Like so many beginning real estate entrepreneurs, I first purchased course after course after course and never did a deal. For the first 12 months, I never even attempted marketing.
Can you relate to this?
My evidence indicates 95% of all real estate investors experience this. In fact, probably 95% never even earn the money back to pay for the training – if they earn anything.
Is the problem the training? NO. 99% of all real estate trainings are loaded with sound information and techniques.
So what’s the problem? Well, I finally figured it out. And it cost me years and tens of thousands of dollars to do it.
The formula for success all boils down to this simple formula:
Success = Skillset + Mindset (TM).
Skillset is the technical side of the business; how to find deals, how to fund deals and how to farm deals, and everything in between. Skillset is an obviously important component BUT it is NOT the sole component – as so many are lead to believe.
The critical component is mindset. And by mindset, I mean the ability to take action despite fear. The keyword here is action despite fear. And we all have fear holding us back.
Mindset is not about willpower; it is not about working harder.
Mindset is about transforming the limiting beliefs that are holding us all back; tranforming and replacing those limiting, disempowering beliefs with empowering beliefs. It happens at the subconscious level, where all manifestation begins.
And the transformation can be done by you. It is all about beginning the process of creating new habits – which originate at the subconscious level.
Recognize that goal setting and willpower is a conscious activity. Goal achievement is a subconscious activity. Upon making that important distinction, I began taking the steps toward real estate and multifamily success and my life completely changed. And you can do the same.
Just remember the critical formula: Success = Skillset + Mindset (TM). It is so critical; you will see it in all my trainings and in everything I do. It is the core of my philosophy about success in real estate.
KEY TAKEAWAY: Success = Skillset + Mindset (TM).
Lance
6 Responses to The Whole Truth About Real Estate Investing
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SECURE AND CONFIDENTIAL
HI:
A friend of mine lent me a book called
“the secrets of a millionaire mind” by
Harv Ekers. Your teaching is almost the
same as his and I love it.mindset+skillset=Suc
You are one of the rare teachers who believes
in giving. Your emails are I look forward to.
Thanks a lot.
I have 13 single family homes and want to switch
to multiunits. MARKET IS FLAT. I HAVE NO MONEY TO
MAKE DOWNPAYMENT FOR MULTIUNITS.WHAT WOULD YOU SUGGEST ?
I’m the person your talking about, course after course and all I been doing is reading. I understand my fear ( now ) and because of you I have no more fear of doing. What I need now is money for down payments for my deals, I’m almose at my finacial end , I have my family frist to look after, what should I do now ?
i’ve spent more on books, courses, seminars, and bootcamps than i would like to admit. well over $25K….and thats not counting the chunk i’ve spent on classified ads. i haven’t purchased a single property! can you say abject failure? i cannot believe it. you’re right on when you make the claim regarding the 95%.
1. Down payment money: It doesn’t have to be *your* money. Find a money partner or private lender. Form an LLC with a very specific operating agreement (use a good real estate attorney and a good securities attorney) that spells out when each member receives and their responsibility to the LLC. (Or talk to your attorney about forming a limited liabilty partnership or a syndication group.)
2. Marketing means letting the world know that you are looking for properties (motivated sellers) and participants (people with money, including people with self-directed retirement accounts).
3. We’ve received good free information from http://www.TheEntrustGroup.com regarding investing self-directed retirement funds in real estate.
4. Write (I mean WRITE — don’t try to keep it in your head) your investing criteria & terms (property type, location, price range, required yields, etc.), and make a written list of people in your network who have (or know of) people who have money to invest in real estate. Ask those people what they think is a good investment in real estate and whether they know of anyone else who may want to consider investing in good real estate deals.
5. Get the free (basic) subscription to http://www.LoopNet.com and do basic searches for properties that fit your written criteria. Then contact the listing brokers, ask for the financial data (income & expense, rent rolls, and current debt structure). Also ask whether they have any other properties that fit your criteria (let the brokers do the searching for you). Do not sign an exclusive right to buy agreement, unless it is for a specific single property for the specific timeframe needed for due diligence and closing.
