5 Simple Steps to Reaching Your Real Estate Investment Dreams

During times of economic uncertainty people are more prone to look for social proof before making a decision.

Social proof happens when people use the actions of those around them to decide what action they will (or will not) take. When they see or hear about others doing something they begin to feel that the same action is the correct course for them to pursue as well. This is also called "groupthink" or the "herd mentality."

And this phenomenon is plainly demonstrated over and over in the real estate market. The media amplifies fear or greed in the market and people see the media reports as social proof.

But here's the good news: to make money in real estate you just have to figure out which direction the herd is stampeding and structure your deals accordingly. If the "herd" is moving away from the real estate market due to fear, it means there are some remarkable deals out there to be had.

Who doesn't want to get in on a deal before others become aware of its potential? The first to recognize an opportunity will usually pay less, have the best choices, and ultimately have the most power. These same principles should be applied to the real estate market.

So, how can one rise above the "herd mentality" and move into making autonomous investment decisions? How can you go against the grain and locate opportunities others miss?

The answer is simple:

You research and discover a system that works for you, and then you work that system the exact same way over and over again. Nowhere does this work better than within the real estate investment field.

Here's our simple five step process ... we follow it every time and we're never concerned with what the herd is doing.

Step 1. Where are you going? Know your goals.

When you know the destination, it becomes easier to map out your journey. You need to know what your ultimate goals are before you ever buy your first property.

Step 2. Study the Market

Look for locations where you'll be able to find opportunities that will help you meet your specific real estate goals.

This is the step where a lot of investors fumble; they get caught up running after the latest 'hot tip' or trend and forget about doing their own research. This is where the herd mentality can catch you by surprise! You must be prepared to do your own research because no one knows your goals better than you do.

And the more you learn, the more confident you'll become in choosing the best properties.

Step 3. Select a Property

The best way to find quality real estate investment opportunities is to utilize your network. You don't want to be the only one keeping an eye out for the perfect property. Spread the word about the deals you're looking for.

Then, based on the research you've done and the goals you've set, choose the property that is going to make you money and meet your goals. And remember ... if you haven't looked at 100 properties you probably don't know what a good deal looks like. You have to look at a lot of properties online and in person before you can select the one that you should buy.

Step 4. Buy the Property

How can you solve a problem for the seller? This is the question you want to ask of yourself when you find a property to buy. The best deals will be created when you solve a problem. Especially if it's a problem that no one else has been able to solve.

If, for example, you locate the perfect property and you have a seller who has vacated and is already paying a mortgage somewhere else, you know they'll be more motivated to sell. In this case you might reduce your offer but guarantee a 30 day close. A cash strapped seller will be more inclined to bite on your offer. The point is to negotiate the most favorable deal; I've seen sellers throw in furnishing, sporting goods, and even automobiles to get a deal done.

Or what about if you found a small apartment building for sale that you think would be a good opportunity for investment. Let's say you find out if the owner is burned out from dealing with the stresses of managing the property - you could offer to do a deal where in exchange for 50% ownership you become acting landlord and property manager.

When the owner agrees, all that's left is for you to retain a lawyer, get your financing together, and order the inspection. If you find the property is in good condition you will be all set to go.

Step 5. Be Profitable - Watch Your Cash Flow

Let's face it: the whole point of investing is to make a profit. Revenues will only be gained by filling your properties with reliable tenants who will consistently pay. You may end up hiring a property manager to handle problems and collect rent, but this is not an excuse to take your eye off the prize. Keep in mind: this is your business; so it is up to you to be constantly looking for ways to reduce costs while increasing revenue. Each new lesson learned will help you in purchasing subsequent properties.

When my husband and I stick to these five steps religiously we eliminate the uncertainty many face when looking to invest in real estate. We know when we buy a property that it is going towards supporting our long range goals. Because of our process, we no longer subscribe to the "herd mentality," instead we do what works best for us and ignore those media reports.

Learn more about real estate investing with Julie's free real estate investing starter tips guide and weekly newsletter. Get more details and sign up at her Rev N You with Real Estate website http://www.revnyou.com

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