Prepare Yourself Mentally to Begin Real Estate Investing
Prepare Yourself Mentally to Begin Real Estate Investing
I’m guessing you’re reading this article because you’re preparing yourself to begin real estate investing.
If I’m correct, you have come to the right place!
The beginning of any career begins with one thing: an interest. Over time and through experience, that small, single interest blossoms into a passion…and a career.
I’m going to walk you through the next steps you need to take in order to give your interest in real estate investing the spark it needs to become more.
Take notes, repeat actions, and don’t give up until you meet your goals.
Without further ado, let’s look at how first-time investors can systemize their life to end up purchasing their first property.
#1: Know Your Why
Before getting into anything in life, I like to ask myself this question:
Why am I doing this?
In the case of real estate investing, do you have a long-term strategy? Are you going to be a buy and hold investor or a fix and flip investor?
Maybe a bit of both?
What do you really want to achieve from getting into real estate? What excites you most about real estate?
These are all very simple yet important questions. When times are tough, you should recall your answers to ground yourself. As we move through this list, your why will be at the center of each step that systemizes your path to purchasing a piece of property.
#2: Pay Yourself First
I am an avid reader.
One of the first books I read when I started getting serious about real estate
was The Richest Man in Babylon by George Clason.
Not only is it a quick read (100 pages cover to cover), but it is also packed with foundational insights for building wealth.
Most people who have read this book agree there is one lesson that stands out the most:
Pay yourself first.
What does this mean?
Rich people pay themselves first. When they receive their paycheck, they do not pay off a credit card or a loan. They do not go spend it on a new shirt or take their friends out to dinner.
The first thing rich people do is take a portion of their income and put it into a savings account for them to use on something they really want (like real estate).
If you are tight on money every month, start by saving 5% of your income. Not enough? Go to 10%. 20% is really where you start to see your savings grow. When you find the property you’ve been looking for, you’ll have the funds ready to go.
Pay yourself first — you won’t regret it.
#3: Educate Yourself
As I mentioned previously, I read often.
Personally, I like non-fiction, but any reading is good for your brain and leaves you feeling a little sharper than you felt before you picked up that book.
I recommend non-fiction for first-time real estate investors. Specifically, non-fiction real estate books.
Here is a great list. Pick out some of the real estate–related books and start learning more about real estate investing.
Use all that PropertyOnion.com has to offer. Find more articles and blogs. Network with other real estate investors. Start talking X’s and O’s.
During this ramp-up time, you’re still stashing away 5%, 10%, or more into your savings. The more you can learn about how real estate works while waiting to buy a home, the better.
If you haven’t noticed yet, you’ve already got some micro goals under your belt.
- Know your why
Micro goal: Really think about why you want to get into real estate. Ask yourself some questions and research others that are important to consider. Put pen to paper here.
- Pay yourself first
Micro goal: Save at least 10% of monthly income in a savings account that you will use to buy your first property.
- Educate yourself
Micro goal: Learn the X’s and O’s. Learn how to talk the talk. Take advantage of the countless books out there by authors who have been in your shoes starting out as a new real estate investor.
#4: Analyze Your Market
Now you’re starting to save on a monthly basis. You’re networking and have built a foundation of real estate investing knowledge while keeping tabs on the reasons you’re getting into real estate in the first place.
Now is when the fun begins. It’s time to get into the weeds!
If you haven’t already, you should now start analyzing deals.
Look at properties listed online. Daily.
Run the numbers. Daily.
Based on what a property would rent for, does it make financial sense for you to invest your money into it?
The numbers to consider are simple. It is gross rent less your monthly obligation on the property.
Your monthly obligation is based on the potential mortgage payment, taxes, insurance, projected utilities, property management fees, lawn care (if required), snow removal (if required), 5% of gross rent for future repairs on the property, and 5% of gross rent for future capital expenditures on the property.
It’s always safe to throw in a little extra monthly obligation to be safe.
This can seem like a lot, likely because it is. At first.
After you have done the legwork to establish general figures for property management fees and what rents are for one bedroom or two bedroom properties, you will start to see knowledge compounding in your head.
So, after you’ve calculated gross rent less monthly obligation, the question becomes, is the return on investment worth it?
Put another way, is the money left over each month enough to justify you investing your money in it?
I don’t want to get too elaborate here, but you get the point: analyze deals!
The more you analyze, the better you’ll become at spotting a great deal as soon as it hits your market, allowing you to put an offer in quicker than the other guys and gals (i.e., your competitors).
IF YOU STOP READING THIS HERE, YOU WILL NOT SUCCEED!
#5: Take Action!
Now that you’ve saved money each month, learned the X’s and O’s of real estate investing, networked with local real estate investors, analyzed every listing in your market, and established a good team, it’s only a matter of time.
Though it may seem like you’ve put the work and the time in and your deal is right around the corner, do not sit back now! Stay the course. Be ready to submit offers when the right property hits the market.
Incorporate This System Into Your Daily Life for Success
The point of this article is to build a system for finding good real estate investing opportunities as a first-time real estate investor.
Here is that 10-step system:
1. Know your why
2. Pay yourself first
3. Educate yourself
4. Analyze deal after deal after deal
5. Take action!
6. Take action!
7. Take action!
8. Take action!
9. Take action!
If you take action on this list every day, you will fall into a routine that will guide you to your very first real estate investment property.