How To Make Your Dream Of Entrepreneurship A Reality In 2016

There has never been a generation in which entrepreneurship was so readily supported, and even envied. The position we were left in following the recession all but forced the hands of many to start their own careers. However, the transition coincides with many obstacles; some that may be too intimidating for the less ambitions. But I can assure you that the move is well worth it for those that are prepared.

1. Take Calculated Risks

First let me preface this step by saying there is a significant difference between an unsubstantiated risk, and one that is meticulously calculated. Under no circumstance would I advise taking a risk that wasn’t worth it. Essentially, there comes a point when the odds are not in your favor, and your business resembles nothing more than a gamble. While there is always the off chance a big risk could pay off, it may not be the wisest business move. The key is to make calculated risks, thus increasing your odds of realizing success.

Let’s be honest, the best entrepreneurs understand that every investment they make coincides with some degree of risk. Having said that, I would be remised if I left out investing’s number one rule of thumb: The greater the risk, the greater the reward. While many business owners share a similar sentiment, the best leaders are more than aware of the differences between a calculated risk and a foolish one. As an entrepreneur, it is up to you to decipher between the two.

Better yet, do your homework. Even the most successful entrepreneurs of our time wouldn’t admit to being risk averse – they are simply more inclined to do their homework before moving forward. Truth be told, the only thing that separates them from the rest of the pack is preparation. So before you go off and make your next groundbreaking decision, be sure to understand what you are up against. Conduct your own research and determine whether or not the move you were thinking about making is the right one. The best decisions you will make as a business owner are predicated on one thing: due diligence.

2. Have A Plan

It should go without saying, but having a plan is the single most important step in becoming an entrepreneur. Otherwise, you run the risk of veering off track and potentially falling short of all of your goals. Not only that, but a well-devised plan of attack will enable you to visualize success, prepare for what is to come, and hone in on what works best for you future as an entrepreneur. I would also like to point out that a lack of a plan demonstrates at least a slight degree of ignorance. In other words, you may not be ready to become an entrepreneur if you neglected to implement something as important as a plan.

3. Promote Personal Growth

Running a sustainable business is as much about personal growth as it is about business growth, or at least that is what I truly believe. In fact, I could argue that personal growth is an essential component to every business plan. How else are you expected to take on the additional tasks that come with running your own business if you neglect to grow as an individual? To that end, the more resources you dedicate to growing as an individual, the more prepared you will be to run your own business. To make the jump from a typical worker to entrepreneur, I recommend increasing your skill set.

Make a point to learn something new with every opportunity that presents itself. Perhaps that means reading more books, or even breaking out of your comfort zone to establish meaningful relationships with like-minded individuals in your industry. Recognize what areas you need to improve in, and start from there.

In the end, the expansion of your career is dependent on the progress you make as an individual. Your skills will define how well you do as a business owner, and how far you can take things. If running a successful, sustainable business is your ultimate goal, your first priority should center on personal growth.

4. Emphasize Team Synergy

As a real estate investor, I quickly learned the importance of having a reliable team at my side. At the very least, their presence enabled my work ethic to match my goals and aspirations. Of particular importance, however, was the support they gave me to grow as a person. I wouldn’t be where I am today if it wasn’t for the great team I have the privilege of working with.

Of course, that doesn’t necessarily mean you can’t become an entrepreneur without a team; it simply means that surrounding yourself with the right people can go a long way in establishing yourself in the industry of your choosing. However, having the right team in place requires more than a vast knowledge of the industry and complementary skill sets. The best teams in any business landscape are founded on one thing: everyone working towards the same goal.

Again, a proper team will propel your business to the next level, but you can’t get there unless everyone is on board. Be sure that everyone on your team is comfortable with your strategy moving forward, and – more importantly – that they believe in it. Don’t be afraid to ask anyone if they have fears or doubts. Not everyone may be as certain as you that the plan will work, but they need to believe that it can. Talk through any pertinent points that are brought to your attention, and address them accordingly. Team synergy can go a long way, but it is up to you to make sure your team has it.

