If you think you can be successful in real estate investing without making mistakes, you have a lot of surprises in store! And in fact, if you are afraid to make mistakes, you will probably never be successful in this business. It’s a crazy world out there, and you are going to make mistakes. It’s time to face up to it and get used to it. It’s a crazy reality, but you will probably learn more from your mistakes than anything else.
Along with all the success I have had, I have made a lot of mistakes in my business. I list only a few of them here in hopes that I can help you avoid the same ones. But if you are hard-headed like me, you will read this list and think, “OK – yeah, that’s great. That’s really good stuff. But I wouldn’t do anything like that. I already know that. I’m cool. Whatever…”
The most successful people in this business learn from their mistakes, and they are wise enough to learn from the mistakes of others. When they fail, they fail falling forward. So here are some mistakes I have made. I hope you will learn from them so you can avoid them yourselves!!!
Mistake #1 – Slowing Down Your Marketing
It’s tempting. You have been doing some marketing and you are getting some success. Now you are starting to get sellers to call you. Congratulations – your marketing is working! You might be getting real excited. All of the sudden, you are busy. You’re starting to wheel and deal. You’re a “deal-maker” now! You find a motivated seller and you get a house under contact. You start seeing dollar signs. You start advertising and marketing the house all over the internet. You take a ton of calls from tenant-buyers. You drive around all over town, meeting the tenant-buyers at the house. You stick signs and flyers all over the neighborhood. Then finally, you sell the house! You breathe a big sigh of relief. The tenant-buyer is happy. The seller is happy. You are happy. You just made $5,000! Congratulations! And then you look around you and say to yourself, “Awesome! Let’s do another one!”
But what just happened? You just wasted 3 weeks spending all your time & effort selling a home while your marketing for sellers has completely ground to a halt. Now what are you going to do for new leads? Well, okay, you start marketing again for sellers. But now it takes another 2 weeks to find another seller. And then it takes another 4 weeks to sell that property. All of the sudden, it’s been 6 weeks since your last paycheck and you’re starting to freak out!
This mistake is real easy to avoid, and it should be obvious how to avoid it… Don’t stop your marketing! Keep doing it consistently, systematically, religiously, etc!
Mistake #2 – Trying To Sell Houses People Don’t Want to Buy.
I get a lot of investors that call me and ask me to help them sell their investment property on a lease option. They are usually extremely frustrated by a lack of results. I ask them what they have been doing to sell it and usually, they are doing all the right things. Then I find out where the house is located and discover immediately what their problem is. They bought a good house in the wrong neighborhood. The numbers work, but no one wants to live in the home – at least no one who wants to eventually buy it. And don’t you think that might be a problem? There is usually nothing I can do to help investors sell these types of homes.
Here’s one of the most important keys you can ever learn in this biz – whether you learn it from me or you learn it after you buy the wrong property… You can only sell homes people want to buy! Stay away from ugly houses in bad neighborhoods! Only lease purchase nice homes in nice neighborhoods.
What are buyers looking for in your area? I run most of my lease purchase business in St Louis, Missouri. Obviously, each market is different. But here is a list of what buyer’s are looking for in my area:
1. 3+ bedrooms & more than one bathroom
2. Homes in good school districts
3. Homes in the median price range ($120,000 – $175,000)
4. Homes that have a basement and a garage
So it’s logical to see which homes I stay away from like the plague:
1. Anything less than 2 bedrooms & only 1 bathroom
2. Houses with no garage and/or no basement
3. Houses in bad school districts
4. Houses in rental neighborhoods
If you follow these simple rules when marketing for Lease Purchase homes, you will save yourself a ton of headaches… aand you will make more money!
Mistake #3 – Not Treating Your Investing Business Like a BUSINESS
Real estate investing should not be a hobby to you. You need to treat it and run it like a business. Do you have a business plan? What are your business goals? If you don’t have something in writing, create a business plan today! It doesn’t have to be an epic tome. What type of real estate investing business do you want to have? How many homes do you need to sell a month? How much marketing do you need to do every week to meet your goals? What cash flow do you need every month to break even? What type of sellers and tenant-buyers are you looking for?
There is so much that could be said about this topic, that I don’t have the time to write it all our here. The main point is that you need to have a plan. You need to have something in writing that guides everything you do. What’s the saying – “If you don’t know where you’re going, I can guarantee you will get there.” Get a plan and work the plan!
Also, one final important tid-bit – learn to manage your cash flow. Cash flow will make you or break you. You have to know what’s coming in and out every month.
Mistake #4 – Being Too Hard For Your Sellers and Buyers to Reach.
Does it really need to be said? Would you ever do business with someone who is impossible to reach? If you look at any successful investor in your area, I can almost promise you they do not use all those expensive & elaborate voice mail systems and websites that all the guru’s try to sell you on. Why? Those systems pre-screen everyone out. If you want to be successful in this business, you must be easy to talk to. When a seller calls, don’t make them jump through 100 hoops and answer 1,000 questions before you call them back. When a tenant-buyer calls, don’t make them listen to a 10 minute message that tries to answer every question they have about Lease Purchasing. Be accessible!
On all my marketing and in all my voice mails, I have a way for people to reach me at my office. They can leave a message if they want, but they also all know that they can be re-directed to my office if they want to talk to a live person.
Now I am not talking about answering the phone at all hours of the day and night. I am just talking about basic, simple customer service. You wouldn’t believe how much business I used to throw away before I changed this part of my business and became easier to get a hold of.
If you’re worried about spending too much time on the phone with “tire kickers”, your focusing on the wrong thing! You’re focusing on yourself and not your customers. Here’s the key – you’re going to waste more time playing phone tag than you would if you just answered the stupid phone and answer their 3 questions! Usually, I am not on the phone more than 2 minutes with a tenant-buyer, and not more than 5-10 minutes with a seller. But before they ask me all their questions, I ask them my questions first. I stay in control of the conversation. I only talk to motivated sellers and tenant-buyers. If they are not motivated, I thank them for their time, and I get off the phone as quickly as possible.
Mistake #5 – Not Outsourcing Your Marketing.
I have a virtual assistant that does ALL my marketing for sellers and tenant-buyers. Yes, you heard that right. Actually, I have 3 virtual assistants – but that’s a different story. I have already talked about how important marketing is. But this is one of the easiest parts to outsource – yet I don’t understand why so few investors are actually doing it!
You think it’s too expensive to hire a virtual assistant? Guess how much I pay my VA? $2.78 / hour. She lives in the Philippines, has excellent English, and is very happy with $2.78/hour.
What do I have her do? Well, you need to subscribe to my course to find out! In my course, I will give you the exact instructions, checklists, and videos I give to all my virtual assistants. It’s not rocket science. All you need to do is write down everything you do for marketing, and have your VA do it. Here are two tools that I use all the time in my outsourcing:
• www.oDesk.com – I like the VA’s from the Philippines
• www.JingProject.com – a free tool where you can record videos and instructions for your VA’s
Listen, you have more important things to do than researching the internet, stamping envelopes and addressing postcards. Hire someone else to do all your marketing. It will be some of the best money you ever spend on your business.
This list of mistakes could easily be 2-3 times longer. These are just A FEW of the lessons I have learned along the way. You can learn more about the mistakes I made and how to avoid them by subscribing to our membership site and gaining access to all our great content.