Real estate investing may seem simple, but it is also a risky business. You spend a lot of money, and you may lose a lot of it too. Here are basic tips for beginner real estate investors on how to maximize your profit and to avoid losing your investments.
10 Tips to Know Before Starting Out
1.) Secure funding to finance your investment. Before you look for properties to sell or improve, it is important to have funds in your pocket. Otherwise, you may miss an important investment opportunity because you are not financially prepared. It is also important to bear in mind that you can only use the money that you are prepared to lose, because you don’t get the expected returns all the time.
2.) Look for properties with low market value. You can search for foreclosures or houses that only require moderate renovations before you lease them or sell them out. In spite of the quick recovery in the real estate market, there are still many foreclosed properties all over the country. It is up for you to look for them.
3.) Start as soon as you can. As King Solomon said in the book of Ecclesiastes, one who waits for rain will never reap a harvest. Today is the best opportunity to start a career that you wanted. People need a house to live in. You just have to give them the house they need at a price they can afford. And, you must look for the right house, make the right improvements and sell it to the right people.
4.) Do your research early. Don’t wait until the potential client knocks on your door and asks you to sell them a house. Make it a habit to look for low-priced homes that you can improve so that when the demand comes, you have the right house to sell.
5.) Make smart decisions. Don’t jump into the waters right away. You have to test it first, and know if you can swim it. In the same way, you have to be very smart when buying a house. If you buy the house and improve it, will someone buy it? Will it get you the profit you expect? Or, is it simply a waste of money?
6.) Set your goals. Create a concrete investment plan before you engage in real estate. Consider the following:
- how much you will invest
- extent of renovation
- time you need to make the house ready for sale or lease
7.) Choose your mentors. Don’t follow everyone’s advice. Choose whom you will listen to. There are people who can help you make realistic goals and practical strategies that really work.
8.) Use foreclosure listing services. If you don’t have enough time to search for every focalized home in the country, or call lenders, agents and courthouses, then it’s time to use foreclosure listing services to speed up the process. These services can help you find the most recent foreclosures in a short period of time.
9.) Be a problem solver. You are going to sell or lease a house because someone needs it. Be a solution to somebody else’s problem and you will get the profit you need. Try to get into the personal details and preferences of your client and tailor your offer according to their needs. If your client has children who go to school, sell or lease them a house which is safe and fit for kids. It must also be located near the schools.
10.) Be patient. If you want great returns, you have to spend more time on your investment. Don’t jump into the first opportunity to buy a house or to sell it. Look for houses that will give you the income you want. You must also be patient in selling it to potential buyers. Who knows? The last person who visits your house may be the one who can give you the best price.
5 Mistakes to Avoid When Starting Out in Real Estate
1.) Don’t pretend that you will never go to court. When you are in real estate, it is possible to have legal problems. Be prepared for it at all times.
2.) Don’t treat inspections as additional expenses. They are investments. It is important to have an inspection to uncover problems that you missed.
3.) Don’t advance money to your contractors who say they need it to buy more construction materials. Confirm what they need it for so that you don’t run the risk of them using it for another project.
4.) Don’t talk too much when you negotiate a deal. Listen to your client and business partners. Doing so will allow you to consider your options and strategies.
5.) When you are trying to convince a buyer, don’t talk as a seller. Put yourself in your buyer’s shoes. In this way, you will be able to understand their needs and they can relate to you.
Consult your trusted real estate mentor for more information on real estate investment basics.
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