Deadly Mistakes You Can Avoid - Part 2

2. Getting into the rental business before your cash-flow needs are met. Boy, did I ever get tangled up in this one. When I first got started with real estate, I decided to buy all the rental property I could. I figured with a lot of tenants in a lot of houses, the cash would just fall into my lap every month, right? n Wrong. It was the biggest single mistake I made for a very simple reason - I just wasn't ready. Like yours truly, many beginning real estate investors get into the rental business because they think it's some kind of quick path to wealth. But it's not. It's slow and long-term. Soon after I built my "rental empire" back in 1982, I discovered that my daily cash flow needs were not being met. I had a huge amount of capital tied up in equity and a thin stream of income. And I had a family to feed! n Don't get me wrong, I've got nothing against rental property as an investment. I'll probably have them until the day I die. However, if you don't have a cash cushion built up, you'd better get really good at buying properties dirt cheap. But even when you do, you'll discover a million ways to spend down your cash flow. n Busted toilets, leaky roofs, paint, carpet, yada-yada-yada, it all eats great big holes in your income stream. Even if you do have enough ready cash to get into the rental game, you need to know what you're doing. For instance, do you know about "professional tenants" who make a living "getting over" on landlords? These creeps know the landlord tenant code and eviction laws inside out and they can make your life a living hell before you finally get them out of your house. If you want to become a professional landlord, you'd better understand how the game is played and get the education necessary to deal with all the potential problems. n Bottom line, my advice is this: Make some fast cash by quick-tu
ing a few houses before you get yourself mired down with rentals. Get into some low risk, high-retu
deals before you start piling up equity and dealing with tenants. Then, when you do become a "Super Landlord," your chances of retiring on your rental income will be much better.

3. Listening to poor advice. This is something you probably already know. As you go through life, there will never be a shortage of people who want to give you advice. Your parents, your spouse, friends, in-laws, kids, they all have opinions about what you're doing and what they think you should be doing. Very often, the value of their advice is worth exactly what you paid for it . . . nothing! n I'm not saying these do-gooders aren't honest, intelligent and well-intentioned. However, you must ask yourself, are these folks qualified to give you advice? Have they had any experience in what you're doing? It seems to be human nature for people to offer advice on subjects they know nothing about. What baffles me is how often the recipients of this so-called wisdom will listen to it and even act upon it without ever questioning the credentials of those giving it. n Through many painful experiences, I've learned that when you take advice from people who don't know any more about the subject matter than you do, the quality of that advice is, at best, suspect. Plus, very often, listening to unqualified advice can have a negative impact on your focus.

So, who should you be listening to? I believe in taking advice only from people who are: n 1. Qualified experts in their field and n 2. Making a whole lot more money tha
I am.

And those people are out there. Don't be afraid to seek help - just be careful where you go to get it - even if you have to pay for it. I think you'll find that if you pay for the opinion of a bona fide expert, the advice you receive will be more than worth the price. nn- Contintued in Part 3