If you are new to real estate investing especially flipping houses this may be a great post to read. Let’s face it, your expectations are probably way off in reference to your expectation being a beginner in investing vs the true realty of investing in Real Estate.
You might even decide that it’s not for you and if you do move forward at least you’ll be going in with both eyes open. In this post we are going to share with you five realities about what it takes to get started investing in real estate and flipping houses.
If you are excited about getting started investing in real estate and flipping houses the purpose of this post is not to suck the wind out of you or discourage you from getting started but rather to help you go in with both eyes open and have a solid understanding of what you need to do to be successful. What you have to understand right now is the fact that reality of how this works can be different from your expectation. There are five realities that you need to know.
Reality number one is everything takes longer in the beginning.
Remember that it is going to take time to get things the way that you want them. Doing your tenth deal is way easier than your first deal just like doing your hundred deal is easier than doing your tenth deal.
One thing to keep in mind is that in the beginning everything takes 10 times longer and it can seem like its 10 time harder than you think it will. A lot of new beginners underestimate this.
In the beginning a lot of times you have no momentum.. Even the smallest challenges can seem like big problems but if you stick with it as you start to do more deals and gain experience, momentum starts working in your favor. Remember, it’s like think of yourself has the little engine that can. The engine has to think you can and know that you will build up momentum.
You have to know that you will have to slowly build up speed until eventually you’re barreling down the tracks and then you’ll navigate through problems and hardly even notice them.. Be patient and be realistic that in the beginning your biggest goal is to build momentum.
Realty number two is you got to be able to find or generate leads.
When you think about lead generation. Lead generation takes a lot of time. So many people getting started expecting to take a few leads to get a deal. The thing is it takes more than just a few leads to close a lot of transactions. You have to realize that real estate is a numbers game. There is something called a leads to deal ratio that you have to keep in mind. Or what we call the number of leads it takes to get so many transactions per year.
The reality of this is lead generation takes time and effort. You might have to go thru 100 motivated sellers to find a few that will raise their hand and take your offer. You’re going to be very disappointed, but here’s the good news over time as you build momentum your lead to deal ratio will improve.
Sometimes the issue is that some investors do not have the tools needed to help them find leads or build up leads…
One of the things that can be used to generate leads is a website. If you do not have a website and have no idea how to get started in finding one, it might be a good idea to check out investor websites. They are the websites that have the we buy house etc on them. If you do not have a website you might want to check into one.
Is a website designed to help Real Estate investors to have there on website.
This is design to help Real Estate investors find deals.
Realty number three you will have to have some money in order to get the deal structured.
Everyone likes to talk about no money down strategies and it’s true there are ways to make money in real estate with no money using creative financing strategies. But let’s be real those deals are far and few in between and they’re difficult to come by. Even with wholesaling where someone else steps in to buy the property and pays you an assignment fee it usually requires that you put an earnest money deposit down on the contract not to mention other operating cost.
So you have to make sure that although your doing no money down deals the money has to come from someone or somewhere. Even when you do subject to deals sometimes it might require that you catch up on mortgage payments or even making sure you honor your agreement with a seller even when you can’t find someone else to buy the property.
Make sure that when you are tying up someone property make sure that you are able to do exactly what you say you will do. If you are unable to do that, then don’t make the offer. Allow that owner a chance to sell their property to someone who is going to close on the property.
There will also come a time when you will need to find hard money lenders or private investors to help you with the financing. Keep in mind that typically the interest rate on these type of deals are going to be somewhere around 12 to 18 percent interest.
Gives information about looking for funding.
Forth Realty is make sure that you have a team in place.
Having a team in place makes a difference when you are trying to deal with real estate. Sometimes expectation are that you can do it all by yourself. Realty of that is you still have to have a team in place. The people on your team can consist of title companies, general contractors, realtors, real estate attorney, handyman, plumbers, electricians etc.
Fifth reality is that you should continue to train and expand your knowledge base.
One thing is for sure you have to keep investing in yourself. You want to make sure that you keep training. Training goes a long way when you are a beginner in investing. The more you train the more you learn.
Keep in mind that all seminars are not bad.. Yes you do have some seminars that aren’t good but you do have some seminars that are great in reference to helping you understand how things work. Especially when you are dealing with creative financing.
So some people expectation are that they don’t have to do any type of training in reference to learning how to invest in Real Estate. But the reality is sometimes training helps you to better understand what you are doing if you never done it before.
Remember, there are a lot of different ways to do real estate. There are different ways to do creative financing. Also when you are meeting a seller each seller has different needs. With that being said if you only know one way then you might miss out on a opportunity to structure a deal with a seller.
Remember that your expectation are great when you are beginning in real estate investing. Remember the realities can vary from your expectation. Make sure that you understand that each personal experience is going to be different. Understand that it takes time to build up momentum. You have to be able to find leads and make offers. You will have to put some money into the deal whether it be just for the earnest money or holding cost. Having a team in place can help you turn deals around a lot faster. Continue your training can also help you structure a good offer for a seller.