How to Become a Real Estate Investor

How to Be a Real Estate InvestorThere are countless people these days clawing at the bit to separate you from your money to show you how to become a real estate investor. Before you take such a person’s advice, whether you pay for it or if it’s free, you’d be well served to probe into their history and current status as a real estate investor. Do this enough and you’ll find the industry of real estate investing education is replete with “experts” that profess to know a whole lot, yet do very little. And as an ancient Chinese proverb reads, “To know and not do is to not know.” They aren’t investors. Only a real estate investor can really show you how to become a real estate investor.

Buying low and selling high resulting in a profit is the mark of a real investor, and that is how to become a real estate investor. There is never a bad time to be a real estate investor. Regardless of market conditions and the economy, there is always a low price to buy for and a higher price to sell for. The concept of supply and demand is overwhelmingly in favor of real estate as an investment, and unless shelter somehow goes out of style, that is unlikely to change. If you understand that, you are ready to learn how to be a real estate investor. The operative word being “learn.” To become a real estate investor will require a significant amount of real estate investing education, and that education will never stop.

Lessons will be learned with every transaction an investor completes, so don’t expect to ever know it all. And having said that, don’t try (as so many do) to learn it all before you begin, you don’t need to. With a basic understanding of the process, you are ready to take action. There are four basic steps to a transaction to place your focus when learning how to become a real estate investor.

Step 1 – Find the deal! There are several acquisition strategies of which to find deals. In hindsight, one of the best tips I had ever been given when learning how to become a real estate investor was to F.O.C.U.S. (Follow One Course Until Successful) and master one acquisition strategy before learning another. Examples of acquisition strategies are Foreclosure Auctions, Short Sales, Probate, Notice of Defaults and Tax Deeds and Liens. There are many more, but those are some of the more popular strategies. A good real estate investor is a master deal finder. To find a good deals, one must know how to generate leads… and the quality of the leads is in the quantity. No leads? No deals! No deals? You’re not an investor. Learn how to find the deal.

Step 2 – Analyze the deal! Now that you’ve found an opportunity that appears to be a deal, how do you know if it’s really a deal or not? Deal analysis is probably the most underrated, and sadly often ignored, skills when learning how to become a real estate investor. Don’t make that mistake. This skill, or the lack of, will either make you or break you. Learn how to analyze the deal.

Step 3 – Secure the deal! After finding a deal, the next step is to secure it for yourself. You do this by putting the deal under contract. It sounds simple enough, yet this is where most new investors get stopped and/or completely fail. The two primary reasons this happens when people are learning how to become a real estate investor are 1) they don’t thoroughly understand the purchase agreement and are afraid they’ll make a mistake, and 2) they lack the people skills to influence a seller to sign the purchase agreement. To secure the deal, of which there is no deal unless you do, learn the purchase agreement and develop your people skills. The ability to get people, sellers specifically, to do business with you will be in direct proportion to your ability to get people to like you, trust you and believe in your competence.

Step 4 – Close the deal! There’s a saying, “You make your money when you buy real estate.” That statement couldn’t be any more true, but it is incomplete. Yes, you make your money when you buy real estate, but you don’t get paid until you sell it. You get paid when you close the deal. There are many acquisition strategies, but there are only four “closing” strategies, of which will most commonly be referred to as “exit strategies” while learning how to become a real estate investor. The four exit strategies are 1) Wholesale, 2) Fix n‘ Flip, 3) Lease Option and 4) Buy n‘ Hold. A good real estate investor will be well versed in all four knowing which to use and when to maximize profits.

In summary, “How to become a real estate investor” consists of knowing there are no good markets or bad markets, just up markets and down markets. An investment in your education will be your greatest investment (as you’ll learn how to modify your strategy with each market), and that education should flow in the sequence of the deal itself. First, learn how to find deals. Pick one acquisition strategy and master it before learning another. Second, learn how to analyze deals. Knowing the difference between bad deals, decent deals, good deals and great deals will greatly contribute to your longevity as an investor. Third, learn how to secure deals. Understand the purchase agreement and refine your people skills. Fourth, learn how to close deals. No close? No pay. Know the four exit strategies so you always get paid the most possible. Ready to take the next step in learning how to become a real estate investor? Invest in your education. There are countless options for your real estate investing education, here are three for your review here.

Comments

  1. james thompson says:

    need a mentor in real estate investing

    • Start looking at your local REI clubs, and specifically look for the person that has the life you want to have. Once you’ve found that person, do everything you can to become of value to them. That’s how I do it.

      Hope that helps.

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