You see, chances are my spreadsheets would not even be suitable for you because I am likely using a different investment methodology.  Even if we are both using a similar technique there could be small differences based on our respective financing or some other aspect that means it doesn't quite fit.

But more important than any of that is this:

I have found that the greatest benefit of developing your own analysis spreadsheet is that you become intimately familiar with the numbers.  By the time you've developed it and used it a few times you understand the numbers inside out and upside down and have a thorough understanding of what numbers are most important and what effect certain adjustments will have.

You should always use your spreadsheet but the funny thing is that once you've gone through this process you actually don't need it as much because you have such a thorough understanding of what numbers will work for you and your market.  What could be more valuable to a real estate investor than that sort of innate knowledge?

The PMT Function in Excel

Before we get into it you need to familiarize yourself with the PMT function and it's variants in Excel.  PMT stands for "payment" and is a variable in a set of functions related to loans.  The variables in this set of functions are:

• PMT - payment
• PV - present value
• Rate - interest rate
• Nper - number of periods
• FV - future value
• Type - payments due at start or end of periods

Here is a Microsoft page all about it - http://office.microsoft.com/en-us/excel/HP100698251033.aspx

One thing to be aware of is that the interest rate must be for the same time period as the payment.  So if the payments are monthly you must remember to divide the annual interest rate by 12 when you put it in this equation.

Inputs and Outputs

In designing your spreadsheet you need to think about what inputs and outputs you will need to evaluate a deal.  This needn't be very difficult.  You can just begin listing variables down the left-hand column and you will soon figure out what other information you need as you go.  Then you can drag and drop stuff to rearrange it later.

But as a primer here is a list of things that you could include as inputs:

• Property Address
• Value
• Price
• Closing Costs (can estimate as % price)
• Percent Finance
• Down Payment
• Amount Borrowed
• Term of Loan (years)
• Number of Repayments per year (needed for PMT function)
• Loan Interest Rate
• Management Fee
• Repair Costs
• Expected Rent
• Vacancy Rate

The output we are looking for is, of course, some form of return on investment.  I'm generally looking at cash-on-cash return (CCR) which is the return on the cash that I put into the deal (not the price of the property).

CCR = net annual cash flow / cash invested

If you have a private investor you would also include an analysis of their cash-on-cash return since the deal must work for them too.

Ultimately though, you can use this spreadsheet to adjust various inputs so that you CAN meet your desired return.  In other words, if your desired CCR is 30% you can adjust various inputs to determine what price you should offer on a property in order for it to be a viable investment.

You would probably also include some other key numbers in a tidy Evaluation Report such as:

• down payment
• closing costs
• total investment
• monthly income
• monthly expenses
• net cashflow

But once again the numbers you display will depend upon your investing methodology.  These are more typical of a cashflow investor than a flipper.

What-if Analysis

And finally, you can use your completed spreadsheet to run various what-if analyses.  For example, what if:

• you get a higher (or lower) LVR (loan-to-value) ratio loan?
• interest rates increase?
• your investor increases the down payment?
• you charge the tenant a greater option fee?
• you change the term of the loan?
• you reduce your management fees?
• you reduce your closing costs?

You can see what I'm getting at.  Once you have a working model you are armed with some very powerful information.

The Layout

I've included this screen capture of one of my spreadsheets just to give you some layout ideas.  Please do not try to model your spreadsheet exactly from this one.  This is for a very specific investing methodology and many of the fields will not make sense for your siutation.

However, I just wanted to show how I divide the spreadsheet into:

• input area at the top (where yellow fields are inputs and blue fields are calculated)
• brief "Deal Evaluation" report at the bottom with some of the key outputs I mentioned earlier (for a cashflow investment)
• a "What-If" tool in the top-right corner

Possible Spreadsheet Layout

I hope I've given you enough information to just start playing with a spreadsheet and figure this out for your situation.  If you have specific questions or difficulties just come back here and use the comment field below.  Either I or one of your fellow readers should be able to help you out.

To Your Success,

Scott Roemermann.

