Over the next few months, the publication date may be erratic, but please be patient, once I get a laptop, it won't be an issue. I have been out of town for a couple of weeks.

We'd love to hear suggestions and specific questions you may have regarding real estate investing. Send us your questions and topics and we'll include answers, discussions with experts and responses in subsequent issues.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Today's Topic: Setting Your Priorities
Issue #005
September 15, 2004
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Also this issue: Nominate real estate investing service providers for our free directory.

Setting Your Priorities

Setting your priorities should be the most important item on your agenda list when you decide to invest in real estate.

But in reality, it rarely is.

New investors get so motivated and are often so hungry to do a deal that they don't start with the basics of:

==> deciding what is most important in my life and
==> how can I integrate real estate investing with those things.

In most real estate investing training I have attended as a student, the emphasis has been on finding the down and out seller who is desperate with the ultimate goal of walking away with that seller's deed.

Of course, there is that side of the business, and it is a great way to make some quick cash.

But, there are many other lucrative areas in real estate investing that have nothing to do with desperate sellers. That is the subject of another discussion.

For now, let's look at different aspects of setting your priorities that really need attention if we are to be happy in our work as real estate investors.

1) What do you need?
2) What are you really interested in and what do you love to do?
3) What does your family need?
4) How can we integrate our real estate investing business with our personal objectives and goals as well as mesh them into the fabric of our families and our daily lives successfully?

In many individual cases of people I know not having a handle on priorities has impacted them negatively.

Myself included.

Let me site some examples to clarify the jist of this line of thinking.

Many of us were enamored with a seminar about investing in preforeclosures we attended several years ago. We all walked out of the conference with fire and desire in our hearts looking for deals, knowing that in 90 days we could quit our jobs and be on easy street.

Now obviously that was not realistic and those of us who had more business experience knew it would take some time and lots of work, but fundamentally we left knowing that the foreclosure business had a great deal of potential.

The net results of some of the original attendees of that seminar are quite varied. Let's look at how those results relate to setting priorities - or should.

Example 1:
One of the group started going gang busters, sending out thousands of letters, placing ads and really working the 'system' diligently. Within a couple of months, he had a deed or two and one in particular (where I was his trustee) that required a bit of fix up but was a pretty cute house.

He bought the house 'subject to' and set up a land trust and started marketing the house to resell it to another buyer before actually closing on the purchase himself.

After he had actually cleaned up the place and gotten it ready, marketed it, found a buyer and was ready to close, he found out that the seller had sold it to someone else and had recorded the title transfer just days before his closing date. It turned out there were some holes in his contract and the buyer pulled it off - even after filing a lawsuit, he did not recover the money he would have made on the deal.

A deal that could have generated ~35K net, ended up costing several thousand.

Within months this guy had lots of deeds and he completed one transaction that really made him some money.

All the while he was working full time - like 60 hours a week - a highly motivated and focused guy, also very bright.

In his case I think it is fair to say that had he understood more about what he was getting into, he would definitely have set different priorities in the beginning.

Yet in many areas of the 'chase', he was quite successful. Overall, his opinion of foreclosures is considerably different than before and for the most part is not very active real estate investing 3 years later.

Example 2:
Another fellow attendee, that we met in the original group, ended up attending every seminar and participating in every mentoring group available out of those series, and has yet to buy her first house, three years later.

Priorities?

Exanple 3:
Another fellow attendee really worked the system. He ended up negotiating and getting several deeds to properties with good profit potentials in each of the deals.

One of the first transactions he got involved in, his 'mentors' did not do what they said they would do and the house (even with a great deal of potential) went to auction because the 'mentors' did not negotiate and handle the 'short sale' side of the deal while this attendee was under their wing - in training.

This is a good guy - a really good guy - honest, diligent, capable and true to his word. In fact, on the deal mentioned above, he gave the seller the cash he had promised going into the deal,even though he lost everyting of his own at the auction. And it was not really his fault at all. I am not going into the details, but I am fairly familiar with them on a close personal level.

Several more deals have dragged on for over a year and he has not cashed a deal in almost ten months.

The net result is a drop from stellar credit to $150K debts and exasperating troubles.

Preforeclosures Is Not Our Top Priority Anymore

We have been involved in a number of transactions. But we have found that the preforeclosure business is:

==> extremely time consuming
==> very frustrating because of the lack of control over bank decisions
==> paper intensive
==> demoralizing - dealing with people who have been through major operations, car wrecks, divorces, layoffs, lawsuits gambling, drug and drinking problems, etc...

We have done some very successful preforeclosure deals. And we will continue to do them as part of the overall mix of our business. But they are no longer a priority.

Setting priorities has been one of my greatest weaknesses - in retrospect.

Personally, I have a tendency to become so driven and intensely focused on succeeding at something that it becomes easy for me to forget about the needs of those around me.

The Number One Priority

One of the things I am finding out - through stepping into lots of my own 'self-dug' holes repeatedly is that the number one priority is good communication.

To look at it another way, it becomes even a more important priority when you lack it.

If you have poor communication skills going into the real estate investing business, make learning how to develop those skills your number one priority.

It impacts everything you do in real estate investing - marketing, finding the deals, negotiating with sellers and reselling or managing a keeper.

Sit Down With Those Close To You

Make certain that your partners, loved ones and family are on board with your real estate investing business. Include them in your decisions and discuss how they are feeling about your work and make adjustments accordingly.

It is easy to get so focused on doing the business that you forget why you are doing the business.

In addition, you have to get results. Make getting results influence your choices about what deals you tackle and get involved in, and which you walk away from. Don't let the business run your life while you are chasing rainbows. Rainbows are fine, keep dreaming your dream and looking at the big picture, but don't forget to include those closest to you in your dreams and your activities or you may inadvertently leave them feeling left out and abandoned.

Real estate investing should be really fun and exciting for you and your partners.

Make this a priority and your will love this business. Don't and you may find yourself paying the consequences at a later date.

Do this business for the right reasons and know what they are before you start. You need to remember that real estate investing is an intensive business and it will impact your life. Set your priorities before you become busy and successful. You may not succeed otherwise.

That's it for now...

=======================================================

NOMINATE A REAL ESTATE INVESTING SERVICE PROVIDER

Nominate a real estate investing service provider to be added to our
free real estate investing services directory here.

=================================================

See you next time.

Best regards,

Michael Barrett