5. Remain Focused

Do you remember the plan we discussed previously? Well, now is the time to refine it. If you are looking to make the transition to full time entrepreneur, chances are you have had time to come up with several ideas that can help your prospects of becoming a business owner. While I commend your proactive approach, now is not the time to lose track of your ultimate goal. It is entirely possible that some of your ideas are timely and beneficial to your current position, and I even commend your enthusiasm, but your focus must be fine tuned at the onset of your entrepreneurial endeavors. I can assure you that exhausting all of your ideas too soon will only serve to convolute your attempt at becoming an entrepreneur. Before you know it, you will have overextended yourself before making the transition. Even the largest companies with the deepest pockets can’t pursue every idea that comes to the table.

As an aspiring entrepreneur, you need to acknowledge the fact that you can’t take on opportunities without cannibalizing others. Instead, focus on what really matters and go from there.

6. Don’t Limit Yourself To Last Year’s Expectations

I can’t emphasize the importance of this step enough. It is absolutely imperative that you don’t let least year’s expectations set the tone for your upcoming transition into the world of entrepreneurship. Not only will things transpire differently when you are your own boss, but you run the risk of limiting your potential if you base everything off of numbers that are a year or more older. If nothing else, you should plan on improving upon the numbers that defined your business in the previous year. By all means, feel free to let the previous year’s expectations serve as a reference point, but you must adjust them for your upcoming transition. In other words, strive to do better than the previous year.

7. Understand The Timing Will Never Be Perfect

More subjective than any other step on this list, number seven is perhaps the most intangible. And by that I mean it is not necessarily something you can teach yourself. For lack of a better way to explain myself, it is really about taking a leap of faith when you feel you are most prepared.

There will always be more to learn, and even concepts that bear better understanding. However, there comes a point when the pursuit of knowledge becomes a hindrance to your progression as an entrepreneur. At one point or another, you need to feel comfortable with making the jump, and simply commit. Understand that the timing will never be perfect, but that shouldn’t prevent you from moving forward. Prepare yourself as much as possible and commit when you feel comfortable. Those most likely to accomplish great things do so with bold actions. As a wise man once said, “a good plan today is better than a perfect plan tomorrow.”

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5 Questions to Consider Before Jumping Into The Real Estate Business

If you are reading this you are off to a great start. However now is when the real work begins.  You can’t just dive right in and make offers on every new property you see.  You need to think about investing in real estate like running a business.  With that there are a few important questions you need to ask yourself before you get too far.  How you answer these questions will determine how you invest and the markets you invest in.  They will shape where leads will come from and how you structure the deals that come your way.  It is great to be excited and eager to get started but before you get too far you need to answer five critical business questions.

  • Do I Need A Partner? A good business partner can take your business to another level. On the flip side a poor partner can drag it down and become a burden to deal with every day. One of the first questions you should ask is whether or not you want to start by working with a partner. A partner should bring something to the table that fills a void in your business. This could be anything from capital to contacts. They may bring handyman experience that can help with your rehab projects. They may be able to manage any rental properties you acquire. Whatever the skill set is it should be different than yours. Two partners who are similar usually end up butting heads and don’t form an effective partnership. You can always partner up with someone down the road if the opportunity presents itself. Never jump into a partnership unless you know exactly what you are getting into.
  • Who Do I Want To Work With? Even though real estate is usually an individual endeavor it takes a solid team to have success. There are many people who you need to reach out to before, during and after you find a new deal. Start by forming a relationship with a real estate agent. You don’t have to work with the most experienced or successful agent in your market. As long as they know what you are trying to do and can help find deals experience isn’t a necessity. From there you should look for either a property manager or contractor depending on the type of properties you invest in. This is especially important if you lack experience with home improvements and upgrades. You also need to find a real estate attorney to help close any deals you have and help protect your business. A good attorney will pick up items on title or language on the contract before they become potential issues. There are also mortgage brokers, accountants and wholesale lead providers that you should reach out to as you are getting started. The stronger your team is the more successful you will be.
  • How Do I Plan To Generate Leads? You can have all the motivation to get started but unless you have deals to work on it won’t make a difference. There are more marketing options today than ever before. With the growth of social media you don’t need to break the bank to promote your company. However you plan on finding deals you need to start with a budget. Your budget will determine if you can do a large scale direct mail campaign or you need to start on Craigslist and social media. You should have a specific strategy in mind and how you plan to implement it. Businesses are constantly changing their marketing looking for the right plan. What you start with may change in a few months but you need to be able to generate leads to give your business a jumpstart.
  • What Do I Want From Real Estate Investing? What type of investing do you plan on doing? Do you want to buy a few rental properties a year or are you looking to rehab a property every month? How you answer these questions will determine the type of property you will look for, the budget and the location. Not every property makes a good rental property just like not every rental property is a good rehab candidate. You should have a clear vision of your goals to pass along to your real estate agent. A good agent will be able to match your goals to what is available in the market. If there is a lack of inventory you may need to shift your strategy or look in a different market.
  • Do I Have Reserve Capital? Even if you drop everything and start looking for real estate today the odds are you won’t see a check for at least sixty days. A more realistic scenario is that you may go ninety days or longer without generating income. Do you have enough personal capital to brace for this? This is an important, and often overlooked, aspect of investing in real estate. Without ample reserves it changes the way you view the business. You may make short term decisions that you know aren’t in your best interests. It will cause you to stress out with your family and maybe snap at your children. A common solution to this is staying at your full time job until your pipeline is full. There are many investors who maintain their employment and look for deals on nights, weekends and any spare work time they have. However you decide to do it you should plan on not generating income for at least the first few months.

