Real Estate Investing Basics

Newbies: These 3 Simple Steps Will Prepare You For Your First Deal

Expertise: Business Management, Commercial Real Estate, Landlording & Rental Properties, Real Estate Deal Analysis & Advice, Mortgages & Creative Financing, Personal Development, Real Estate Investing Basics
126 Articles Written

Many years ago, when I was learning to trade stocks and options (which I subsequently did for a couple of years but no longer do), you are taught to “paper-trade,” which means you make real trades, but you’re using “fake” money, i.e. paper money. Many trading accounts let you paper-trade. It’s a fantastic way to get experience and build a track record without losing your shirt.

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We don’t have this in the real estate investing world. But we should. And we can, if we’re intentional about it.

Newbies are stuck in the endless cycle of having no experience to be taken seriously so they never get started and never the get experience to get out of the gate.

“Paper-trading” with real estate lets you overcome this catch-22.

My passion is to help people get into their first apartment building deal, so I’m going to illustrate the 3 steps to “paper-trading” real estate from this perspective.

Step #1: Visualize to Believe

Professional athletes use visualization techniques every day. They visualize themselves performing at the highest level, beating the world record, and holding the gold metal.

It should be the same for us real estate entrepreneurs: see yourself touring the apartment building, negotiating it, and signing the contract. Visualize yourself at the closing table, signing the closing documents. See yourself meeting with the property manager to discuss the previous months' performance. Imagine the bank account grow as the rents come in. See yourself selling the building in 5 years and getting a $430,000 check at closing.

Related: 5 Tips to Use Visualization to Become a Successful Real Estate Investor

Step #2: Create a Sample Deal Package

A Sample Deal Package is a document about the kind of apartment building deal you WANT to do. Everything in it is real: the property description, photos, financials, your business plan and projected returns. The only difference is that you don’t have it under contract.

The main reason I teach people to create a Sample Deal Package is to use it as a tool to raise money from other people. (To read more about this, see my article “Psst … The # 1 Secret to Raising Money to Invest in Apartment Buildings.”)

In addition to helping you raise money, the Sample Deal Package is a tool that forces you to behave as if you had an apartment building under contract. You’ve reviewed the marketing package and the financials. You’ve made assumptions and projections. Perhaps you’ve even visited the building.

Behaving “as-if” makes it seem real.

Step #3: Start Making Offers and Don’t Be Afraid to Go Under Contract

A student of mine managed to get a 54-unit apartment building under letter of intent. He felt that the building was too big for him (he was looking for a much smaller one), but we decided to keep moving forward. We put it under contract and worked together on due diligence for nearly 3 weeks. At the end we decided to terminate the contract, but he told me that he learned SO MUCH during the process that he no longer felt a 54-unit was overwhelming. By simply going through PART of the process, his comfort zone quadrupled.

In the same way, we can “fake it before we make it” by making offers and not shying away from putting something under contract. If you construct your contracts correctly, you’ll have several weeks to perform due diligence and you can terminate the contract for ANY reason.

I’m not advocating that you do this repeatedly; otherwise, you’ll develop a bad reputation for not closing, but you don’t need to do this very often to see your comfort zone expand dramatically.


The secret to getting into your first deal (or a much larger deal) is to “fake it until you make it.” Visualize what you want to accomplish, create a Sample Deal Package, visit properties, network with professionals, and make offers. You do this long enough, and you’ll eventually get someone to accept your offer. When this happens, don’t freak out, but go with it.

Related: Newbies: Before You Buy Property, Gauge Your Rental Rates. Here’s How.

Worst case scenario, you terminate the contract before the due diligence period expires. Best case, you figure it out, overcome your fears and end up with your first deal.

Even if you don’t end up closing the deal, you will have gained the experience you were looking for by “paper-trading” a real estate deal. No harm, no foul, but your comfort zone just exploded and you’re one step closer to that first deal. So don’t sit on the sidelines because you lack the experience. Get out there and “paper-trade” a bit!

Talk about a time when you got into a deal that didn’t go anywhere. What happened to your comfort zone? How did this impact what came next?

Be sure to leave a comment, and let’s talk!

Michael Blank is a leading authority on apartment building investing in the United States. He’s passionate about helping others become financially free in 3-5 years by investing in apartment building deals with a special focus on raising money. Through his investment company, he controls over $30MM in performing multifamily assets all over the United States and has raised over $8MM. In addition to his own investing activities, he’s helped students purchase over 2,000 units valued at over $87MM. He’s the author of the best-selling book Financial Freedom With Real Estate Investing and the host of the popular Apartment Building Investing podcast Apartment Building Investing podcast.
    Daniel Ryu Investor from Irvine, CA
    Replied over 5 years ago
    Great advice Michael. Nothing beats experience for expanding ones comfort zone. I also have a paper trade account set up for LEAP options. How’d you do with your options? while I prefer real estate for all the reasons everyone else does, I like looking at options to help me understand how to price risk – I think, a valuable overall skill for any investor.
    Daniel Ryu Investor from Irvine, CA
    Replied over 5 years ago
    Looking forward to putting my first deal under contract ^^
    Daniel Ryu Investor from Irvine, CA
    Replied over 5 years ago
    Looking forward to putting my first deal under contract ^^
    Janet Brown from Laurel, Maryland
    Replied over 5 years ago
    Thank you so much! @Michael Blank. I love tis blog post. I intend to fake it till I make it. Thanks for the encouragement.
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied over 5 years ago
    A good book for those afraid of jumping in is Feel the Fear and Do it Anyways by Susan Jeffers. I would highly recommend it.
    Eric Anderson from Visalia, California
    Replied over 5 years ago
    Excellent perspective… Thank you for giving me some real focus
    David Dalton from Atlanta, Georgia
    Replied over 5 years ago
    Thanks for the encouragement and direction! I made my first cold call the other day, and it went pretty well! Ultimately I don’t think the numbers really work so I’m working on putting together my reasons WHY they don’t work. Hopefully it’ll earn some credit if I can tell the seller clearly why it doesn’t work for me. Brief and to the point Similar to what your recommend in your article right? How do you think I should go about it? Open to anyone’s suggestions
    Jimmy Nevarez from Lakewood, California
    Replied over 5 years ago
    Once again, great article! Having never purchased a property there is a lot of fear that goes with it. I appreciate your write-up and thankful that you would take the time to help build up courage for us who are new. Thanks again Michael! – Jimmy
    Jamie S. Real Estate Investor from Palm Harbor, Florida
    Replied almost 5 years ago
    Thank you, Michael! I will definitely practice these steps!
    Erik Oquendo Real Estate Professional from El Paso, Texas
    Replied over 2 years ago
    @Michael Blank, I will go forward after reading this great article and review the rest of your articles. I do have a newbie question; do you recommend going straight into Commercial REI if you can? Im not a total newbie as I’ve exposed to Commercial RE at NYU while studying RE Finance for a few years. Thanks for your post and help.
    Fernandez Luckett Investor from Los Angeles, California
    Replied over 2 years ago
    I am taking your advice Michael Blank. I feel that will definitely expand my comfort zone. Thank You