I like to look at everyday as an adventure, you just never know what is going to happen, who you might meet, or what business might cross your desk. Most people are a bit intimidated about going out on their own and leaving the comforts of a weekly paycheck, but now that I have done it for so many years, I could never go back. The excitement of trying to put together unique deals and unique opportunities never seem to get old to me. The highs and the lows.
In the past two months I have put together and then loss almost 1M in potential revenue due to unforeseen circumstances – did it suck, yes, did it make me stop, no. I think that’s the best part of being an entrepreneur, but it’s not something that everyone can stomach. Now the excitement of taking an opportunity that others overlook and trying to find creative ways to make it a reality and an income stream sets my wheels on fire.
I can remember when I started my first business and left the comforts of my day job. I left a cozy paycheck which was pretty good money at 24 years old. I was young, I made a million mistakes, turned down investor money when I shouldn’t have and battled against some of the giants in the industry. Tiny budgets against millions, david versus goliath. I depleted my bank account and my savings for a dream, eating peanut butter sandwiches and never going on vacations. We all live too fancy which in turn sacrifices many of our dreams. I can remember turning down buying my first house to run my first manufacturing run. I was sitting in my one bedroom apartment with a contract to purchase the home and an invoice for my manufacturing run, both were going to cost me 40K out of pocket, I had to make a decision. We all know what I did and that house sold two years later for 150K more than I would have bought it for and now sells for 250K more! That was six years ago. That would have been a pretty good investment, but I would have learned less than a quarter of what I have learned over the past six years starting my own business and I wouldn’t have it any other way.
Not relying on the comforts of a weekly paycheck has forced me to learn new tactics and new skills that never once crossed my mind before. It has made me a thousand times better than I was before. You need to let a little fear into your life and that is what is going to push you to new levels and learn new skills. Rather than crippling to the inevitable downs in life, you need to learn from these traumas. Instead of worrying about what you cannot control, you need to shift your energy to what you can create.
Thinking about getting started in real estate investing? I get a lot of people coming up to me and telling me that they want to get started in real estate investing. Real estate investing is a wildly popular topic in the market right now with the likes of Grant Cardone and other top real estate investors speaking regularly on the topic. The only issue is many people say they want to get started but don’t really know where to get started and aren’t 100% willing to put in the work to get themselves started. The first question I always ask everyone when they mention they want to get started in real estate investing is, “what is your investment criteria.” The common reaction is most people look at me and pause and come back with “ummm I want to make more money.” Now that’s not really an investment criteria that is more so an undefined goal. So with that being said there are four factors that are really going to be discussed and need to be understood and identified when looking to get started in real estate investing.
The first facet is going to be knowing what your goal is. What are you looking to do from a real estate investing stand point. Are you looking to fix and flip, appreciation, rent and hold, wholesale, what are you actually looking to do. So that is going be your first step, knowing what you are looking to formally do to make sure you don’t end up in a situation like many did in 2006 to 2008. Know what you are trying to do.
The second facet is going to be knowing the location. You need to know where you are looking to purchase or flip in. Know what is around the property, know the streets, know the schools, know the attraction to the area. Some properties can look great on paper, but that is often due to the location of the property which in turn is effected by facet number three.
The third facet is going to be knowing the market that you are looking to invest in. Is it a growing real estate market? Are people moving to the area? Is the market appreciating or depreciating. You need to know what is going on in that real estate market. Real estate is somewhat national, but on another hand it is very hyper local. You could have an appreciating town right next to a depreciating town and that could 100% be based off the location of the property or facet number two.
The fourth facet is going to be know your numbers. I can not stress facet number four any greater. Knowing your numbers is what is going to make and break your investment. Whether or not your property is going to be cash flowing or not is what is going to prevent you from losing your investment or asset in a down turn market. So what most people do is analyze their property from a monthly stand point, but we don’t own a property for only a month, you own a property for a year, two years, ten years or more. So you need to always annual your numbers on an annual perspective and that is where many novice investors make a huge mistake.
Once you know these four facets you can begin looking for real estate investment opportunities and begin to analyze the deal. Next week we are going to be discussing how to analyze a deal and how to calculate the numbers you need to know in order to know if it is a good investment opportunity or not.