You can probably make a list of twenty important questions to consider before you close your first deal. Investing in real estate is a business and if you think about it in that regard you will be much more successful.

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5 Tips To Sustain Your Real Estate Investing Success

We live in an instant gratification society. We want to see an immediate return on whatever it is we are doing.  While this may work for some aspects of your life it may not always be best for your real estate business.  There are times as an investor that you need to look at the big picture.  Instead of thinking about what gives you the greatest immediate return you need to consider what is best for your business six months to a year down the road.  This may seem like forever away but successful investors know this comes much sooner than we realize.  If you want to learn how to make your dream of entrepreneurship a reality this year, keep these five tips in mind:

  • Set Short And Long Term Goals. Think about where you were and what you were doing one year ago. If you were in the business the odds are that you most likely made some pretty significant changes over the past twelve months. A firm set of both short and long term goals will help guide you with every decision you make. Instead of making rash decisions only to secure your next deal a list of goals will help you see the big picture. Your goals should be what drive you in every turn you make. If a deal or partnership doesn’t help in some way achieve your goals you should pass and wait for the next opportunity. This certainly takes some discipline but sometimes the best decision you will make is passing on an opportunity you aren’t 100% sold on. Map out where you see your business anywhere from 90 days to five years down the road. Revert back to your goals when things get difficult. Without a list of goals you can end up chasing your tail and not making any real progress.
  • Create Lasting Relationships. Most people in business recognize the value of relationships. This is especially the case when it comes to real estate investing. A few solid strategic business partners are more valuable than a stack of business cards on your desk. To build these relationships you need always consider their position inside of a transaction. If you can make their life easier they will appreciate it and want to work with you again. If you can repeat this process on the next deal you may have secured a partner for life. Something as small as working with someone involved in the deal to reduce a fee or calling someone with bad news can make you stand out from the pack. Regardless of who you are or what business you are in you want to be recognized and appreciated for your efforts. By making an attorney, real estate agent or wholesaler know just how much you appreciate them they will be more inclined to work hard for you in the future.
  • Create Follow Up System. One of the keys to long term real estate success is following up. As simple as it sounds you need to follow up with everyone you come in contact with. There are many cases of investors working well with a real estate agent or mortgage broker on a given transaction and never working together again. This isn’t because they don’t see value it’s usually because they never followed up. By simply reaching out and following up after transaction you give yourself the best chance at working together again in the future. Following up is something that people understand is important but don’t do enough. The people you reach out to will be much more inclined to want to work with you again. This is how lasting relationships are started.
  • Every Action Has A Consequence. The people that stay in business the longest are the ones that understand every action has consequence. How you handle yourself in the middle of a tense situation is more important than how much profit you can provide. If you scream and yell and everyone around you people will find someone else to work with. Additionally you can get branded with a reputation that can be difficult to overcome. Conversely if you are the one that smooths things over or brokers a tricky conflict people will be much more likely to work with you again in the future. It is also important that you fight the urge to squeeze every last dollar out of a transaction. If you can make your real estate agent even a half a percentage more commission on a deal they will definitely remember it. The next time a deal comes their way you can bet that you will be one of their first calls.
  • Embrace Change. The real estate business is constantly changing. Something you thought of even a few months ago may not apply to you today. If you are a step ahead rather than a step behind you will be in front of the curve and better prepared to make changes. Think about how prevalent foreclosures and short sales where just five years ago. If you based your business solely on these types of deals you may have found it difficult sustaining it. If you were able to shift gears and were open to change you were able to ride the wave. Doing this isn’t always easy to do but it is essential if you want to have prolonged success.

