Getting Started In Real Estate Investing - Phase 1 Focus

As part of our continuing series, Getting Started In Real Estate Investing, today's post is Phase 1, Getting Focused. Getting Started In Real Estate Investing - Phase 1 FocusGetting focused sounds simple and laugh if you wish, (many already skipped to the next phase) but this is the first phase and the one that is most often missed, skipped or ignored.

If you read this first phase through in its entirety, you will be more successful than probably 90 percent of investors out there. I am going to share something very special with you new investors, something NO-ONE ever talks about! (They may keep this a secret because they know if you do not understand this part, you may never succeed and that leaves more of the great investment properties for them.) Whatever the reason, I know from 35 years of real estate investing, the number one category of education that is missing from most every bit of real estate knowledge is the phase of Focus: Purposeful Planning.

Start by thinking like an investor, and for many of you this may be thinking opposite of what is the popular belief.

Most people know the concept of investing is to “buy low and sell high”. Yet the majority of people do the opposite, why? Because they tend to do what everyone else is doing. When everyone and their brother is buying, they want to buy. Thinking like a real estate investor, if everyone is buying, it is actually a sellers’ market and you cannot possibly make good sustainable money in a seller’s market.

As the saying goes, “you want to get in the lane where few people are traveling”. This feels uncomfortable, but as another saying goes, “it is lonely at the top” (I wish I knew who to quote for these fine comments because they make great sense). Seasoned investors know they have little competition because by the time everyone else figures this out, they will have already made the best deals. Go where others fear to tread and you will find the riches.

OK, stop sweating because phase two will make this much easier than your anxiety filled stomach is now feeling.

Finding Real Estate Investing Focus

The first thing to do is take the emotion out of your decisions. People buy the home they live in with emotion, but You MUST purchase your investment properties with LOGIC.

So you will want to sit down and make some notes:

  • why are you wanting to invest?
  • what do you want to get out of the investment? (and don’t say “I just want anything that will make money", this to me makes the same sound as someone running their fingernails down a chalk board, uugghh)

Do as a seasoned investor does, create a plan. You MUST know what you want long term out of your real estate investments.

  • Is it cash flow and what do you want the cash flow for? (hint: it should be to reinvest and build a big portfolio, but hey this is your plan) OR
  • Are you looking for long term capital Growth (my personal favorite) OR
  • Maybe you want the lifestyle investment where you can own property in a beach front or golfing or mountain community and visit it from time to time, meanwhile having someone pay for the mortgage and expenses

Take your time on this and write it down.

Things to consider for your plan:

  1. What is your investment strategy?
  2. What type of properties do you wish to invest in? (single family homes, multi unit buildings, etc.)
  3. How long do you plan to hold the investment?
  4. What are you most planning to get from your investment?
  5. How do you wish to take ownership to the property (Trust, LLC, etc.)
  6. Which markets interest you the most and why?
  7. How much do you currently have allocated to invest?
  8. What are your Source of Funds?
  9. What type of returns are you realistically expecting to receive?
  10. What would you like to accomplish in the next 5 years with your real estate investments?
  11. What are your exit strategies?
  12. Additional items of importance to you?
  13. Additional items of importance to you?
  14. Additional items of importance to you?

Seriously, take your time on this and once you're done you can read the next post which will be about entity structure and finance set up.