By: Dennis Henson
In order to become successful in any business or sport there are certain skills that must be mastered. For example to play basketball the skills of running, dribbling, passing, shooting, and blocking shots are required just to play. And without any one of those skills it would be impossible to be a successful basketball player.
Investing in real estate also requires skill. There are five skills that must be learned, practiced and mastered in order to become a successful investor in real estate. I call these the “5 M’s of Real Estate Investing”. They are:
The “Mining” skill is being able to find really good deals. Anyone can find a property to purchase. There are thousands of them on the MLS, in newspapers, at auctions and offered “For Sale By Owner”. But to become a successful investor requires the skill of being able to uncover that “golden nugget” or in other words–a really good deal.
A really good deal is a deal that will almost guarantee a good return on the investment of time and money. This kind of deal is not hard to find after the Mining Skill has been developed. There are many books and CD’s on the market that clearly detail the strategies for locating and purchasing good investment properties. Some of the strategies are:
- Using Realtors
- Looking at ads in newspapers and on the internet
- Placing ads in newspapers and on the internet
- Bidding on Real Estate Auctions
- Working foreclosure lists
- Buying Short Sales
- Purchasing REOs (Real Estate Owned By Banks)
- Making offers on homes For Sale By Owner (FSBO)
- Following up with the owners of empty homes
- Working with builders
- Buying from wholesalers
All of these strategies work–and by focusing on one or two of them, an investor will be able to develop the Mining skill needed for success.
The second skill “Money” is becoming proficient at locating and procuring the funds to purchase all those great deals found while Mining.
An endless supply of money will be needed in order to succeed at investing so it will be necessary to develop the Money skill to provide that supply. This is where many new investors stumble because at first it is much harder to find money to purchase great deals than it is to find the deals. But as with all skills–practice will make the process much easier.
Here are some good places to practice the money skill:
- Mortgage Companies
- Credit Unions
- Credit Cards
- Other Real Estate Investors
- Individual Investors
- Home Sellers
- Hard Money Companies
Reading books and listening to CD’s about Real Estate Investing is another way to find some strategies that will help to start developing the money skill.
As with all skills—it takes repetition to become proficient. Finding money is not easy at first but with effort and time the money will start to come in faster than deals.
“Maintenance” is the by far the easiest of the 5 M skills. This is the skill to develop for getting an investment property ready to market and it is as simple as finding the right people to do the work.
Find a good and honest general contractor, show him or her what needs to be done and how you want it done, then follow up to make sure they are performing to your expectations.
The forth skill, “Marketing”, is also critical to any investors success. An empty home is a money drain. As soon as an investment home is purchased—money starts flowing out of the investor’s bank account. Money for taxes, insurance, water, power, gas, lawn care, advertising, vandalism, things that break, things that go bad and the list goes on and on.
Successful investors learn how to rent, sell or lease option the property quickly in order to stop the outflow of money. A real estate investment sitting unoccupied for any time at all can and will put a dagger in any chance of success. Investors should search out good techniques that will allow them to fill properties quickly to increase profits and avoid holding costs.
“M” number five is the skill of “Managing” property. Next to the “Money” skill this one is usually the most difficult skill to master. Not because it is the hardest to learn but because many investors just do not spend the time and effort necessary to learn how to manage their properties.
Some gurus recommend that from the very start all properties should be managed by a property management company. To simply find a company that will take one or two properties and put them at the top of their list over their customers with twenty to fifty properties may sound good in theory. Unfortunately that is not the best plan. Real Estate Investors should learn how to manage properties themselves so that they will better understand how to manage the property management companies.
I hope this article will help you in your quest to build wealth through real estate investing. For more articles on real estate investor training, visit my website at www.7secrets4success.com.