Tips for new real estate investors

Posted by Mords1944 on September 1st, 2019

As a realtor, I meet many people at dinner parties who, when the problem arises, mention that they are real estate investors. The conversation goes on for a while, and I typically classify that person as a real or real estate investor. Real investors generally have a number of transactions under their belt, they realize that they are still learning and open to all the knowledge they can provide, and I am always open to their knowledge. Real estate "investor" has usually never made the leap and bought a property solely for investment, is unaware of the difficulties of investing in real estate and continues to overwhelm me with his "expert knowledge." What they should do is listen.

1) It's not as easy as it looks on TV

"Flip This House" is a great TV show, as realistic for the average investor as "Sponge Bob Square Pants." The problem with television investment programs in television is that they minimize the work involved and highlight the money that investors earn. "Flip This House" shows you an orderly profit of $ 150,000 wrapped up in a 30-minute episode. What they do not show you is the work done to find the property below market value, build the necessary industry conditions to tackle a significant project, the skills needed to manage this project and market knowledge to accurately predict the final selling price of the properties. The bottom line is: investing is difficult. However, it can be very lucrative.

2) Go before driving.

Many "investors" decide one day that it is time for them to make millions in the market and start looking for the perfect investment, or a perfect rental home, at a high price. Want to walk out the door today to run a marathon without training? Absolutely not! Investment is very similar. There are MANY mistakes you can make and a big mistake can increase an investment. The best way to minimize your risk is to start small and reduce your variable costs. If you are buying a property that generates income, buy one that is already rented, preferably from long-term tenants. That way, you can investigate a tenant's credit rating BEFORE jumping and buying the property. You will also know exactly how much cash flow your new property will generate. If you buy a rehabilitation project, it is often maintenance costs that can overwhelm a new investor. If possible, buy your rehabilitation project as your home so you can take your time without paying the consequences. If this is not possible, you must accumulate MANY transportation costs, approx. 6 months. When you have some investments below their accumulated value, you can accurately predict your variable costs, keep them lower and make more profits.

3) For long-term prosperity: it's a marathon, not a sprint.

Many new "investors" come to me with the business model "to buy old houses and fix them." This seems to be the easiest way to make money, but it's not. Demolishing houses requires skill, foresight, market knowledge and market resources. Tearing down houses is hard work and makes quick profits. Unless you take advantage of the 1031 stock exchange, the collapse of houses generates short-term capital gains. The real path to long-term wealth lies in the properties that produce income. Buy an income property in a market that you think you would appreciate, hire a property management company and forget about it. Let the check arrive by Mail once a month: These "mailbox money" becomes your best friend. After renting the property for 3, 5, even 7 years, check its value and you will be pleasantly surprised! The key here is that he did not have to dedicate much work: he simply found a large property in an appreciative market and let a passive investment make big profits.

4) Use a real estate agent you trust and do not follow your commission.

Author Robert Kyosaki says, "Companies have boards. You also need one." Good realtors earn a substantial income and are worth every penny. The keyword here is "Good" because the real estate industry is like any other: there are many bad agents. Don't hire any agent who crosses your path; Be sure to interview many realtors and find one that works with investors and investing personally. When you find your "Real Estate Advisor", do not seek your commission.