Ten Commandments for a Successful Career in Real Estate Investing
According to the Founding Fathers of our great nation, the laws for basic human behavior and civil conduct were directly based on the Ten Commandments of the Bible.
As real estate investors, I believe that we also have laws for the basic behavior of success and civil profitability. Here are my
Ten Commandments for a Successful Career in Real Estate Investing
1. Make offers! I must make at least 3 WRITTEN Offers per week. My experience in helping thousands of investors and students over the years with their businesses has been that Offers are often the number one reason a business is not profitable. If you are not bidding, you are not making money. I know it sounds simplistic, however it is a real gem of advice. Remember, it MUST be a written offer; verbal offers are just conversation.
2. Secure financing! I must speak to at least 3 funding sources per week. These sources of money will come from my “5 P’s of OPM” and are: 1. Personal money, 2. Association money, 3. Professional money, 4. Private money and Private bank money. If you make at least 3 deals per week, you will start to fill your deal portfolio and need ready funds to close your deals. Until you know you can pick up the phone and get in touch with enough money to buy 3 houses this week for ALL CA $ H, you will continue to raise funding sources.
3. Detail-oriented! I must be detail-oriented when it comes to Contracts, Agreements and Procedures. In the real estate sector, IF IT IS NOT IN THE CONTRACT, IT DOES NOT EXIST! It is the same as our offers, if it is not in writing it is just conversation. More abuse has been done because the investor thought one thing and the seller or buyer thought another. Make sure you put everything in the contract. The hype in this area is very good. Follow your “Silly Enough Deal Checklist” to make sure you’ve covered your assets.
4. Market, market, market! I will continue to market inbound offers even when I feel like I have too many offers. This is the second most common mistake that I see investors, both new and experienced, make. We start getting a ton of offers and feel overwhelmed or scared so we stop marketing. NO NO NO! This is when we simply adjust the amount of profit we are willing to work for and start using our buyers list to wholesale deals we can’t handle or are not interested in, BUT NEVER STOP TRADING!
5. The human touch! I will keep the “human touch” in my business by having a human answer my phone. In this day of incredible technology, it’s easy for us to give in to the ease and convenience of gadgets, BUT IT IS VERY EXPENSIVE! No, I don’t mean the cost of the device, I mean the cost of lost deals. If you are using voicemail or even an old answering machine to receive calls, you ARE losing money. The problems in our business are too costly. A missed phone call early in my business cost me $ 60,000 in profit! It still hurts to think about that. Use an answering service to have a human answer your phone when you are not available. Answering services in today’s economy are cheap, lost deals are not.
6. Know the numbers! I will know the component numbers of my deal backwards. In the world of real estate investing there are many “OOPS” waiting with our names on them. If you don’t know exactly how much something is going to cost, don’t guess, find a professional in that area and get a solid number. A repair you didn’t see because you were trying to save a couple hundred dollars by not having the property professionally inspected is now going to cost several thousand to repair, OOPS! Of course, this applies to all areas of your business, not just repairs. Know the numbers to eliminate OOPS!
7. Know the exits! I will have my “exit strategy” in place before I make a deal. I fly about 100,000 miles a year and have heard the flight attendant say “Please locate the 2 exits closest to you” probably 1,000 times. On a flight I realized what a valuable lesson this is for investors. Before taking off (making a deal), know your exit strategy. Many investors jump into a deal without thinking until the property is sold. If you don’t clearly know the way out (how you will be paid), steer clear of the deal.
8. Don’t spend it all! We’ve all heard the need to save for a rainy day, well guess what, it’s ALWAYS raining somewhere! And sooner or later it’s going to rain on you. Many new investors, seasoned investors, and yes, even myself, have been or are guilty of spending all the proceeds of a deal. Follow this simple formula of cash flow for wealth; Tit me 10% and keep 20% in business. You tithe 10% because you must give back in life. You keep 20% of every dollar of profit in the business because no real estate business can fully operate without a few ca $ h.
9. Be sure to insure to insure and guarantee! I will make sure I sleep well and secure my wealth because I WILL SECURE my business. In our lawsuit-happy country, it would be financially unwise to run any business without general business liability insurance. For around $ 100 per month, many commercial companies will provide million dollar general liability insurance. This is the same thought process as car or health insurance, you hope you never have to use it and yes, it IS better to have it and not need it than to need it and not have it.
10. INC. Before you ink it! I will incorporate (“C” Corp., “S” Corp., LLC or any other appropriate entity structure) my business to have some protection against frivolous lawsuits. I will not risk my financial well-being or that of my family by not having an established entity structure. I will seek competent advice regarding this matter and I will get it DONE NOW!
The “Ten Commandments for Successful Real Estate Investing”, Copyright © 2006 by Bill Barnett. For more information on Bill Barnett and “Are you dumb enough to be rich?” visit our website at
http://www.AreYouDUMBEnoughToBeRICH.com