Overcoming the Fear of Making Offers
Becoming a successful real estate investor often corresponds with becoming successful in dealing with people. This is especially true for new and small investors as they deal with people at almost every stage of the investing process. Those that are naturally charismatic and charming and feel comfortable around people have a natural comfort in entering the real estate field, but even the shyest among us can succeed as the repetitive nature of real estate naturally breaks down these barriers.
There is perhaps no aspect of real estate that is more repetitive than that of making offers. Many new real estate investors, even those with a great deal of education, become very apprehensive when making their first offers. There is apprehension and worry that their offer will be to low (or high), that the other party will be offended at a lowball offer, or that they simply are not comfortable with the offer-making process. Any one of these areas can create a paralysis in the new investor that stymies action.
Learning the Word "No"
While fear or apprehension might initially exist, any new real estate investor will soon become a resilient individual. This is because real estate is often a simple numbers game, a game in which you will be told no many times. You will be told no so often that, in time, any apprehension you had at the beginning vanishes completely. It is the rare experience for someone to have their first offer accepted. Some individuals have stories of dozens, and even hundreds, of offers being made before their first one was accepted. The first couple no's may be frustrating, but after the first deal is done, successful real estate investors become fearless and new real estate investors learn the process of making offers so well that it becomes second nature to them.
So, if you have any apprehension of making offers, there is simply one way to overcome it: get out there and start making them. Set a goal to make one by the end of the week. After that, set a goal to make two more by the end of the next week. In no time at all, you will start to lose any apprehension you have, and start developing the fearless mindset that so many successful real estate investors have.
Understanding the Seller's Needs
Your chances of making offers that are accepted goes up if you learn to properly identify motivated sellers. This term is used to describe individuals who need to move their property, usually the sooner the better. Their need to move the property can be due to financial problems, work relocation, or a variety of personal situations that occur in life. Learning to identify and work with motivated sellers will be the focus of next month's article.
Whether they are a motivated seller or not, taking just a little time to find out what the seller needs can go a long way to your success in real estate. Because we are trying to make a profit in our real estate dealings, there may be situations that the seller's needs simply don't fit what our bottom line dictates. They may require cash and the margin may not simply be there. However, there are seller's whose situation may be amenable to terms, a situation in which many of the strategies taught by Rich Dad Education come into play. The simple fact is until you take a few minutes to genuinely learn what the seller needs out of the arrangement, you are only guessing.
More often than not, the two parties will not be on the same page. They may need a level of money up front which you don't have, you may not agree on a fair price, or you may never settle on terms that are acceptable for both parties. When this occurs, and it will occur often, simply part on good terms, and move onto the next deal. If you were genuine in trying to find out what the other person needed, and open and honest in your dealings, then you may find over time that the seller comes back to you in later weeks or months when they still are still in need of selling.
Over time, in which you deal with a great variety of people, this process will make you wonder what you ever feared in the first place.
A Variety of Strategies - the Need for Education
There is a wide variety of creative financing scenarios that a real estate investor may encounter in the offer-making process. Imagining all of them makes the need to have a variety of strategies at your disposal apparent. There are numerous ways to structure an offer using a combination of alternatives to cash, such as promissory notes, deferred payments, lease with purchase option, land contracts, simultaneously selling off part of the property, cross-collateralizing, or sweat equity (to name just a few). While real estate requires a level of tenacity, it also requires some good old-fashion school work in becoming familiar with the numerous ways to make a deal happen.
Along with the creative financing scenarios, there are also many basics that you should feel comfortable with before you make your first offer. Among your skill sets should be the ability to analyze property value, know the trends within the market you are analyzing, be comfortable estimating repair value, and your ability to obtain financing. If you are using a specific strategy, you should also be comfortable with it. These are fundamentals of real estate investing, and many of the courses that Rich Dad Education offers focus on helping you develop them. Once these skills are mastered, the next step is often summoning up the courage to make that initial offer.
Brush up on those skills, and find the fortitude to make that first offer. Next month's article will focus on learning how to identify motivated buyers, a skill that will speed up your offer-making process.