"Knowing what you know now, what would you do differently?"
This is a question that so many people have asked me, and it's a tough one. Based on my
current position and the blessings I have experienced, I really would not have done anything
differently. I'm very pleased with my current situation as an investor, and I fear that if I had done
anything differently, then I wouldn't be where I am today. In my opinion, a more appropriate question
"Based on your experience, in which direction are you going from here and what advice do
you have for a new investor?"
While my plan for the future is still in process, I have some advice to offer new investors.
Tip Number One : Quality Over Quantity
In the past, I set goals to complete a certain number of deals and as a result, found myself
at times pursuing volume over quality. This sometimes put me into bad situations, costing me both
time and money. For example, I might have paid too much to buy a home just so I could say I did a
deal and hit my target. While I did experience many situations that other investors never encounter,
this is not the way to do business.
Today, I realize that I didn't need to do as many deals as I've done. Now I pass over a ton
of opportunities that I would have taken years ago. Rather, I sit back and cherry-pick, waiting for
the "home runs" to come along.
That's not to say that beginning investors should wait for the big deals. Most don't have
the resources to compete with the experienced investors, including myself, who don't need the smaller
deals to survive but can afford to be patient. We can bide our time until the best deals present
themselves and still have enough resources to take advantage of them when they do.
What I am saying is that beginning investors should do what they need to do to survive,
keeping in mind that it is better to do one quality deal than a multitude of average deals. As a
beginner, you must get into the game, but do it carefully with good deals. Then go from first to
second to third to home, taking it one step at a time. Crawl before you walk and walk before you
run. Otherwise, by rushing into things, you run the risk of making mistakes that will set you back
months or even years.
Tip Number Two : Set Goals And Put Them On Paper
I did not have concrete goals when I began, so two years after getting started, I was in
about the same place as when I started. I ran around in circles and covered a lot of ground, but
didn't get too far from my starting point. Only then did I develop a plan (smart, huh? Only took a
few dozen "seminars" and a few more whacks upside my head).
So I teach my students to put together a plan sooner rather than later, preferably before
they even start investing. Anyone who drafts a realistic plan and sticks to it can achieve as much
in one year as I did in three.
Not that creating a plan is easy, especially when you don't know what to expect. Accurate
goal setting is actually very difficult, and not many people teach you what you need to set REAL
goals. Most teach goals that get people excited, good in the sense that it usually prompts people
to take action, but bad in that it develops unrealistic expectations and sets people up for
To set realistic goals, speak with experienced investors in your chosen field (wholesaling,
rehabbing, lease-options, "subject to") and get their honest opinions regarding profits
per deal and the average time required to complete a deal. Then, based on this and your current
resources of cash and credit, set your long-term cash, cash flow and equity goals for one year,
three years and five years. Once you have these long-term goals, fill in your short-term goals
of three, six and nine months by outlining the steps you need to take to accomplish your long-term
goals. Unless you draft a plan similar to this and truly commit to it, you are going nowhere.
Tip Number Three : If Possible, Keep Your Best Deals
Looking back, I have owned a lot of homes that I wish I would have kept. I don't regret
having sold them since every sale contributed to my success, but I did have some gems that have more
than doubled in value since I sold them.
When I sold, I just didn't believe that the areas would take off like Realtors and others
were telling me. So I cashed out and used the profits for other things. If I had held the 50 best
deals that I have sold to others and done nothing else, my net worth would probably be three times
higher than what it is today.
Not that I'm complaining. My net worth used to be negative, and today it is pretty
respectable. I'm just advising you to hold onto your best deals if you can. Sometimes, though, it
is necessary and understandable to sell a property for cash profits even though it would be nice to
keep it. Use your best judgment.
Tip Number Four : Don't Limit Your Profits
When you purchase a great deal, don't feel obligated to pass all of the savings on to your
buyer. I could have generated more profits than I did from many of the properties that I
wholesaled. Often, when I purchased a SUPER deal, I passed along the SUPER savings to my buyer
with the attitude that I should only make $2k-$4k per transaction.
Well, this was a mistake. My advice to you is to take what you can get. Don't inflate
your prices above the market and gouge people. Give them a good value. However, don't think it's
necessary to limit your profits just so a buyer can benefit. After all, this is business. Let
the market set your price. There will be plenty of times when your profit isn't as large as you
expected. Take advantage of the big hits when they come.
Tip Number Five : Separate Business And Charity
Sometimes, I used my business as a charity when I shouldn't have. My recommendation for you
is never to do the same. Don't let someone live rent free or give someone else more for a service
than what it makes good business sense to give.
I've learned that I need to run my business for a profit, and that I need to do all I can to
keep it profitable. I've also learned that it's OK for me to be charitable with my profits, but
that I can't be charitable with my business. Giving your business away before you make profits
cuts your wellspring off at its source. It's not prudent, and your business will suffer greatly as
a result if you choose to do so.
Tip Number Six : Hold On To The J.O.B. As Long As You Can
I know it's hard to hear this, especially for those of you disgusted with your current
position, but I recommend that beginners with good jobs hold onto them for a while. They provide a
safety net while you are learning and particularly allow you to establish yourself with banks and
credit card companies. Convincing these organizations to work with you as a self-employed person is
Tip Number Seven : Start As Early As You Can
I first became interested in investing at the age of 18, and I wish I had pursued it from
that age. Instead, I waited 10 more years to get started. As of this writing, I've only been
investing for 5 years and it's hard for me to imagine, based on my current position, where I would
be if I had started when I was 18 years old. It's never too late, but you need to start NOW!
Tip Number Eight : Use Partners Wisely
Use a partner only when you need them. In other words, choose someone with time, money,
knowledge or skills that you don't have. They should bring to the table something that you need.
All too often, two people with a dream and nothing else decide to be partners. Not good. Partners
need to complement each other, not have the same qualities.
Today, I teach others to use partners strictly on a deal-by-deal basis. The form of
partnership I teach most often is one where one person puts up all of the money and the other is
responsible for everything else.
In retrospect, I would not have taken on the one partner I had. In time, I didn't need a
partner anymore, yet I still had one and felt as though I was giving half of everything away. He
probably felt the same way.
Tip Number Nine : Dare To Dream
Finally, I'd like to stress that if you can dream it, you can do it through effort and
perseverance. Having money, a decent job, and good credit make investing easier, but are not
When I began my career as a real estate investor, I had no money, no job and poor credit.
In the past five years, through the grace of God, I have come a long way. So set your goals and
start taking the steps necessary to achieve them. Reevaluate and adjust every so often, but don't
quit and don't let anything stop you.
Since 1998 Steve Cook has flipped many hundreds of houses as an active Baltimore-area real estate investor. Steve’s
unique specialty is the “flipping homes 1-2 punch”, a proven system of real estate investing that powerfully combines
wholesaling and rehabbing houses. Also the founder of www.FlippingHomes.com, Steve is dedicated to helping others
in this thriving online community succeed through understanding and aggressively applying his time-tested,
step-by-step approach to flipping real estate. Get FREE weekly tips from Steve Cook and other house flipping
experts at www.flippinghomes.com
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