After absorbing hours and hours of real estate investing education, you finally feel like you are ready to start actively investing…except something is stopping you from doing a deal. Fear is stopping you from taking the leap and actually finding a deal. It’s enough to stop many, many potential investors from getting started.
Fears such as:
- “What is my first step?”
- “Am I buying at the right price?”
- “Will I lose money?”
- “How will I find a buyer?”
- “What happens if I get stuck with property nobody wants?”
- “What if there is a huge defect in the property that I miss and it costs me thousands to fix?”
These fears are valid but if you are buying “right”, then your risk goes significantly down.
Setting up a termination option in your contract can help protect you from a lot of risk. By having a set time that you’re allowed to terminate the contract, it gives you time to:
- Have an inspector come out to check the condition of the property
- Have a contractor come out and provide a bid if you’re looking to rehab
- Provide you time to find a buyer if you’re wholesaling it
It’s important to let the seller know your intentions.
If you want to be a fix-and-flipper, don’t start off with a huge project. It can be intimidating and the bigger the project, the higher the risk.
Find a property that needs a light repair (paint, carpet, landscaping, etc.) so that you are better able to budget for the rehab.
Regardless of what exit strategy you utilize, make sure to run the comps, analyze the numbers, and don’t choose a deal that has tight numbers.
Choose a deal that you’re comfortable with doing.
The first few deals you see might not make financial sense for you to do and it’s okay to turn them away.
Practice analyzing numbers on the deals that you don’t take.
Make a note of the property address and every few weeks, check to see if it sold and for what price. Was it higher or lower than you were comfortable with? As the general rule of 70% of ARV (after repair value) minus repairs, you’ll be able to see what other investors are buying at in your market. Knowing this information will help you gauge whether a deal is good or not.
In addition to analyzing the numbers, you want to pay close attention to what repairs are needed. Not realizing the electrical needs to be replaced can set you back quite a bit if you didn’t budget for it (on a rehab).
If you’re still second-guessing yourself, it might be helpful to find a mentor who can walk you step-by-step through the entire process the first few times so that you can get familiar with the process.
Mentors aren’t cheap, but they can fast-track your success and your return-on-investment can be huge if you put the work in.
For those wanting to look into having a mentor, check out the FlipNerd Investor Coaching. Mike provides weekly steps to take that will help lead you to your first deal, along with training videos and weekly group calls to ask questions about deals you’re working on.