At the time, I desperately wanted a mentor to support me (or tell me exactly which deals to do).  I'm sure many, many newbies would love to have a Robert Kiyosaki as a friend so he could just tell them which deals are good and which ones to stay away from.  And I'm also sure I've heard Robert tell stories of problems he's had with friends that he's tried to help in this way.  But back to the issue at hand.

Why is it that so many of us want a mentor-in-a-pocket above all else when we are starting out?

I believe it's because we are looking for a "sure thing".  We want:

• guarantees
• zero risk
• the confidence to pull the trigger
• to KNOW that a deal is golden; and
• to know where such deals can be found.

And the reason we want these things is simply because we lack the confidence in our own ability.

So, what can we do about it?  What things can we do that will move us as close as possible to a "sure thing"?

If we look back to the post entitled How To Get Started in Real Estate Investing you will see that step 4 of that plan was some risk reduction techniques.

When you are ready to do your first deal, the risk reduction technique that will get you closest to a "sure thing" is thorough deal analysis.  If you do this right and use conservative numbers then any surprises should be in your favor which makes a deal as close to certain as possible.  However, before we get into that (in a later post) I want to introduce you to a technique that I classify as 100% risk free for new investors.

Bird-dogging is a fantastic way for new investors to get their feet wet with ZERO RISK.  It may not guarantee you success but it is a guarantee that you will not crash and burn.

So what is it?  Bird-dogging is a term that refers to scouting for profitable real estate deals which you then on-sell to professional investors.  It is a win-win arrangement since the investor can locate good deals fairly easily and the bird-dog can learn the ropes and start to develop some skills without risk.

For anyone who is not yet confident to step out and do a deal on their own, I highly recommend you consider bird-dogging as your first step.  As you start to work with experienced investors you will pick up invaluable skills including deal analysis that will just build your confidence.

It really is a great way to earn some money as you begin to learn the ropes of real estate investing.  And I'll say it again - RISK FREE.

But the best part is that you can fairly quickly develop your skills to the point at which you are confident to do your first deal.

So, for anyone who is still looking for that "sure thing" I have no hesitation in recommending bird-dogging as your starting point.  If you are ready to take some positive action today, here is a link to the best course I have found on this topic: The Ultimate Bird Dogging System.

If you have any questions just add a comment below.

To your success,

Scott Roemermann.

The more commonly known government foreclosures are through HUD and VA and more information about those can be found on the following pages respectively:

• HUD foreclosures
• VA foreclosures

There are pros and cons with each so weigh up whether they are for you and also consider the following lesser known government foreclosures.

Another great source of government properties is the General Services Administration's Office of Property Disposal (https://propertydisposal.gsa.gov/).  It is their role to "dispose of" unneeded or underutilized federal property.  Such properties can vary greatly in value and can include: undeveloped land; office buildings; warehouses; commercial and industrial facilities; military holdings; and single- and multi-family residences.

The Treasury auctions off a wide range of residential and commercial property which has been seized through IRS-Criminal Investigation, Immigration and Customs Enforcement, the U.S. Secret Service, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.  Upcoming auctions are listed on their site (http://www.treas.gov/auctions/treasury/rp/) along with their Terms of Sale and everything else you'll need to bid.

The USDA has quite a sizable database of acquired properties and potential foreclosures on their site (http://www.resales.usda.gov/).  These include single family homes, multi-family housing, and commercial properties.

On the website of the US Marshals Service (http://www.usdoj.gov/marshals/assets/sales.htm) you will find a list of assets, including real estate, being auctioned by Bid4Assets (http://www.bid4assets.com/storefront/index.cfm?fuseaction=USMS&sfid=150).  They also list forfeited real estate with Fidelity National Asset Management Solutions (FNAMS).  And these properties are listed by state on the US Marshals Service website with more details available at www.fnams.com.

The FDIC has plenty of information about buying real estate assets from them on their site (http://www.fdic.gov/buying/owned/index.html).  Check out the FAQs.  They also have a searchable database of current properties available (http://www4.fdic.gov/DRRORE/).

