5 Simple Steps to Maximize Your Profit in Real Estate
When you're first learning about real estate investing, there's many moving pieces.
All these emotions are consuming you, trust me, I understand. I've been doing this for over 14 years. I've had the privilege of having amazing partnerships with some of the biggest real estate entrepreneurs in the game including; Josh Altman from Million Dollar Listing, Barbara Corcoran from Shark Tank and Kent Corsini from Flip or Flop: Atlanta. I mean, the list goes on and on. Most of these people I've done business with are playing the game at the highest level. They're making crazy money inside their self-directed Roth IRA, have massive portfolios of properties, and they're all hidden in trusts. I want this to be you. I want you to picture yourself just like these guys. I am going to teach you how to make that happen for yourself.
Wherever you're at in your evolution, you're probably reading this trying to learn the game, and I'm glad you're here. Maybe you've never done a deal before or you're just trying to figure this business out.
Now, let's discuss about the big mistakes that new real estate investors make. Take notes and process this.
1. Winging the business
This is something I did in the beginning of real estate investing. I was going to all these different networking events and everybody was giving me their opinion. People were telling me 50 million different ways to do direct mail and others would tell me that I needed to use real estate agents. I was just dabbling in everything, which is not good. What you should do is follow people that already cracked the code. There are strategies and processes that are working right now in today's market that generate leads easier. Instead of winging it, get the recipe and apply it to your real estate investments.
2. Do not fall in love with the deal
Okay, this mistake was a huge one for me. When I first started, I loved the idea of remodeling houses, architecture and I was that kid that enjoyed real estate. Not everybody likes real estate. It's important to constantly remind yourself about deals. You shouldn’t get stuck thinking that deal (house) is your one and only offer. This is an investment and if you have watched some of my videos, you know there are two types of real estate investing; active and passive.
Active is wholesaling and rehabbing houses. Passive is being a landlord and owning rentals.
There are systems and processes. So, don't fall in love with the house. You have to understand that you have to create efficiencies in your business to maximize your returns. There needs to be a financing structure in your business so that way you can maximize returns. How? You want to buy the right property and become an expert at negotiating.
Here's another tip. If you're renovating, you've really got to make sure that you don't fall in love with the property because I've seen so many new investors lose money on their first rehab because they over-renovated the property.
3. Not having marketing stamina
What does marketing stamina mean?
Does it mean putting out one bandit sign or sending out one piece of direct mail? It could also mean that you test, tweak, split-test, and you do everything that you can to maximize the return on that marketing expense. Sounds good right? Even if you're doing free social media marketing, there's still an expense because your time is involved. You can't get that back. If you don't have marketing stamina, there's an old marketing adage that says, “You should want to touch your prospect with your marketing message seven times, and that's about when you start seeing a response.” When I go to buy a house from somebody that's either in a distressed situation or having financial troubles, I feel that there's nobody better in the world to show up on their doorstep than me. I want you to feel that same way.
4. Thinking debt is bad
I always thought of debt as really, really bad. I never understood the power of leverage. Let me explain leverage to you. It's the power in this business. As real estate entrepreneurs, you want to leverage everything. You want to leverage other people's time, money, skills, resources, and connections.
There's good and bad debt. I see new investors making the mistake thinking everything is bad debt. Whether they're constantly trying to pay down their mortgage, borrow money from their credit card to invest in education or just scared to take a cash advance from their credit card and use that as an earnest deposit to wholesale a house. As long as you're applying that money towards the right thing.
5. Not making enough offers
This business is a relationship business, and you've got to cast a wide net. It's critical to track KPIs (key performance indicator), a measurable value that demonstrates effectively how a company is achieving business objectives. Eventually, you will have to ask yourself questions. How many phone calls do I have to make before I generate a lead? How many leads do I have to generate before I create a lead intake form? If you're not making phone calls, you're not making money. If you're not making offers, you're definitely not making money.
Talk to people. Success habit number two: After you get done talking to them, send them an offer. Even if they don't accept it, send them the offer.
What do you think the biggest mistake new real estate investors make? I'd love to hear your thoughts.
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