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Manual 1The Investor MindsetIt is imperative that real estate investors possess the correct mindset, actions, and skill setto become successful in the real estate industry. This manual will explore key ways tohelp investors achieve success through building a successful real estate business. As a selfmotivated entrepreneur, the real estate investor can determine one’s own success and createwealth.Mindset is the key in the real estate industry, especially since the investor is self-employed.The successful real estate investor will focus on what can be done, not on what cannot bedone. The real estate business is one that requires focus and commitment, coupled with anentrepreneurial spirit. To be a successful investor, one needs to have a deep knowledge of realestate and be well informed on the current market conditions.Investing in real estate does have its advantages and disadvantages, as with most propositionsin life. The risks involved are usually rewarded well financially, when real estate investmentsare carefully considered and planned out. Fundamentals of real estate investing encompasseverything from financial means to market knowledge and just plain business sense. At theheart of a good real estate investor, the drive to be an entrepreneur must reside. A real estateinvestor is one who builds wealth, not one who seeks to gain a quick dollar in the bank.or Tip #1:tReal Estate InvesStay informed, attend seminars/webinars and become involved in alocal real estate investing club.The potential to purchase a revenue-generating asset is appealing to most, although it maytake a large monetary investment and some sweat equity, the possibility for profit within thereal estate market is only limited to ones imagination and drive. When it comes to real estateinvesting, both failures and successes are inevitable. The key to earning wealth by investingin real estate is to have a full understanding of the market and to make smart, well-educatedbusiness decisions. Seasoned real estate investors know the creation of a business plan witha solid investment strategy is the key to beginning a career as a real estate investor, as well asdoing a lot of homework/research. Short-term and long-term goals must be identified in order1Copyright 2013
Manual 1to ensure that the investor’s goals are in line. The following manual will serve as a guide toentrepreneurs interested in beginning a career in real estate investing.Defining the Real Estate Investor:The definition is simple. Anyone who invests in real estate may be considered a real estateinvestor. What further defines a real estate investor is one’s personal drive and motivation tomake money and enhance neighborhoods by flipping/rehabbing properties or renting them out.Typically a successful real estate investor is extremely business oriented and possesses a passionfor real estate. Real estate investors are also considered entrepreneurs, as they take a financialrisk to organize and operate a business. It is this risk that allows for the creation of wealth overand above what one could make in a monotonous 9 to 5 job.Characteristics of a Successful Real Estate EntrepreneurFirst and foremost the investor must have an open mind. This is the launching pad tosuccess. Entrepreneurs are some of the most open-minded business professionals. However,the world teaches people from an early age to stay within the lines and not to think too big,as letdowns and failures are inevitable with big risks. However, successful entrepreneurs havediscovered that is not true. An entrepreneur is continually looking for new ways to accomplishgoals quickly, efficiently, and outside of the box. A few descriptors common to the open-mindedentrepreneur are:yyBe present in each moment of lifeyyWhen facing an obstacle, be open to all solutionsyyWhen opportunity presents itself, identify it and quickly act on it.Be optimistic! Develop a mental alarm that goes off when there is any pessimism. Whenthe alarm goes off, immediately replace it with positive optimistic thoughts. Never surrender!Reject negative thoughts and be positive. Perseverance and determination will allow the realestate investor to find a solution, eliminating any obstacle that is hindering growth. Part ofbeing able to remain optimistic all the time is to make sure that investors surround themselveswith supportive peers. Without this, the pessimism has a way of creeping in, bringing with itnegativity.2Copyright 2013
Manual 1Provide a service. This can be taken in a variety of different ways, but the investor shouldmake a concerted effort to be helpful and give back. It can be easy to get caught up in life’s journeyand forget the principle of reciprocity, which states that: “When you share with someone, theyfeel obligated to do the same.” Sharing something for free will keep investors humble and assuccess grows, they will need a little humility to keep themselves balanced. Do not give awaythe keys to the kingdom, per se, but do not be unwilling to share information or a service.It can be easy to keep secrets for fear that someone else will take the limelight, but themost successful and happy entrepreneurs have faith and confidence that they will always besuccessful, regardless of the inevitable competition. There are many reasons for and benefits ofthe principal of service, both giving and receiving. Entrepreneurs should be helpful and look togive back or help the next guy. Typically, most entrepreneurs know how difficult it can be tobuild something from scratch.“Entrepreneurship is living a few years of your life like most people won’t so youcan spend the rest of your life like most people can’t.”AnonymousEntrepreneurs should have faith in themselves and others. Fear will fail and faith prevails.Instincts will develop as the entrepreneur practices being open minded and optimistic. Thoseinstincts will become stronger than the fear. With the right mindset, an entrepreneur will not fail!“I have not failed. I’ve just found 10,000 ways that won’t work”– Thomas EdisonLongevity the investor’s focus should be on building wealth. Therefore, assets are criticalto longevity and building wealth. Look at opportunities to fix and hold a property, as well asfix and flip a property. Examine every opportunity (property) closely to determine the bestentrance and exit strategy. Fix and flip has always been the most attractive strategy but will onlypay once. Buy and hold provides 5 different ways to profit.1.Cash flow2.Leverage3.Forced equity4.Depreciation5.Capital appreciation3Copyright 2013
