Today at Limitless TV, we're going to be talking about the 5 worst mistakes that new investors
make.
So I look forward to sharing with you what you can do to make sure that you avoid those
pitfalls, avoid those trial and errors so you can crush it in real estate.
Kris Krohn here and today, I brought out with me Steven Michael Miller and you need to know
this man because when people come and work with me in our real estate vision, this is
the real estate guru, this is the man.
Steven is the one that has helped thousands of people build game plans and execute them
and get traction which is so important because today, we're talking about the top 5 mistakes
that brand new investors make and why their strategies flop and the deals and at the end
of the day, it's like they burnt their house down, they were the one holding that match
and they didn't even know it.
So today, we're going to be helping you not do that.
- I'll tell you, if you can avoid these 5 mistakes, you can see immediate success in
real estate.
Now this isn't about get rich quick, this is about gaining and producing wealth over
time but these 5 mistakes will keep most people out of the game and pointing at real estate
and saying, "real estate sucks" So we want to get you to avoid these 5 mistakes and move
forward effortlessly.
- Okay, mistake number one, no margin.
Now just for a moment, think about what that means.
People will go into a deal and you need to have a winning strategy with either equity
or cash flow or the right system.
You have to have a strategy and so what often happens is, people are failing left and right
because they walk in and they don't have the right kind of margin on the property.
Often that margin shows up with, for example, equity.
And equity means that when I buy the house, I should walk into a certain amount of equity
that says, "Wow, this is the right system, this is the white right property and I'm starting
on the right side up instead of upside down."
- Yeah, cash flow is the second one, right.
Most people get into real estate and they don't have enough cash flow off the bat.
I know so many people that say, "Hey, I just want to jump in, I want to buy a house and
it pays me great, but if not, I'll hang on for 5, 7, 10 years until finally catches up
and starts paying me."
No.
We don't do it that way, okay?
If you want to do it right in real estate, get cash flow starting day 1, we've got a
system that does that for you as well.
- Number three, poor mindset.
Sometime in your real estate journey, your real estate is going to throw you a punch,
there's going to be an unexpected repair, there'e going to be a tenant that moves out,
there's going to be some damage to the property.
When you're doing real estate, you need to come and prepare for the unexpected.
And what I've seen happen too often working with investors, is that they'll actually have
a dynamite property and yet with the wrong mindset, it's amazing what you can do.
I once was sitting down.
Steven, with these two individuals as couple that had come into the system, they bought
two properties and they came to me and said, "Kris, we're so worried about the debt.
We had leveraged our house to be able to buy these two properties and debt is like the
worst thing for us and everyday we're just feeling horrible."
I know it's like the big bad monster in your life and guess what?
I said, "Well, tell me about your properties."
"Well.."
"How much equity do you have?"
"Well, this one, we've got a $50,000 equity position."
"What about this one?"
"That one's about $70,000."
"Okay, so I just want to understand, so far, in the last four years of holding these properties,
you've made a $120,000?"
"Well, yeah."
"So tell me about the cash flow."
"Well, we're making about $350 on this one and then on this one about $100."
"Okay, so you're making $650 a month."
"Yeah but Kris, with the debt on our house, we're really netting only about $300 because
it's counteracting."
So I said, "I want to make sure I understand.
You're up a $120,000, you're cash flowing positive $300 a month after all expenses."
"Yeah."
I'm like, "Hey, how 'bout I just come in and take those deals off your hands?
I'll take over, I'll buy you out."
And they looked at me and they're like, " NO, NO."
That poverty mindset, that poor mindset has the ability to put your entire portfolio at
risk.
If you're going to hold on to a home for seven years and something doesn't go right, for
just one of the moments, you got to remember how this whole story's going to end and cannot
allow yourself to get caught up in the moment with a poor mindset, where you put your real
estate of fire sale and end up burning everything down when you're actually on track.
- Absolutely.
The fourth thing right here that you need to, the fourth mistake that you need to avoid
at all costs is having a bad strategy to begin with.
Now you know as well as I do that you can search the internet and find a million and
five different ways to do real estate, right?
You're looking for the very best way to do real estate.
Not just the best way to do real estate, the best way to increase your financial freedom
and you have to have the proper strategy going into it.
So many people look to their parents or they look to their grandparents or they have a
friend that jumped in some sort of investment and they want to just kind of follow soon,
let me just tell you right now, that's not a strategy.
