Welcome to Marge Coffing’s ezine!! We’re delighted to have you join us, and hope that the information and perspective in this series of ezine’s will be helpful to you in your real estate investing activities. Should you wish to print this out for your records as a Word document, it’s included as an attachment.

This edition focuses on an overall perspective of what’s important in some business aspects of investing, titled:

Ten Commandments for Real Estate Entrepreneurs.

#1   Do what you Love, and Love what you Do

Long ago we learned that each of us is different. Our strengths, our weaknesses, our interests, our passions, our trigger points, our background, our dreams….these define us as individuals. Critical to long range success in any real estate entrepreneurial activity is matching who you are and what you’re good at, with the type of investing and type of activity you see for yourself.   

If you have several ideas, go with the one that really turns you on. You’re going to need that kind of “juice” for your perseverance on the less-than-wonderful days.  Just because someone else is really turned on by wholesaling, or picking up cash quickly by turning over a lead to someone else for the repair process, doesn’t mean that’s your way to go. It’s really important that you take a good look at yourself and find the niche that is right for you. In fact, it is more important to start a right new venture, than to start a new venture right….think about it!!

#2   Your First Operating Priority is Cash Management

A well known fact about new businesses is that 80% of them will fail. Don’t kid yourself – whether your goal this year is to buy, fix up, and sell 8-10 houses as a full time investor or buy one rental property to hold, you’re in the real estate business. Your ability to manage cash flow on these projects is going to determine both your short-term and long-term success.

If you’re not on top of the numbers - what’s going out and what’s coming in - on at least a weekly basis if not daily with bigger projects, you’re not managing or controlling the cash flow.

It’s very true that the start-up phase of any business is almost always “cash hungry”, and that means the survival mode. Businesses of all sizes fail if they have inadequate capitalization. Do you know what your resources are, both the

cash reserves and credit possibilities? A strong suggestion is that you don’t spend money before you needed on fancy furniture or office equipment purchases, if used stuff or rental stuff will get you going so the money will start flowing. Keep your ego in check.

#3   Your Second Priority is Clarifying the Profit and Income Perspective

To stay alive as a business, you must always focus on your income objectives first. You won’t be able to collect the profit if you’ve gone belly up on your way there. Every day, look at the activities you had listed, and prioritize them, asking yourself, “What will bring in the most money, the fastest? What’s the most important thing I should be doing today?”  Every day new opportunities arise, so your priorities and your lists will change daily.

# 4   Borrow or Rent the Brains of Others

Small business survival depends to a large degree on the entrepreneur's ability and desire to become and remain an informed decision maker. How do you do that?  Pay consultants, pay mentors, join subgroups, read, and go to classes. Find a buying buddy to work with as a second set of eyes for you. Find someone experienced in the same part of the business you're interested in, and ask for help. In the rental business, don't let your education come from the tenants or the judge. Interview accountants to find those who own real estate themselves. Find an attorney who understands his/her appropriate role for keeping you out of problems, not making your business decisions

# 5   Don't Spread Yourself too Thin

Be clear what business you're in, whether its the rental business, the flipper  business, the rehab business, the paper business, or a variation of that. Remember that for each area, or each house, it should be a profit center. Select your area of activity and learn all you can about it. Focus on what will make you succeed in that arena, on that day.

#6   Document and Record all Communications with Anyone who can Hurt you, or who can Help you.  

Make it a habit to “write a memo to the file” with the date. Especially if you’re in the rental business, include both the date and time. You never know when you’re standing before a judge in a landlord-tenant dispute, and your one-page summary showing dates and times of “who said what, when” will make the difference in winning your case. But even more important will be knowing the people who can help move you forward.

#7   Know when to say NO

An important lesson to learn is that you should never get involved in a business in which the following two elements are both present at the same time:  1) the business is a high risk and 2) all of your savings are at stake. Of course, any one starting a business is taking a risk, and without risk there is no reward. However, your excitement about any aspect of real estate investing or any one property needs to be tempered by your awareness of how much, or how little experience you have in that aspect of real estate.

A prudent way to move forward would be to limit your exposure to no more than a predetermined amount. For instance, if you had $30 thousand in savings, you could choose to invest only $10k. Or, enter into a short term lease with an option to extend,  so you would go into a high risk situation in a calculated way. Hold off committing all your resources until you are sure of the outcome from having experience and a business that works.

#8   Plan Carefully When you should Incorporate

Sole proprietorships cost less to start, file, and record. But at some point you’ll want a corporation, C or S, or an LLC. At what point will you have employees, or be earning at least $30,000 from your business activities? Or need liability protection? There are tax implications on your choices, so seek professional advice that makes the most sense for your situation.

#9    Avoid Investor Burnout

As the CEO of your organization, recognize  the importance of keeping yourself fully functioning. You are your best business tool, which must be sharpened, cleaned, oiled, and at the ready. To do that, you must be well trained, healthy, and properly rewarded.

Since you know that stress affects your effectiveness, put together a plan that you will honor. List what steps you must take to make the plan work.

Calculate what your time is worth and then delegate jobs that pay less, unless you enjoy them.

Take stock at least once per year, and be honest with yourself about your situation. If necessary, fire a tenant or fire a property if it will enhance your company’s overall situation.

Nothing beats the perspective you get when you lend a hand to someone less fortunate.

#10    Remember, You Can Get Everything in Life You Want, if You Help Enough Other People Get What They Want.

Thank you for your interest. We’d appreciate any suggestions or comments on this publication. If you have any questions or topics you’d like to have covered in future editions of “Minute With Marge Online”, please contact us.