According to the Founding Fathers of our great nation, the laws for basic human behavior and civil conduct were based directly on the Ten Commandments of the Bible.
As real estate investors, I believe we also have laws for basic success behavior and marital profitability. here are my
Ten Commandments for a Successful Real Estate Investing Career
1. Make offers! I must make at least 3 WRITTEN Offers per week. Based on my experience helping thousands of investors and students over the years with their businesses, deals are often the #1 reason a business doesn’t explode into profits. If you’re not bidding, you’re 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 talk to at least 3 funding sources per week. These sources of money will come from my “5 P’s of OPM” and they are: 1. Personal money, 2. Partnership 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 you will need funds ready to close your deals. Until you know you can pick up the phone and get through with enough money to buy 3 houses this week ALL CASH, you’ll keep collecting funding sources.
3. Detail oriented! I must be detailed when it comes to Contracts, Agreements and Paperwork. In real estate, IF IT’S NOT IN THE CONTRACT, IT DOESN’T EXIST! It’s the same as our offers, if it’s not in writing it’s just conversation. More bad deals have been made because the investor thought one thing and the seller or buyer thought another. Make sure you put everything in the contract. Overkill in this area is very good. Follow his “Dumb Enough Settlement Checklist” to make sure you’ve covered your assets.
4. Market, Market, Market! I will continue to TRADE incoming offers even when I feel like I have too many offers. This is the second most common mistake I see investors make, both new and experienced. We start getting a ton of offers and feel overwhelmed or scared, so we stop trading. NO NO NO! This is when we simply adjust the amount of profit we’re willing to work for and start using our buyer list to wholesale the deals we can’t handle or don’t care about, BUT NEVER STOP TRADING!
5. The human touch! I will maintain the “human touch” in my business by having a human being answer my phone. In this day of incredible technology, it’s easy for us to give in to the ease and convenience of devices, BUT IT’S VERY EXPENSIVE! No, I’m not talking about the cost of the device, I’m talking about the cost of lost deals. If you’re using voicemail or even an old answering machine to take calls, you ARE losing money. Complexes in our business are too expensive to own. A missed phone call early in my business cost me $60,000 in profit! It still hurts me to think about it. Use an answering service to have someone answer your phone when you are not available. Answering services in today’s economy are cheap, missed deals are not.
6. Know the numbers! I will know the component numbers of my deal inside out. In the real estate investment world 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 bucks by not having the property professionally inspected is now going to cost several thousand to fix, 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’ll have my “exit strategy” before I make a deal. I fly about 100,000 miles a year and have heard the flight attendant say “Please locate the 2 closest exits to you” probably 1,000 times. On a flight I realized how valuable this lesson is for investors. Before you take off (make a deal), know your exit strategy. Many investors jump into a deal without thinking all the way through to the sale of the property. If you don’t clearly know the way out (how you’re going to get paid), stay away from the deal.
8. Don’t spend it all! We’ve all heard the need to save up for a rainy day, well guess what, it’s ALWAYS raining somewhere! And sooner or later it’s going to be raining on you. Many new investors, experienced investors, and yes, even myself, have been or are guilty of spending all the proceeds of a deal. Follow this simple cash flow to wealth formula; Tithe 10% and Keep 20% in the business. You title the 10% because you must pay it back in life. You keep 20% of every dollar of profit in the business because no real estate business can fully operate without some cash.
9. Be sure to insure to guarantee and guarantee! I will insure a good night’s sleep and I will insure my wealth because I WILL insure my business. In our lawsuit-happy country, it would be financially unwise to run any business without commercial general liability insurance. For around $100 a month, many commercial companies will provide a million dollars in 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 entity structure in place. I will find a competent attorney regarding this matter and I will make it NOW!
The “Ten Commandments of 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