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Will You Sink or Swim?

Posted in The Profit December 2015 by Russ Hiner

This is your life. You have decided that real estate investing is something you want to do. But…

Are you sinking or swimming?

Right now, I am teaching a 58 year old friend to swim. I can see his fear. He is thinking, “What if I drown?” or “What if I can't do this and I look silly?” We all have fears about uncertainties; fear is natural and good—it can keep us out of trouble! But, when fear controls you, when it stops and paralyzes you, when it keeps you from success, it is a problem.

Remember: There is no such thing as a dead end.

Your fears can be conquered easily through calculated action and baby steps.

How is your business like learning to swim? Like my friend, you probably have fear. Maybe you fear loss of financial security or not being able to know a bad deal from a great deal. Maybe you fear failure, or you fear what people will think if you make bad decisions. Maybe you even fear success. The problem is that fear will wear you out and kill your drive. Just like the swimmer, you need to know when to swim and when to float. You need to learn to trust the system and yourself.

In order to trust, you need to build a base on which to put your feet—you don't want to jump from the diving board right away. One of the things you have to do before you jump is research properties. Before you trust, you need to know the cost of repairs on a property because you have to leave enough meat on the bone to allow an end buyer to profit. If your repairs are off, then they won't buy. If your business model is buy-fix-and-sell, then you need to be very tight on the cost of repairs, because this is your profit margin. Knowing the expenses will allow you to make an offer and sell for a profit.

For some people, calculating repairs seems difficult. But it is very easy!

Here are some simple but tried & true actions that you can take with confidence:

  1. If you don't know the price to make repairs, get a contractor to give you a bid. Many contractors have software that will tell them how much it will cost. They price out a standard for the industry. Then add 15% to the bid for error factor. This your cost. Contractors will generally give you one free bid.
  2. Factor in the big five—these are $5000 each: heating, plumbing, roof, foundation, and electric. You may not need these fixed, but assume going in that you will.
  3. Decide if this is a major or minor fix.
    1. If it's major, here is an example: If you are looking for a high end job, the cost to build on to a house is $120 per sqft. Builder grade for a new build is approximately $100 per sq. ft. You can build from the ground up for $100 per sq. ft. A house that is completely trashed will cost $45 per sq. ft.
    2. If it's minor here is an example: You are going to spend $10,000 on a 1,000 sq. ft. house. Think of it this way: the house will need to have $10/sqft rehab with just cosmetics.

      Here, the calculation is easy. You multiply the price per sq. ft. by square footage of the house/ renovation. Paint and carpet will eat up a lot of money. Houses that have 3000 sq. ft. will need more paint than a small house.

      A larger house will cost less to build than a smaller house because the rooms are larger, and the bath and kitchen costs are spread out over a larger area.
  4. Put several houses under contract for what the owner wants. Then put them on the internet with lots of photos, and see if you get any bites. You could also take those photos and send them to other investors and ask if they think your estimate is accurate. Note: Most investors will do this only once; as your coach, I will help you as many times as you need it.

So, the question remains: will you sink or swim? I recommend that you do what my friend is doing to learn how to swim; get a coach. Have someone who knows how to do it help you.

Remember, the best education is the one you pay for! You can pay for your education via a coach or mentor, or you can go to the school of hard knocks. If you want to swim in the real estate business, you need a coach. You need me!

I want you to be wealthy! I do mentoring and coaching, and I am looking forward to meeting you and helping you to wrap up 2015 successfully and enter 2016 strong!

Invest in YOURSELF and your business and contact me for affordable, 1 hour, on-line coaching sessions four times a month at low cost of $99 per month.

Source: Will You Sink or Swim?

About Russ Hiner

Russ Hiner

Russ Hiner is an active real estate investor, coach and mentor. Russ teaches several workshops throughout the year on a variety of real estate investing topics such as Negotiations, Wholesaling 101, Wholesaling 401, Real Estate 101 and more. Russ’s current real estate business is focused on the rentals, wholesale real estate transactions, lease options, notes and deeds, loaning private money, commercial and note buying.

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