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Real Estate 101: The L.O.A.N. Principle | By: Chris McClatchey

One of the hardest things about getting started in real estate is getting started. There is so much information to absorb. There are so many “experts” ready to teach you their method. There are so many different types of deals and so many ways to structure them. Sometimes there is so much information, it feels as if you are trying to take a drink of water from a fire hose. Don’t worry. It does get easier. It gets easier once you understand one thing. In order to understand what that one thing is, ask yourself this question : “What do you want real estate to do for you?” Start with what you want and that will lead you to the niche that works for you. 

Once you have decided your “goal” for real estate, then it’s time to put a “plan” in place.  That plan is what I call the L.O.A.N. Principle. If you do these four things, you will be successful. Don’t get caught up in all of the distractions. Don’t get caught up in anything that takes your focus off of these four things. If you do, then you will get side tracked. If you keep your focus and do these four things, the sky’s the limit.

L = Leads: But not just any Leads. The leads you generate have to be consistent with the types of deals you want to do. They have to be leads that get you closer to your portfolio objective. In other words, generating the wrong kind of leads is a distraction.  An example of this comes from the type of investing that I do. I am a long-term hold investor. Meaning, I buy properties for their cash flow. I also specialize in creative financing and seller financing. So the leads I want to generate have a set of specific criteria. In other words, I exclude foreclosures, short sales and
REOs. Why? Because, those leads require all cash to purchase and therefore are outside of my portfolio objectives. Remember, only generate eads that help you attain your goals.

O = Offers: Make offers, make offers, make offers. That is what most “experts” will tell you. And while I agree that you have to make offers, I adhere to the principle of only making offers on properties that meet my goals. In other words, I make offers that get me closer to my objectives. I make offers on properties that I want in my portfolio. The offers you make can either get you closer to your goals or they can take you off track. A few times during my investment career I attempted to do deals that were outside of my objective. I lost a lot of money. Make offers, make offers, make offers, but only on deals that make sense for you.

A = Analyze: As a Coach, I believe it is my job to not only teach how to do deals the right way, it is also my job to make sure they don’t get themselves into bad deals. The area where most investors get themselves into trouble is in the analysis stage. Most new investors underestimate expenses and overestimate income. Don’t make this mistake. Make sure you know how to analyze the deal. Just as important is to make sure you are analyzing it according to your portfolio objective. Meaning, does this deal accomplish what you want it to accomplish? Does this deal get you closer to your goals? If so, do the deal. If it feels like you are stretcing the numbers to make it work, stop. Don’t do the deal. Remember this, sometimes the best deals are the ones we don’t do.

N = Negotiate: Negotiation is a technique. There is an art to it. Don’t worry, it isn’t something we are born with. It is a learned technique. It is something we can develop and fine tune. Yes, you can read books to learn some of these techniques, however, I believe the best way to learn negotiation skills is to put them into action. The way we learn what to say in different situations is by making offers and communicating with the sellers and real estate agents. Action is by far the most effective way to learn. Remember, sellers will tell you what is important to them by their counter-offers. They tell you by the items they are changing. So use this information to get the deal you want, while at the same time addressing what is importation to them. 

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