THE GUIDELINES

GUIDELINE 1. GOAL ORIENTATION: A major factor for attaining success in any endeavor is the strength of a person’s focus on his or her goals. As important as focus is, you need to understand that without a well-defined goal, success will continually slip away.

Proper goal orientation requires work and practice, and continual fine tuning must take place along the way. In real estate investments, the adjustments occur as investors learn about their own aspirations, future desires, and abilities and expand on each. In each situation, you will discover that it will be confining to set goals within the current reach of your abilities. Every goal process must include the improvement of abilities, so that greater and more challenging goals can be set, attempted and achieved.

The most successful people in any form of endeavor are continually learning, and they take pride in that process. People who think they know it all - already know all they will ever learn! In contrast, the person seeking success should make an effort to learn something new and meaningful every day – and – then apply that new bit of knowledge as soon as possible.

When you don’t know something, admit it: then ask how to learn it. People will respect your desire to learn.

GUIDELINE 2. PRIORITY OF TIME: When your goal is clearly in sight, and the steps to get from start to finish are clearly planned, the proper use of time becomes a critical step in the attainment of these goals. If time is not valued, goals may take too long to attain, making them obsolete, and frustration and disappointment can become stronger than the desire to attain the original goal. A common error is to over budget the use of time or to under estimate the time it will take to attain a certain intermediate step.

For example, one of the elements of building your comfort zone (which we will speak of soon) is to become an expert of the property and events that are going on within that zone. This is not an overnight process, and in fact, is something that continues for the entire time of evolvement within that investment zone. However, the process must start somewhere, and a certain, definite time must be set aside for the process to occur. That time should build rather slowly to allow you to adapt to the new and growing sphere of reference.

GUIDELINE 3. SPHERE OF REFERENCE: As the comfort zone develops, you will see and feel the growth of the sphere of reference around you. If you have been faithful in expanding your real estate education (i.e. attending seminars, buying and reading books, implementing your new found knowledge) your sphere of reference is tremendously greater than the day you started.

Step by step this sphere grows. It will become the envelope that will contain everything that goes on around you of which you have control over, or if not direct control, direct contact. The process is not automatic, however, as to gain benefit from the natural process you must follow up on the growing contacts around you.

Learn the names and faces of the people within your comfort zone that can and will be of assistance to you and your goals. In a positive way, make them remember who you are. Surrounding yourself with allies is paramount to your success.

THE STEPS

STEP 1. ESTABLISH A GEOGRAPHIC TERRITORY: The first step is to decide where the investment zone will be. The best place to begin with will be a geographic area that is convenient to where you live or work, however, it is important that the zone meet the following minimum criteria:

1. SHOULD NOT BE IN A DETERIORATING NEIGHBORHOOD

A deteriorating neighborhood is usually obvious, but there may be plans in the works not yet publicized that are about to shake up a stable neighborhood. One such event may be the closing of the only major employer in the community, or a new super highway that is gong to slice through a neighborhood, cutting it in half and making it either un-accessible or undesirable. Whatever the situation, you should avoid spending any time (or money) in a deteriorating neighborhood. In fact, if you live (and own) in one, you may want to consider getting out as soon as is practical. Remember, where you live can have a profound effect on your mental and financial mindset. Living in a negative area of town will affect you negatively.

You will be surprised to learn that if you look hard, and even use some “sweat equity”, you can move to an improving neighborhood easier than you think. Live and work in positive surroundings.

2. SHOULD CONTAIN AFFORDABLE PROPERTIES

Affordable properties do not mean properties that you think you can afford at this moment. As your real estate education continues, you will discover that that it is possible to buy properties and profit from them even if they seem out of reach, price wise, at this moment in time. Affordable means property that is priced from the middle of the specific market for the area to the lower end of that same market. If the price range is from $150,000 to $250,000, then the affordable range is from $150,000 to $200,000. This is the range where there can still be improvement in value and will present the greatest opportunity for the investor.

3. SHOULD HAVE BETWEEN 600 AND 1000 PROPERTY OWNERS

At the start, each comfort zone should have between 600 and 1000 property owners. The basic reason for this is to give you, the investor, a wide choice of properties and sellers from which to select, while at the same time limiting the size of the zone in which you start. This will allow you to focus your efforts on a narrow part of your town or county.

4. SHOULD BE WITHIN ONE GOVERNMENTAL COMMUNITY

In the beginning, you will need to concentrate your efforts on one municipal or governmental community. Different communities, even though they may border each other, often have different rules, deed restrictions and covenants, ordinances, and possibly the worst scenario – different attitudes about real estate investors. You should concentrate on one closed area, getting to know it like the back of your hand before you move to another.

STEP 2. BECOME THE EXPERT FOR THAT TERRITORY: The fortunate part of real estate is that almost everything of importance occurs locally. This localized nature makes it possible for any determined investor to become an expert in any given area in a short period of time. Even though becoming an expert is very simple and basic, most property owners rarely, if ever, take these steps.

The following is a list of the information that you should strive to learn about your investment comfort zone. Keep in mind that many of these factors change from time to time and thus a constant review of the current circumstances is required.

TWENTY FACTS YOU SHOULD KNOW ABOUT YOUR INVESTMENT COMFORT ZONE

1. Geographic layout

2. Street names

3. Subdivision names

4. Zoning rules & regulation

5. Local ordinances that affect real estate

6. Price ranges by subdivision or streets

7. Rental market data and rents charged

8. Future road plans

9. Future utility plans

10. Future developments in the planning stages

11. Local employment statistics

12. Employment trends

13. Major impacts that will affect employment trends

14. The “how” and “who” of local government

15. “What”, “how” and “who” of the local building department

16. School districts and how to get in to other schools

17. Bus and other local transportation routes

18. “What”, “who” and “how” of public records

19. Names of prominent business leaders in the community

20. Sources for local financing

OK… Where does this data come from? Every item mentioned above is part of the public information that is available from your city or county government. It is up to the devoted investor to find and utilize this information. Attend one of our many educational seminars and we will teach you how and where to find the information sources of all these items.

