Lessons From a Newbie
In Real Estate - as any other endeavor - you "Don't know what you don't know. New investors take one of two approaches to this problem. The first is spending all the time in the world reading every book on real estate without putting money on any deals. The second is jumping in with both feet and a blindfold on. Both of these fall at opposite extremes and both can be harmful to long term financial success.
That said, there I have four tips from someone who is just getting started down the long road to real estate success for the person who has not purchased a single deal yet. These four tips help one gain both book knowledge and functional knowledge - areas that the two approaches outlined above will leave you lacking in.
Carving Out Time To Learn
In school, you don't just show up to the final exam and expect to pass - unless you're some sort of savant. However, most of us need to show up to class each day, do our homework each night, and run through the material multiple times before becoming proficient enough to pass an exam. This is no different. Give yourself time to learn. If this means watching less TV on weeknights or going out to the bars less on the weekend, then so be it. We often talk about budgeting our money so we have enough capital saved to invest, but we often forget about budgeting our time so that we have enough time capital saved up to invest.
This can also be done creatively. You can listen to a podcast or audiobook instead of Spotify while you're at the gym or while on the daily commute, you can read a blog article or two over lunch during the workday, or you can make a game out of analyzing properties you find on the MLS.
Regardless how you do it, take the time to hone your analysis skills, master rules of thumb and understand their underlying assumptions, and take the time to build a baseline of what makes a good investment in the area you are looking at! At a certain point, you will know what makes a killer deal just by looking at the numbers.
Build Confidence in Yourself and Your Process
Have you ever has a process or procedure explained to you, only to be extremely hesitant the first time you implemented it by yourself? Certain activities require a high level of faith on the front end, and real estate is one of those things. It is easy to sit behind a desk and analyze a deal when there is no money at stake, however that first massive purchase requires a ton of faith! If you have honed in your process doing a number of "dry run" analysis projects in the preceding weeks, the buy should be easier. This confidence will come with each additional purchase, as each deal provides an opportunity to be a proof of concept for your analysis and deal finding process. At some point you just have to trust yourself and trust that your education and effort thus far is enough to step up to the plate and make some deals happen.
Leverage Other People's Knowledge and Experience
This is exactly what BiggerPockets is all about. I am blown away by the amount of collective knowledge and experience available at all of our fingertips. Even outside of BiggerPockets - no matter how weird or obscure you feel that your question might be, chances are someone else has already had to deal with it in the thousands of years that real estate investing has been around. Seek out that knowledge and experience in your local REIAs, through books and BiggerPockets, and by talking about what you do with people that you meet (chances are you will run into some other real estate investors on the plane, at work, or wherever!).
Keep a Journal to Prevent Having to Relearn Lessons
Self improvement is the name of the game. Making a mistake once proves you are human. Making the same mistake twice...now that is a problem. We are all on a path, with the vast majority of people way ahead of me. However, no matter how much (or little) experience you have, chances are you are making mistakes and not running an optimal portfolio or business. By the simple act of taking notes and keeping a real estate journal, you are more likely to remember the lesson. Something about the neurological connection you make by actually writing something down makes it stick longer...I'm not a doctor though. But the best part is, even if you forget the lesson it is written down so you can go look it up! Besides just writing these lessons down, I review my journal on a quarterly basis so that these notes stay fresh in my mind, increasing the likelihood of avoiding similar mistakes in the future.
As I stated earlier - we are all on this journey. And, we wouldn't be on this site writing and reading blog posts if we did not care about our success in real estate and personal finance! By taking time to learn, building up our confidence in the process and our abilities, leveraging other people's experience and keeping a journal we can take one more step closer to optimizing our own time, money and efforts as we all move along this path together.