Long term real estate success requires long term thinking. As you work on building your day to day business always keep an eye on the future.

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5 Things Every Self-Employed Investor Must Recognize

Do you think you have what it takes to become an entrepreneur? For many people being self-employed feels like reaching the top of the mountain. There is the ability to create your own schedule, work from home and you no longer have a boss breathing down their neck. As great as this scenario may be it is not for everyone. It takes a certain discipline and mentality to work in isolation. Even if you have a business partner it is a far difficult culture and atmosphere than working in corporate America. You may have a passion for real estate but it may not be enough to run a successful business. Before you take the leap to self-employment there are a few things you need to know. Here are five areas every prospective self-employed investor must recognize.

  1. Discipline Is A Must. Being your own boss means you don’t have to be in the office by 8:00. You can sleep in a few extra minutes and avoid the morning commute. On the surface this sounds great but you can’t let it become a habit. You still need to develop and refine your daily schedule. Sleeping in one day a week can quickly turn into two and the next thing you know you start every day an hour or two later. This is lost production time that can completely impact your business. With nobody screaming in your ear and pushing you to work harder there are times when you can let your guard down. Working for yourself means you need to stay disciplined at all times. There will always be the temptation to sleep in or put tasks off until you really feel like it. Even the most motivated investors struggle with discipline until they establish a routine.
  2. There Are Expenses. Even if you work out of your house there are plenty of hidden business expenses. Start with your technology. If you work out of the house it is a must that you stay on top of today’s technology. This means getting an updated computer, phone, tablet and whatever else you need. You also need to have the ability to run an office from your living room. This means having a printer, paper and extra cartridges on hand at all times. Another hidden expense is health care and insurance. If you left your office job to become an investor your insurance coverage was one of the tradeoffs. You won’t feel this until you get sick or something happens. Finally, there are also a series of expenses in generating and securing deals. Between marketing, title searches, inspections and other due diligence the costs of doing business can get away from you quickly. Before you decide to work for yourself you need to have a little bit of a nest egg to fall back on in the event of an emergency.
  3. Embrace Isolation. As a real estate investor you will do many tasks by yourself. A good amount of your due diligence is done in isolation. Gone are the Monday mornings where you can huddle around the water cooler and talk about the previous day’s football games. There won’t be anywhere to go if you want to take a break and talk to a co-worker. For some people they are much more efficient without all of the distractions. For others this is a big adjustment that they need to get used to. You are not going to spend every waking minute of every day alone but you very easily can spend an entire morning. This underscores the importance of discipline and need for self-motivation. Even though real estate investing requires a good team you need to prepare yourself to work in isolation.
  4. You Are The CEO Of Everything. As a real estate investor you are in control of everything. You are the one that makes all of the decisions and decides which way you want things to go. For some people this can be a very overwhelming task. Not everyone has the ability to make decisions without looking back. Even if you do get used to this you also need to become an expert on every area of your business. As you are just starting out you need to know about marketing, lead generation, deal evaluation, networking and much more. There will be nobody to pass these off to. If the phone rings you are the only one that is going to answer it. You can’t have an off day or take your frustrations out on an incoming call. You have to take time every day to learn about a different aspect of your business. Until your business grows you are the CEO of everything.
  5. Different Pay Structure. Perhaps the most difficult adjustment for anyone newly self-employed is the manner in which you get paid. Gone is the consistency of waking up every two weeks with a set amount in your bank account. Some new investors embrace the ability to create their own income while others like the assurance a steady paycheck. Making the leap to full time self-employed investor means that you may go several weeks, or longer, between closings. When you do have a closing you need to have the ability to spread that out for however long it takes until the next one. You also need to save some of your profits for when Uncle Sam comes calling.