You can also search for foreclosure properties with the government established corporation, Fannie Mae (http://www.fanniemae.com/reoSearchApplication/fanniemae/reoSearch.jsp).  While Fannie Mae is now a shareholder-owned company it still has a public mission of supporting America's housing needs and that's why it's included here.

It might surprise you just how many government departments own real estate that they need to dispose of.  In this day and age, such properties are normally listed on the website of the relevant department so go and check some others out and you could get a leg up on your investing competitors by discovering some hidden government foreclosures.

Within the category of government foreclosures you can consider quite a many different sources.  These include VA foreclosures from the Department of Veterans Affairs, HUD foreclosures from the Department of Housing and Urban Development, the General Services Administration, the Department of Treasury, the Small Business Administration, the Department of Agriculture (USDA), the Marshals Service, the Federal Deposit Insurance Corporation (FDIC) and also Fannie Mae.  At last count there were about 37 different government departments through which you can locate foreclosure properties.  One site that has compiled listings from a few of these departments is www.homesales.gov.

With respect to bank foreclosures you will find many banks have their REO listings on their websites.  A popular one is Countrywide whose REO listings can be found here.  You can even find directories of banks that do list their properties online to save you doing the hunting around.  Otherwise you can find many REO properties via asset management companies.  It is their job to help lenders dispose of such assets and many asset managers list the REO properties of the banks they work for on their own website.

It is also very important to look at pre-foreclosure properties as a possible source for your investments.  To be able to capitalize on this option you really need to have a decent understanding of the foreclosure process.  But at various stages of the process notices are recorded with the County Clerk and these public records may be searched by anyone which gives you the possibility of locating properties that are heading towards foreclosure.  You can then approach the owners about acquiring the property prior to foreclosure and help them out of a sticky situation.

As a part of the foreclosure process the Notice of Sale must be made public by publishing it in the newspaper.  If you search the Public Notices section of local newspapers and business journals you will find notices for trustee sales.  It may be better to be aware of properties before they have reached this stage of the foreclosure process as you need to be very thorough with your research if you buy at trustee sales. Since the properties are sold "as-is, where-is" you need to exercise some caution.

It could be well worth your while familiarizing yourself with the county website for your target market to see what resources they offer online for researching foreclosures in that market.  This could be useful whether you are interested in acquiring properties via pre-foreclosure or at foreclosure auctions on the county courthouse steps.

So you can see there are many different sources of foreclosure listings and I encourage you to use multiple sources rather than just subscribing to a single online foreclosure database.  If you are reviewing the inventories of a few banks, asset managers, several government departments and the county clerk you will have a larger range of properties to choose from.  And this will obviously give you a big advantage over other investors.

Further Resources

For more information about foreclosure investing, including where to locate some great deals I suggest you checkout "How to Get Rich Buying Foreclosures Dirt Cheap".

I know you probably came here looking for a bunch of secret tips and methods that the real estate experts use to make "the big money" in real estate.  Well, while I can and will give you a bunch of good tips, the truth is that none of them are great secrets known only to the wealthy.  I've revealed a bunch of things for you to look out for in the report "7 Traps of Real Estate Investing" but in my opinion, there is one secret that trumps all the rest and needs to be exposed.

The dirty little secret of the real estate investing world is that trainers around the country are selling their courses to people, quite comfortable in the knowledge that less than 5% of them will actually do anything with the information.  In other words, 95% of people will never do a deal and will never even recover the cost of that course, let alone become a successful investor.

It is my intent to change that.

You don't have to be just another statistic.  Another person that gives up and walks away from their dreams.  I want to see you use what you've learned, do your first deal, and go on to great things.

And the whole purpose of this site is to make that happen.

With the right approach and support it can be done and I feel that trainers are being lazy and irresponsible by just selling courses and not providing the support infrastructure to give you every chance of success.

It's like a parent who just buys a kid their first bike with no training wheels and says "there you go, good luck".

Riding a bike seems impossibly difficult until you have done it.  But that hump of learning how to ride is the entire challenge.  Once you have successfully ridden a bike for a couple of minutes… its easy. Almost zero further effort is required.  It's similar with real estate investing.

