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7 Steps to Success New Real Estate Investors Can Start Taking Today http://www.biggerpockets.com/renewsblog/2013/07/21/new-real-estate-i…

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The BiggerPockets Blog » Real Estate Investing » A Challenge to New Real Estate Investors: 7 Steps You

Can Start Taking Today

A Challenge to New Real Estate Investors: 7 Steps

You Can Start Taking Today

by Mark Ferguson on July 21, 2013 · 13 comments

Tweet 37 28 LikeLike

My last article discussed why I think the 2% rule is a bad rule of thumb for beginning investors. In this article,

I give newbies a few simple tips on how start taking action in their investing career.

The BiggerPockets forums are full of posts from new investors introducing themselves or asking questions.

Even though there are many new investors looking to get started buying properties, very few ever actually

become successful investors.

Many new investors hear how great investing in Real Estate can be and they want to start buying property right

away. The new investor quickly realizes how much money it takes, how much work it takes and how much

competition there is. It can be overwhelming for a new investor to visualize all the steps it will take to get to

where they want to be.

The biggest hurdle to anyone starting something new is taking the first step. I am not talking about reading

books or looking up information online, but actually taking action. My advice to the beginning investor is to

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take action in their Real Estate career. Analysis-paralysis is a great term for investors who over analyze a deal,

instead of going for it. I think the term can also apply to newbies who are stuck in the education phase and are

not taking action.

I am not advising that new investors go out and buy a property as soon as possible. However, I am suggesting

new investors start the process of investing as soon as possible. There are so many things a new investor can do

to get involved and take action towards buying an investment property. Here are a few suggestions on how a

newbie investor can start taking action!

1.) Look at houses for sale

One of the most important things an investor needs to know is their market. Almost every house for sale is

listed on the internet somewhere. It is very easy for an investor to look up homes online and start getting an

idea for what prices are in a particular market. This is a great start, but a new investor needs to start physically

seeing houses as well. Start by driving by interesting properties, then find some open houses to go to or talk to

a Realtor who can show you houses.

2.) Talk to a Realtor

A Realtor can be an investors best asset, especially a beginning investor. A Realtor can show you almost any

house for sale, can give you an idea of what prices are and let you know about good deals. I would ask around

for any referrals of good Realtors from your friends, family and co-workers.

Don’t be afraid to talk to a couple Realtors to find one who will work hard for you. Be honest with Realtors and

tell them your goals and what your plans are. Don’t be afraid to take a Realtor out to lunch or give them

something back if you plan to have them show you houses before you are ready to buy.

3.) Go to an REIA meet up

Even seasoned investors can learn a ton from REIA meetings. They are also a great place to network and meet

valuable business partners. Whether you want to be a wholesaler, flipper, long term investor or even a Realtor,

REIA meetings can link you up with the people you need to know. They are also full of investors willing to

share information to help you get started.

4.) Talk to a Lender

One of the first steps for any investor, is talking to a lender. Local lenders have a reputation to up hold and are

usually much more accountable than out of town lenders. I have been an agent since 2002 and I always

recommend using a local lender. A Realtor can suggest a couple of lenders to talk to or you can talk to the bank

you have your current accounts with.

It is best to talk to a lender as soon as possible when looking to buy a home. There may be some unknown

credit issues or judgments against you, that catch you by surprise. Even though they may be very minor issues,

they can easily prevent a lender from giving you a loan. It may take a couple weeks or even months to clear

these issues up, so talk to a lender right away.

5.) Calculate your cash flow on a property

7 Steps to Success New Real Estate Investors Can Start Taking Today http://www.biggerpockets.com/renewsblog/2013/07/21/new-real-estate-i…

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Download the FREE Ultimate Beginner’s Guide From

BiggerPockets! This free eBook from BiggerPockets.com will give

you the steps needed to begin your investing

Research and education is great for newbies, but reading books and forums is not enough. Not only should new

investors be learning by taking in information, they need to be practicing what they learn. A great way to get

your brain in investing mode is to write out the expenses and income on a potential property. I prefer to write

things out by hand, not a computer, but either one is fine.

Take out a piece of paper and write down all the possible figures you can on a property.

Price, down payment, mortgage payment, closing costs, rent, utilities, repairs, taxes, insurance, carrying costs,

vacancies, maintenance, property management, legal fees and anything else that comes to mind.

From these figures, at a minimum calculate your monthly cash flow, total cash needed and cash on cash returns.

6.) Create a Budget

Many new investors are blown away by how much it can cost to get into an investment property. If you want to

invest, but don’t have the money, take steps to get that money. One of the hardest things for me to do, is look at

how much money I spend. I know I spend too much and I don’t want to know just how much I spend. Even

though it is not easy to do, it is essential to have a budget, know where your money goes and where you can cut

back.

