Dean Graziosi

Many people start investing in real estate the right way. But lots of people get into the business sort of on a whim, just to see what will happen. Rarely do people go into any other  business like this, but real estate seems to be the exception to the rule. Let me explain by telling a story of how a couple I knew got involved.  They had a small factory, which was producing some money for them, and they worked hard every day hoping that they would eventually make real money.

They believed that by continuing their business and working hard every day they would achieve their goal, but along the way to reaching this goal over a 10 to 15 year period, they would run across people that were multi millionaires. Now these multi millionaires didn’t work, they ran around barefoot on the beach, dressed casually and did whatever they wanted. How did they do this? What allowed them to have the money they needed to do this?

When the couple asked how these guys made their millions, they were always told, just buy and sell houses. It doesn’t matter whether the economy is like, whether its in a slump, whether financial conditions are right, or whether the real estate market is on the rise, or not. Dean Graziosi will tell you that buying real estate is right at any time.

For a long time this couple just continued with their business, figuring that they would achieve that financial freedom sooner or later, after all they had been in business for almost 15 years, had all these employees, and the factory itself. Until one day after meeting another couple that didn’t do anything again, they decided to follow the advice “buy and sell houses,” and so, decided to  buy a house.

Because they weren’t very convinced they started their real estate investing process off by doing all the wrong things. They called up their local real estate agent, told him they wanted to invest and asked him to find them a piece of property.

The agent saw a great opportunity to get rid of a home that was located near their offices, and had been on his list for quite some time. Actually up until then the property had been un-sellable for cosmetic reasons, and because of  its location.

The couple thought the property would do, it was the first home they looked at, it was close to the factory, and seemed a simple transaction. They paid asking price for it, didn’t bother to negotiate, and left it at  that. As I said before, according to what Dean Grazziosi teaches, they did everything completely reversed, as if they expected to fail at this new endeavour.

Lucky for them, fate stepped in and property value increased in the area, and they ended up making 20% of the value of the home after just two years. (Remember they did everything the “wrong way”).

In the end, even when they did everything the wrong way, they found out that they could make more from real estate investing than from working the whole year, every day, the whole day long. 

This story is not “one of a kind.” Many people that are in the real estate investing world got there on a whim. They didn’t really plan the investment, didn’t look for the best type of investment, or the area they were investing in.  This is probably something they would have never done had they been thinking about any other type of investment, and sometimes this type of real estate investing works, and often it doesn’t.

The point is, most of these people would never dream of going into any other business transaction this way. They would never dream of handing over $100,000 for a business that they knew nothing about, nor had investigated, studied and analyzed the transaction. Yet, often they are willing to do just that when they go into a real estate transaction. If they are  lucky, they make money. More often than not, they have problems with this type of transaction, and then complain about how real estate investing is not profitable.  In my opinion, there are not many profitable business transactions,  that can be done on a whim. 

Most businesses require experience, knowledge, studying, research, and the same holds true for the real estate market. Real estate investing does have advantages. You don’t have to wear a suit, deal with difficult customers, go to an office every day, deal with troublesome employees. You can wear your pj´s to work, you do have more free time, but every investment needs to be thought about, and real estate trends need to be read. You do need to learn about your market.

If the news of the poor economy is paralyzing you from moving forward, you are not alone.  Unfortunately, if you are waiting for news of a turnaround in the real estate market before you step out into the world of investing, you are making a big mistake.  In most cases, it is a lack of knowledge that causes “would be” investors to stop taking action.  In fact, there are numerous reasons that novice investors stop short, sometimes just before they hit the big-time. 

• Believe it or not, it is not cash that stops investors from securing a deal, it’s the deal itself.  Expert investors such as Dean Graziosi will tell you that if you find a truly good deal, the money will find you.  It is not hard to find an investor willing to put up the funds if you find a great deal.  Most newbie investors simply are unable to find a great deal. 
• New investors often make the mistake of believing they have to quit their jobs in order to be a serious real estate investor.  The truth is that it only takes a few hours a week to find great deals.  Try taking a different route home from work or from the grocery store and you will be surprised how many opportunities you will spot. 
• Don’t take advice from people that make less than you do.  Seriously, if staying up late at night watching infomercials is keeping you from moving forward, stop doing it.  You will always find pessimists that will tell you what you are trying to do don’t work.  The fact is, what you believe will be your reality, not what someone else believes. 
• You have to make deals happen; they won’t just fall in your lap.  Most new investors are worried about competition when in actuality, they shouldn’t be.  There are more than enough properties to go around.  Moreover, in today’s economy, the fear of losing money has cleared out much of the competition.  Now is the time to find cheap homes with excellent terms.  It is a buyers market, so get buying!
• Poor credit is not an excuse not to buy real estate.  There are so many creative ways to finance properties these days that credit is no longer a barrier. 
• Although everything has risks, real estate is safer than almost any other commodity.  In the long-term, real estate is the smartest investment you can make. 

If you are a new real estate investor you may not know that there are many different ways to flip a property.  Most people have heard of the fix and flip property, a fixer upper that is purchased for pennies on the dollar, renovated and flipped for a huge profit.  This type of flipping does work, very well in fact, but investors should know that there are other ways they can flip and make a profit.

One way you can flip a property, other than selling your fixer upper for cash, is to sell on terms.  Once you have rehabbed your property, refinance it for the new appraised value.  The objective here is to have little or no money tied up in the deal.  Then, you sell it on a lease with option to buy.  You have your potential buyer, likely a renter with a dream of homeownership, pay a large enough monthly rent to cover your mortgage payment and when the buyer exercises the right to buy, you walk away with cash.  You can also require potential buyers or lessees to put down a few thousand dollars as a non-refundable deposit.  In this case, if they choose not to exercise the option you keep the money and then start the process over again. 

The next strategy will depend on the market.  This strategy requires you to buy fixer uppers and then flip them un-rehabbed to other investors.  The key with this strategy is to make sure that you purchase the property cheap enough that you can sell significantly below market value and still make a profit.   If you want to see profits quickly, this may be the way to go.  For example, let’s say you purchase a fixer upper for $12,000.  You turn around and sell it for $14,500 and make a quick $2500.  It may not be a lot of money, but if you are in the business of flipping properties regularly, the profits can add up quickly. 

If you prefer not to invest your money into real estate, but wish to make a profit in the business, you can be a scout.  A scout is the deal finder and for a fee, will pass that information onto investors.  This method does not involve money or risk because all you are doing is looking for distressed properties.  If you are short on cash, or if you are trying to build up your cash reserves for future real estate purchases, being a scout for seasoned investors is a great opportunity.