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Top 7 Tips For New Real Estate Investors
b>As a real estate broker, television program – that’s about
I meet plenty of people at as realistic for the average
dinner parties who, when investor as “Sponge Bob Square
the subject comes up, mention Pants.” The problem with TV real
that they are real estate estate investment programs is
investors. The conversation that they downplay the work
will go on for a bit, and I involved, and accentuate the
typically classify the person in money made by the investors.
question as either a true “Flip This House” will show you a
investor, or a real estate tidy $150,000 profit wrapped up
“investor.” True investors in a 30 minute episode. What
typically have a number of they’re not showing you is the
transactions under their belt, work done to find the property
realize that they’re still under market value, build the
learning, and are open to any industry relationships necessary
insight I can provide – and I am to tackle a sizeable project, the
always open to their insight. skills necessary to manage that
The real estate “investor” project, and the market knowledge
typically has never actually to accurately predict that
taken the leap and bought a properties final sales price.
property purely for investment, Bottom line is: investing is
doesn’t realize the difficulties hard. It can be, however, very
of real estate investment, and lucrative.
proceeds to overwhelm me with
their “expert knowledge.” What 2) Walk before you run.
they should do, is listen. So many “investors” decide one
day that it’s time for them to
1) It’s not as easy as it make millions in the market, and
looks on TV begin looking for that perfect
“Flip This House” is a fantastic flip, or perfect rental property
– with a hefty price tag. Would around 6 months worth. Once you
you walk out of your door today have a few investments under your
to run a marathon without built, you’ll be able to
training? Absolutely not! accurately predict your variable
Investing is very similar. There costs, keep them lower, and make
are MANY mistakes you can make, more profit.
and one big mistake can turn an
investment sour. The best way to 3) For Long Term Wealth –
minimize your risk is start out It’s a Marathon, Not a
small, and reduce your variable Sprint.
costs. If you’re buying an Many new “investors” come to me
income producing property, with the business model of
purchase one that’s already “buying old houses and fixing
rented out – preferably to long them up.” This seems to be the
term tenants. That way, you can easiest way to make money, but
do research on a tenant’s credit it’s not. Flipping houses takes
worthiness BEFORE you’ve taken skill, foresight, market
the leap and bought the property. knowledge, and market resources.
You’ll also know exactly how Furthermore, flipping houses is
much cash flow your new property hard work, and results in quick
will generate. If you’re buying profits. Unless you take
a rehabilitation project, it’s advantage of 1031 exchange,
often the carrying costs that can flipping houses results in short
overwhelm a new investor. If, at term capital gains. The true
all possible, buy your rehab path to long-term wealth lies in
project as your home – that way income producing properties.
you can take your time without Purchase an income property in a
paying the consequences. If market you think will appreciate,
that’s not possible, then build hire a property management
in PLENTY of carrying costs – company, and forget about it.
Let the check come in the mail investors, and personally
once a month – this “mailbox invests. When you find your
money” will turn into your best “Realtor Advisor” don’t go after
friend. After you’ve let the their commission. Any good
property rent for 3, 5, even 7 Realtor will have plenty of
years, check its value and you clients and you want to make sure
should be pleasantly surprised! that you’re not playing second
The key here is that you didn’t fiddle to them.
have to put in very much work –
you merely found a great property 5) Put Together a Business
in an appreciating market, and Plan, And Stick To It
let a passive investment earn big The only time you can’t POSSIBLY
returns. lose money is before you invest
it. That’s why putting together
4) Use a Realtor You Trust – a solid business plan is the
And Don’t Go After Their smartest action step you can
Commission. take. Decide the type of
Author Robert Kyosaki says, property you plan to buy, what it
“Corporations have boards of will cost to purchase it, what it
directors. You should have one, will cost you to hold the
too.” Good Realtors earn a property, and how much income the
sizeable income – and they’re process will produce for you.
worth every penny. The keyword Most investors have a “formula”
here is “Good” because the real for buying properties – develop,
estate industry is like any other borrow, or steal one. Write
– there are plenty of bad agents. EVERYTHING down on paper and
Don’t hire any agent that analyze every possible expense.
crosses your path; Make sure and Plan for the worst and anticipate
interview plenty of Realtors and how you will avoid the worst.
find one that works with Once you’ve put together your
business plan and investing business plan and contracted a
“formula” – Stick to it!!! property, you need to look at
Execution is key to successful every negative aspect of the
investing. property. Plan for the worst and
hope for the best! Oftentimes,
6) When You See Something planning for the worst involves
That Looks Good – Take walking away from the
Action! transaction. After you’ve
I’ve worked with many investors invested the time finding the
that have excellent business property and the money to
plans, and great formulae, but contract and inspect the
who refuse to pull the trigger on property, you might feel
something that looks good. There emotionally invested. However,
are MANY ways to back out of a don’t let these feelings get in
contract, and if you hesitate the way of making a smart
when you see a good deal – financial decision. If you look
another investor will already at every possible negative that
have tied the property up in can happen in the transaction and
their contract. In Texas, you you will still make a profit,
typically pay $100 for a 10 day then go for it. You can always
option period. You have 10 days minimize the negative variables.
to terminate the contract for ANY However, if the worst does
reason. In my opinion, not happen, you will still have all
losing a good deal is well worth the clothes on your back. No
tying up MANY questionable deals matter how hard it is, if it
at $100 a pop. looks like you COULD lose money,
walk away.
7) Try And Talk Yourself Out
of the Deal There’s big money in real
After you’ve put together your estate investment, and there’s
the potential for big losses, as the plunge, talk to plenty of
well. Someone giving educated investors with
themselves the title of experience, and follow these
“investor” far from makes them an simple steps.
actual investor. Before you take
About the Author:
Eric Bramlett currently manages his Austin Texas Real Estate Guide, his Austin Real Estate company’s website, & his Austin Texas Homes Guide.
Read more articles by: Eric Bramlett
Article Source: www.iSnare.com |
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