This post covers six dynamite real estate investing tips intended to help anyone just getting started in real estate investing to successfully launch and hit the ground running with real estate investment property.
1. Develop the Correct Attitude
To stand a chance of succeeding at real estate investing, foremost, you must understand that real estate investment is a business, and you will become the CEO of that business.
As your first order of business, then, it's crucial to develop the correct mind-set about investment real estate and be able to make this distinction between buying a home and investing in real estate:
"You buy a home to live and raise a family; you buy real estate investment property to pay for the home, live comfortably, and raise your family in style"
As one very successful real estate investor said, "Only women are beautiful, what are the numbers?" In other words, you will not succeed at real estate investing until you acknowledge that it's not curb appeal, amenities, floor plan, or neighborhood that should turn you on or off to the investment opportunity; what counts most is the property's financial performance.
2. Develop Meaningful Objectives
A meaningful set of (realistic) objectives that frames your investment strategy is one of the most important elements of successful investing. Yes, we may all desire to make millions of dollars from real estate investing, but fantasy is not the same as expressing specific goals and a method on how to achieve it.
Here are some suggestions:
How much cash are you willing to invest comfortably? What rate of return are you hoping to generate? Are you expecting instant cash flow, looking to make your money when the property is resold, or merely looking to achieve tax shelter benefits? How long are you planning to hold the property before you dispose of it? What amount of your own effort can you afford to contribute to the day-to-day operation of running the property? What net worth are you hoping investing will help you to achieve, and by when would you like to achieve it? What type of income property do you feel most comfortable owning, residential or commercial, or does it matter?
3. Develop Market Research
If you're new to real estate investing, you undoubtedly know little about investment real estate in your local market. So, do market research to learn as much as you can about income property values, rents, and occupancy rates in your area. The better prepared you are, the more likely you are to recognize a good (or bad) deal when you see it.
Here are some good resources:
(a) The local newspaper, (b) A local appraiser, (c) The county tax assessor, (d) A qualified local real estate professional, (e) A local property management company
4. Run the Numbers
I can't stress enough the importance of running the property's cash flow, rates of return, and profitability numbers. Remember, real estate investing is a business, and as the CEO of your investment enterprise, you've got to know what you're buying, especially if you're trying to determine which of several investment opportunities would be the most profitable.
You have two options:
(a) Invest in real estate investment software. This will enable you to discover for yourself the investment property's cash flow and rates of return, and create your own analysis reports. Moreover, you gain a broader understanding of real estate investing nuances by running the numbers yourself, and in turn are less likely to be deceived by someone with little concern about how you spend your money.
(b) At the very least, work with a real estate professional that has invested in real estate investment software and can calculate, present, and discuss the property's financial data with you.
5. Develop a Relationship with a Qualified Real Estate Professional
Working with a qualified real estate professional is a great way for beginners to get started with rental property investing because an astute professional can acquaint you with local market conditions, recommend a property that meets your investing objectives, and discuss strengths and weaknesses about specific property performance.
Here's a warning, however: Work with a real estate person who understands investment real estate.
Be sure the agent has a firm grip on key financial measures inherent to real estate investing, knows how to measure profitability and rate of return, has the ability to present the data you need to make wise investment decisions, and, most importantly, shows a genuine interest in how you spend your money. The last thing you want to do is to get involved with a real estate agent that would throw you under the bus just to make a commission.
Here's a good way to interview for an agent. Ask about cap rate, cash-on-cash return, and then request an APOD or Proforma Income Statement. If their response (even to these basics) is to stand there looking at you like a deer into the headlights of a car, find another agent.
6. Start Investing
Hopefully, this has given you some insight into real estate investing, highlighted a few things to make you a more prudent real estate investor, and perhaps alerted you to a couple of things that should be avoided.
Okay, that does it for us, now it's time for you to get started. Here's to your success.
Monday, September 1, 2008
Getting Exposure on Your Real Estate
In today’s real estate market it may seem almost impossible to buy a property, and let alone, sell a property. This is why there are so many different avenues a buyer and seller can take in order to purchase a property, starting from low interest loans, and to a sell a property, ranging from acquiring a real estate agent to for sale by owner. The real argument these days is which avenue will bring the most chance of selling a property. The economy is a very large factor in this process but when selling a property it boils down to one simple thing, exposure.
Many believe that in order to truly get exposure of a property that they will either have to spend endless hours on their computer finding dozens of free websites on the internet that they can submit to in order to market their property, or there is going to be a lot of money involved when selecting one large website to get exposure on. ListingVUE.com doesn’t charge to market on their website and for a very small charge this website markets a property on 10 to 15 additional, high traffic, websites for you. So exposure argument is slowly being overtaken because it is achieved on this website and you don’t have to pay an arm and a leg.
Many people stick to the traditional real estate agent because they know that the results will be achieved, the only downside is, a large percentage will have to be paid to the buyers agent and the sellers agent. What many people don’t realize is they will get hit with double the commissions, and all of this really makes the selling experience rather unpleasant. All of this wouldn’t be a problem if house sales weren’t as low as they were as a result of the soft economy. These days making any money at all on the sale of a property is becoming rare, which is why a lot of people are going the For Sale By Owner route.
Now, whether someone decides to go with a real estate agent or chooses the FSBO route, the main argument that remains is getting exposure. The more times a property is seen on the internet by different sets of eyes the more chances there are of that property, not only getting sold, but getting a better price for that property. This brings us back to marketing properties on numerous websites, a service that www.ListingVUE.com provides at no charge, to market on 3 additional websites, and at a small charge to market on 10 or 15 additional websites.
At the end of the day, with the real estate market being the way it is, a rather unstable one at that, it all boils down to getting exposure on a property. There are many routes one can choose to market their real estate, but what matters most is which one will be the most cost effective and which one will bring the most results.
Many believe that in order to truly get exposure of a property that they will either have to spend endless hours on their computer finding dozens of free websites on the internet that they can submit to in order to market their property, or there is going to be a lot of money involved when selecting one large website to get exposure on. ListingVUE.com doesn’t charge to market on their website and for a very small charge this website markets a property on 10 to 15 additional, high traffic, websites for you. So exposure argument is slowly being overtaken because it is achieved on this website and you don’t have to pay an arm and a leg.
Many people stick to the traditional real estate agent because they know that the results will be achieved, the only downside is, a large percentage will have to be paid to the buyers agent and the sellers agent. What many people don’t realize is they will get hit with double the commissions, and all of this really makes the selling experience rather unpleasant. All of this wouldn’t be a problem if house sales weren’t as low as they were as a result of the soft economy. These days making any money at all on the sale of a property is becoming rare, which is why a lot of people are going the For Sale By Owner route.
Now, whether someone decides to go with a real estate agent or chooses the FSBO route, the main argument that remains is getting exposure. The more times a property is seen on the internet by different sets of eyes the more chances there are of that property, not only getting sold, but getting a better price for that property. This brings us back to marketing properties on numerous websites, a service that www.ListingVUE.com provides at no charge, to market on 3 additional websites, and at a small charge to market on 10 or 15 additional websites.
At the end of the day, with the real estate market being the way it is, a rather unstable one at that, it all boils down to getting exposure on a property. There are many routes one can choose to market their real estate, but what matters most is which one will be the most cost effective and which one will bring the most results.
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