How to Be Successful in Real Estate
I can think of a lot of different ways how you can screw up your success in real estate investing. Fortunately, I’ve developed a proven 5-ingredient formula that we can use when investing in real estate. Why does it work?
This 5-ingredient formula works simply because it’s a systematized approach. I love real estate, but I love business systems even more. And when you put those two together, it becomes the singular best strategy in all of real estate investing. In the video above, I showed mathematically why it is.
To find success in real estate, you must try this 5-ingredient formula:
Start with the right system.
The right system would include buying single family homes. What I buy and what I call the American Dream real estate is a 3-bedroom, 2-bathroom home. Always buy below the median! Why? You must remember that everything below the median is a lot safer and insulated than anything over the median.
What do you think is the most overwhelming part of real estate? The risk it entails. So buying below the median keeps you protected from any sudden shift in the economy.
Buy in the very best markets.
I’m interested in two different types of market: Equity growth market and Cash flow market
In an equity growth market, you’re focused on getting those big gains because you’re buying severely below the rebuild value. For example, I’ll purchase homes in Orlando, Phoenix, Las Vegas – those are great equity growth markets, or I’ll purchase my homes in markets like Indianapolis or Memphis; those are markets where I’m getting 13%-14% cap rates all day long.
In a cash flow market, you go after properties that have the highest cap rate or the highest ROI, or your month on month return – the money that you get every month as far as cash flow is gonna be the highest.
Have a track record.
This is actually a really critical key piece here, and I do this through commoditizing real estate. Remember how I said it was 3-bedroom, 2 baths, certain amount of square footage, and all these other variables that are really important in putting this whole system together, well that’s exactly what I am doing with my real estate. I’m comparing it against each other.
For example, if I buy in a market, I can take a look at my last 1,000 homes and then I can compare them to each other and start figuring out really important critical information like how long is it going to take to rent – 42.3 days in this zip code, 38.4 days in that zip code.
Knowledge is VERY powerful to make sure you’re properly and adequately prepared, so track record is really key.
Leverage other people’s money.
Another thing I like doing is leveraging other people’s money. I’m not just talking about using the bank’s money on purchasing a home where you get a 5 to 1 ratio. I put 20% down. I can put a partner’s 20% down and supply the real estate so I use no money out-of-pocket.
Have the right team.
This is the final secret and this is a big one. You have to have the right team! There’s no such thing as succeeding in real estate all on your own. Strategy is important. System is important. But TEAM is one of the most important key elements. Why?
Because this is where you’re coordinating the people that are going to keep you safe with all the proper contracts and legal contracts on actually acquiring the real estate, lining up the lending, property management, and having it properly insured.
The more people you have involved, the more leverage you have, the easier it is for you to expand your operation without you necessarily getting buried by the workload. The team I assembled does all the work for me. What does it look like I’m doing? I’m now also leveraging people!
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