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Just Say No! How to avoid this common rookie mistake

     You’ve heard me say that real estate is real estate is real estate – meaning that the techniques I teach can work in any city, any state in the country. I’ve proven it hundreds of times – I’ll fly into a city to do a seminar, and in just a few days I can segment the market, find deals and qualify the best ones, and in some cases, make an offer or two.
I do that to prove a point, to show that my success has nothing to do with my location, my connections, or my luck. It’s to prove that this isn’t rocket science – it’s a proven approach that works, time and again, in lots of different places and with lots of different people.
But here’s a point that some people miss – just because you can apply my techniques all over the country doesn’t mean that you should.
What do I mean by that? Once you start effectively using my techniques, you may find yourself checking out real estate everywhere you go. Visiting the kid at college, back in the old hometown for a reunion, on vacation at the beach – wherever you are, you’re picking up the local Pennysaver and jotting down phone numbers off FSBO signs.
Now I think it goes without saying that this is a good way to start a fight with your significant other. But beyond that, it’s also a sure way to derail your real estate investing business – especially when you’re just getting started.
Why? Because until you become financially independent – and even after – you need to maximize your positive cash flow. And the best way to wring every last penny out of each and every investment property is to manage them yourself.
Think about it – how are you going to screen tenants from another state? How are you going to respond to maintenance requests? How are you going to collect rents? Sure, you can pay someone else to handle these things, and do some of them over the phone or through the mail. But trust me, you don’t want to.
I won’t get into all the aspects of tenant management here – I’ve written another piece on that topic that anyone considering remote management should definitely read. But suffice to say that tenants are best managed face-to-face. Before renting one of your properties to someone, you should meet them, shake their hands, see where they are currently living. Before agreeing to a repair, you should evaluate the situation yourself to see what is actually necessary and if you are responsible for it.
Same goes for contractors. If you’re not local, you’ll have to hire someone to do everything from painting to plumbing to mowing the lawn. How will you find trustworthy workers? How will you guarantee that they’re doing the work they say they will, when they say they will?
Sure, you can hire a property manager. But do you really want to pay 20%, 30% or more of the property’s cash flow to someone else? And the reality is, no property manager in the world will look out for your interests like you would. Every time your property manager tells you that he had to spend your money on new carpet or paint, or makes excuses for a tenant who is behind on his rent, you’re going to wonder…how would I have handled it?
Of course, there are exceptions to every rule. I’m sure you can find investors who have had great experience with properties in other cities, and have found wonderful property managers that run things more efficiently than they ever would. It can happen.
But my feeling is, why complicate things? There are enough deals for you in your own part of the country -- you don’t need to go searching all over for them. If your goal is to become financially independent, and build wealth for you and your family, the best place to do that is in your own backyard. When you’re traveling, it can’t hurt to look a little, just to see if you can learn anything you can use at home. Just don’t make any offers – instead, invest your time and energy in enjoying your time away and the people you’re with. Remember, they’re who you’re doing this for in the first place.

Article Source:

Russ Whitney

Posted on 2010-10-10, By: *

* Click on the author's name to view their profile and articles!!!

Note: The content of this article solely conveys the opinion of its author,

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