Manual 1Real Estate for ProfitWhile being a real estate investor is no easy task, the financial return can be great. Therewards also transfer over into the community by providing housing for renters, or flipping ahouse improves the overall aesthetics of a neighborhood.Selecting the investment property is the biggest piece of the puzzle, a concept that willbe covered more in-depth later. Most people look into the opportunity of real estate investingbecause they seek financial security through their investments, and ultimately search forfinancial freedom. While this is a fully obtainable goal, it does take hard work to achieve. Thetime allotted for a real estate investing business is completely up to the individual. Building asuccessful business, however, does take time. Some real estate investors work 40-hour per weekjobs and do real estate investing in addition to a regular job, so that they have a steady andreliable source of income. While other real estate investors make a full time job of it, whether itbe from the beginning of their career or after they have established a little bit of income to helpsupport themselves and their business. One of the best ways to begin in the real estate investingbusiness is to identify a cash flow positive property, which is determined by the rent minus theexpenses, which equals a positive cash flow that can deposited in the bank.The great thing about being a real estate investor is that the nature of the business affordsthe investor the unique ability to define personal success based upon how much effort, timeand money invested. Wealth through real estate can be accomplished through achievingone’s personal investment goals. While not all real estate investments are created equal, it isimportant to complete due diligence prior to making an offer and consequently a purchase. Byimplementing a successful real estate investment strategy, the investor is purchasing a revenuegenerating asset that has the potential for a high Return on Investment (ROI) when comparedto other investment types available.Before beginning on any real estate business venture, investors should ask themselves somekey questions:01.Am I fully committed?02.Do I have the financial capacity (or am I able to secure funding) to make real estateinvesting work?03.Do I have the time it takes to invest in making the business a success?04.Is my business plan and marketing strategy good enough?05.Have I done my homework? Have I researched the real estate market, demographics,crime, property values and cost of improvements?06.Do I have an entrance and exit plan in place for each property?4Copyright 2013
Manual 1“Ninety percent of all millionaires become so through owning real estate.”-Andrew CarnegieConclusionThe difference between a ‘normal’ real estate entrepreneur and a ‘millionaire’ real estateinvestor is that a normal real estate entrepreneur tries to build assets and looks towards thefuture. Conversely, the millionaire real estate investor has built wealth through buying whenreal estate values are down, cash flowing then leveraging, or selling when the values hit a highmark.The following are great attributes for successful real estate entrepreneurs to possess: Open minded, ‘outside of the box’ thinkers Optimistic Hard-working Determined Fully committed Financially savvy Possess a strong ability to network and market (not only themselves, but theirbusiness as well) Know the current market conditions within their real estate investing area(s) Are passionate about real estate Never stop learning and possesses a thirst for knowledge Have a plan!“Warren Buffet would buy every single house on the market if it were logistically possible.”This just goes to show that the smart entrepreneurs invest in real estate and possessthe mindset necessary to be successful in the business.5Copyright 2013
Manual 1Why Real Estate?There are three basic necessities that everyone needs in life: food/water, clothing andshelter. Just as every person needs to eat, people need a place to lay their head at night. Everyoneneeds housing, which is why real estate is a huge market, regardless of physical locale. MostAmericans will experience buying and selling a house at least once in their lifetime. A real estateinvestor will experience buying and selling properties at a much more rapid pace.Housing Supply and Demand - Annual Averages (thousands)1974-1983Demand:Change in HouseholdsChange in VacanciesNet RemovalsTotal DemandSupply:Single FamilyMultifamily2-4 units5 or moreManufacturedTotal SupplyForecast 2004-2013ModerateHigh1984-1993 1994-2003 Immigration ces : Census Bureau Housing Vacancy. Current Population Survey. Construction Statistics ; NAHB projectionsof population, households; historical supply represents completions, forecast supply is starts.The above chart demonstrates the annual averages of housing supply and demand since 1974.r Tip #2:toReal Estate InvesNo matter what the market is doing,people will always need a place tolive. Develop the ability to read themarket and have the ability to shiftwith it.Real estate is an enormous market and can be slow at times, but when it is moving it istypically booming. When the housing market imploded back in 2008, it took its toll on a lotof people. Everyone from realtors to homeowners and investors felt the shock of the market’srecession and had to suffer. The housing landscape has now become beautiful once again, after6Copyright 2013
Manual 1all the dust has cleared and more and more people are finding their path to home ownershipand/or real estate investing. Lenders are also seeing applications for new home loans steadilyincreasing.“Buying real estate is the best, safest way to become wealthy”. -Marshall FieldRealtor.com offers some informative statistics that are updated monthly that reflect mostmajor US Cities. The report may be viewed at: istics.aspx?source webAnother great website that is updated monthly to show current market trends can be viewedat: her online resource worth checking out is Corelogic, which can be accessed at(www.corelogic.com)FreedomWant to earn more, while having more time for family, hobbies, and other pastimes? RealEstate can offer a freedom like very few other industries can. Investing in real estate can putthe investor on the path to becoming a millionaire. Considering that, as of 2012, 86 percent ofmillionaires were self-made, and of those, real estate created the largest number of them.Here are a few fun facts about millionaires:yyApproximately 7 percent of all American households are millionairesyyHalf of all millionaires are self-employed or own a businessyyOnly 20 percent of millionaires are retirees, about 80 percent still go to workyyIn the year 1900, there were only 5,000 millionaires in the United States. In 2000,there were more than 5 millionyy63 percent of North American millionaires are men and 37 percent are womenOne study concluded that 90 percent of all millionaires in the United States were millionairespartly due to their ownership in real estate. Consider a few of the more well known millionaire
Mindset is the key in the real estate industry, especially since the investor is self-employed. The successful real estate investor will focus on what can be done, not on what cannot be done. The real estate business is one that requires focus and commitment, coupled with an entrepreneurial spirit. To be a successful investor, one needs to have a deep knowledge of real estate and be well .
