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One Crucial Step You Need to Take BEFORE Investing in Real Estate

Ben Leybovich
3 min read
One Crucial Step You Need to Take BEFORE Investing in Real Estate

It’s five in the morning, and I can’t sleep; commonplace around here, actually. There is a cup of coffee next to me, with maple syrup for sweetener. I haven’t had an iota of processed bleached sugar that they sell in the store in my mouth in over a year; it’s horrible for you. Coffee tastes great with local, all natural, organic maple syrup — and with a wonderful additional flavor profile.

But while it’s waking up my body, it is kinda slow to do anything for my creativity — I cannot come up with a single writing idea to save my life…

Related: Property Investment: 5 1/2 Tips for Success

Well, you probably know what I do at times like these. Whenever stuck, my favorite solution is to see what my dear friend Brandon Turner’s been up to on this blog — and then good-heartedly pick him apart. Brandon is always highly enthusiastic about his content — and often offers a positive, optimistic outlook. I mean, this is not a bad thing, and in fact, this character trait is precisely why his wife Heather and his friend (Me) love him as we do. But this is also why Brandon’s content can be fertile ground for counterpoint from someone — someone who’s been around a while — someone like me… 🙂

Alas, as irresistible as this proposition seems at 5:30 AM, it’s not happening this morning. I must be getting old and losing my edge…

What I need to do instead is go check the Forums, the other method of coming up with things to write about. Surely somebody must have said something silly that I can cling on to. Hang on…

I am back — success!

I saw several people post the proverbial I am fully committed to Real Estate – where do I begin?  

This is lovely. Where do I begin…

The First Thing to Do When Getting into Real Estate

Most of you are trying to break into real estate to solve a problem — a financial problem in your life.

Related: Newbie Real Estate Investors: The Path to Success Starts HERE

Am I right? Of course I am right, or Josh wouldn’t be paying me the big bucks. You most likely read a couple of articles from Brandon all about how you can make millions, and it’s easy, and it’s pleasant, and you can do it with no money, experience or brains. You probably read all about this “creative financing” that he likes to write about (all of which he learned from me), and thought – BINGO; Real Estate it is!

Well — I won’t tell you that he is wrong ’cause he is not.

You can indeed create solutions out of thin air using real estate as a vehicle. However, I think it’s important to understand that real estate is not where the solutions are created. The solutions come before; real estate simply amplifies those solutions when used correctly.

Let Me Paint You a Picture

Do you like to roller skate?

Naturally you do ’cause you are young, healthy and cool. But one day you fall down on asphalt and scrape your knee rather badly; nothing that won’t heal nicely if treated correctly, but something that could turn into a gangrene if left unchecked.

Let me ask you: do you think you ought to wash the wound out before covering it with a bandage, or do you think that simply putting a bandage on the problem will do the trick?  This ain’t rocket science — unless you want to end up with gangrene, you need to clean up the affected area first before covering it up.

You know this…

Why is it that you don’t get this as it relates to your financial aches and pains? Why is it that most of you think that your financial problems will “heal up” simply by jumping into RE? Real estate is the bandage that helps things to heal, but not if all you do is cover up problems without treating them first.

Before Doing ANYTHING Else

Thus, the first thing to do if you want to play the game of real estate should be your Financial Statement and Budget.

Whatever the reasons you are struggling, they are rooted in your behavior. A financial statement will illuminate the problems, and the budget will illuminate the behavior that causes those problems.

So, to start, if you don’t have a financial statement — build one. If you are not living on a budget — change that.

You need to “clean up” the wound that is your financial circumstance before attempting to lay a bandage on it!  And if you don’t know how to create a financial statement and a budget, then your problems are so much worse than you think.

One thing is for sure — buying property before cleaning your financial life up is going to result in disaster, guaranteed!

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.