Know These 9 Tips Before You Begin Inv...

“Knowing what you know now, what would you do differently?”

“If you had to start over entirely, how would you do it?“

These are tough questions that so many people have asked me. Based on my current position and the blessings I have experienced, I really would not have done anything differently.

Hey Moguls, Shaun McCloskey and I’m very pleased with my current situation as an investor, and I fear that if I had done anything differently, then I wouldn’t be where I am today. In my opinion, a more appropriate question is:

“Based on your experience, in which direction are you going from here
and what advice do you have for a new investor?”

While my plan for the future is still in process, I have some advice to offer new investors, and perhaps investors who already have some experience can use these as helpful reminders.

Tip #1: Quality Over Quantity

In the past, I set goals to complete a certain number of deals, and as a result I found myself at times pursuing volume over quality. This sometimes put me into bad situations, costing me both time and money.

For example, I might have paid too much to buy a home just so I could say I did a deal and hit my target. While I did experience many situations that other investors never encounter, this is not the way to do business.

Now, I realize that I didn’t need to do as many deals as I’ve done. So I pass over a ton of opportunities that I would have taken years ago. Rather, I sit back and cherry-pick, waiting for the “homeruns” to come along.

That’s not to say that beginning investors should wait for the big deals...

Most don’t have the resources to compete with the experienced investors, including myself, who don’t need the smaller deals to survive but can afford to be patient. We can bide our time until the best deals present themselves and still have enough resources to take advantage of them when they do.

wine What I am saying is that beginning investors should do what they need to do to survive, keeping in mind that it is better to do one quality deal than a multitude of average deals.

As a beginner, you must get into the game, but do it carefully with good deals. Then go from first to second to third to home, taking it one step at a time. Crawl before you walk and walk before you run. Otherwise, by rushing into things, you run the risk of making mistakes that will set you back months or even years.

Tip #2: Set Goals and Put Them on Paper

I did not have concrete goals when I began, so 2 years after getting started, I was in about the same place as when I started. I ran around in circles and covered a lot of ground, but didn’t get too far from my starting point. Only then did I develop a plan (Smart, huh? Only took a few dozen seminars and a few more whacks upside my head.).

So, I teach my students to put together a plan sooner rather than later, preferably before they even start investing. Anyone who drafts a realistic plan and sticks to it can achieve as much in 1 year as I did in 3.

Not that creating a plan is easy, especially when you don’t know what to expect. Accurate goal-setting is actually very difficult, and not many people teach you what you need to set REAL goals.

Most teach goals that get people excited, good in the sense that it usually prompts people to take action, but bad in that it develops unrealistic expectations and sets people up for disappointment.

To set realistic goals, speak with experienced investors in your chosen strategy (wholesaling, rehabbing, lease-options, subject to, etc.) and get their honest opinions regarding profits per deal and the average time required to complete a deal.

Then, based on this and your current resources of cash and credit, set your long-term cash, cash flow and equity goals for 1 year, 3 years and 5 years. Once you have these long-term goals, fill in your short-term goals of 3, 6 and 9 months by outlining the steps you need to take to accomplish your long-term goals.

Unless you draft a plan similar to this and truly commit to it, you are going nowhere.

Tip #3: If Possible, Keep Your Best Deals

law Looking back, I have owned a lot of homes that I wish I would have kept. I don’t regret having sold them since every sale contributed to my success, but I did have some gems that have more than doubled in value since I sold them.

When I sold, I just didn’t believe that the areas would take off like Realtors and others were telling me. So I cashed out and used the profits for other things. If I had held the 50 best deals that I had sold to others and done nothing else, my net worth would probably be three times higher than what it is today.

Not that I’m complaining…

My net worth used to be negative, and today it is pretty respectable. I’m just advising you to hold onto your best deals if you can. Sometimes, though, it is necessary and understandable to sell a property for cash profits even though it would be nice to keep it. Use your best judgment.

Tip #4: Don’t Limit Your Profits

When you purchase a great deal, don’t feel obligated to pass all of the savings on to your buyer. I could have generated more profits than I did from many of the properties that I wholesaled.

Often, when I purchased a SUPER deal, I passed along the SUPER savings to my buyer with the attitude that I should only make $2k-$4k per transaction.

Well, that’s a mistake.

My advice to you is to take what you can get. Don’t inflate your prices above the market and gouge people. Give them a good value. However, don’t think it’s necessary to limit your profits just so a buyer can benefit.

After all, this is business. Let the market set your price. There will be plenty of times when your profit isn’t as large as you expected. Take advantage of the big hits when they do come.

Next Time

Hopefully, these 4 tips have given you some food for thought. Next time, we’ll cover my remaining tips including when you should ditch your J.O.B., whether you need a partner and more. See you then.