To most beginners, the world of real estate investing is enticing and at the same time intimidating. Many investors who consider this kind of business today put little effort in research but they are quick to conclude that it is out of reach and give up altogether. The few that take the time to learn the inner workings of the property industry ultimately discover the reality that with work and determination, anyone can break into the house and property business and succeed. Here is a list of top tips to know to succeed in this business.
1. Start learning everything about selling houses and never stop
You will find a lot of information on selling everything that can be owned in books, journals, magazines and blog articles. Gathering as much information as possible is the best thing you can do to begin your journey to being a successful investor in the property industry. There are also many videos on the subject and professional podcasts on the internet that can provide you with valuable insights.
Of course, you cannot learn everything in a sitting or two. The idea is to have a grasp of what the industry is all about to get the confidence to start. You could even find motivation from successful investors who started from scratch.
2. Discover the many facets of putting your money in housing
Contrary to what most people assume, the market is not one big trading umbrella where property is exchanged for money. When you begin reading posts and books about buying and selling houses, you will discover that the market is actually made up of various completely independent forms of businesses. Once you resolve to invest, you will still need to learn as much as you can about all the categories of the market and make your pick. The industry can be categorized into commercial, residential, industrial, trusts, and mixed investments types. When you grasp the workings of the market, it will be easier for you to figure out which one or two you can profitably invest in.
3. Connect with local investors and learn the lingo
If you are serious about the estate investment market, then you must find the time and put a lot of effort in connecting with and learning from local investors. No one knows the inner workings of the industry than your local realtor. You can start as simple as showing up in open house events, attending seminars or hanging out where known investors go, and you will gradually pick up their attitude and jargon. It is a good thing that successful investors are often ready to show off their accomplishments; you may need to show a little bit of interest to get valuable tips that will apply to your specific situation and the market you have your eye on.
4. Write down your plan
In the same way, you cannot embark on a cross-country trip without a map; you should write down a plan for your business. A solid plan should demonstrate how to get from where you are now to where you want to be. It should detail the principles that will be the foundation of the business, how much you want to invest over a specific period, and how the investment will make money. There are four main investment options in the housing market that you can target: property value appreciation, cash flow income, real estate service charges, and ancillary investment income.
5. Start small and grow
Regardless of how much money you have set aside to invest, you should not dive in the deep end of the market by buying a 30 unit apartment complex. Many first-time investors fail because they are over-impressed by big deals and the little knowledge they have gathered while considering the investment deludes them into making a wrong move. You can partner with someone who has grasped the workings of your local market on a 50/50 small partnership flip and invest 10% of what you plan to invest in the long run. If you want you can go big, but this could be risky. Treat the business as you would any other venture and invest cautiously at the beginning. If the investment is right, it will grow naturally.
6. Expect and be ready for problems
Murphy’s Law states that what can go wrong will go wrong. One important defining trait of a good entrepreneur is the ability to expect and prepare for any hurdles along the way. Fluctuating and high-interest rates, taxes, insurance costs, regulatory fees, and natural disasters are just a few of the problems that your business plan should cover.
Investigate the human elements of business including realtors, mortgage brokers, and banks to understand what kind of problems you should be ready for should they arise.
7. Do not lose sight of the prize
Cheesy as it may sound, one of the most important tips that first-time buyers who intend to sell or rent must always bear in mind is their objective for investment. The market rarely ever makes instant millionaires; keep your expectations in check to avoid tumbling and eventually losing money. For some investors, the returns the investment brings is not the primary reason they enter the market. Some do it for the thrill, others to finance other projects, while others want to build an empire that will survive their mortality. Whatever your reason for investing, be sure to stick to it to fruition.
Anyone can jump into real estate investing, but not everyone benefits from it. One takeaway from this post, however, is that making real money flipping property is not an illusion. The best thing is that you do not need to have any professional training or experience to master the art of investment in properties. The above tips should help you get you started in the venture and hopefully set you up for success.