6. Learn how to analyze quickly the financials to see whether there is any potential for a deal. I suggested running the numbers for a 75% LTV (Loan To Value) first position commercial loan, 15% seller financing, 10% down payment (that pays the closing costs and broker fees). If you can take over the payments on the existing debt, then run those numbers also. Determine which way makes the better deal for you.
7. Negotiate a deal by starting with a Letter of Intent (LOI) that is non-binding, spells out the basic terms of your deal. If you get “traction” and come to an understanding, then your attorney drafts the actual purchase contract. Get the property under contract with a due diligence contingency clause that lets you look at the property for free for 90 days. If you can’t get 90 days, then try for 60 days. If you can’t get 60 days, then try for 45 days. If you can’t get 45 days, then try for 30 days or quit. Earnest money is a promissory note redeemable for good funds *after* satisfaction or removal of all contract contingencies.
8. You get the upfront due diligence costs (appraisals, surveys, phase 1 environment report, etc.) from your network of private equity partners that want to participate in your deal. They look at your deal and decide whether they want a piece of it. If none of your investors want it, then exercise your escape clause and bail out.
9. If the due diligence looks good and you get your financing lined up (either by taking over the property subject to the existing debt or bringing in new debt), then prepare for the closing, take over the property, put in professional management, and start depositing your net positive cash flow into your bank account.
Generally, you’ll be subject to the “one out of three” rule. 100 suspect properties will cross your desk. One third (about 30) are prospects that will be worth asking for the financials (the others are in fantasy land or don’t meet your criteria). Of those 30, one third (about 10), will be close enough to merit submitting a LOI and trying to negotiate a deal. Of those 10, one third (about 3), will get to a signed contract and then you perform the real due diligence. Of those 3, about one third (1), will actually close. 100 suspects, 30 prospects, 10 offers, 3 acceptances, 1 closing. It’s a filtering process; just do it. Each rejection puts you that much nearer to a closed deal.
A good starter book is “Commercial Real Estate Investing for Dummies” by Peter Harris and Peter Conti. Another good starter book is “Commercial Real Estate Investing 101″ by David Lindahl (with short commentaries by Donald Trump sprinkled through it). These are only *STARTER* books; you’ll need much more information from good mentors, coaches, attorneys, syndicators, and investors who have “been there done that”.
Hope this helps.
ok thanks again lets do some deals
I’ve been in the construction and development business for 46 years and this is my fourth Recession.
The absolute best time to”dive in” is during a Recession as long as the deal measures up – and by that I mean a”perfect balance of economy,aesthetics,and market appeal”(location).
Once your mindset allows you to get a few of these deals completed,then it’s not a big jump for you to progress into Real Estate Development like rehabs or condo conversions,and then into new ground up Projects. Development is complex…not complicated.
Now is the time to get existing buildings the way Lance describes, and then use the margin to either add to your portfolio, or leverage options on land that you can hopefully rezone to a higher and better use to either sell to Developers or develop yourself.
Lance is absolutely right when he states that Skillset + Mindset is the key. The skillset comes from experience through a combination of the information he offers plus practical experience, however,the biggy after that is definitely the mindset.
Once you have committed in your mind that you could develop a passion for Real Estate (I do -there’s nothing to compare with Real Estate Development for making something out of nothing and having fun while you do it),then you can do this (through faith..and hard work, all things are possible).
For my first ground up Development( $5Mil in 1980)Project, I cashed in $5,000 from my visa for the refundable deposit on the Land.The completed building was sold to private investors for $7Mil.
Most of our Projects are ground up developments,but since the Market is currently slow, I plan to try Lance’s system and sources as a separate revenue generator for my Company.
It may take 5 or 50 attempts before you structure the right deal,but it’s a great feeling from the accomplishment of closing a sweet deal.
The deals Lance describes are out there -just do it….
Regards and good hunting…
Ian