In order to build a successful Real Estate Investing (REI) company, there are 6 fundamentals you must have. These are the foundation of your business and missing any one could severely cripple your chance for success.
- Exit Strategy – You must decide on the initial strategy you will employ. Many investors begin looking at houses and reviewing deals without a clear cut picture of the exit strategy they plan to use. If you don’t know what you plan to do with the house – how do you know how much to pay?
Don’t get me wrong, you should implement multiple strategies in your business – just not all at the same time. Get your business functioning profitably, and then continue to add additional strategies that support your goals and objectives.
Deciding on the right strategy to start should be based on your goals and objectives; your resources of time, money, and credit; and your personal strengths. Each strategy requires different skill set and different demands on your resources. Select appropriately.
For instance, I recently spoke to an investor that was building her rental portfolio, but her goal was to replace her current income. Rentals should be used to build long term wealth, not to replace salaries. In fact, my advice is always to have a significant source of revenue before starting in the rental business and do not rely on rentals to cover your current monthly cash requirements.
- Proper Knowledge – Once you have decided on a strategy, seek out the appropriate training. Whether you plan to or not, you will pay for your training. You’ll either purchase the training or you will pay the school of hard knocks, and I have found that school has a fairly hefty tuition! Decide whether you learn best from a workshop; a book; online videos; or personal instruction. Then find the right teacher that will provide the best information for you.
- Marketing – If your goal is to grow and see your profits soar, then you need to market to find deals. Start marketing…repeat your marketing…and never stop marketing until you are ready to retire from the business! Be a student of marketing!
- Financing – One of the great benefits of REI is the ability to finance properties is so many different ways (besides using a bank). Your options include money (equity) partners; hard money lenders; commercial loans; hedge fund loans; seller financing; subject to financing; business lines of credit; private lenders. Learn your different options and set up your financing so when a deal presents itself, you are ready.
- Investor Buyers – If you want a steady stream of cash each and every month, you want to build a solid list of Investor Buyers. Local investors to where you are marketing for deals are your best customers, but don’t under-estimate the buying power of a national list. These buyers will also buy your affiliate promotions creating yet another cash flow stream for you.
- Web Presence – In this technological age not having a website is a real detriment. It not only adds credibility with your motivated seller prospects, it provides them an alternative method of contact: they can call OR visit your website. For buyers, your website is a quick and easy way for them to join your list. Use your auto-responder for on-going communication with both sellers and investor buyers.
Take the time to ensure you have the fundamentals established and your business will grow easily and quickly.
Expect abundance,
Lou Castillo