A kid learning to ride needs training wheels and support from a parent to remove the risk and give him the confidence that he won't fall.  But after that - it's a smooth ride.

And so it is with real estate investing.  The hardest part is getting that first deal done and getting a feel for it.

Would you try to learn how to ride a bike by purchasing ebooks?
Would you go to an expensive seminar and listen to experts telling you how to ride a bike ?  Of course not.  Because you know intuitively that the best way, the only way to truly learn, is to go out and do it.

You need to start pedaling!  But you also need training wheels.

And we've got them.  Over at www.reiallstars.net we have a team of experts lined up to guide you and catch you.  Coupled with our processes which remove a large amount of the risk, you really have nothing to worry about.  Getting started has never been so simple nor the path so clear.  There is no longer any reason for fear, uncertainty or doubt to get in your way and prevent you from achieving fantastic success in real estate.

That's really what we are trying to achieve here.  If we can remove all the things that create fear, uncertainty and doubt when doing your first deal, we MUST be able to help more of you get over that hump and become true real estate investors.

What's The First Step?

So, how do you ensure you don't become a statistic in your bid to become a real estate investor?  What do you need to do?

Begin by going back and reading my 5 Step Plan for Getting Started in Real Estate Investing.

Then anyone who has not completed that first step of getting an introductory education needs to do so.  You can begin by visiting sites like these:

• creonline.com
• reiclub.com
• tcinvestor.com
• biggerpockets.com
• dealmakerscafe.com

At these sites, you can read hundreds of articles and start asking questions in the forums.  But be careful with the forums.  First of all, you never know who you are getting advice from.  There's a fair chance it's from someone else who's never done a deal.  Secondly, it can become addictive and just give you another way to avoid going out there and taking action.

Alternatively, you can jump over to this page to watch a collection of videos from a team of the real estate industry's best trainers.  These videos will get you trained up to this basic level in the shortest time possible.

However, I ONLY want you to take a look at the videos if you have not completed the first of the five steps.  Do not waste your time on this if you've already got a solid understanding of the methods available to you.

Remember: The objective of this post is not to get everyone squandering time on the videos.  It is to get you on track to DOING YOUR FIRST DEAL.  For some of you, however, the next step will be getting educated.  For others, you need to move on to subsequent steps in the 5 step plan.

So if you are ready to move on and ensure you do not become just another real estate investing statistic, head over to the 5 Step Plan and figure out what your next step should be.  Then start pedaling!

To Your Success,

Scott Roemermann.

• www.biggerpockets.com/renewsblog/
• blog.flippinghomes.com/
• www.mentorfinancialgroup.com/blog/
• www.realestateinvesting123s.com/
• www.realestateweblog.org/
• getrealrei.com/blog/
• www.thereibrain.com/realestate-blog/
• www.equityscout.com/
• www.successrei.com/
• realestatevideo.wellcomemat.com/

For a detailed explanation you can check out this very thorough page at Wikipedia.

However, in essence Section 1031 of the Internal Revenue Code allows you to defer the payment of capital gains taxes that would otherwise be due on the sale of a property if you exchange it for another appropriate property.

If you are a real estate investor it is obviously in your interest to do your home work on 1031 exchange rules. It could save you many thousands of dollars in taxes, and could help you avoid many of the pitfalls and problems associated with 1031 tax exchanges. By doing a little research you can maximize and optimize your tax deferrals.

1031 Exchange Rules

One of the most important things to know about 1031 exchange rules are the deadlines. You must purchase a replacement property within one hundred and eighty days after the sale has been registered or before the next filing deadline. But there is also a forty five day identification period in which time you must use one of three methods to identify properties that you are considering for exchange.

To maximize your tax deferrals, all of the cash from the sale of the property must be reinvested into the new property. The 1031 exchange rules state that you cannot use proceeds from the sale to pay for expenses that are not part of the exchange. To get the maximum tax benefit from these expenses you should handle them on a separate part of the settlement and footnote them and write a separate check to the buyer.

