[Joshua Berg]

I had this idea--amongst my ideas to help other real estate investors--of giving you my ten best (or favorite tips), of real estate investing. In other words the ten things I find most useful, but not necessarily ten things I thought of myself, some I learned, others were taught.

You see we all know there's a hundred things to learn and the problem is, we're all just too busy to read everything we need to know. If there's one thing that everyone reads though it's, "best tips" and I think they'll help all of us. Then I thought well why stop there? So once I have enough tips, I'm going to keep choosing out the best and then break some down into categories.

... ok, I've just realized I need to think of a few more to make ten and then I'll put mine up here shortly.

...you know we have the best real estate pros in Houston on this board, so I think you all will have a lot to add. NO, they don't have to be your "BEST". So don't feel intimidated if you don't have the ultimate tips, I'm sure we can still learn from them, so let's hear 'em.

[Choice Realtor]

10...you want 10??? Okay, I'll try to be short!!!

1. BUY RIGHT (I'm sure this one will come up again!!) - This is the basis for your success or failure on any given deal.

2. DON'T GET PERSONALLY ATTACHED - No matter how cool the property is or how much potential the deal has, don't fall in love with the property. A deal is a deal but it's no longer a deal if your emotions let you pay too much for it (and they will)...or underestimate the rehab in order to "make the deal work!"

3. COMMUNICATION!! Stay in touch with everyone. Don't let it be a surprise when, the day before closing, you find out that your buyer hasn't submitted all the documentation required by the lender. Stay in touch with loan officers, title companies, lenders, buyers, sellers, Realtors, neighbors...hell, see if the guy next to you in line at the store knows anything about the deal!!!

4. DO A GOOD JOB ON THE REHAB - As a Realtor, one of my toughest jobs is handling a seller who believes his property to be worth full market value even though he (or she) did a crappy job on the rehab. Price your properties in line with where they fall in the immediate market. Crappy rehabs can sell for less than un-updated resales in no better than average condition.

5. PRICE RIGHT FOR SALE (also see #4) - It's okay to price a property 5-10% over market value to see what you can get for it. BUT - if buyers aren't looking at the home & you're not getting offers, you're probably overpriced...it's time to do a price reduction. Don't get greedy!! Take the price the market will give you (or explore other options like owner finance or renting).

6. NETWORK - Can't stress this enough (and I'm guilty of not doing it enough myself!!). Network, network, network...you never know who you're going to meet that will change your life, your business or who knows what!! Or who you're going to meet that knows one of those "life changers."

7. FIND YOUR NICHE - For me, this is when my business took off. Find something you fully understand & can relate with intimately. Learn it, practice it and become THE benchmark for your target market (residential vs. commercial / under $100k vs. $200k & up / wholesale vs. rehab / etc.). As you network within this market, you'll notice that deals start to find you rather than you not being able to find deals!!

8. DON'T PAY 'TIL THE WORK IS DONE - Okay, so I just learned this one myself. Well, I already knew it but $300 down the drain and having to make a nasty phone call etched it into my brain for good (I'm just glad it wasn't more!!). If the contractor can't afford to get started without money up front, find one that can!

9. DON'T OVEREXTEND YOURSELF - Don't bite off more than you can chew. If you only have enough resources (credit, cash, manpower, hours in the day) for two projects at once, don't try to take on five at once!!! No matter how unbeatable the deal (okay, within limits), you may not be able to realize all of that potential if you're occupied with what's on your plate already. If you don't have enough cash reserves to cover the notes on five vacant rentals then only leverage three in the first place...or something like that!!

10. MOW THE YARD!!!!! - If you list a rehab with me, you'll hear this just about every other week (unless your yard crew beats me to the listing that week). If you spend tens of thousands of dollars to fix up the house, why not spend an extra couple hundred bucks to keep the yard neat while it's up for sale...so buyers can actually SEE what you've got to offer. No matter how nice the house looks, no one wants to buy (or even see) "the house with the ugly yard."


I know we've discussed a few of these at length but I tried to be vague so we could expand further, as needed, to provide Josh enough info to put something good together (we know he needs help...in more ways than one!!).

Personally, I can't wait to read more...

[Joshua Berg]

1. Buy right. You make your money when you buy a property, not when you sell. If you bought wrong, the inverse of this can also be true, you lose your money when you sell (or hold). <I see Kevin used his telepathic powers to steal that one from me before I posted it.>

2. Try, try and then try something else. Be creative, think up new ideas and try different things. If you tried three, ten, or twenty forms of marketing and failed, you haven't tried enough yet. There are no failures, just people who quit trying.

