Become a Failure and Succeed Past Your Wildest Dreams!
by Scott Rister
Obviously this is not the bit of advice that you would be expecting, but once
you get this concept, success will be laid before you. You want to fail in the
right ways limiting financial and legal liabilities.
To give you a better idea of exactly what I am talking about you simply must
know where I'm coming from and possibly a bit of my personal story will help
make sense. Why? That is because over my 10 year real estate career my first
five years were anything significant and needless to say 'fun'.
I found myself with 25 properties after the first five years. Not bad right?
WRONG!!! I had 25 properties barely cash-flowing AND I also had my corporate job
still to keep everything afloat. Definitely not what I had expected.
It all sounds so nice, right?.....become a landlord with no money down deals and
you can be taking vacations on the beach six weeks a year while tenants pay you
to fire your boss and live the life you've always wanted. Am I the only one here
that bought into that? I didn't think so but there is always a silver lining.
So after my first five years of real estate investing I had graduated with an
MBA from the school of 'hard knocks'. The only good side from those experiences
was a sense of, 'well, I'll never do it that way again'. Believe me its not the
easy and profitable way to learn in real estate.
Still determined and passionate about real estate beyond description I literally
wrote myself a note which is the focus of principles I sorely want you to learn
and burn into your short and long-term memory. This is my motto that I still
live by on a daily basis today: 'What is the absolute worst-case scenario that
can happen on this deal...and if it does, am I financially and legally prepared
for the consequences?'
There is NEVER a no-risk scenario when it comes to real estate investing. Let me
quantify that before anyone starts talking about contingency clauses and the
such. You will always be risking at the very minimum your time that has value
and not to mention even some marketing dollars to find the deals.
Now that doesn't sound as bad now does it. This in summary is what I mean: limit
financial and liability issues as much as possible in real estate investing.
For example; if I know ALL there is about how to structure contracts to
wholesale flip for quick cash to other investors and limiting any possible
negative liability consequences, then what is my risk? Possibly only 'risk'
would be a couple hundred bucks mailing to absentee owners. Even if not one deal
is made, then that is a consequence I can live with.
Another example; if I finance this rehab project through a hard-money lender do
I have enough reserves to make the interest only payments? What happens if I
come into some unexpected repairs that are outside the LTV of what the lender
will allow for repairs? If the house is still on the market after six months and
hasn't sold, what will I be prepared to do? A little bit more serious risk that
I need to look at in great consideration.
There is this guy 'Murphy' that shows up a lot of times in real estate deals.
You know, 'Murphy's Law'! It means what- ever can happen sometimes does and it
is most of the time not to your advantage. Just be prepared and it would be
prudent to have some vision in working through all possible scenarios.
Recently I closed on a property making $7,000 as a quick flip. This property I
secured through my probate marketing simply gaining an option on the property
with no legal liability to perform if I didn't buy it or get someone else to buy
it. I knew there was a chunk of equity in the property but it was heading
straight to foreclosure. Not enough equity for investor offer, but GREAT deal
for a retail buyer. So after tieing up the property under contract I then
advertised 'handy-man' special. Then I had $100 in advertising invested. I can
live with that risk if I don't make any profit on the property.
From there I found a buyer the next day with an 800 Beacon score! Never had that
happen and probably won't again. Went through the loan process controlling the
whole approach. Loan went through to underwriting and termite/inspection report
revelealed some moisture damage as required by my state to report. Loan wasn't
going to close until repairs done even though was sold 'as-is'.
The house then needed $725 worth of repairs in order for the loan to close. I
paid the repair bill and now I've got $825 in the situation. If the loan STILL
doesn't close and I lose my $825, I still can live with that risk. Funny things
and not in a 'ha-ha' kind of way can happen at underwriting so nothing is still
guaranteed.
After all the dust settled, I realized a $7,000 net profit after the repairs and
advertising expenses were paid. I had a total of $825 at risk in the entire
situation and if the deal never closed then that is an amount I could live with
as a loss----definitely NOT be happy with but I wouldn't lose sleep over it at
night.
If you're concentrating on deals and real estate holdings that literally keep
you awake at night when you should be sleeping.... start asking yourself how you
can limit those risks to a bare minimum.
This whole business is about QUALITY of deals and not QUANTITY. Continue to
invest in the education of yourself and limiting your worst-case scenario
downsides, then build up to a quantity of quality deals! That is called putting
your real estate business in overdrive for true financial security that
corporate America just can't provide for you like real estate can and does for
investors on a daily basis.
To your success and good hunting as luck has absolutely NOTHING to do with it!
Bio:
Scott Rister is a successful full-time investor living in Dallas, TX. Closing 72
deals in one 9 month period, Scott's property acquisition company, One-Stop
Realty, LLC maintains current holdings in four states.
After building a sizable portfolio of keeper properties that was not getting him
where he wanted to go, he discovered the art of wholesaling. Since that time
he's done hundreds of deals and focuses exclusively on motivated sellers using
technology and a targeted marketing approach.
Scott Rister's approach is based on the belief that the successful real estate
investor will leverage the best use of his/her time by implementing systems that
can run on auto-pilot with minimal maintenance.