7.) Write Out a Ten Year Plan

I love goals and projecting where I am going to be in one, five or ten years. I wrote out a ten year plan to

purchase 100 rental properties and detailed exactly how I was going to do it. At first it seemed like an

impossible goal, but once I started writing it out and breaking down the 10 years into one year increments it

seemed more possible. At the end of my plan I actually believed I could accomplish purchasing 100

properties and it provided great motivation.

Write out a plan for how many houses you want, what the rents will be, what the cash flow will be and how

much money you will be making at the end of ten years.

Conclusion

All of these items can be started without spending any money and at any point in your investing career. The

sooner you get started taking action, the sooner you will know your market, meet valuable people, and get a

clear picture of what you want to accomplish.

Photo: Micah Taylor

A Challenge to New Real Estate Investors: 7 Steps You Can Start Taking Today by Mark Ferguson

7 Steps to Success New Real Estate Investors Can Start Taking Today http://www.biggerpockets.com/renewsblog/2013/07/21/new-real-estate-i…

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career! (BiggerPockets Members can access this

through the BiggerPockets FilePlace!)

DOWNLOAD IT NOW!

Tweet 37 28 LikeLike

By Mark Ferguson

Mark’s Website: http://www.investfourmore.com

Mark has written 26 articles for us.

Mark is Real Estate Broker and investor in Greeley, Colorado. Mark invests in long-term SFR rental homes and

also does 8-15 fix and flips a year. Mark started a blog this year that focuses on investing in long term single

family rentals.

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Business Plan Template

{ 12 comments… read them below or add one }

Donna McGuirw July 21, 2013 at 3:45 pm

I am a real estate broker and am going to start flipping. Any advice you have for a seasoned broker just

starting to flip, please send!

Thank you,

Donna McGuire

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Mark Ferguson July 22, 2013 at 12:58 pm

Hi Donna,

Thank you for the comment. There is a ton of advice to give on flipping. Since you are a seasoned

broker, you know your market and values and that is the number one thing to know.

I would make sure you have a couple of good contractors ready to work who you trust.

I would always overestimate costs and overestimate the time it will take for repairs.

I would look at the flip from a worst case scenario, what would you make if everything went

horrible and could you make it through if that did happen.

A lot depends on your market. A few years ago we were making homes super nice to be the best in

the neighborhood because of the competition. Now, the it is a sellers market and the homes do not

have to be as nice to sell. We don’t have to do quite as much to them.

If your home is the nicest in the neighborhood, remember the appraiser is going to have to find

comps to support value. Over improving can bite you in the end.

Gloria July 21, 2013 at 6:13 pm

This is great advice Mark! It’s given me a very realistic starting point in this new career field–Thanks!

Mark Ferguson July 22, 2013 at 12:59 pm

Thank you Gloria, If I helped one investor get started it is a success in my book!

Brandon Turner July 21, 2013 at 9:33 pm

Great post today, Mark! Excellent tips!

Mark Ferguson July 22, 2013 at 12:59 pm

Thank you Brandon!

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Sheryl Cromedy July 23, 2013 at 12:06 pm

Mark, this is great information. Thanks for sharing. They are very doable steps to following. Thanks

again.

Mark Ferguson July 23, 2013 at 2:58 pm

Thank you Sheryl!

James Ormond July 23, 2013 at 12:22 pm

Hi Mark,

Great post! Thanks for sharing with us. I see that you are a Broker and also hold several SFR rentals,

which is what I will focus my REI business on. I’ve recently considered getting my license, but am unsure

how much this would help or hinder me with a buy and hold strategy. I have enough time to complete the

local RE school before I begin acquiring properties, but am not sure if this is money (and time) well spent.

I was thinking that just the additional education and contacts I make locally would be worth the price of

the coursework, even if I do not even take the exam for licensing. Do you have any thoughts or concerns

that might help me shape my plan?

Thanks so much for your generous contributions to BP!

James

Mark Ferguson July 23, 2013 at 3:02 pm

Thank you for the comment James,

I am actually writing an article on this topic for my next post. I highly suggest getting your license.

It saves money on commissions and you don’t have to rely on a Real Estate agent to submit

contracts and show you houses. Saves a ton of time.

Julianne September 30, 2013 at 11:23 am

Wow Mark, great article. I read it and you described me to a tee. I’m a nurse by profession, but I have

been interested in investing in real estate for quite some time. I read and research, then research and read

some more, but am paralyzed and intimidated by all of the real estate jargon, closing costs, escrow. I am

confident that I can get financing, but worried about getting in over my head. I’m interested in buying and

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holding long term, but I live in a coastal community which might be too pricey for me to start. You have

motivated me, however, to call my bank and get the process going. Thank you.

Julianne

Mark Ferguson October 1, 2013 at 2:34 pm

I’m glad I could help you get started! Thank you for the comment Julianne