If you’re new to real estate investing, you’re probably excited to get involved in a business with so much profit potential. Controlling real estate has long been a tool for generating wealth throughout the world. However, it also has ups and downs that all investors should be prepared to deal with. Here’s some valuable advice for people new to real estate investing.
1.) Have a Plan
As with any other project or business, you can’t expect to get far without a plan. It doesn’t have to be anything fancy, but your short and long-term business goals should be written down to help keep you on track. Review them weekly and look them over whenever you’re facing a major decision. It’s easy to lose sight of your original vision when problems arise and you’re forced to make changes. Approach real estate investing like a business and don’t allow minor setbacks to throw you off course.
2.) Find a Niche
There are many ways to make money with real estate and the more you learn about various types of properties and techniques, the more likely it is that you’ll want to try them all. Unfortunately, this isn’t the best way to get started. It’s better to have a full understanding of one market before moving on to another.
For example, the most common property type for new investors is single-family homes. They’re easier to buy, sell, rent and finance than large apartment buildings. However, it’s also possible to inherit an apartment building from a relative, making it your first property. Regardless of which one you start with, know that there are differences between how the two are constructed, appraised and financed. Furthermore, they require different approaches with regard to property management. It’s better to stick with whatever you start with until you have a firmer grasp of it.
3.) Read and Learn
It’s highly likely that your interest in real estate investing was inspired by either a book or a television program. There’s no shortage of infomercials promoting different systems. They often coincide with free seminars coming to your area. The seminars provide just enough information to prompt you to purchase more expensive courses and programs. There are lots of useful techniques in these courses, but you can find much of the same information online or at the local bookstore. I strongly suggest taking advantage of those resources first, so you can learn more for less and save your money to buy properties.
4.) Ask for Help
Remember to always ask for help when you need it. You don’t have to know everything to become a successful investor, but it pays to know others who probably do have the answers you seek. There are lots of groups and communities you can join where you can meet experienced investors who don’t mind sharing what they know. Look for them on the Internet and social media. One day you’ll be in a position to help someone else. Think of it as a way to give back.
5.) Budget for Property Management
Just because you don’t think you’ll need a property manager doesn’t mean you won’t at some point. This can really hurt your numbers if you didn’t include it in the budget from the start. Remember that circumstances can change and although you might not have a problem managing your own properties now, you may need help in the future and the money to pay for it will have to come from the rents. For more information on property management services, click to Jayne & Moss.
6.) Do the Math
Never buy until you’ve done the math several times. Ask the previous owner for a list of all expenses, including taxes. Find out how much rent is coming in from each unit and ask for a walk-through of each one. Don’t wait until it’s yours to find out about structural problems that even the tenants might be oblivious to. Get full estimates on any work that’s needed and be conservative with the numbers. If it’s going to cost too much, you’re looking at a bad investment.
Keep in mind that the only way to become a successful real estate investor is to get out there and do it. Don’t be afraid to fail. You’ll learn valuable lessons from each mistake that can save you from making bigger ones down the road. In time, you’ll find that the journey can be every bit as rewarding as the destination.
Erin Sanderson earns a living in property sales and always enjoys sharing her investment tips and ideas online. She writes for a variety of consumer finance and lifestyle websites.