Build a Solid Foundation for Your Investing Business – The Exact 35 Step Process

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If you're new to real estate investing, you'll want this info today. If you're an experienced investor, you'll want to use this list to make sure that your foundation is as solid as possible.

If you've got your own thoughts or additions, I'd love to know. If you've got your own investing problems, I'd love to help solve them. Leave me a comment!

Build a Solid Foundation for Your Investing Business – The Exact 35 Step Process

Note: You Can Get Started Today Without Spending Any Money on High-Priced Training or Consulting.

Hi, I’m JJ Pawlowski, and I can’t wait to help you start building a solid foundation for your investing business. As you may already know, there are lots of gurus out there who sell high-priced training and consulting services to newbie investors, but most of them only share appetizing nibbles of information, much of which isn’t truly valuable or advisable.

In my experience, these appetizing nibbles aren’t enough, and there’s no amount of money that can make up for real-world experience.

This is something I learned the hard way through literally hundreds of real estate transactions over the course of my career. You see, I’ve personally been a real estate investor for more than a decade. I’ve also professionally assisted and/or represented more than a hundred other investors through the entire investing process. I’m a specialized agent and a licensed Broker, and I own my own property management and hard money lending companies. I give presentations rooms full of real estate investors at various conferences, meetings and live events, and I help educate countless others through my online education and resources.

My goal has always been to offer real, actionable, “meat and potatoes” information that investors can use day-in and day-out to save time, money, headaches and stress.

Much like many of my own great teachers and mentors, I always encourage my students and clients to begin with the end in mind. In fact, I include that age-old adage as one of the 35 steps outlined in my Investor Road Map, which is a quick-start guide for real estate investors that will help you save a lot of wandering around wondering what to do and how to get started. It can also help you avoid some of the costly time-consuming problems and mistakes that plague experts and newbies alike.

My Investor Road Map, as well as my other materials and training, is derived from my personal and professional experiences, including things I’ve done and things I would do differently now. It explains the following 35 steps in great detail and provides links to several additional must-have resources for real estate investors. Be sure to download it now while it’s still available for free. Otherwise, you may get stuck paying $47 it, which is still a great deal, but I’d rather see you put that money toward your next investment.

And now, here are my 35 steps for getting started today without spending any money on high-priced training or consulting:

Step #1 – DETERMINE YOUR WHY

Why are you wanting to invest in real estate? Is it for passive income? Your retirement? Child’s college education? Money in the bank? Freedom? You might have one or many whys. The more you think about your why, the more your fire to invest grows (read more about your why).

Step #2 – KILL YOUR FEAR

Your why will motivate you but unfortunately fear will sometimes try to get in the way and stop you. When this happens you have to take control of your destiny, look your fear in the face, and punch it repeatedly. You can get past your fears by keeping your why in front of you for motivation, focusing on your investing business, gaining knowledge and education, forming a solid foundation, and following a good plan (read more about fear).

Step #3 – JOIN AN INVESTOR GROUP

You should join a local real estate investor group in your area. Do a quick online search and you will probably find one, or several. Networking and creating relationships with other investors helps you fight your own fears, too, among other things.

Step #4 – START USING _____________.COM

There’s a real estate investing website that I should have started using a lot sooner than I did. I didn’t know about it, nor did I know all of the free resources, training, forums, podcasts, and even more help for investors available there. It is also a place you can network with other investors, ask questions, and maybe even find a mentor (get the details).

Step #5 – CHOOSE YOUR INVESTING NICHE

What exactly do you want to do? You need to decide the type of real estate investing you want to focus on, and there are many options. There are many variables you could consider such as supply and demand (flip, rentals), days on market (flip), cash flow (rentals), landlord-tenant laws (rentals), laws of the state or real estate commission (wholesaling), do the numbers work (all forms of investing) and more (read all about it).

Step #6 – MAKE A PLAN

Once you choose the type of investing you are going to focus on you need to create a plan to see it through. You should sit down and write out your goals, your objectives, your to-dos and the more specific you can be, the better. I did this in February 2004 when I was a newbie investor. I mapped out the next 25 years in increments of 1 year, 3 years, 5 years, 10 years, 15 years, 20 years, and 25 years from that specific day in time (learn the process).

Step #7 – FIND A MENTOR

The single most important factor in my early real estate success was finding the right mentor. I don’t care how smart you are, how much money you have, whether or not you think you need a mentor or professionals working with you, whatever your thoughts are, I am telling you based upon my own experience success often comes quicker to those who surround themselves with the right people (find out more).

Step #8 – CONSIDER THE NUMBERS

Real estate investing is about the numbers all of the time. This is Rule #1 of investing. Some seasoned investors will say Rule #1 is “don’t lose money” and that is very true; again it directly goes back to the numbers (read more).

Step #9 – SILENCE THE NOISE

You are going to hear a lot of noise and have distractions from your investing goals. You have to learn to ignore the noise and distractions and instead focus on your plan and give yourself the time to see it through. One good email in your inbox specifically related to your investing business is much better for you than 100 generic ones to distract you (see other examples).

