Do you want to invest in real estate, but have no idea where to start?
When I first got started in real estate investing, I had no idea where to focus my efforts. I actually spent a lot of time searching for, and leveraging, other people's systems and starting where they told me to. It was a long and expensive learning process.
As I look back, I realize that it started with three incredibly important (but simple) steps.
In this article, I'm going to share with you the first three steps that every real estate investor should take to be set up for success in this business.
I’ll also share with you the number one mistake that most new investors make. HINT: You may have already made this mistake in your business.
If you're reading this and are just getting started, then let me be the first to say, "Congratulations!" I’m very excited for you!
Let me know in the comments of this article where you’re from and where you’re at in your business.
Let's start with your why.
Step 1: Identify Your Why
The first step in creating your real estate business is to identify your why.
That is, THE #1 reason why you are getting into real estate.
This is something that you should think long and hard about, before you ever start picking up the phone and talking to sellers.
It can’t just be, “to take beach vacations,” “to make money,” or “to get rich.”
It has to be something personal to you. Something you long for with all your heart. Something that is going to continue to push you forward when things get hard.
Do you want more time freedom to be there for your family when they need you? Or maybe you’ve been let-go from your position and never want to see that look on your family’s face again as you tell them that you lost your job.
If your reason why is monetary, then you have to go a step deeper. What will that money enable you to do?
Do you want to be able to give more freely to causes or people that you care about? Or maybe you want to pay that medical bill for a family member or friend when it comes due.
Whatever it is, it has to be deep and meaningful to you.
That’s because your why is the anchor that will keep you in this business when the going gets tough.
So start with your why. Give it some thought, and write it down. Review it and recite it often. When things start to get hard, visit it often.
My why is my daughter and my son. My goal was to be able to provide security and enjoyment for their future so that they're able to chase any dream that they have and not have to worry about how they're gonna pay for it.
Do you already have your why in mind? Let everyone reading this know what it is by leaving it in the comments.
Step #2: Set Up Your Business Entity
The next step in getting started in real estate is to set up your business entity. That includes your legal entity, bank account, etc.
First, let me say that I’m not an attorney, so if legal advice or other expert or professional assistance is required, the services of a competent professional person licensed in your area should be sought.
Second, you might be tempted to skip this step, but DON’T.
The reason being, if things go wrong, which they quickly can in this business, you don’t want to open up your personal assets to potential lawsuits. By creating a legal entity, you are shielding yourself and your loved ones from any potential hardships in the event that something goes wrong.
The good news is that it's usually a simple, and relatively cheap, process to set it up.
Most real estate investors create a limited liability company, also known as an LLC. If there are partners involved, they create a multi-member LLC. Each type of LLC has its own advantages.
I recommend talking to a local real estate attorney about setting up your business entity to find the right one for you, and to make sure you are setting it up correctly.
If you don't want to contact an attorney, this is something that you can do yourself with your Secretary of State in the state where you live. A quick Google search will help you find the correct steps for your state.
There are a few other steps involved, like setting up your business bank account, and setting up your branding.
To get a business start up checklist that includes all the steps you should take to set up your business entity correctly, check out the Real Estate Investing Toolkit below. (It's FREE so don't miss that opportunity!)
Step #3: Start Talking To Sellers
The next step is to start talking to sellers.
Talking to sellers is one of the most essential parts of real estate investing.
If you’re afraid of it, don’t worry, you aren’t alone. With the right script and practice you’ll be a natural in no time!
There is a great script for talking to sellers in the Real Estate Investing Toolkit that I mentioned above. It is the exact same script that I wrote an article about for Realeflow because I use it every day in my own business. You can read the article about my most profitable strategy for talking to sellers here.
Talking to sellers will also help you to do two things; learn, and refine your focus.
There is no better way to learn this business than talking to sellers. You might be thinking, "What if they ask me something that I don't know the answer to?"
If they have a question that you can’t answer, give them a simple, “I think I know the right answer to that, but let me do a little research for you, and get back to you. I just want to make sure that I’m giving you the right information.”
Then you get to go call a friend, Google it, or crack open a book to find the correct answer. The beauty of this is that on top of learning something new that you can stash away, you now have a reason to follow up with them!
Learning as you go is much more efficient.
The second reason you should be picking up the phone is it will help you refine your focus. That is, as you talk to sellers in foreclosure, in the probate process, or who have owned a property for 20 years, you will start to figure out what area of real estate investing you want to focus on.
You'll quickly start to learn where you can truly help and be the hero of someone’s story. You'll discover which areas of real estate you like, and which you don’t. Then you can focus on the areas that you like and feel called to.
A great way to get over your fear of talking to sellers is to go on Craigslist, or another classified site, and find some For Sale By Owner properties in your target market that look like they might be in disrepair. Grab the seller script in the tool kit and start calling. Set a goal of making 10 calls in one sitting.
Realeflow also has a seller script built right into the software that stores all of the information electronically, saving you time on every deal.
It then provides you with a repair estimator, comps, and deal analyzer so you can do a desktop analysis on the property to help you determine if you should call the seller back with an offer on the property. Before you call, set up a free trial with Realeflow and you can use their seller script while you're practicing.
If you're still afraid of talking to sellers, let me know in the comments, along with what you’re afraid of. I’ll try to help any way that I can. Or another reader might have some insight for you.
Now that we've talked about the three steps you should be taking to get started, let's talk about one that you SHOULD NOT be taking.
Taking Too Long On Small Things
The BIGGEST mistake that I see most new investors make is taking too long in the “set up” side of things. It shouldn’t take you more than two weeks to pick a name, set up your business entity, get a basic logo created, and get some materials printed.
The longest part of that process is really picking the name and making sure that it’s available in some form.
What you absolutely don’t want to do is take a month to craft the perfect logo or color scheme. The truth is, all of that can be changed at any time. People buy from you, not your brand.
So the takeaway here is not to spend too long on the small stuff.
Once you get your entity started, it’s going to give you momentum and a sense of pride. Keep that momentum going and start talking to sellers. You have a confidence when you have a firm foundation beneath your feet.
Do the three things that I talk about above, and avoid taking too long to do them, and you'll be well on your way to creating success in your real estate business.
Also, don't forget to get your copy of the Real Estate Investing Toolkit that includes over 18 different ebooks, scripts, templates, and tools that you can use to get started in real estate.