Strategic Real Estate Investing: The Missing Piece of the Puzzle?

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It's time to get real.  Let's be honest for a moment and look at the results the average person is getting with the masses of real estate investing information that's available today.  A frightfully low percentage of people that attend the typical real estate investing seminar or bootcamp go on to build a real estate business of any significance.  Why?  According to Brad Wozny, 92% of all investors fail in their first three months.  Why?

Why are people having such problems with real estate investing:

• buying lots of educational products but not having the confidence to use them
• never getting that first deal done
• replacing a practical education with a theoretical one
• hopping from one hot idea to the next
• trying to operate without a business model
• complete lack of focus
• no thought given to what skills are required
• no thought given to what resources are required

That is NO WAY to start a business!!  And that is another key issue here.  We are talking about a business, not a hobby.  And yet most people spend more time planning their annual vacation than they do planning their real estate business.

There are two major parts to this problem that relate to different stages of business.  And if we look at the biggest hurdles confronting real estate investors we can see it nearly always comes down to having a sound strategy at each phase of business.  The two phases of business we will examine are:

1. getting started
2. the growth stage.

Phase 1: Getting Started

Most of us honestly believe that it really is possible to make a lot of money in real estate, even for the average person.  But the problem that is rarely spoken about is that there's a huge hurdle to overcome - getting started.

A severe lack of confidence to act causes people to continually put off the decision to do their first deal.  Again, we must ask "Why?".  Why are people lacking that confidence?

There are a couple of factors:

1. Confusion - with so many experts promoting so many different methods for making money people are confronted with the paradox of opportunity.  It is great to have choices available to us but only if we are equipped to make a decision.  Too many choices without a plan of a attack equals confusion.

2. Risk - aside from the risk of making the wrong choice your average person is not equipped with the tools to evaluate and minimize the risks associated with a real estate investment.

So, you see, that doubt that is preventing you from acting is actually trying to protect you from making a mistake - that's your inbuilt defenses working for you.

And you sense there's something missing, so you go to another seminar or buy another book and just get overloaded with more information and more methods that just compound the problem by increasing your confusion.

But here's the trick:
We believe that the best way to reduce risk and boost confidence is through education.  And there's a lot of truth to that.  But the thing is that the best education, by a LONG shot, is a practical one.  In other words, the best education comes from doing that first deal.  So you see, it's a catch 22.  We need an education to get started but the only education worth having comes from getting started!

So what's the answer?

We need a plan!  In order to remove the confusion and risk and replace it with confidence you need a plan, a strategy!  And one that works.

There are other tools for reducing the confusion and risk besides getting educated.  We need to couple those methods with a basic education in your "getting started plan" to give you enough confidence to do your first deal and let the REAL learning begin.

But the nice thing is that once you get that first deal under your belt the momentum snowballs because you are no longer as unsure about things but your confidence just grows and grows while the risks are reduced.

Previously, I think the majority of people who had successful starts in real estate investing simply had to build up their courage enough to outweigh the risk and then just take a leap of faith - which of course is quite a risky approach.  Well, you don't need to do that anymore.  You can take the smarter route of reducing the risk and confusion with a solid education AND plan.

I will give you the details of this "getting started plan" in Part II of this article soon.

But for now, let's also take a quick look at the need for strategy in the second phase of your real estate investing business.

Phase 2: Growth Stage

Beyond the getting started phase, real estate investors tend to be plagued by problems related to a lack of strategy again, when their business seems to outgrow them.  It is at this time that many investors tend to "wake up" and discover one day that they have a business.  And there is just far too much for them to do.

What I find most strange though, is that even after this realization few people seem to ask themselves the all important question, "What does it take to run a successful real estate investing business?".  Instead they just get buried in the day-to-day chores and try to run faster to get more done.

The solution for this is to think a little ahead of time about what we want our business to look like and build some structure around our activities with a very deliberate plan for designing and building the business we want.  Ideally this would mean a business that we work on rather than work in.  Or to borrow from Robert Kiyosaki's vernacular, a 'B' quadrant business rather than an 'S' quadrant one.

We need to consider what skills and resources will be required.  We need to start building business systems and a team to give the business scalability.  And personally the business owner will need to move from an employee role to a manager type role.

But even before you get to this stage it will help if you have set up a business that is designed around your strengths and weaknesses and it is here that a connection between your Phase 1 strategy and Phase 2 strategy is so important.  The "getting started plan" that I will talk about in my next post has the added benefit of having that built-in so you can be sure you will end up with a business that fits you personally and you can grow with confidence.

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