How to get Started Investing in Real Estate

First and most important—In order to start investing in real estate you must either have some money or have access to money. Without access to money you’re going to have a very difficult time getting started (review my report on “A Dozen Ways to Purchase Property with Little or None of Your Own Money”).Now that you have found some money–the next thing is to find a good mentor (see report on “What to Look for in a Mentor”). A mentor can help you through the toughest part of getting started–completing your first deal.

Let’s get moving…

1. Pick an area. Choose some zip codes or mark a section on a map. You want to find an area where people will want to live and own a home. Look for clean, quite neighborhoods with freshly cut grass and clean driveways. Avoid big power lines and jacked up or abandoned cars. Try to find the areas with the most desirable school systems and that are convenient to shopping, recreation, and major arteries.

2. Set your criteria. You should know exactly what you want in your investment homes. How many bedrooms, bathrooms and parking areas do you want? Decide on size, age, and price ranges. What extras do you want? You should also know exactly what you don’t want in your homes–such as pools and spas.

3. Start building a team. Your team should include a mentor, a real estate attorney, a banker, a mortgage broker, one or more realtors, a title company, an insurance agent, a CPA, grass cutters, handy people, cleaners, carpet cleaners and other investors.

4. Locate properties. Your goal should be to find the best system of finding deals that works for you and that you enjoy. But while you’re learning–try a number of techniques. Locate some properties that are for sale by owner, from ads in papers, on foreclosure lists and empty homes. Also search out real estate owned by banks, Housing and Urban Development (HUD), Veteran’s Administration (VA), and attend property auctions run by auction companies.Ask your realtors to help you find good deals and finally visit several real estate investor clubs in your area. Wholesalers often attend and offer deals at real estate investment clubs. Get into the habit of making daily contacts with realtors, REO bankers, wholesalers, auctions, and FSOB’s.5. Set appointments to view properties. Set a goal of making for example ten calls each day and talking to at least three sellers. This daily activity will quickly move you toward your goal. Having found some promising properties–using the strategies above–make owner contacts to find properties that have possibilities.Make calls and ask sellers questions that will eliminate the time wasters and identify motivated sellers. Set up appointments to look at properties with motivated sellers. At first you need to put your feet inside a number of houses each week. How many houses you should look at will depend on how successful you want to be. If you want to purchase one home this month you should plan to visit at least fifteen homes each week.

6. Research the properties. Before your viewing appointment—check with your realtor for current values or do research to determine the after repaired value. Get together maps, tax values, the MLS sheet, comps. View the properties and while visiting the properties make a list of all the needed repairs.

7. Prepare your offers. Be sure to plan to offer an amount that will allow you to profit when you sell or rent the property. When preparing an offer to an individual home owner—write three offers—a low all cash offer, a medium cash and terms offer and a higher all (good) terms offer.

8. Place you offers. Present your offers to motivated sellers, place your bids for the HUD, VA and bank auctions and attend and bid at commercial auctions. Negotiate with sellers for the best terms possible and get a signed contract to lock in the deal not to mention you will make a higher profit.

9. Make offers on a large number of properties at first. Do this for practice and experience. Offer amounts that are considerably less than what you think will be accepted. You may get a nice surprise and if you are taken up on your offer—you will find it much easier to fund the really great deals. It’s much easier to place more low bids and get better deals than it is to buy a lot of less profitable deals and spend your time working on fixing them.

10. Prepare for and attend the closing. After your have a contract—start preparing for the closing by getting all the money you will need together for the down payment and closing costs.

11. Have your title company prepare the closing documents. Inspect the closing documents for errors and have them corrected before the day of the closing. Go to the closing, sign the papers and take ownership.