STEP 3. BUILD THE INVESTMENT TECHNIQUES REQUIRED: You will find that your investment career will be short lived if you need to rely on conventional methods of purchasing and financing the properties that you find in your comfort zone. By conventional, I mean utilizing a realtor to transact the deal (paying a healthy commission) and utilizing your local bank and/or mortgage broker to get the money you need (needing large down payments, paying points and being limited to how many mortgages your good credit and income will afford you).

Therefore, you need to develop and perfect creative purchase techniques. These techniques will become the tools for building your investment portfolio. As with any tool, practice will hone the edge and will give you confidence in both the technique and your ability to use it.

I personally have limited my tool box to the following tools:

1. The Option Agreement

2. The Lease Option Agreement

3. Wrap-around mortgages and secondary seller-held financing

4. Sweat Equity

I will not expound on these four techniques in this newsletter, rather I will list them as conceptuals. Tune in to next month’s newsletter, “How to Buy and Sell Real Estate for a Profit”, where I will go into great depth on each of the four techniques.

For now, suffice it to say that just as no single tool can be used for every purpose, so it is with real estate investing tecniques. As you buy and sell, you will learn the best times and circumstances to apply each technique.

STEP 4. ACT ON OPPORTUNITIES: As you begin to get the feel for your comfort zone, there will be a sudden shift in what you actually see! It is almost like looking at the proverbial forest and not recognizing one species of tree from another. They are all green and though the Pines may stand out somewhat, the rest all look more or less the same. Finding that Sugar Maple may be an impossible task… until you become an expert in Sugar Maples! This same perception happens in the investment comfort zone.

Opportunities in real estate are rarely so obvious that they have a sign out front that announces them as “ The Opportunity of the Day”. Frequently it is the subtle, usually not so obvious potential for economic conversion that will guarantee you a profit.

When you know the geographic territory like the back of your hand and have a firm grasp of those twenty key facts, opportunities will stand out like Sugar Maples among a forest of Pine trees.

The secret of success in life is for a man (or woman) to be ready for his opportunity when it comes.

-Benjamin Disraeli

In our zeal to make money and live on Easy Street, it is human nature to ignore signs along the way that forecast danger or rough terrain. There are pitfalls that you can avoid by taking heed of the advice that experienced investors willingly give you:

DO NOT LOOK FOR SHORT CUTS.

When it comes to running into brick walls, real estate investors have their share of the hard lumps that come from such walls. The key is to keep working at the process, and to continue to build this very important sphere of reference that I mentioned earlier. But as I stressed before, this sphere of reference only works if the particular reference gets to know and remember you. This requires follow up and more follow up on your part. If you are looking for short cuts you will find many, but they are all pathways to some other destination, and not for the goal you so strongly seek.

LET FAILURE WORK FOR YOU, NOT AGAINST YOU.

There is nothing harsh or sinister to way the word “failure” sounds. If that is the case, then why are so many people frightened of it? Fail is what people, even successful people, do a lot of the time. In fact, failure that occurs just a little bit less than half the time can indicate a huge success. People who are not successful in working their comfort zone attain a lack of success because they do not take chances. It is usually not that they shirk responsibility and hard work…quite the opposite; they often work harder trying to avoid a confrontation with another person where they may (heaven forbid!) fail at something.

DON’T LET ANYONE TELL YOU THAT YOU CANNOT SUCCEED.

Don’t let the opinions of the average man sway you. Dream, and he thinks you’re crazy. Succeed, and he thinks you’re lucky. Acquire wealth, and he thinks you’re greedy. Pay no attention… he simply does not understand.

Think of everything as small bits and pieces that guide you to success. If your goal is to try to buy a small income property, then look at the elements that can lead to that goal:

1. Get to know the area.

2. Look at everything on the market.

3. Find a realtor that is compatible with this goal – or – get good enough to go it on your own.

4. Make offers.

5. Make more offers!

6. Make even more offers!

7. Work with COOPERATIVE and MOTIVATED sellers to close a deal.

Obviously these steps contain intermediary steps that have to be accomplished, but each step moves in a positive direction. Frequently the drive toward the goal loses momentum at steps 4, 5 & 6 above. Somebody steps in the way – a broker, a lawyer, a negative seller, who actually says “”NO!” to your offer. None of these people are roadblocks, they simply represent road signs to make you stop for a while and see if something can be done to work out that particular deal or to simply move on to another property and another seller. Trust me… there will ALWAYS be another property and another seller!

The unfortunate aspect of life is that there are more negative people than positive people. The nice part about life is that positive people generally attract more positive people around them. It is simple mathematics if you think about it. Because there are more negative people, and because positive people attract more positive people, make the shift to another simple fact of life:

Positive people enjoy their success and strive to have more of it while negative people believe they have attained enough of it.

Keep your attitude positive and your eye clearly focused on your goals.

Post Note: I have one very avid and astute reader of my newsletter that contacts me to let me know of typographical or grammatical errors in each edition. He is a dear friend of mine, so of course I receive his critique with the intent in which he delivers it. So… I have decided to include one spelling and one potentially grammatical error in each future newsletter so as to give him something to look forward to each month. It is obvious that he needs a hobby or something! Happy hunting Flotsam!!!!!