That's not going into a plan, that's just following like a lemming and you follow like
a lemming and chances are, eventually, you're going to jump off the cliff, alright.
It's just going to happen.
You'll fall down and it's not going to be fine, you won't look pretty.
So make sure if you're getting into real estate, that you have a really cohesive and amazing
strategy in place.
- Okay, mistake number five.
No mentor.
You need somebody looking over your shoulder that can shepherd you through the process
that is already been where you want to go.
Right now, we're in a society that's just, it's all about do it yourself.
And the problem is, you read a real estate book or maybe watch some of these videos and
I want you out there transacting real estate, I want you taking action but make sure you
have someone in your life that has your back.
It might be Steven, it might be me but it might be somebody that you know.
Get network in the real estate and if you're going to be flipping a deal, if you're going
to be doing a short-term buy and hold like we love to do, if you're doing a lease option,
make sure you have somebody with extensive experience that's looking over your shoulder
and along the ways, giving you pointers because reality is, they've already probably stepped
into the pitfalls and they can help you avoid that trial and error by spoonfeeding you the
correct information based on live experience, no video, no book can trump real life experience.
So make sure you have a mentor.
- So if you want success in real estate, if you want success in financial abundance, if
you want to grow yourself and you want to get pass all of the naysayers and people that
are telling you you cannot, if you want to void the mistakes, then make sure that you're
avoiding those five things.
Make sure that you're getting in and you're jumping in and you got the equity positions,
you got the cash flow going, you got the mindset running with you, you got the strategy in
place and that you're getting a mentor for you so that you can make sure that you're
going forward with nothing holding you back.
- Now before we end this video, in this next segment, we're going to throw out a little
bonus on what we believe to be the ultimate system to avoid these five common mistakes
and help you experience maximum success.
So now that we're totally clear on the five worst mistakes that new investors make, let's
talk about what you want to be doing instead.
You need a system.
A what?
- A system.
And what does system stand for?
- I don't know.
- Save You Some Time, Effort, and Money.
- Okay, now think about it, time to commodity, efforts on money and money to commodity.
So you need to be utilizing those very strategically and if you don't have a system, then you might
be going into real estate too haphazardly.
For example, when Steven and I built game plans for people, it's what's your next step?
How do you get your next house?
Then once you have your next house, it's how do you maximize monetizing it and managing
it for maximum gain, in time how do you take money out of it and put it to the next property
and then when do you sell this first house to go buy another while this equity is actually
buying you a fourth house.
And so, in other words, there's a system, there's a team, there's individuals, there
are experts that are lined up.
My success in real estate, I can tell you, didn't come from what I knew and what I was
doing, it came from what others knew and what other people were doing and because I was
inside of a system and I was building a system, that's what leaded to great success.
Steven, when you're helping someone build their own personal real estate power team,
what are the basic people they're going to need to be able to go out and crush it in
real estate?
- I mean, you're going to need to get in touch with a realtor whose competent.
By the way, this realtor needs to not just be a realtor, it should be a realtor who's
also an investor, right?
Super super important.
So some of those finding those deals for you.
You're going to want to understand and know somebody who knows the loan world.
A mortgage loan officer, a mortgage broker, you want to know somebody who understands
loans and not just how to get you one good rate on one loan, you want to know somebody
who can actually work with the market and work with you and help you understand how
you can get from where you are, buy maybe your first home to buying home number 10.
- And the third person that I recommend is property manager.
Now, lease option, even though requires old for minimal property management but when we
built our original power team, Steven played the management role, my business partner,
Steve Earl, played the real estate realtor role and then Kevin Clayson played the loan
officer role.
This was my original team and we would upstairs, in this house, in my office, the four of us,
each week and we would coordinate the homes that we're buying and at times the homes that
we even helped other people, which by the way, my system grew so successful that we
built so big that we started leasing it out to other people and now ten years later, that
team is still here, crushing it bigger than ever before and now it's definitely the time
to the time to be investing in real estate.
So either build a team or rent a team and my team is available, our team's available
that you can actually use that.
You can personally work with Steven Miller and myself, we put on our training events,
our weekly calls, you can be a part of our community where we'll help line up all of
the lending teams that you need, all of the finding teams for the best deals, the property
management teams and get it all done for you.
So build a team, rent a team, you need a team, have a system.
People that make the biggest mistakes in real estate don't usually have that power team
so start with it before you get going and if you don't have one, find out how much easier
and fun life is when you have one.