“Twenty years from now you will be more disappointed the things you didn’t do than the ones that you did do.” – Mark Twain
Real estate investing is actually fairly simple. If you’re thinking that this is going to be the year you begin real estate investing, but doubt and fear are paralyzing you, overcome those feelings following a basic investing process. If you take it step step, and spend enough time doing the research at each step, you can find good properties that will produce massive amounts of wealth for you over time. And, once you get started, it will just get easier.
Oversimplified, real estate investing for us happens in five steps:
1. Set specific goals.
2. Find and research a market to invest in.
3. Find and evaluate properties.
4. Buy the property that meets our goals.
5. Make money from it – good property management and paperwork.
When we’ve deviated from these steps, we’ve made mistakes. When we skipped the goal setting phase, we ended up with no money down deals that could have bankrupted us. When we skipped out on market research we ended up with a condo in an area of Toronto that grew over 2,000 units of THE SAME SIZE condo in the five years after we bought it, and when we’ve been careless in our selection of property managers or tenants (in the make money from it phase) we’ve suffered the consequences with court fines and tenants that don’t pay rent.
Our real estate investing life has the plot of a great made for t.v. movie. It’s been dramatic, and often a bit too stressful. But, we could have prevented most of the drama spending a little more time on each step. If we’d done that we would only have a couple of good stories to tell…not dozens!
So, to start real estate investing and feel good about that first step… SET YOUR GOALS. We set goals for our health and our wealth. Just like losing weight…it’s too easy to say “I want to lose weight” and then do nothing. It’s also too easy to say “I am going to be rich” and then wallow in your sorrow when it just doesn’t happen. You will never get there just thinking those thoughts… You need to be specific about what you want, and then take action.
And with real estate it’s critical to know where you want to go before you start. In order to figure out what type of property you are looking for you will need to know what exactly you can put in (in terms of time, effort and money) and what you want to get from real estate investing.
Ask yourself some questions:
– Is it more important to you to find a property that doesn’t cost you much money or one that doesn’t cost you much time?
– Do you have much spare time?
– Are you handy? Do you want to do work on the property?
– Are you expecting to do a lot of work on the property yourself or do you prefer to not be involved much at all?
– What is your risk tolerance?
– Do you want real estate to be your primary source of income after a certain period of time?
– How much money can you (or do you want to) dedicate to real estate investments versus other investments?
– Do you have good credit?
Without a clear understanding of what you want to achieve, it’s very difficult to get started. It’s also very scary! So get clear on what you want to do, take some ba steps and soon you’ll feel confident and ready.
If you’re new to goal setting, here’s the simple steps we use:
1. Start listing everything you want to accomplish in your realestateout. We do this without judgment. We list everything from learning to play the drums, being fluent in Spanish to owning enough real estate to generate $25,000/month in net income each month. No judgement…just list it all.
2. Review your long list, and find the ones that are most important to you to focus on in the next few years. We highlight them, and then proceed to break them down into the smaller steps that we need to take to move ourselves towards each of those goals in the next 3 years, in the next year and in the next month.