Working for yourself can be one of the greatest joys in life but only if you know what to expect. As a real estate investor you need to embrace the fact that you self-employed and everything that it entails.

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5 Things To Consider Before Purchasing A Multifamily Property

There are pros and cons to almost everything in real estate. One segment of investors will tell you that multifamily rental properties are the only way to go. Another camp will tell you that they are more trouble than they are worth and you should be focusing on single family properties. The reality lies somewhere in the middle. Multifamily properties are a great way to accumulate long term wealth but only in the right situation. Before you get involved you need to know exactly what you are jumping into. One bad rental property can weigh your portfolio down and become a burden on the rest of your business. Here are five things you need to consider before purchasing a multifamily rental property.

  1. Increased Price Of Entry. Over the past five years the multifamily market has grown in leaps and bounds. Once devastated by the mortgage collapse multifamily homes have seen an increase in home prices for the better part of the last decade. While this may be great as an owner it can cause some problems if you are looking to buy. Multifamily home prices are at a five year high point and in most markets considerably more expensive than the average single family rental. Rising home prices require additional capital for down the down payment, closing costs and property tax escrows. It also means that the rent generated needs to be higher to offset the rising monthly costs. There is a definite trickle-down effect to every aspect of the property solely due to the increased price of entry. Multifamily investing has its benefits but can make ownership a difficult hill to climb.
  2. Higher Mortgage Standards. There is a tremendous difference in the loan items required for a multifamily property as opposed to a single family. With a single family property you can get away with around 10-15% down payment with credit scores considered good but not great. With a multifamily property you need to have excellent credit scores, 20% down payment and have low debt to income. Being strong in two of these areas is not enough. A two or three family property has stricter loan guidelines across the board. With home prices rising coming up with the 20% down payment is a difficult initial hurdle. This money needs to be in an existing account of yours for at least 60 days. Gift funds of any kind are not allowed. Credit scores must be at least 700 and in some cases as high as 720. You also need to look at how you generate income. Most lenders only use 75% of any rental income received and will calculate income based on the adjusted gross income. Before you do anything else you need to reach out to your lender or mortgage broker and find out exactly what you need to do to qualify.
  3. Tenants. Having an additional number of tenants can be considered a blessing and a curse. On one hand more tenants increases your cash flow options. Instead of having just one tenant to rely on you can have two, three, four or more checks coming in. On the other hand more tenants usually mean more potential issues. A three family property has three sets of tenants each with their own set of problems and drama. If you decide to manage the property yourself you can expect a phone call from one of your tenants at least every week. This is one of the reasons it is so important to find quality tenants you can trust. If they don’t respect the property or each other you can have a continuous cycle of problems. There is certainly an upside in collecting more checks but you need to be weary of everything that comes with it.
  4. Increased Maintenance. Yet another example of differing points of view with multifamily rentals is with the cost of maintenance. Investors that favor multifamily rentals will point to the economy of scale associated. Under this scenario you can cover multiple expenses at once. If the roof needs to be repaired there is only one roof on the property, not three. If the lawn needs to be cut or the driveway plowed there is only one item of each regardless of the number of units. The other side to that coin is that the cost of repairs is generally much higher. Additionally you also need to stay on top of multiple units. This means repairing or replacing multiple sets of dishwashers, dryers, stoves, toilets and more. With increased tenants and units the odds are that something will need to be fixed during every lease.
  5. Limited Buyer Pool. Owning a multifamily property works in reverse when you are trying to sell. Even though home prices have jumped higher it still can be difficult finding the right buyer. Not every interested buyer will be able to satisfy the required mortgage guidelines. If, and when, you do find a buyer it will take some time to close. Single family homes are closing in roughly 40 days and multifamily homes take between 50-60. This increased closing timeframe makes it almost impossible to sell in a pinch if you needed to. It also stresses the importance of accepting the right buyer as opposed to the highest offer.

There is nothing wrong with pursuing a multifamily property but you need to know what you are getting into. There are pros and cons associated and it is important that you always form your own opinion.

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