3. Always be ready to walk away, that is your strength in negotiating. Don't keep offering more just because you want that particular property. At some point in a majority of deals, you will need to walk away and look for something else.

4. The contract is only as good as those that believe in it. If you talk a seller out of a contract with someone else, by convincing them it's not a big deal, they're likely to walk on it with you too.

5. Treat others the way you want to be treated, honestly and with respect. There is no need to be dishonest in the real estate business, being dishonest is a shortcut that will take you the long way around. The same goes for dealing with other investors, as well as sellers and buyers.

6. Be ready to act. Study the numbers thoroughly FIRST, then move when the deal is hot . Don't get analysis paralysis, if you never make offers, you'll never get a deal.

7. Educate yourself and don't stop. The tools you need to be successful in this business are only available through education. Learn many things and you'll use many, or most of them.

8. Out of a hundred possible houses, make 10-20 offers, to get 2 or 3 contracts and one deal to close. Don't whine about the first three houses, or first twenty. If you're not making a lot of offers, you're not going to get any deals.

9. Don't be greedy. Pigs get fat, hogs get slaughtered. Know when to drop your prices and cut your losses. Don't hang on waiting for something magical to happen, it doesn't. Don't get yourself strung out financially and have backup plans.

10. Don't sign anything without reading it. That seems obvious, but in a society with too much paper work your average person does not read anything before signing it.

Bonuses:
-Real estate investing is not for everybody and takes a while to get going. Plan on having other income while getting started.
-A deal is never done till it's closed.
-Deals you think will never close, will sometimes surprise you and close.
-When you get a contract from a new contractor, it's going to need changes, loopholes removed, specifics and dead lines put in.
-Your contractor should know he's working for you, not the other way around. Treat them fairly and pay them on time.
-Once you have the house do a good job on it.
-Don't "over improve" a property for resale. It'll still only be worth what the comparables have already sold for.
-Check DOM (Days On Market) before and after you sell, be prepared and plan for the same.
-While your house is up for sale, keep an eye on your immediate market. What other houses have, or haven't sold and for how much?

[CTubbs]

Joshua Berg, on Mar 29 2007, 09:04 AM, said:

Bonuses:
-A deal is never done till it's closed.

My new experience is that a deal is never done until it funds!

[Michael Plaks]

What have you done, Joshua?!?
You should not have let the Genie out of the bottle.
You should not have provoked me to reply.
Now it's too late.

Before I launch my diatribe, let me share my fav definition:
Pessimist (def.) - a well-informed optimist.

All of the tips above are good for somebody already IN the business.
But what good does the "buy right" tip do for someone who never bought?
Never bought - right or wrong, for that matter.
How will he know the difference?

My tips are for those who are just thinking about becoming the next big dog.
And I am numbering my tips randomly. (Hey - I am a tax accountant, what did ya expect?)

Tip #127.
Be realistic about the people you will deal with.
33% will be competent but dishonest. Another 33% will be well-meaning but incompetent. 33% will be neither competent nor honest. Together, this is 99%. The remaining 1% is Josh, Kevin, and Chris - but statistically, they are invisible (and almost extinct). If you think that dealing with the 99% that I described will make you rich - think again.

Tip #319.
Be realistic about the money you will lose.
Yes, I said "lose." Yes, you can flame me all you want. History is strongly on my side: you are extremely likely to lose money at first. Or at second. Or at third. For each success story that the promoters show you, there are another 99 untold stories. Untold for a reason. Real estate is a BUSINESS. Like any business, it has great potential - both for spectacular success and spectacular collapse. You guess what your personal odds are.

Tip #4.
Be realistic about the money you will need.
Despite all these "no money" recipies, the reality is that you will need a lot of money. (Ironically, you have to pay big bucks for those "no money" courses themselves!) If you do not have alot of cash, you will have to borrow. Then, be realistic about your ability to borrow (which includes your credit), and - even more importantly - about the cost of borrowing money. Borrowing "hard money" for a typical rehab project will cost you $5,000 - $10,000 - which comes right off your expected "profit" - turning that profit into a loss.

