There's opportunity to earn both monthly passive income and large chunks of cash months after closing on a property.
But, you need to know what you're doing and we constantly see beginners make mistakes because they don't follow the basics of getting some education, then finding a mentor and then following a system.
To cover all the mistakes we see would take weeks and we'll keep adding articles to address various examples of things to watch out for.
For this article we'll focus on one of the most important aspects of real estate investing...advertising and filling your property with a tenant.
After all, having someone pay you money every month is kind of the idea. That's one of the important ingredients if you are going to get rich in real estate investing.
Here's something that we've noticed over the last couple of years...
Anyone can take a project to 90% completion. It's a real pro that finishes the job. And it's that same pro who gets to reap the rewards of a finished project.
Getting a tenant into a rental property is obviously worth a good sum of money to a real estate investor.
And depending on the rental program used there may be an immediate windfall on the line.
For example, if you are renting out a singly family home using a lease option, the successful placement of a tenant is worth thousands of dollars to you on day one and possibly tens of thousands of dollars to you after a couple of years.
There are four important differences between an amateur real estate investor and a real professional.
And these four can mean the difference between selling a property at a loss to rid yourself of it and making very healthy returns.
Amazingly you don't have to be a marketing genius to fill a property with a good tenant but you do need to do these things:
- Constant Presence.
Let's say you advertise your property for a week in the local paper. Towards the very end of the week you line up a tenant for your property and set a date two days later to sign the lease and pick up some cash as a deposit to hold the property.
You are excited and to save a couple of hundred dollars you stop advertising in the classifieds for the next week.
The meeting day rolls around and of course - it happens.
One of you has a kid that is sick, or a dog that needs surgery, or a car that isn't behaving and you need to reschedule.
Then for no reason whatsoever when you try to meet up on the agreed upon rescheduled day the possible tenant vanishes. Calls aren't returned, their voice mail box is full and their girlfriend, who you called because you were smart enough to get a back up contact number, has no idea who you are.
Frustration settles in.
You begin to wonder if you can ever get rich in real estate investing.
You have no more tenant leads because you stopped your advertising. To save a few hundred bucks you pulled your advertising and all the momentum you were building is lost.
The other possible tenants have vanished and you need to start all over again.
You then resort to questioning human nature. A popular question asked at this time by beginners is "Why do these tenants lie? They said they wanted the house, why don't people do what they say they'll do? What's wrong with people these days?"
Nothing is wrong with people. People have behaved this way for hundreds of years and will continue to do so.
The problem is you, not them.
It's your lack of sales experience and knowledge that is the problem (a huge topic for another time).
You focus on the negative and it's a downward spiral from there.
We've seen this happen to amateurs over and over.
And it ends up being so scary at this point some people just break down and decide they can't get rich in real estate investing and leave the game all together. Bad idea, but to each their own.
Now the professional does the opposite.
The professional investor keeps advertising until the lease is signed and there is cash in their pocket. And not just on free websites like craigslist. They'll actually spend the money to keep a well written classified ad in the papers and on that paper's website.
A signed lease can represent tens of thousands in revenue.
You get rich in real estate investing by getting things like leases actually signed.
Why would anyone jeopardize that to save a few hundred bucks on advertising?
Small thinking produces small results and by cutting off advertising before you have a signed lease agreement you are thinking small.
The professional investor learns about human nature and realizes that people may not follow-up on commitments.
But the pros don't not focus on that. Instead they focus on having 3 or more possible backup tenants in the wings.
They continue to show the property to other possible tenants until the lease is signed. They attempt to sign the lease on the very same day that someone shows interest.
If that person doesn't have the full deposit on hand they accept whatever it is they have in their pocket.
They know that when someone coughs up even a partial deposit they are emotionally tied to the property.
They leverage their other possible tenants to create a competitive situation.
The professional understands momentum is key and works hard to create and maintain it.
To get rich in real estate investing you must never stop advertising until everything is signed, sealed and delivered.
Never.
- A Good Yard Sign right on the, surprise, front lawn.
Now one may seem obvious but we've seen amateurs screw this up.
It's amazing to me that someone will buy a property for a few hundred thousand dollars and then invest zero or next to zero on a good yard sign.
