When getting into any new field of interest that is worth pursuing, it is easy to drown in a sea of information while trying to navigate towards your goals.
Instead of making your own way, you can look towards already established players in your field and what models and strategies they use. By doing this, you will not only save yourself a lot of time, you will also increase the height of the ceiling your are inevitably going to hit (at which point you need to add other resources to your undertaking)
Most successful investors understand that time is the most important resource they have, which is why they try to be effective in what they do by focusing on the essence. The Pareto principle comes to mind. It dictates that only about 20% of your actions influence 80% of your results. This is true for many areas in your life. A while ago, I read that some people even cascade these 20% into a 20/80 rule as well which would leave you to do a hyper focused task at a time but for starters, I think the basic form should be enough. I'd encourage you to pick any repetitive job or task and try to split it into the most essential steps. See how much "fat" you can cut out of the equation as long as the quality of the outcome stays the same.
Going back to REI, this means that we it should be beneficial to break down the topic in a couple of main areas of attention in order to identify the work that needs to be done and then break it down into the more important tasks within those areas.
We will explore each area in further detail but for now let's just identify them first. The areas in which everything you do in real estate investing falls into are:
- WHO you are working with. (your Network)
- WHAT you are looking to invest in (your Criteria)
- HOW you are going to invest (your Terms)
The people you are working with support everything that you do. Whether it is a contractor that helps you estimate the repair cost or a lender that's about to refinance your deal to the agent that might find a property with potential to begin with. Each and every one of them is important in your investment journey, which is why you should dive right in and go to some networking meetings in your area. Here in Honolulu I can recommend the monthly meetings of the Hawaii Real Estate Investors Club. Feel free to mention that Kamil from 808estate.com sent you ;)
Focusing on your network will most likely be your first step in your investment career since your goal is to manage your risk you will need to work with people who have been there and done it.
You need to know what you are looking for in order to know when you found it right? That being said, I once heard someone say that "Every property can be a great deal at the right price". Sticking to our goal of working efficiently we should still define what it is that we are interested in. Depending on your strategy (fix and flip, buy and hold, wholesale etc.) you need to know what you are after. Single family homes or condominiums? What amenities? What Condition? What location? You get the point. The goal here is to narrow down your choices to the properties that represent the best opportunities for you.
This is the juicy part. HOW you invest into a property can turn a modest deal into a great one and the same goes in the other direction. All the negotiable elements of a deal fall into this category. This can be the offer price, down payment, interest rates, closing cost, occupancy, repairs and the list goes on. A veteran negotiator can lead him or herself in a better equity position, improved cash flow or sometimes both. It should be clear and important to remember that you are making your money going into a deal, not through the exit.
Those are the areas that successful investors spend most of their time in and they work the 20/80 rule heavily with everything that has to do with them. Everything you do in REI is, in one way or another, connected to at least one of these three core elements. Swing by in a little while to find out more about each of them in greater details.
PS: If you have any questions now, you can ask in the comments or contact me directly.
Combining experience in renewable energy and real estate, I strive to deliver innovative and creative solutions to common problems in the industry.
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