According to the Founding Fathers of our great nation, the laws for basic human behavior and civil conduct were directly based 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. In 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 in profit. 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 a conversation.
2. Secure financing! I must speak 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. Society 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 ready funds to close your deals. Until you know you can pick up the phone and reach out with enough money to buy 3 houses this week ALL CASH, you’ll keep collecting funding sources.
3. Detail oriented! I must be detail oriented when it comes to Contracts, Agreements and Paperwork. In real estate, IF IT IS NOT IN THE CONTRACT, IT DOESN’T EXIST! It is the same as our offers, if it is not in writing it is just a conversation. More bad deals have been made because the investor thought one thing and the seller or buyer thought another. Be sure to put everything in the contract. Overkill in this area is very good. Follow their “Dumb-Enough Settlements Checklist” to make sure you’ve covered your assets.
4. Market, Market, Market! I will continue to MARKET incoming deals even when I feel like I have too many deals. This is the second most common mistake I see investors, both new and experienced, make. We start getting a ton of offers and get overwhelmed or scared so we stop trading. NO NO NO! This is when we simply adjust the amount of profit we are willing to work for and start using our buyers list to wholesale the deals we can’t handle or 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 gadgets, BUT IT’S VERY COSTLY! No, I’m not talking about the cost of the device, I’m talking about the cost of lost deals. If you are using voicemail or even an old fashioned answering machine to receive calls, you ARE losing money. Complexes in our business are too expensive to own. One 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 numbers of my deal components from the inside out. In the world of real estate investing 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 come up with a solid number. A repair you missed because you were trying to save a couple hundred bucks by not having the property professionally inspected, now it’s 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 the OOPS!
7. Know the exits! I will have my “exit strategy” before making a deal. I fly close to 100,000 miles a year and have heard the flight attendant say “Please locate the 2 exits closest 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 to the sale of the property. If you don’t clearly know the output (how you’re going to get paid), stay out of the deal.
8. Don’t spend it all! We’ve all heard the need to save for a rainy day, well guess what, it’s ALWAYS raining somewhere! And sooner or later she’s going to be raining down on you. Many new investors, seasoned investors, and yes, even myself, have been or are guilty of spending all the proceeds from a deal. Follow this simple cash flow formula for wealth; Tithe 10% and Keep 20% in the business. You entitle 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 operate entirely without some cash.
9. Be sure to insure to guarantee and guarantee! I will ensure 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 per month, many commercial companies will provide a million dollars worth of 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 inking 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 established entity structure. I will seek a competent attorney regarding this matter and I will get it NOW!
The “Ten Commandments of Successful Real Estate Investing”, Copyright © 2006 by Bill Barnett. For more information on Bill Barnett and “Are you DUMBBY enough to be RICH?” visit our website at
http://www.AreYouDUMBEnoughToBeRICH.com