Article By: Natalie Coghill
“Don’t wait to buy real estate, buy real estate and wait”. – T. Harv Eker
When you first discover the power of real estate investing and the impact it can have in your life, you may want to dive in and reach ultimate success as fast as you can. Maybe you attended an event that left you feeling enlightened. Maybe a seasoned investor spoke and inspired you with their journey, usually of how they worked hard, but now effortlessly scale their portfolio and do whatever they want, whenever they want with their time.
However you came to find real estate investing as an avenue to financial freedom and wealth, you’re hooked, and that’s a GOOD THING! We’d like to slow down just a little, and share some important tips from seasoned professionals as we know how important it is to make sure you take your first big step on the right foot, and ensure that you set yourself up on the path to success from day one, before you spend any of your hard earned money.
1. Establish your ‘Why’
One of the first things paid coaches and educational programs will have you do as a new investor is to find your ‘why’. Something brought you to this point where you are pursuing more in your life. What is motivating you to make a change? Why do you feel this is what you need to do? Is it your family? Aging parents? Young children? Is it your current financial situation? Ie. Not enough money? Is it your current job? Ie. Not enough time OR money? Are you nearing retirement and realizing you will not retire comfortably or at all if you don’t find another way to make it happen? These are all common examples and very valid reasons for you to be motivated for change. The importance of establishing your why is that this is what will carry you through the roadblocks, and hardships you may face along the way. Keep it in your back pocket and remember why you started!
2. Start With A Strong Foundation
Could you imagine a nurse starting their first day on the job without having gone to university to learn how to be a nurse? The confidence level of that nurse would be considerably lower with no education compared with the nurse who completed the required education and practice.
Although real estate investing is a career that anyone can do with little to no formal education, we advise that you first invest your time in learning as much as you can. Start by figuring out what types and location of real estate you want to invest in; and what strategy would best suit your goals. (As you learn about strategies, you’ll learn there are many different ways to invest!).
If you have the money to invest in a coach, or an education program, do your due diligence in finding the right one for you and your goals. You can do this by joining groups on social media and connecting with other investors.
Take advantage of as many free opportunities for education, and join in-person, and online (social media) networking groups to get to know your local circle of investors. They are a wealth of knowledge. Ask questions. Many long term investors are happy to talk to new investors and share their best tips and things they wish they had known. Read books. Get yourself an accountability partner in the real estate investing world, and get used to the people you know (unless they’re investors) doubting you and your goals.
“First they will ask why you’re doing it, then they will ask how you did it”.
If you’re feeling like taking risks, you can also take the ‘school of life’ route, and jump right in by buying a property. Learn as you go, but understand the risks are higher if you haven’t learned the basics, specifically how to analyze the numbers in a deal. You may take a loss as you learn what not to do, but you will at least be learning!
3. Learn The Different Ways To Invest
There are many ways to invest in real estate, including various strategies. Talk to mortgage brokers and other investors (not just one). You may feel that you don’t have the money to invest, so you can look into options such as house hacking, joint ventures, short term lending solutions, or ways to use other peoples’ money (OPM). You may also find that you have equity in your home that you can invest, or an RRSP that you can learn how to lend to other investors or use as an investor yourself. Passive and active investing are other topics to look into. Creative financing is another term you may become familiar with as you learn, which may include agreement for sale (AFS), seller financing, vendor take back (VTB) and more. Keep an open mind and if you are told “no”, continue looking for other ways and talking to more people.
4. Get Your Financial House In Order
If you have debt, or spending issues, you may find yourself hearing a lot of the same advice; take care of your debts before pursuing real estate investing. If you plan to use OPM to invest, this will be even more important; would you want to lend your hard earned money to someone who had debts or spending issues of their own? Taking care of and understanding how debt works will also help fix bad credit and help set you up on the path to success as a real estate investor. Book recommendation: What the Average Joe Needs to Know; The Nine Rules of Credit by Richard Moxley.
5. Create A Business Plan
Even if you don’t plan to ‘go big’ as a real estate investor, and your goals are on a smaller scale, we still recommend you create a business plan, and ‘run it like a business’. This means organizing files, ensuring purchasing and all things associated with your investments are done with due diligence. This also includes getting your ‘power team’ together: realtor, lawyer, accountant, mortgage broker, trades people, etc. Ensure renovations are done with appropriate permits and that you are following all applicable rules and regulations, ie. Residential Tenancy Act, City regulations and codes, compliance and legal implications. This is why education is recommended and important before jumping in! If you plan to ‘go big’ it is even more vital to ensure these things are managed well from the start. You essentially want a well-oiled machine!
6. Set An End Goal
There are a lot of people, especially as new investors, who quantify their success by the number of properties they plan to have, or by a monthly income amount, ie. When I make X amount per month through real estate investing, I can retire/quit my job/be financially free. Whatever your end goal is, and you have an idea of what you want your life to look like, work backwards and ‘reverse engineer’ what you will need to do to achieve that goal. What is your most important next step, and what pace will you need to work at to achieve your goals in the time frame you have set for yourself? Remember, these things can change throughout your journey, and you can re write your goals to keep yourself accountable weekly if you need to!
As you may have noticed while reading these tips, some of the best advice from the pros comes down to mindset, goal setting, education and planning. Keep an open mind as a new investor, and accept that mistakes are a sign of learning and growing. This will keep you on the right path to success. Understand that many successful entrepreneurs worked for years before they achieved ‘success’-no matter the type of business. Whether this is the first article you’ve read, or you’re becoming familiar with these tips, use this time as you start your journey to learn as much as you can so that you can make educated decisions for yourself and your future as a real estate investor.
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