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7 Real Estate Tips for New Investors: Tip 4

Tip 4:  The ‘Now’ Principle

An important part of real estate success is finding a great deal. With homes and/or land at stake, it’s important for investors to be patient in their decision making, and wait for a good deal. However, there’s a difference between waiting for a good deal, and waiting for a perfect one.

The latter is a trap many rookie investors fall into. Their resources are not yet built up, and few if any purchasing experiences are under their belt. Consequently, they choose only to act on deals that are free of risk or potential backfire…and none ever come.

A similar problem exists among poker players. They wait and wait and wait for the perfect hand to come, passing up many opportunities to double up, and when they finally land a pair of aces, either they’re nearly out of chips, or no one bothers to play the hand.

The ‘Now’ Principle does not dictate that success entails pulling the trigger on the first seemingly appealing deal. What it does posit is that good deals need to be searched out, developed, and even created from scratch. Calculated, effective risk management clearly states that no-risk deals don’t exist, and if they do they’re not worth your while.

A savings account is no-risk. Or so one might believe. But as stated in a previous post, hoarding every dollar you have and refusing to spend is the riskiest play of all, and is doomed to fail.

Moral of the story: Take action. Smart, reasonable action…but action. Otherwise, you’ll find that indecision is the worst decision.

Read Tip 3                                                        Read Tip 5

For our loyal clients, and our future ones

RPM East Valley

7 Real Estate Tips for New Investors: Tip 3

Tip 3:  Ditch the Accumulation Paradigm

We all have heard stories of couples and families who over the course of the careers saved dutifully for retirement. They worked steady jobs, paid their taxes, looked for bargains when shopping online, and built their nest egg. We admire their dedication, but many of their stories don’t end well.

Somewhere between age 50 and 60, they have amassed significant savings, but begin to do the math. They consider their currently lifestyle, add to it a few perks they’d like to enjoy during retirement, and multiply by the number of years they roughly plan to live. And they find that it’s not enough. Yes, they won’t starve, but the visions and aspirations of the well-earned retirement come crumbling down.

We call this the Accumulation Paradigm. The idea is to trade hours for dollars, and then stash their dollars in a mattress, aka savings account. That money sits there, providing a false sense of peace of mind, and absolutely no added investment or profitability.

Real estate calls for the opposite. We take the money we have, and we purchase something that will make us more money. Many people cringe at that notion because it involves ‘spending’ their savings, but we fail to recognize that dollars that aren’t working are like people that aren’t working.

“We would never employ someone to sit around at our bank and do nothing, but that’s exactly how we often employ our dollars.”   -C.R. Bennett

Ditch the Accumulation Paradigm. Put your dollars to work.

Read Tip 2                                             Read Tip 4

For our loyal clients, and our future ones

RPM East Valley

7 Real Estate Tips for New Investors: Tip 2

Tip 2:  The Skill that matters most

Most jobs and careers are based on a set of skills. Through school and work, we develop abilities and talents that we trade for dollars. A plumber learns piping and septic, a banker learns mortgages and financing, and an executive learns management and leadership.

Real estate investors: Problem solving

Yes, there is problem solving in just about every profession. However, few business ventures require as much (and as effective) problem solving as real estate. And more importantly, the ability to solve problems effectively is what separates decent or has-been investors…from those who consistently succeed.

We could spend more words convincing you why, but here’s the catch: To succeed in real estate, don’t be surprised when you encounter problems, especially in the beginning. Without those problems, everyone who tried real estate would succeed relatively easy, and any opportunity to build your portfolio would be nonexistent.

Again, we stress this because the number one threat to real estate investment is giving up. And one of the main reasons people give up is because either they’re not effective problem solvers, or they don’t want to deal with problems.

Fortunately, no college degree in problem solving is necessary (or exists) because life provides us that education regardless. If you are willing to solve the problems you face, then you’ve already solved the first and biggest problem that stops many would-be investors.

Read Tip 1                              Read Tip 3

For our loyal clients, and our future ones

RPM East Valley

7 Real Estate Tips for New Investors

Daunting. That’s the word many of us real estate professionals would use to describe our first impression of succeeding in this field of investment. There seemed so much to do, so much to learn, and so many ways to fail.

But as we got into the water, some dipping our toes in first, while others cannon-balled in, we began to see that it’s doable. Yes, there’s a lot to do, but not as much as you might think. Yes, there’s much to learn, but it’s worth is so apparent and usable.

And yes, there are ways to fail, but with a little bit of help, those landmines can be sidestepped, and a positive real estate experience begins. Here are a few tips to help you along with way:

1)  Keep the ‘why’ close by

As ‘feel good’ as it sounds, one of the biggest hurdles of new investors is simply sticking with it. Some of the early times are hard, especially as you set up your contacts, begin networking, and honing in on the logistics.

Many jobs and businesses out there are worked as a necessity: ‘work to live’. But real estate investment done right is simply a better way to work, and therefore a better way to live. Our recommendations are not to place reminders in your home or car as to why you work (although if that floats your boat, go for it), but rather to develop a purpose-based mindset in your real estate ventures.

Whatever the reason(s) you have for investing real estate, remember that you chose it over other uses of your time, energy, and money, and as you will quickly discover, it will help you realize your financial goals and ambitions faster and more permanently than perhaps anything else you do.

Read Tip 2

For our loyal clients, and our future ones

RPM East Valley

Boosting Investment Power, Part Four: Income

This blog post is a continuation of RPM East Valley’s prior posting, “Boosting Investment Power, Part Two: Debt-to-Income Ratios”. This discussion includes methods for clients both current and future to strengthen their monetary prowess. To start this blog post from the introduction, click here.

Income

Finally, we have arrived where many assumed we’d start.

Yes, higher income translates to bigger loans, better loans, and more of them. When a car dealership or real estate firm asks for your annual household income, it does matter. Larger number…more willingness to lend.

Many ask “Is there a magic number? A threshold that, if you make more than a certain amount, new doors will open?” The answer to that is: it depends on the size of the investment. There are most certainly individuals who own homes and/or new vehicles who make $14 or $15 an hour. Are those homes mansions, or those cars Aston Martins? No. But the majority of those looking for increased investment power are simply seeking a reasonable home, a paid off car, and so on.

Do what you can to not only boost income, but consistently do so. Sit down with your boss to see what you need to be doing to earn annual or semi-annual raises. Inquire if a special project is available that garners a unique bonus. Better yet, investigate if a similar role with a different organization could earn you better pay. If so, take that to your boss, and begin a conversation of matching that rate.

 

This concludes our four-part series on boosting investment power. We appreciate our existing clients, and welcome any and all questions from those who read our blog.

Sincerely,

RPM East Valley