5 Things You Must Know Before Getting Started In Real Estate
By JD Esajian on August 22, 2016
The real estate business is hard. Not everyone who gets involved with real estate is going to be successful. There are plenty of new investors who enter the business thinking deals will just fall on their laps. When it doesn’t happen they get frustrated and in the matter of just a few months give up on the business. For those that manage to make it real estate can truly be life changing. Not only financially but also with the ability to work on your own schedule. Getting to that point takes time and hours of dedication but it is possible with the right frame of mind. Here are five things you must know before you get started in the real estate business.
- Hard Work Is Not Enough. As you enter the business you may have a track record of hard work and commitment. While this is certainly important it does not guarantee success. There are plenty of hard working investors in almost every market. Hard work may get you ahead in other professions but it is an expected part of the job in real estate. It is only when you combine hard work with networking, problem solving and the ability to connect with people that you separate from the pack. One of the biggest mistakes that new investors make is by not working on the right things. You can fool yourself into thinking you are working hard by pounding away at a problem for six hours. This isn’t working hard it is working inefficiently. It is always better to work smart than to work hard. As you enter the real estate business know that just because you do not have a boss doesn’t mean you do not have to work hard.
- Reserve Capital Is Critical. There are numerous ways to tackle the real estate business. What you will find is that what works for someone else may not necessarily work for you. There are plenty of new investors who get started with a shoestring budget. They make do with what they have and operate their business as such. In a perfect world it is better to wait a few months to accumulate capital before getting started. Reserve capital helps you make the best decisions on every scenario you are faced with. Instead of looking at short term opportunities that carry more risk you can do what is best for the growth of your business. You don’t need to spend every dime but having something to fall back on lets you run your business without constraints. What you do in the first six months has a great impact on the path your business takes. Increased reserves allows you to do whatever you feel is best without the pressure of having to quickly generate income.
- Ups And Downs. If you watch one of the various investing shows on TV you will see that things are often wrapped up nice and neat at the end of sixty minutes. The investor usually ends up making a profit or having things fall into place just how they planned. What you don’t see are the other dozen times when things didn’t go their way. When you are just starting out this is the norm much rather than the exception. You will face plenty more disappointment than you do joy. There are times when you feel that a deal is ready to go only to have it fall out at the 11th hour. How you react to these situations will define your business moving forward. There is definitely a roller coaster feel associated with investing in real estate. Instead of feeling defeated with every setback you should embrace the journey and enjoy the ride-however difficult it may be.
- Constant Change. How you envision your business in the first ninety days may be nothing like what really happens. Having a plan and vision is a recommended starting point but you should also be flexible enough to adjust on the fly. There are many investors who get stuck in their ways and are unwilling to change. What usually happens is that they get swallowed up by the market. You don’t have to try every new niche that comes your way but you should at least be open to hearing about it. Think about how hot foreclosures and short sales where just a few years ago. While there are still fantastic deals in these areas it has become more difficult to find them. If you centered your business solely on this niche you may be having trouble with the increased competition and reduced supply. However, if you were open to change this could be one of a series of deal streams you have in your arsenal.
- Step Outside Of Comfort Zone. As a real estate investor there are many hats to wear. You are the CEO, CFO and president of your business. In generating leads and growing your business there are times when you will have to step outside of your comfort zone. This could be making presentations to a group of real estate agents or preparing video blogs for one of your properties. Whatever it is you need to be prepared to do plenty of things you don’t want to do. This is the way for many business owners especially at their outset. Even if you have some financial success there are things that you cannot pay someone else to do for you. Like anything else the first couple of times trying something new will be uncomfortable. The more you do them the better you will feel. Eventually you will look back and wonder why you were so nervous about doing something in the first place.
Real estate investing is one of the few businesses that anyone can do but not everyone does well. As you get started in real estate focus on these five areas to help ease your transition.