If you live in a different state to where the property is sold, many states mandate that the closing agent or real estate agent must withhold a percentage of the sale price to make sure that the state receives any tax revenue due, because tracking down these non residents later can be very difficult.

The real property tax act of 1980 as it pertains to foreigners requires that at least ten percent of the sales price must be withheld for this purpose. This withholding requirement can be waived depending on the state, so it's important to check your state's individual rules.

Finally and most importantly, you must use a qualified intermediary who completes all the necessary paperwork and filing and must adhere to the 1031 exchange rules. There are many places on the internet where you can find such intermediaries.  You can start by making sure they are members of The Federation of Exchange Accommodators (FEA) - www.1031.org.

Further Resources

www.blog1031.com
www.1031podcast.com
www.ipx1031.com
www.starker.com
www.investorschoiceindy.com

• what is a HUD foreclosure?
• how do I find a HUD foreclosure?
• what special rules and procedures are involved?
• do they really stack up as a great investment?

Hopefully that will give you enough information to evaluate this as an investment opportunity and know where to begin.

HUD homes are owned by the United States government through the Department of Housing and Urban Development. When a foreclosure is carried out on these homes, the ownership of the home reverts to the government, for use or "disposal" as they see fit.  HUD contracts management companies to handle the preparation and sale of the homes in each state.  Their respective websites which list all the HUD foreclosures are sorted by state on the HUD website here.

The Purchase Process

HUD foreclosures are sold using a blind bidding process, meaning there’s an offer period, during which sealed bids are accepted via a real estate sales professional who is authorized to sell HUD homes (most are).  However, bids will only be considered from investors if none have been received from owner-occupants.  All offers are opened at the end of that initial offer period and the highest bid will generally be accepted.  If the home remains unsold after the initial period, bids are opened when they are received.  The winning bidder will be notified within a day or two and given a settlement date that's usually 30-60 days from the contract date.

HUD does not offer financing directly but some HUD homes qualify for FHA insured loans.  Otherwise you should simply apply for regular financing for a HUD home.

Investment Opportunity?

At first glance there appears to be little or no opportunity here for investors despite there being a lot of buzz about foreclosures representing the chance to obtain heavily discounted houses.  Especially given the fact that you must first wait to give owner-occupants first shot at any and all HUD foreclsoures.  However, there is an opportunity here for investors.

You see, HUD foreclosures are sold "as is" and they often have enough problems that your average home buyer will simply not be interested.  However, the good news is that the priority given to owner-occupants actually becomes a useful screening process for you as an investor.  This is because the properties that most home buyers would be interested in will not have sufficient profit potential for investors.

This means the opportunity in HUD foreclosures lies in the fixer-uppers.  And as such they are really only suitable acquisitions for investors pursuing that particular strategy.  It will not be a good source of deals for an investor who is not an accomplished fixer-upper.

You will need to get good repair estimates and choose the properties wisely.  In other words, you must choose properties with problems that you can handle and where your financial analysis shows sufficient profits can be had after the repairs.  Basically, you will need a good valuation of the ARV (after repair value) and subtract the cost estimates for the repair work.  You then need to subtract any profits and safety margin to come up with your maximum offer for the property.

• Experience is the Best Teacher of Real Estate Investors
• Strategic Real Estate Investing: The Missing Piece of the Puzzle?

If you've read these previous posts, it should be fairly obvious to you that I believe the most important thing for would-be investors is to TAKE ACTION early in the process.  I have spoken about the concept of looking at your first deals as "training deals" because the most important thing that will come from them is the learning rather than the profits.

However, getting those first few deals done is the hardest thing about real estate investing for most people.  And the reason for that is the risks (real and perceived) outweigh your risk tolerance - plain and simple.

So, what we need to do is first take steps to reduce the risks and then boost your risk tolerance until it surpasses the remaining risks.  Factors that influence your risk tolerance include:

• practical education / experience
• theoretical education
• confidence
• skills
• upbringing
• personality
• psychological make-up
• mood
• financial situation

Ironically, the biggest barrier preventing people from getting their training deals done is the lack of practical experience itself, since it has the greatest effect on both your risk and your tolerance for risk.  But since you can't get that practical education before doing any deals we need to utilize the other factors that will get you comfortable enough to take action.

