Unable to move forward, fear of the unknown or of making a costly mistake, “don’t know where to start”?
Biggest thing holding investors back is unsure how or where to secure financing.
There are so many people afraid to make a move, waiting around for someone to hold their hand and take them step by step. That is one of the reasons why “Gurus” such as Dean Grazioski are doing so well. He charges thousands and promises to “hold you hand”. I personally know a couple who spent $40K of their small savings to attend one of his seminars and are now in dept up to their eyeballs and still paralyzed.
Remember when you were a kid and got your first bike? Did you read tons of books about how to ride a bike or did you just get on it and start peddling. Perhaps Dad was there to put some trainers on but chances are he didn't peddle for you. You had to do that yourself.
Let's look at another example, learning how to drive for instance. Sure you took some drivers ed classes and maybe Mom and Dad shelled out for a driving instructor. But you still had to get behind the wheel, learn the basics, swallow your fear and start driving forward. You did that!
The point is, books and forums, like here on BP, provide tons of info but ultimately, you need to ask yourself if you can muster up the courage to "just do it". Like falling from the bike and scrapping your knee, you have to be willing to make some mistakes along the way. It's life and we all do it! Investors are no exception. It's okay to mess up so long as you actually learn from the experience and gain more confidence along the way.
There are some things you can do to prepare.
1. Identify how much you are willing to invest and how. Write it down!
2. Get your ducks in a row, if you need financing, secure it first before you make an offer.
3. Use facts, not emotion or public opinion, to identify the best market based on your budget. Remember, you're don't have to live there.
4. Have your proof of funds at the ready and your financing set-up so you can act quickly. This is a competitive market and good deals don't linger.
5. When identifying your first deal, put aside emotion and other people's opinions. Run the numbers (cost of repairs and improvements, fixed costs, rent rolls, etc.) and make sure you come out with a decent profit.
6. Fake it if you have to and display confidence. Like you're very first job interview, you may be shaking like a leaf inside, but do you best to get the deal closed.
7. Be willing to make a reasonable offer with only few contingencies such as 30 day inspection period and a close after the inspection with clear title.
8. Operate with integrity and honesty. A bad reputation spreads fast and can seriously hamper your efforts in this market.
9. Don't let naysayers prevent you from reaching outside you're backyard. Research with an open mind. Find out why investors are flocking to a market where others are running scared. What do they know, that many don't?
10. Make an offer! There are plenty of "good deals" out there and only a few great ones. Don't make the mistake of passing up several small good deals for the "holy grail". Experienced investors know that lots of small "good" deals quickly add up.
Thank you for this post. I am right there on the verge ready to start making offers. I am currently looking to secure some type of financing and and doing my best to not get into "analysis paralysis."
@Bryston Wisekal My advice is to clearly define "some type of financing" into an actual plan. Call lenders (banks or hard money guys). Don't give up! Set a specific deadline such as "I will have found and taking action to secure a loan by Friday, March 21st. Write it down and post it on your computer. Pick up the phone and start dialing. Just do it!
@Annette Hibbler great post. 2 votes for you.
@Bryston Wisekal jump in. The water is warm.
to me it's all about FEAR and RISK. You have to learn how to control both. To much or to little of either and your in trouble. Take small steps first but make the steps!
@Annette Hibbler , thank you for posting this! I needed a swift kick in the pants.
I feel like I was falling back into analysis paralysis mode and I need to get out of that. I have a couple of properties lined up to see on Monday, and if I like what I see, I'm prepared to make an offer.
@Mark Ferguson So long as the numbers work and you come out ahead, do it! Remember, lots of small good deals add up quickly. So start small, realize you'll make mistakes along the way and move forward. Consider it a right of passage, if you will. I've make tons of mistakes and learned from each one. Go out there and do it!
Let us know how it goes on Monday?
@Annette Hibbler What a great post. I am new at this. And ready to learn what i need to do. Thanks for sharing.
Thanks everyone for your input. I was hoping this would reach many more BP'ers since I suspect many are in similar situations.
I am hoping that the post will help motivate many to pick up the phone, go see the property, knock on a door and\or take another step closer to securing finances for your next deal. You all can do this! It's okay to be nervous, just don't let it paralyze you. Swallow hard and get off the chair. I also find that asking lots of questions helps me overcome my initial nervousness.
I have another post that will be up tonight on here called "Are You a Tirekicker or a Dealmaker?" Hope you'll all look out for it and let me know what you think. :)
thanks a lot for this post it really help me and got me more motivated then I was before can't wait to get some phone calls and close some deals
@Walter Thompson Glad to be of some help. Remember to have your financing in order BEFORE you make a serious offer. Sellers won't wait around for you. Show that you are prepared and ready to act right from the start and you'll quickly move passed the "tire kickers" submitting low ball offers and a laundry list of contingencies.
If you're wholesaling, the best advice I can give is to QUALIFY your seller and buyer equally. Ask lots of questions and find out if the buyers has his/her financing at the ready along with a POF (proof of funds) letter to send you. Get it first, so you can quickly send a copy along to your seller. Make sure your buyer can act quickly and decisively and you'll get more deals along with a good reputation among other sellers.
Thanks for this post, I have just signed up to BP this week and I am still trying to go thru all this great info!! I am interested in wholesaling, but am confused I see posts that say find property before finance and others say get finance before property??? Which is right??
What good is finding the right property at the right price and profitability margin if you don't have the financial backing already set-up to obtain it quickly? No one will take you seriously.
Thanks for the article. I am a little over a year investing in real estate, so at this moment I am very motivated. Right now I have three rentals and another under contract and I am going to "bundle" them next month.
As I am seventy years old, I prefer to go it alone and only use banks for financing, thus the "bundling".
I have close friends who are plumbers, electricians, and carpenters for the upkeep. Like me, they are retired so they are available at a moments notice.
I set up the insurance and taxes in the mortgage so I never worry about that.
I clear $250 to $300 a month on each property and I save it for more real estate opportunities.
Most importantly, I will not rent out (or purchase) a home that I would not live in myself.
For people buying "retail" for the future this is great advice.
For Real Estate "Entrepreneurs" doing wholesaling - flipping, sub2, wraps, cfds, Owner Financing, lease option assignments, etc, this is not enough.
Give a cash offer that is low with cash financing, and give a terms offer (see above) that gets the seller more money over time.
2 offers per seller a day will get you further.
Passing up a turnkey rental simply based on the fact that it would not be "good enough" for you personally, is a common mistake of entry level entrepreneurs. I have many such rentals that are very good for my tenants and they are happy living in them. I keep in mind that my personal economic level is higher than most and as are my expectations when considering a personal residence. But I put that all aside when it comes to rental property.
I make sure neighborhoods are good and safe, schools and plenty of retail shopping and jobs opportunities are nearby. The term "rent ready" means the house is safe inside and out, clean, fresh paint, clean cabinetry and working appliances, windows are efficient (no drafts), floors are in good shape, etc. Do my rentals have granite countertops, double ovens and jacuzzi tubs, absolutely not. It would be total overkill and a waste of my money. I have a good grasp on what other houses in the area are equipped with and stick to much the same.
Thank you Annette so much for your posts. I am very new at this and they are very helpful. Thank you for your encouraging words.
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