Or buy one but let it sit in the trunk of their car (I can only assume there is a pool of possible tenants in their trunk and that's why it's there).
If you are going to get rich in real estate investing you must put in a yard sign.
We have found that a HUGE percentage of tenants for student rentals, regular single family home rentals and lease option rentals come from the immediate surrounding area.
It's either by a friend walking by the house that sees the sign and passes on the information, or a family member who lives in the area and is looking for a place for their extended family or someone out on a drive just scouting the area for a good home.
And those little 8" by 9" black and red "For Rent" signs don't count.
You need a big professional sign. The type a realtor would use. You want this thing to stand right in the middle of the lawn using a solid frame to hold it up.
Home made signs fall down, blow over, deteriorate to mulch in the rain and just don't get the job done.
Invest is a solid sign. You're looking at approximately $100. If you really want to get rich in real estate investing you won't let $100 stand in your way.
Without it people have to be mind readers to figure out your house is available for rent or for sale. Possible I think, but not common.
I'll leave this point with a story.
We were working with one investor who really wanted to get rich in real estate investing.
He spent thousands of dollars on training courses before they began working with us, he then took time to find a property, he ran all the numbers, lined up financing, set up a partnership with a family member and bought the house.
They ran some ads in the paper but didn't put up a yard sign...didn't think it was necessary.
Well, after a few weeks of not placing anyone in their rental property they got nervous.
After chatting with them and learning they hadn't done the obvious thing and let people in the area know their house was availabe we yelled at them. Again and again.
They went and put up a yard sign.
The very same week a couple signed up to lease the home.
And they made a comment that went something like this - "We were on this street last week looking for a place and didn't ever realize this home was available."
Ouch.
The professional real estate investor knows that to get rich in real estate investing you have to take this business seriously.
And advertising your property with a basic yard sign may sound simple, but it's a key ingredient that beginners often ignore.
- Massive Action - this is a biggie.
So many people of been handed things to them their entire lives that when something doesn't go according to plan they break down.
They freeze.
Deer in the head lights syndrome.
Here's what I mean.
If an amateur investor doesn't get their property rented out quickly they will start blaming the people that came through the house.
They'll blame the possible tenants for not "seeing" the value in the home, or for not following up, or for not having enough money to put together first and last month's rent.
The amateur blames everyone but himself. You will never get rich in real estate investing like this.
If a professional investor doesn't get a home rented out within a reasonable time he/she goes into action, MASSIVE ACTION.
They do not just do one thing to try and fix the situation.
For example, if their yard sign was small they don't just go get a bigger one.
The pro will get rich in real estate investing because they'll go off and do 10 things all at once.
A new sign, flyers to the area, improve the street appeal, work on their sales skills, seek advice from a mentor, change their ad, introduce a voice mail system instead of answering calls live so they aren't fumbling the phone in the car trying to answer calls, put up directional "For Rent" signs on street corners...
All too often the amateur investor will do one thing and think they've done enough.
Nothing could be further from the truth.
When the going gets a bit tough you need massive action to create momentum.
Massive action is what will allow you to get rich in real estate investing. Action, lots of it.
Beginners move so slowly at improving their strategy that I think they actually bore themselves into losing interest.
They had a dream to get rich in real estate investing and then let it fade.
They have no committment.
It's nuts.
Move quickly, it's really the only way to get things done.
And it leads us to the final point...
- Taking responsibility for the results.
Professional investors ask questions about all situations. And then adjust their approach immediately.
Amateurs piont fingers.
Professionals take responsibility.
The amateur investor focuses on everything but themselves.
The pro will always be asking themselves questions:
Am I getting the proper number of leads from my advertising in the paper?
Can I word my ads better?
Is my yard sign visible?
Can I improve the street appeal?
What is the feedback from the tenants who have been through the house?
Am I pushing people away with a hard pitch to rent out the home?
Are my price points set properly? Am I doing a good enough job explain the price and the value?
Where are people coming from to view the property? Can I advertise more in that area specifically?
And they will take these answers and turn them into the massive action required to complete the job.
Remember, anyone can do anything up to 90%. It's the pro who takes it all the way.
To get rich in real estate investing you have to become a pro.
