By: Stephen Cook

Tip Number One : Quality Over Quantity

In the past, I set goals to complete a certain number of deals and as a result, found myself at times pursuing volume over quality. This sometimes put me into bad situations, costing me both time and money. For example, I might have paid too much to buy a home just so I could say I did a deal and hit my target. While I did experience many situations that other investors never encounter, this is not the way to do business.

Today, I realize that I didn’t need to do as many deals as I’ve done. Now I pass over a ton of opportunities that I would have taken years ago. Rather, I sit back and cherry-pick, waiting for the “home runs” to come along. That’s not to say that beginning investors should wait for the big deals. Most don’t have the resources to compete with the experienced investors, including myself, who don’t need the smaller deals to survive but can afford to be patient. We can bide our time until the best deals present themselves and still have enough resources to take advantage of them when they do.

What I am saying is that beginning investors should do what they need to do to survive, keeping in mind that it is better to do one quality deal than a multitude of average deals. As a beginner, you must get into the game, but do it carefully with good deals. Then go from first to second to third to home, taking it one step at a time. Crawl before you walk and walk before you run. Otherwise, by rushing into things, you run the risk of making mistakes that will set you back months or even years.

Tip Number Two : Set Goals And Put Them On Paper

I did not have concrete goals when I began, so two years after getting started, I was in about the same place as when I started. I ran around in circles and covered a lot of ground, but didn’t get too far from my starting point. Only then did I develop a plan (smart, huh? Only took a few dozen “seminars” and a few more whacks upside my head).

So I teach my students to put together a plan sooner rather than later, preferably before they even start investing. Anyone who drafts a realistic plan and sticks to it can achieve as much in one year as I did in three. Not that creating a plan is easy, especially when you don’t know what to expect. Accurate goal setting is actually very difficult, and not many people teach you what you need to set REAL goals. Most teach goals that get people excited, good in the sense that it usually prompts people to take action, but bad in that it develops unrealistic expectations and sets people up for disappointment.

To set realistic goals, speak with experienced investors in your chosen field (wholesaling, rehabbing, lease-options, “subject to”) and get their honest opinions regarding profits per deal and the average time required to complete a deal. Then, based on this and your current resources of cash and credit, set your long-term cash, cash flow and equity goals for one year, three years and five years. Once you have these long-term goals, fill in your short-term goals of three, six and nine months by outlining the steps you need to take to accomplish your long-term goals. Unless you draft a plan similar to this and truly commit to it, you are going nowhere.

Tip Number Three : If Possible, Keep Your Best Deals

Looking back, I have owned a lot of homes that I wish I would have kept. I don’t regret having sold them since every sale contributed to my success, but I did have some gems that have more than doubled in value since I sold them. When I sold, I just didn’t believe that the areas would take off like Realtors and others were telling me. So I cashed out and used the profits for other things. If I had held the 50 best deals that I have sold to others and done nothing else, my net worth would probably be three times higher than what it is today.

Not that I’m complaining. My net worth used to be negative, and today it is pretty respectable. I’m just advising you to hold onto your best deals if you can. Sometimes, though, it is necessary and understandable to sell a property for cash profits even though it would be nice to keep it. Use your best judgment.

Tip Number Four : Don’t Limit Your Profits

When you purchase a great deal, don’t feel obligated to pass all of the savings on to your buyer. I could have generated more profits than I did from many of the properties that I wholesaled. Often, when I purchased a SUPER deal, I passed along the SUPER savings to my buyer with the attitude that I should only make $2k-$4k per transaction.

Well, this was a mistake. My advice to you is to take what you can get. Don’t inflate your prices above the market and gouge people. Give them a good value. However, don’t think it’s necessary to limit your profits just so a buyer can benefit. After all, this is business. Let the market set your price. There will be plenty of times when your profit isn’t as large as you expected. Take advantage of the big hits when they come.

Tip Number Five : Separate Business And Charity

Sometimes, I used my business as a charity when I shouldn’t have. My recommendation for you is never to do the same. Don’t let someone live rent free or give someone else more for a service than what it makes good business sense to give.

I’ve learned that I need to run my business for a profit, and that I need to do all I can to keep it profitable. I’ve also learned that it’s OK for me to be charitable with my profits, but that I can’t be charitable with my business. Giving your business away before you make profits cuts your wellspring off at its source. It’s not prudent, and your business will suffer greatly as a result if you choose to do so.

Tip Number Six : Hold On To The J.O.B.

As Long As You Can I know it’s hard to hear this, especially for those of you disgusted with your current position, but I recommend that beginners with good jobs hold onto them for a while. They provide a safety net while you are learning and particularly allow you to establish yourself with banks and credit card companies. Convincing these organizations to work with you as a self-employed person is tough.

Tip Number Seven : Start As Early As You Can

I first became interested in investing at the age of 18, and I wish I had pursued it from that age. Instead, I waited 10 more years to get started. As of this writing, I’ve only been investing for 5 years and it’s hard for me to imagine, based on my current position, where I would be if I had started when I was 18 years old. It’s never too late, but you need to start NOW!

Tip Number Eight : Use Partners Wisely

Use a partner only when you need them. In other words, choose someone with time, money, knowledge or skills that you don’t have. They should bring to the table something that you need. All too often, two people with a dream and nothing else decide to be partners. Not good. Partners need to complement each other, not have the same qualities.

Today, I teach others to use partners strictly on a deal-by-deal basis. The form of partnership I teach most often is one where one person puts up all of the money and the other is responsible for everything else. In retrospect, I would not have taken on the one partner I had. In time, I didn’t need a partner anymore, yet I still had one and felt as though I was giving half of everything away. He probably felt the same way.

Tip Number Nine : Dare To Dream

Finally, I’d like to stress that if you can dream it, you can do it through effort and perseverance. Having money, a decent job, and good credit make investing easier, but are not necessary. When I began my career as a real estate investor, I had no money, no job and poor credit. In the past five years, through the grace of God, I have come a long way. So set your goals and start taking the steps necessary to achieve them. Reevaluate and adjust every so often, but don’t quit and don’t let anything stop you.

About the Author: Steve Cook Since 1998 Steve Cook has flipped hundreds of houses as an active Baltimore-area real estate investor. Steve’s unique specialty is the “flipping homes 1-2 punch”, a proven system of real estate investing that powerfully combines wholesaling and rehabbing houses. Also the founder of www.FlippingHomes.com, Steve is dedicated to helping others in this thriving online community succeed through understanding and aggressively applying his time-tested, step-by-step approach to flipping real estate.

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