Nuts and Bolts of First Deal?

Question

This is what I get stuck on, and why I haven't gotten started making offers yet:

A large portion of real estate investing education about starting out that I have seen has been about what kind of REI to start in, (Eg. wholesaling, flipping, buy and hold etc.) or how to get started in your specific niche. (How to market for wholesaling, basics of land lording etc.) What I haven't seen is how you should prepare for your first deal. Should you have a LLC already set up? Put together a team first (realtor, lawyer, CPA, mortgage broker, etc.)? Have investors and partners lined up? Related - Is it a good idea to have investors/partners/funding lined up before you make your first offer? Should you have a business plan?

Or is it okay to go out, make a deal, and then figure out the rest as you go along?

I struggle because I want to go and make deals, but I can see so many risks if I don't have that foundation in place first. Yet, if I want to get started, I have to get out there an start making offers. Basically, am I better off focusing on building a foundation of a business through networking and planning before I start making offers and finally have that 1st deal?

Brent Coombs · Answer

Same rules apply to your first deal as they should to gambling: only risk the amount you can afford to lose. The better you can MANAGE that risk (mentors, partners, research etc), the more likely that you will make 'winner' deals.  BP is a great way to get those calculated-risk juices flowing! Cheers...

Jeff Rabinowitz · Answer

How are you going to attract partners and investors if you don't know what type of deal you will be doing? Do a deal, two, three... See what appeals to you, what you like to do, what you are good at. The type of deal will inform the structure of your business (if you even need a structure other than sole proprietor) and the team members who will be important. If you attempt to set up a structure before doing a deal you may be frustrated very early. Worse, the structure you form may not be appropriate for what you end up doing. You may have to scrap it and start over anyway.