Become a Real Estate Investor - Start at the End

Private Property South Africa
Scott Lamm

So you want to become a real estate investor?! One of the most common questions

I get from those who are just starting to invest is, "Where do I start?" or,

"How do I know where to begin?" I want to share some secret principles with

anyone who has ever struggled with how or where to start in the world of real

estate investing; just start at the end.

When I say start at the end, I mean that you have to figure out where you want

to end up or it is awfully hard to develop a plan for how to get there. It would

be like the family that says they want to go on vacation but they never take the

time to figure out where they want to go! If they never take the time sit down

and decide where to go, then they forfeit the right to complain about never

arriving anywhere.

Your real estate investment choice should begin with drilling down to what

amounts to 2 very basic baskets of choices:

  • Would I prefer a bigger chuck of cash now?

  • Would I prefer the passive income each and every month?

Either answer is fine. Let's face it: in real life we will want both, but we

also know that we need to have a primary and a secondary goal when it comes to

these two categories. If you already have a good chunk of cash, then you would

most likely lean towards the passive income category. If you lack the cash and

need to build up some money, to solve some other issues or areas of your

financial life, you would most likely lean towards getting a bigger chunk of

cash sooner.

Consequently, when we come across deals, we tend to try and push them towards

the primary objective that WE need; either cash flow or cash now. I have seen

many beginners get frustrated when they just can't seem to get their first deal

under their belts. One of the reasons they might be struggling is because they

have tried to fit a square peg into a round hole. Maybe the deal they have found

would be great for cash flow but not so great for cash now. Or maybe they found

a decent wholesale deal that would have some cash if they flipped it; but it

spits off no income if they were to keep it.

Instead of trying to force our own will and what we need into every deal, we

need to learn to stand back and start at the end and see what the deal allows us

to do. When I look at any prospective deal, I ask myself 3 questions regarding

any potential profit:

  • Can I make money living with it?

  • Can I make money renting it out?

  • Can I make money selling or refinancing it?

First of all, if the answer is no to all three of these questions, then it

probably is not a deal I am going to do. What if there was money renting it out,

but I don't want to have rentals or I need the quick cash? Or what if I could

buy it right, but the rents just won't cover the debt service? Should I throw

the deal away? Definitely not!

This is why it becomes so important to build our team. Just like Robert Allen

and Mark Victor Hansen (two prominent real estate investors and personal

development specialists) talk about in their book "The One Minute Millionaire",

you need to develop your own Mastermind Team. A Mastermind Team is essentially a

group of like-minded people with similar objectives. They can be your guide and

support system at the best of times. Find and Surround yourself with other

investors who might be looking for things that you are not. For instance, if you

are looking for cash flow, and you find a deal where there is profit on a flip

but not from a passive income perspective, you could flip the deal over to one

of your Mastermind team members who is looking for a rehab. If you are looking

for fixers to rehab and sell, but you find a duplex in good shape that has some

cash flow, you could still turn the deal over to one of your team members who

seeks that. You can also form joint ventures in a deal if you need to spread the

risk.

Simply said, rather than getting frustrated when we find deals that don't give

us what WE want, see if there is profit in another category and make a bit of

money by flipping the deal to another investor who may be seeking something

different. The other advantage of a MM team is that you can share strategies and

ideas on a regular basis to maximize your portfolios.

Another way to say it is, "start at the end". See what the deal allows you to do

and go with it instead of fighting it! For example many investors try and sell a

property if it does not perform whereas they could refinance and save on tax,

estate agent commissions and other duties.

*Scott Lamm is a hugely successful American Real Estate Investor. Investing in

real estate anywhere in the world is based on sound investment principles first.

It is irrelevant in what country you are buying property, what entity you are

buying in, what tax laws apply, etc. It is important first to have a strategy

which works for you the investor. Lamm is a 1989 graduate of Robert Allen's

Wealth Training. Fifteen short years later, he has bought and sold over $36

million in real estate and currently owns nearly 100 rental properties. Lamm

owns nearly $5 million in real estate including single family homes, commercial

properties and apartment units. He recently completed The Hampton's -- a

72-acre, 387-lot residential subdivision. Lamm began speaking and training

nationally in 1992, upon leaving his management job at upscale retailer

Nordstrom. Lamm is a featured speaker and trainer for The Robert Allen

Institute. He is also a distinguished member of Robert Allen's Millionaire Panel

and regularly appears and speaks at Robert Allen and Mark Victor Hansen's Wealth

Retreats and other National Events. Lamm is a multi-disciplined professional,

well versed in all aspects of real estate, sales, management, mass audience

communication, financial markets and both internal and external training

programs. He brings a vast wealth of knowledge and experience to bear in

relationship and rapport building, overcoming fears, marketing, teaching,

training and all aspects of Real Estate investments and financial and securities

markets. His dynamic and unique style of teaching and training, filled with

real-life learning curves and experiences, is respected and enjoyed by all;

beginners appreciate his simplicity and more experienced investors value his

sophistication.

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