Step #10 – BUILD A TEAM

You need to start putting together a good professional team for your investing business. Any problem arising in your investing business will be easier to handle and solve when you have a team already in place and know who you are going to call (get my comprehensive call list).

Step #11 – INVESTMENT FINANCING

Many investors hit a big brick wall when it comes to financing their investing business. Financing options are important because your plan might be hard to get off the ground without financing in place. While it’s possible (sometimes) to do investing without a lot of cash or credit, you should expect to need some cash, credit, and financing at some point of your investing business. Most investors regularly utilize some type of financing for their investments. You need to seek out and discover all of the financing options available to you today (view full list of options)

Step #12 – LEARN HOW TO CALCULATE A DEAL

Every investor will have a different way to calculate a deal but the general outcome sought is positive income or profit or some target of return, i.e. Make Money! In my own investing business I have several criteria I use depending on the type of investment I am doing. For example, in my own flip projects I don't want to get into any property for more than 75% of the current average retail value (ARV) and this is after all expenses are considered (view details and example calculations).

Step #13 – NEGOTIATE

You’ve probably heard the phrase “Everything is negotiable”. This is especially true in real estate investing. You can negotiate the sales price. You can negotiate terms. You can negotiate repairs. You can negotiate with contractors. You can negotiate for discounts from retailers. You can negotiate seller paid closing costs. Even if you are brand new to investing you can still become a good negotiator (learn how).

Step #14 – BE A READY BUYER

Most sellers are going to require a buyer be pre-approved or have proof of funds when it comes to the offer or contract time. You don’t want to miss out on a deal because you didn’t have your pre-approval or proof of funds available (more details).

Step #15 – DON’T QUIT YOUR DAY JOB

Most investors start out as part time investors while working their other job. While you might envision one day being a full time investor, and this day may very well come, you should continue working your regular job for a number of reasons (learn more).

Step #16 – BUILD UP YOUR RESERVES

You will need money in your investing business. Reserves should ideally be in the form of cash on hand or cash accessible without a lot of penalty to do so. While there might be arrangements you can make in order to limit the amount of money you might need for a specific deal, you always need a reserve to fall back to when bad things happen in your investing business. Remember my tornado story from earlier? (Read the tornado story).

Step #17 – BEGIN WITH THE END IN MIND

In my investing business I start with asking myself "What is the end result here or what is it I am hoping to achieve?" Having the ideal end result identified at the beginning will help you formulate your plan to get there. You might say, "I want to flip a house," or "I want to own a long term rental." Or maybe you want to buy a duplex or find a great deal so you can sell it to another investor. In my investing business, I of use sales comparables of like-property in the immediate area to help estimate my ARV and keep from paying too much for the property in the beginning (see more examples).

Step #18 – HAVE A PLAN B

Real estate investing is notorious for not working out the way it was supposed to. Maybe it’s a flip house that flops, doesn’t sell. Maybe it’s a rental no tenant wants. Maybe you have a short term hard money loan that is coming due. There will be an occasion when your initial exit strategy doesn’t work out. Your plan B might sound something like this. . . (see example).

Step #19 – FIND GOOD DEALS

Where you do find deals? The answer is anywhere and everywhere you can! You might find deals by networking with other investors in the groups you are associated with, on the MLS, through online marketing, through direct marketing, on Craigslist, through bandit signs, etc. There are many ways to find a deal. And don't forget, a deal can be created with the right numbers (learn how).

Step #20 – OBEY THE LAW

Every state, and even many local cities, has its own rules, regulations, landlord-tenant laws, real estate laws, codes, rental licensing requirements, etc. You need to learn as much as you can about the type of investing you want to do where you want to do it. Claiming ignorance won’t be a viable defense. I’ve found in my own experiences hat the investor is usually held to a higher accountability than the opposing side because the investor is expected to know and understand the laws (learn more).

Step #21 – BE YOUR OWN BEST ALLY

You will work with many people in your investing business. These people include Realtors, contractors, sellers, buyers, other investors, tenants, lenders, professionals, etc. Some will have your best interest in mind but many will have their own best interest in mind. You are your own best friend in investing. No one will work as hard for your business as you will (learn more).

Step # 22 – CRAFT YOUR ELEVATOR PITCH

Know what you are doing and where you are going, and be able to articulate it in 2 minutes or less. For example, when working with or seeking out a lender, your pitch might go something like, “I want to buy and rehab this single family 3 bed / 2 bath / 2 car garage split-level property which is similar to most of the other houses in the same neighborhood. I’m capping my offer price at…” (read the rest of this example and more).

Step #23 – USE ONLINE MARKETING AND SOCIAL MEDIA

We live in the age of new technology. Besides the importance of joining and networking on online investor sites, other online marketing and social media sites give you access to deals and help you promote yourself, market to tenants for your rental properties, sell your property, and much more (get more details).

