There are four stages to a real estate investor's career. If you make it to stage four, you'll be rewarded with a life spent on your own terms, where you control your own destiny.
Stage one begins at 3:00 am one morning. You're channel surfing and you stop on an infomercial of Carleton Sheets sitting on the beaches of Hawaii. Because there's nothing else on TV at that time, you sit through the 30 minute infomercial.
The next morning you wake up and you can't get real estate investing out of your mind. You're sick of your job and have wanted to get out of the rat race for a while now. You know that many fortunes have been made in real estate and you decide that you're going to begin on the path to a better lifestyle.
You don't have the foggiest idea in the world how to invest in real estate so you go to the bookstore and read a few real estate books. After two or three books you think you're pretty much an expert. Maybe you try to buy a house through a Realtor, or maybe you put out some signs and find a motivated seller that way.
Stage one is a very dangerous stage. This is where a lot of people get taken advantage of by con artists, because you don't know what you don't know. You also might do a terrible deal and lose thousands of dollars (I did a horrible deal in this stage that cost me $20,000). If you survive stage one, then you move on to stage two. Unfortunately, 95% of people quit at stage one (this is why less than 5% of people in this country are millionaires).
In stage two, you quickly realize that you need help. You realize you need to get a mentor and purchase some quality courses and read this magazine to give you a proper education. You also attend a few seminars and attend your local real estate investment meetings. You set up your LLC, get business cards, set up a website, get a dedicated phone number and make sure your infrastructure is in place.
You also learn the importance of marketing. You create a marketing plan and start putting up your bandit signs, mailing your postcards and letters and networking every chance you get. Through the help of your mentor and your education, you get your first deal and make your first profit in this business (mine was a check for $3,500).
The feeling you get in stage two is amazing. You finally believe in yourself and in this business. You know that the business works and your self-confidence explodes. In stage two you close 1-4 deals.
In stage three you continue to invest heavily in your education. You get another mentor, buy more educational products and attend more seminars. You also learn multiple investing techniques. If you started out as a wholesaler, you learn how to do subject-to and lease options. It's very important to learn multiple techniques in this stage. If you aren't able to create several solutions every time you evaluate a property, you won't last very long in this business. Also, you need to learn how to use other people's money and other people's credit. Using OPM and OPC is what makes people millionaires.
This is also a time to build your power team. You get an accountant, a lawyer, a title company and a home inspector. It's very important to remember that all of these people work for you. Most lawyers and title companies have no idea how creative real estate works. If you mention the word “subject-to” they will either tell you its illegal or have no idea what you're talking about. This is why you need to interview several people until you find quality team members. Also, don't be afraid to fire someone if they can't accomplish tasks in a timely manner or don't live up to your expectations.
Stage three is a lot of fun because everything is starting to come together. You get the big picture of this business and you are starting to make some serious money. Toward the end of stage three you're able to fire your boss and become a full time investor. This is an incredible moment because your dreams are coming true. In stage three you close 5-15 deals.
Stage four is what I like to call the lifestyle stage. This is where you start to put your business on auto-pilot. You implement systems and outsource everything so you only have to work a few hours a day, if that. Here are a few things to do to free up your time as a stage four investor:
- Get a virtual assistant – Getting a VA was one of the best decisions I ever made. Your VA will answer all of your phone calls. They will take down seller information, coordinate closings, screen tenants and do a number of other things.
- Hire someone to do your bandit signs – Post an ad on Craigslist.com. Have your virtual assistant order your signs and have them delivered and put up by the person you hire.
- All of your marketing should be automated so that your assistant can take care of everything through sites such as click2mail.com
- Through your networking you'll have people bringing you deals left and right. These deals will be faxed or emailed to your assistant who can evaluate them for you.
- Avoid unnecessary meetings. Do everything over the phone, fax and email.
- Only meet a seller in person after they have been thoroughly screened over the phone: first by your assistant and then by you.
- If you have a vacant property, hire someone from Craigslist.com to put a lockbox on the property so that you never have to show it.
The best part of stage four is all of the free time that you have to spend how you wish. For me, it means vacationing a lot. I head to Florida once a month; I go whitewater rafting, I go hiking and I've been all over Europe. For you, it could mean the fancy car, the dream house or being able to spend more quality time with your family.
Also, in this stage most entrepreneurs explore other business opportunities (we're not just real estate investors, we're entrepreneurs at heart). Stage four is 16 deals through however big you want your empire to be.
I sincerely hope that you survive the beginning stages so you can live the lifestyle you deserve. Nobody should have to spend 40 years in a cubicle and luckily real estate is the answer for many of us.