Many people believe you need to be wealthy to invest in real estate, like the Hilton’s, or Donald Trump. Or they think you need to save thousands of dollars for a down payment, like when purchasing your home. Both thoughts couldn’t be further from the truth. You don’t need to save thousands or come from a wealthy family. All you need is the knowledge, people and tools available to help you succeed.
There are things that you need to have in place when investing in real estate. We will cover those things, and they will only cost you a little money, time and possibly lunch.
Now this “Poor Man’s” Guide is not going to suggest that you spend tens of thousands of dollars like you would attending college, but be mindful that education is the key. Sticking with the theme of this article, we understand that money isn’t a surplus, so we suggest going to your local bookstore and getting a basic real estate investing book to get a foundation to build upon. Don’t assume you already know all there is to know about investing in real estate – be willing to learn. The web is a wellspring of knowledge and information from which you can pull information and expand your real estate investing education as well.
I STRONGLY suggest a person spends a minimum of one year educating themselves before actually trying to conduct a transaction.
Cost: $50 (a few books), 1 year (time studying)
Groups cover many aspects, but were going to focus on two groups. Group One, the groups of people you’re around in your daily life. These people are your family, friends, co-workers and neighbors. Anyone within these groups that tells you “you won’t succeed investing in real estate,” can kill your dream. I suggest not talking to the dream killers about investing. Get some new friends to be around. People who will be positive, encouraging, and supportive of your new found quest to make a dramatic change in you life personally and financially.
Group Two, groups like your local Real Estate Investor’s Association (REIA), or any group locally investing in real estate that you can work with, network with, learn from, and build the relationships necessary for your business to succeed.
Cost: friends (maybe), building relationships (time)
To build your team you need to develop yourself and your people skills. There are many members of your team who will be necessary to become truly successful and to avoid many of the pitfalls along the way. Their value vastly outweighs the time and money spent (possibly lunch), rather than trying to go at it alone. Starting out your team should include but not limited to.
- A Realtor (with experience working with investors) – Realtor’s who have worked with investors should have an understanding of what you’re looking for and what you’re trying to do.
- Banker/Mortgage Broker (with experience working with investors) – develop relationships so in the future you may have a funding source for you buyers.
- Contractor/Handyman – They can provide you with estimated repair cost for properties.
- Title Company (with experience working with investors) – they are familiar with creative deals and can help you with the best way to close a deal.
- Lawyer/Legal Advisor – preferably one specializing in real estate law, have them review all documents you will utilize in your business.
- Mentor – learn from and model yourself from someone who has been down this road before, your mentor can be a possible investor for you as well.
Cost: time, lunch (maybe)
Your plan should be the basis for your investing. Your plan should consist of the niche of real estate investing your going to do, and how your going to accomplish your goals. Write down your investing goals from small to large and the steps you plan to take to get there. Your mentor should be able to assist you in laying out an investment plan for you.
As a “Poor Man’s” real estate investor it’s understood that you need to get the most bang for your buck. So I’ll touch on three marketing budgets to get you started, they’ll be the $100, $300 and FREE marketing budgets.
- $100 Marketing Plan – for $50 you can order a few bandit signs that say I/we buy houses with your phone number on it. In many cities these signs may be unlawful, so I suggest spending $50 on a pre-paid phone and list that number on the bandit signs so the authorities can’t trace them back to you. Go online to one of the many card companies where you can get 250 to 500 business cards for free. If possible get them in bright yellow, pink, or orange simply stating again I/we buy houses with your number.
- $300 Marketing Plan – it’s the same as the $100 plan but double the amount of bandit signs, and in addition go to your local print shop and have them print you 1000 to 5000 ¼ page fliers in those bright attention getting colors, again stating that you buy houses. Place these fliers anywhere your allowed.
- FREE Marketing Plan – the best of all, visit an online business card site and order the business cards just like the $100 marketing. Place dummy ad’s on online sites that allow ad postings and other similar sites to build your list of potential sellers and buyers. Network, network, network, let any and everybody know what you are doing from your neighbors, hair stylist, friends, family, co-workers, bartender, waiters, and anybody whom may feel can use your services or place you in contact with someone that needs your services.
Cost: $100, $300, or FREE
This is the moment of truth and the most difficult for many who want to invest in real estate; taking action. I know and understand that when you get to this point you get cold feet, the negative thoughts start creeping into your head ( what if, what if, what if) and you need to stop them cold. Take what you spent a year learning from books, online, your mentor, your team members and your REIA group and put it into action, so you can see the potential in this business and more importantly the potential in yourself.
When taking action many times I see new investors trying to make that great BIG killer deal right out the gate when they don’t even have a firm hold on how to get a deal done. May I suggest that you try to make some money, not all the money at once. Their is an old saying where I’m from……. A Fast Nickel Beats A Slow Dime.