Surviving Your First Year In The Real Estate Business
Ambition alone is not enough to make you a successful investor. Every day there are thousands of new investors that enter into the real estate business with aspirations of making it big. However, there is one stark reality: not all of them will make it past their initial year. Between unrealistic expectations and poor business plans, many will burnout within twelve months. On the flip side, if you can get past your growing pains you will build the foundation of a successful business for many years to come. How you approach your first year as an investor will go a long way in determining how successful you will be. The methods you implement to survive your first year as a real estate investor will shape your entire career.
Just because you want to start investing doesn’t mean that deals will just fall in your lap. You have to treat investing as you would any new business. This means spending time learning your craft and knowing how the business works. If you opened a pizza restaurant, you would spend weeks, if not months, perfecting your recipes and getting everyone in place before you served your first meal. As an investor, you should know your market and how you plan on getting business before you look at your first property. There should be no reason not to hit the ground running as soon as you get started.
Developing a sound business plan should be the first thing any investor does. The more detailed you are, the less chance you have of getting off track. There are numerous ways to invest in real estate, and just about everyone has their own opinion. If you don’t have a firm plan, you will bounce around from deal to deal and market to market without getting anything accomplished. You should have an idea of what price ranges you are comfortable with and what you intend to do with the properties after you acquire them. You should start accumulating a team around you that can help you carry these plans out. If your investing business plan involves nothing more than making a few phone calls, you are in for a rude awakening. You can never plan for everything the business has to offer, but you should spend time researching the best plan of attack for you.
Planning is certainly important, but most of your plans will be predicated on how much money you have. While you may not need your own money to invest, you will need to find capital along the way. Your access to money will directly impact your property type, rehab options and the marketing budget you have available. If you are serious about investing, you will get all your money together before you start so you know exactly what you are working with. Too many investors will find the properties first and try to get the money later. This leads to working on strict budgets and possibly cutting corners on certain deals. You don’t need to have an open line of credit to get started, but you should know exactly what you have to start with. This amount will directly affect everything you do in your first few months.
There are many successful investors who invest exclusively on a part-time basis. However, they are successful because they know what to do and when to do it. Accordingly, they have developed a strategy. Regardless of what you are doing, you need to do it with all your focus and determination. Investing requires you to follow up on leads or to network in your spare time. Over time you will figure out which things you do will and those things that you need to improve upon. Instead of watching your favorite show a few nights a week or surfing the internet at lunch, you can scour the MLS or join a networking group. You won’t need to put in forty hours a week, but you will need to work much harder than you thought if you want to be successful.
Finally, you should have goals in place before you get going. It is important to keep these goals in line with reality. Some of the most successful people in business make goals they strive to attain. Your goals can be something as small as making five new contacts a week or as lofty as closing five deals a month. Not only should you make goals, but put an action plan. How are you going to achieve said goals? They will give you something to strive for when things are slow or they don’t go the way you originally plan. They will also give you focus and purpose when you are still finding your way.
The first year in any new business is always the toughest. If it was easy, anybody would be an investor. If you spend time learning your craft and developing a plan, you can make a successful transition. You don’t need a license or a degree to start investing in real estate, but there are a few things you should have in place if you want to survive your first year in the business.