Here is the 5 Step Getting Started Plan that will get you over the line so you can go on to attain the confidence and know-how that can only come from practical experience:

Step 1 - Get An Overview Education

Get a basic understanding of most of the common methods for making money in real estate investing.  This can be done online completely for free but you might like to consider resources that review various techniques and also attend some free (or cheap) seminars and start mixing with active investors.

The broader your education is in the early days the better off you’ll be because you’ll be more informed about where to ‘invest’ your money for the greatest return (ie. which methods to focus on and learn more about).

So, my suggestion for getting some direction and making your education highly effective is to get your hands on any resources that review the gurus’ techniques so you can choose one or two strategies to focus on and maximize the return on your learning investment.

Do broad research of your options early in the process and you’ll minimize the risk of wasting money on unnecessary or unsuitable educational products.

Step 2 - Screening and Selection of Investing Methodologies

Next you need to choose one investing method that you will build your business around.  If you REALLY need more information before you can choose one, at least get it down to a short list of no more than three.  The key to this screening process is a SWOT analysis.  SWOT stands for Strengths, Weaknesses, Opportunities and Threats and you should find a method that is well matched to your strengths and weaknesses as well as the opportunities and threats in the marketplace.

Step 3 - Set And Commit To Goals

Where do you want this business to take you and how quickly?

I know many people just shut off when someone starts talking about goal setting but this is a very important issue that cannot be ignored.  Real estate success, like all success, is driven by good goal setting.

Personally for me, goal setting is the thing that I attribute my real estate investing success to most.  You can read more about that in my post "Getting Started In Real Estate Investing" and I also strongly encourage you to read this article about how to set goals for success in real estate investing.

Step 4 - Risk Reduction

There are several things you should do to reduce your risk levels to the point that you feel reasonably comfortable doing your first deal.

i) focused education

Once you have chosen the method you will focus on, THEN you can start to spend some money on more detailed information about applying that method if you want.  But do not go and buy up every course out there before you have chosen which tactic you will apply in your business.  That will just create confusion and overwhelm you.  Focus is key.

I would dare say that this is NOT a mandatory step although, like me, you may need to do this to boost your confidence and reduce your risk.  In my opinion, education is the most powerful risk mitigation tool.

ii) analyze the numbers

You should begin by creating your own spreadsheet that allows you to analyze the numbers for your chosen investing method.  The main reason to do this yourself (even if you also use an "off-the-shelf" package) is you will know the numbers inside and out if you have to create your own spreadsheet.  It will give you a MUCH deeper understanding of what it takes for a deal to be profitable.

iii) contingency planning

Brainstorm any possible problems (within reason) you think you might encounter and then come up with a contingency plan for each.  eg. if you have trouble finding tenants you could hire a property management company to put tenants in the property.  Yes, it will eat into profits but we are talking about a possible defensive position you can use if needed.

If you do these things along with the obvious risk mitigators such as inspections and insurance you will minimize your risk sufficiently that you should feel comfortable doing a "training deal" or two just for the experience.

Step 5 - ACT!!!

Go out and stretch yourself.  Make that first deal happen.  Even with all the preparation to reduce your risks and build your confidence you will probably still feel quite uncomfortable.  Be confident in your preparation (if you've done it) and stretch yourself.

If you are still far too uncomfortable or just can't muster the courage to do it go back over the previous four steps and see which will help you break through by getting your risk tolerance to surpass the risks.

The rest of Step 5 is all about solving issues as they arise.  At the most basic level this will include: locating suitable properties, analyzing the numbers, financing the deal, and finding suitable tenants or exiting the deal.  But the key is to stay focussed on the game plan for your chosen tactics.

So there it is.  I hope this plan is of use to those of you wondering how to get started in real estate investing.

