The second article in our series of six keys to successful investing while holding a full time job is the one I get the most push back on. I don’t understand it, as I believe that it is very simple, yet people are always trying to cut corners or they try to outsmart the system.
If you are going to be successful investing while holding a full time job (and you have support of your significant other, see Key #1) you need to put in “The Work”. I actually call it “Homework” as it seems easier to digest, after all we all have demanding full time jobs already.
So what do I mean by Homework, how do you complete the Homework and how do you know when you are done with your Homework?
First, what do I mean by Homework?
Because you only have limited time in the day or week given work commitments, about half of the homework can be done at home after hours and on weekends, while the other half of the work needs to be completed in the field in the market you have selected to invest in.
You need to become knowledgeable about your market, meet new people in your market that could be on your team, and you need to see at least 50 properties in your investment market.
50 properties? Why not 10 or 5? “Remember I am smart and I have no time.”
Do what you want, but remember, I said 50 properties. I think an investor needs to see at least 50 properties before they can isolate a great deal from good deals. If you see less than 50 properties you wouldn’t be able to collect enough data points, and you will be investing with incomplete information.
I still review at least 20 new properties a month and I have been doing this for 10 Years.
How do you complete the Homework?
Unfortunately, there is no short cut or easy answer. Time and effort are required to scrutinize the details, call on your contacts, and finally, get on the road and review as many properties as time allows.
Learn the details about your market: find out the price range of different type/size properties, expected rents for different type/size of properties, vacancy situation, neighborhood, cost of rehab, etc.
Expand and talk to contacts in your market and become an expert on the properties for sale in your market.
How do you know when you are done with your homework?
I think the best measuring stick for being done is the ability to answer the questions with confidence:
Can you go through 10 Properties in a day and rank them from best to worst based on your investment criteria?
What criteria are you using to rank these properties?
If you can do this you are well on your way to successful investing in real estate. If you can’t rank the properties best to worst, I suggest you see more properties.
Another key to being done with your homework is feeling conformable calling a stranger. Let’s face it, most real estate agents will be strangers the first time you call them, so make it a practice to call at least one new real estate agent a week.
In the end, by securing full support from your significant other and completing the required homework you will set yourself up for successful investing while working full time.
Key #3 is coming next week
Photo: Phil and Pam