Step #24 – CONSIDER INVESTING AS AN ENTITY

This is an important question for your real estate attorney. I can’t tell you what might work best in your own situation. I can only tell you to try to determine what you are going to do early in your investing business (more details).

Step #25 – BE CAREFUL PARTNERING

Most investors jump too quickly into a partnership, and many partnerships end up going sour. When sour happens it’s usually messy, costly, and tough to deal with. Profit and equity are usually lost. Relationships are ruined. Make sure you and your partner are seeking the same outcome. For exampled, you don’t want to do a project where your partner wants to sell it but you want to keep it (for several reasons).

Step #26 – GET GOOD AT PAPERWORK

You will need good, accurate, complete paperwork throughout the investing process, and it is important to start off the right way. Paperwork might be corporate documents, contract forms, appropriate lease agreement, proof of funds, partnership agreement, and others depending on your own investing business. It can be very hard to go back and change or correct paperwork if you have already executed it, which can lead to several problems (see example).

Step #27 – KEEP GOOD RECORDS

You need to keep every receipt, every invoice, every lien waiver, every W9 (for end of year 1099s), all your closing and contract documents, insurance forms, bank statements, etc. And if you are going to really do it correctly, you should keep a mileage log for when you are working in your investing business, among other things (see the list).

Step #28 – CONSIDER YOUR AGENT

An ideal agent for you is one with professional investor experience, or is an investor themselves. Most real estate agents are never trained or educated when it comes to real estate investing. Continuing education classes rarely cover any investing information. Don’t assume the real estate agent is going to know any more than you know, and don’t expect your agent to read your mind about what it is you are looking for (view other considerations).

Step #29 – AVOID AND SOLVE PROBLEMS

Real estate investing is not always easy and fun. I have experienced some of my life’s most “educational” events throughout my investing business, and I don’t want those lessons repeated. My education has included basements flooding, pipes breaking, tenants trashing my property, complaints from neighbors, overwhelming stress, police calling me about one of my properties, going to court for an eviction… (learn about more problems you’ll want to avoid).

Step #30 – LEARN FROM YOUR MY MISTAKES

You’ve probably heard that the definition of insanity is doing the same thing over and over and expecting a different result. The same can be true in real estate investing. You will make mistakes. The key to making a mistake is to not repeat the same action again. Learn the lesson and move forward keeping your why in front of you at all times (dive deeper).

Step #31 – REMEMBER: SIZE DOES MATTER

In your local market there will be a sweet spot for rentals and flips. What I mean by sweet spot is a price range where most of the tenants are renting (Ex: $750-$995) or most of the buyers are buying (Ex: $100K-$150K). As you are continuing in your investing business I suggest you stay in the sweet spot, as long as you’re finding deals and making money of course. Bigger isn’t always better (learn why).

Step #32 – DON’T FORGET: TIME IS MONEY

You will never know all there is to know about investing, so if you are waiting until this time comes, you will never act. Time is money in your investing business. The sooner you begin, the sooner you’ll start to realize your investing goals. Time is also a great buffer to problems (see example).

Step #33 – PERSEVERE

It might take you a day, a week, a month, or several months to find your first real deal. As a new investor you are probably going to be anxious and want to get your first deal today. My advice, wait it out. The “deal of a lifetime” comes along frequently in real estate investing (more info).

Step #34 – REMEMBER: THERE ARE NO SECRETS

There really aren’t any secrets or ways to invest that haven’t been done already. Much of the time the newest “investing fad” is simply an old way to invest with a new spin on it. Or it could be someone trying to scare you into buying something out of fear (learn more).

Step #35 – CONSIDER YOUR MANAGER

If your investing business includes owning rental property I will tell you ongoing management is going to be key to the success of your investment. It is certainly true you need the tenant to pay the rent but the big picture long term plan should include appropriate and efficient management (learn more).

THE END IS YOUR BEGINNING

I do hope you found this abbreviated version of my Investor Road Map helpful and you learned something. This informational guide is meant to give you some basic knowledge to help you get started forming the foundation in your investing business. It’s certainly not meant to be an end all as you will have to learn and gain knowledge here forward.

Final Thoughts – MY HINDSIGHT

I think anyone can learn the basics of real estate investing then use the basics to help build their investing business. Yes, it is hard work, takes time, and there are trials and tribulations along the way, but the same can be true for any new business you might be interested in. If I only knew 10+ years ago when I got started what I know now, this is honestly what I would tell you…

(Download My Investor Road Map to Find Out Exactly What I Would Have Done Differently)

One of the people who I’m most proud to have shared these 35 steps with was student/client of mine named James from South Carolina. Below is some of what James had to say about overcoming his own fears, making the most of his mentoring program and ultimately building an investing business with a solid foundation. I hope the information in my Investor Road Map can help you on your way to a successful investing career, too.

Here’s What My Student/Client James Had to Say…

Thanks to James for sharing his experience, and thank you for reading.

I hope to talk to you soon.

– JJ Pawlowski