart Money
Magazine, Money Magazine and Reader’s Digest in
articles about successful real estate
entrepreneurs.
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