Tip #VII-a
Be realistic about your skills and abilities.
Can you negotiate? Can you paint? Can you market? Can you manage contractors? Can you handle stress? Whatever you cannot do well (and none of us can do well everything, not even Joshua) - you will have to hire other people to do. And, as you remember me saying before, 99% of these people are...

Tip #1/3
Be realistic about your time and energy.
Business takes insane amount of both. Nuff said.
(Bonus tip: you can save some time by not reading the rest of my posts.)

Tip #-9999
Be realistic about learning real estate business.
It's a catch 22: you will not do well without knowledge, but you will never know "enough." Take this from somebody who actually teaches a lot of real estate classes himself: the best education is in the field. As long as you understand that this is education. Education does not make you money, education costs you money. Your first deals will likely bomb. You will likely lose money. But eventually, you will learn how not to lose money. Otherwise, you can spend unlimited thousands of dollars on classes and "systems" and still not know jack. In fact, if you believe that what you need is a CD-based system - I have a great CD to sell to you for $999.95. (This CD just has me singing Russian songs - but hey, it is not any less useful than some of the "systems" I have seen. And it is cheaper too.)

Tip #1.
Go out there and learn from the hard knocks. Just do not expect any miracles. Be realistic.
Good luck!

PS. And if/when you do make tons of money, I will help you protect it from the IRS.

[Joshua Berg]

Michael, I think the best tip is about the CD with you singing Russian songs. I just want to know what is the least you will take for the CD in fast cash (even though I will not actually give you any cash)? Is that the best you can do? Is it a music video? ...and, will you take a fair trade for a CD of my cousin singing in Tagalug?

The rest of your tips were very useful, except for the numbering.

You will need money is too true. In spite of all the "no money techniques" you will need money, the more the better. If the gurus don't need cash for real estate investing, why are they selling the courses for "cash". The good news is, you can get this from real estate. Start with the deals you CAN do and CAN afford (with either cash, or the knowledge that you have). Then work up from there, don't bite off more than you can chew. I started with flipping $500 lots.

[Choice Realtor]

Joshua Berg, on Mar 30 2007, 12:01 AM, said:

The rest of your tips were very useful, except for the numbering.

It's all smoke & mirrors to distract us long enough that we don't notice he only came up with seven! I guess when the tips are that good (and if the DVD is of Michael singing Russian in his boxers), you don't need the full 10!

[Michael Plaks]

Choice Realtor, on Mar 30 2007, 07:08 AM, said:

It's all smoke & mirrors to distract us long enough that we don't notice he only came up with seven!

Guys, quit whining about my numbering! It is far more consistent than numbering of the chapters in Internal Revenue Code. Besides, Kevin did not give me a credit for the "bonus tip" hidden in the middle. So, this makes the total number of my tips exactly $9.99 (before taxes)

Choice Realtor, on Mar 30 2007, 07:08 AM, said:

(and if the DVD is of Michael singing Russian in his boxers)

Kevin, if I were you, I'd keep my fantasies private.

PS. count this as another tip

[CTubbs]

1. Learn to crawl.....despite what the no-$ down gurus tell you. Running before you can walk will result in a lot of bloody noses and broken limbs.

2. Start small......The mistakes will be made, and the lessons must be learned to succeed in any business. It's a easier to recover from the mistakes when you're dealing on a relatively small scale.

3. Education is important, Action is required, losses are inevitable.

4. Don't work in a bubble. Talk to others, share ideas, get ideas, ask for help. There are more deals available when you open yourself to giving and receiving from other, even the perceived "competition"

5. understand the power of credit.

6. get comfortable feeling like you don't know enough.

7. savor the successes. just as you rewind and analyze your mistakes, take in the successed and enjoy them.

8. continually ask, "How can I make this -deal- better". Never get comfortable.

9. Think the deal through, don't decide when your emotion is high. Decide the exit, before you sign the deal.

10. I already gave one in an earlier post, so this is a space filler.

[Joshua Berg]

Hi Martin,

Within the "so many areas of Houston" there are even more areas that are different from one another in pricing, appreciation, types of houses, etc. So it's really hard to say something specific about any area of Houston without being wrong.

Since what you're looking for is a home to live in, I would suggest you first consider the side of Houston you want to be on, based on your work, relatives, friends, recreation, etc. After you know which side you need to be in, there are many areas to choose from based on appreciation, price range and more. So if you have more specifics about the area you like, then between us, someone can give you some good advice on what's in the immediate area as far as your housing desires.