Further Resources

http://www.mentorfinancialgroup.com/blog/?p=27 

Why are people having such problems with real estate investing:

• buying lots of educational products but not having the confidence to use them
• never getting that first deal done
• replacing a practical education with a theoretical one
• hopping from one hot idea to the next
• trying to operate without a business model
• complete lack of focus
• no thought given to what skills are required
• no thought given to what resources are required

That is NO WAY to start a business!!  And that is another key issue here.  We are talking about a business, not a hobby.  And yet most people spend more time planning their annual vacation than they do planning their real estate business.

There are two major parts to this problem that relate to different stages of business.  And if we look at the biggest hurdles confronting real estate investors we can see it nearly always comes down to having a sound strategy at each phase of business.  The two phases of business we will examine are:

1. getting started
2. the growth stage.

Phase 1: Getting Started

Most of us honestly believe that it really is possible to make a lot of money in real estate, even for the average person.  But the problem that is rarely spoken about is that there's a huge hurdle to overcome - getting started.

A severe lack of confidence to act causes people to continually put off the decision to do their first deal.  Again, we must ask "Why?".  Why are people lacking that confidence?

There are a couple of factors:

1. Confusion - with so many experts promoting so many different methods for making money people are confronted with the paradox of opportunity.  It is great to have choices available to us but only if we are equipped to make a decision.  Too many choices without a plan of a attack equals confusion.

2. Risk - aside from the risk of making the wrong choice your average person is not equipped with the tools to evaluate and minimize the risks associated with a real estate investment.

So, you see, that doubt that is preventing you from acting is actually trying to protect you from making a mistake - that's your inbuilt defenses working for you.

And you sense there's something missing, so you go to another seminar or buy another book and just get overloaded with more information and more methods that just compound the problem by increasing your confusion.

But here's the trick:
We believe that the best way to reduce risk and boost confidence is through education.  And there's a lot of truth to that.  But the thing is that the best education, by a LONG shot, is a practical one.  In other words, the best education comes from doing that first deal.  So you see, it's a catch 22.  We need an education to get started but the only education worth having comes from getting started!

So what's the answer?

We need a plan!  In order to remove the confusion and risk and replace it with confidence you need a plan, a strategy!  And one that works.

There are other tools for reducing the confusion and risk besides getting educated.  We need to couple those methods with a basic education in your "getting started plan" to give you enough confidence to do your first deal and let the REAL learning begin.

But the nice thing is that once you get that first deal under your belt the momentum snowballs because you are no longer as unsure about things but your confidence just grows and grows while the risks are reduced.

Previously, I think the majority of people who had successful starts in real estate investing simply had to build up their courage enough to outweigh the risk and then just take a leap of faith - which of course is quite a risky approach.  Well, you don't need to do that anymore.  You can take the smarter route of reducing the risk and confusion with a solid education AND plan.

I will give you the details of this "getting started plan" in Part II of this article soon.

But for now, let's also take a quick look at the need for strategy in the second phase of your real estate investing business.

Phase 2: Growth Stage

Beyond the getting started phase, real estate investors tend to be plagued by problems related to a lack of strategy again, when their business seems to outgrow them.  It is at this time that many investors tend to "wake up" and discover one day that they have a business.  And there is just far too much for them to do.

What I find most strange though, is that even after this realization few people seem to ask themselves the all important question, "What does it take to run a successful real estate investing business?".  Instead they just get buried in the day-to-day chores and try to run faster to get more done.

The solution for this is to think a little ahead of time about what we want our business to look like and build some structure around our activities with a very deliberate plan for designing and building the business we want.  Ideally this would mean a business that we work on rather than work in.  Or to borrow from Robert Kiyosaki's vernacular, a 'B' quadrant business rather than an 'S' quadrant one.

We need to consider what skills and resources will be required.  We need to start building business systems and a team to give the business scalability.  And personally the business owner will need to move from an employee role to a manager type role.

But even before you get to this stage it will help if you have set up a business that is designed around your strengths and weaknesses and it is here that a connection between your Phase 1 strategy and Phase 2 strategy is so important.  The "getting started plan" that I will talk about in my next post has the added benefit of having that built-in so you can be sure you will end up with a business that fits you personally and you can grow with confidence.