Mistakes that Investors Make

I am the guest speaker at my own REIA next Tuesday (I must know someone or something)

My topic is the top 10 mistakes rehabbers make. Being married to a rehabber and also his private realtor who finds the houses and helps sell them I have seen a ton of rehabs. I also list houses for my rehabber buyers from time to time. And I go through a ton of the competition to see what we need to do to our house, confirm pricing, etc. So I have seen a lot of great rehabs and a lot of really bad ones.

So today as I sit here comtemplating my presentation on this fine cloudy Mother’s Day morning, I am finding that while the topic is for Rehabbers, it seems more like for most investors.

The very first mistake that many rehabbers make is not taking action. I am guilty of this as well as the next person.

First the newbie investor who wants a magic pill to swallow and they will instantly become a successful real estate investor – YOU NEED to TAKE ACTION in the form of educating your self. You don’t know what you don’t know. And while a great deal could just fall from the sky it probably will not so you need to do three things.

1. Educate yourself on real estate investing in general and your niche in specific. You can do this through books at the bookstore, online articles, teleseminars, training courses from the so called experts, bootcamps, and trial and error. Or maybe a selective combination of these things. Make it a goal to read 1 book or listen to one teleseminar a week (or maybe 2 or maybe 3, dending on the time you have).

2. You need to build your real estate investing team. This is the group of experts in their field that you will call on when needed: Realtors, Lenders, Appraisers, Contractors, Property Managers, Accountants, Attorneys, the list can be quite large, and the best place to start is your local REIA group. Make it a goal to speak to at least 5 new people at each meeting, find out what it is that they do, and follow up with them after the meeting to get referrals for your team.

3. You need to pick an area to focus your attention. This could be a subdivision, a school district, a zip code or a town. Become the expert on that area. Go look at every house for sale that you can. Call every for sale by owner. Get to know all the realtors who work that area. What do the houses look like, what do they sell for, and who is selling.

Then we get past the newbies who are just getting started and we find the people who know exactly what they want to do, but they spend all their time finding excuses as to why they have not done a deal yet. The simple truth, they are afraid.

So if you have not done a deal yet, keep in mind that if you don’t make offers, you dont do deals. If you don’t go look at houses and talk to sellers you don’t make offers. And if you don’t have a way to get the houses to look at or to get sellers to call you, then you are just at home getting business cards and setting up web sites.

If you have not done any deal yet you also need to do 3 things.
1. As you already know what kind of deals you want to do and the area you want to do it in, you need to find a way to get deals in front of you. There are several options.

If you are going to buy REO property, you need to find out every agent that sells REO properties and every investor who wholesales houses and get on their mailing list of properties. Then set up a schedule to (1) look at their web site and give them a personal phone call at least once a month and ask “what house in “x” area are you having trouble selling that I should make an offer on” Or what is the hot deals this week. Then go look and make an offer.

If you are going directly with sellers you could sit down and watch craigslist and the newspaper and call all the for sale by owner houses, plus all the signs in your area, but guess what you probably will not. So you need to spend some marketing dollars to get sellers to call you. Put up bandit signs, mail to code violations, post notices on front doors that you buy, and get the seller’s to call you. And answer the phone if possible. Then you are talking to sellers and will be going to look at houses.

As you talk to the realtor, wholesale seller, or home owner, set up time to go look at houses. If you are not buying anything anyway, you have plenty of time. Get out of the chair and into the car and go look at houses. Work your numbers and make an offer. Who cares what the asking price is, make your offer, the worst they could do is say no, they might counter offer you, and you never know, they might take the offer.

But there is a secondary reason for going out to look at houses, to see what else is out there. While driving to and from have a house buying sign on the car. Have a note pad in the car to write down addresses to mail, for sale by owner signs to call on. Have business cards in the car to hand out to neighbors. Have notices to post on front doors of potential houses.

3. Make offers this is the hardest thing for many investors to do, they are afraid they will pay too much, they are afraid they might have to buy it. What ever. If you are financally ready to buy houses, get your financing lined up and make offers. If you are not ready to buy, but want to wholesale, if you find a true deal, something that is going to make someone money, you can take it to someone in your group with more experience and funding and they will do a deal with you in some way.

Then we have the experienced investor and we too don’t take action. We get stuck in what we are doing and get blinders on and can’t see the forest for the trees. It may be that what we are doing in our business is great, but we might be able to make some changes and do it better. The economy might have tanked and we might need to change a few things. So those of us who are experienced need to do three things as well.

1. Keep an eye on the market to watch for major changes and adjust our methods.

2. Take continuing education to make sure we are on the right track and make implement improvements as we learn new techniques.

3. Implement new strategies if our old ones are not working so well.

I will be going over more mistakes rehabbers and other investors make at the May 12th General Meeting of Mid-America Association of Real Estate Investors. I hope you will be able to join us. Their meetings are FREE for paid members of the assoication and guests can attend for $25 (pre-register through the calendar on their web site for just $15) Web site is www dot MAREInet dot com (www. MAREInet .com)