What makes a successful real estate investor different from those who fail, give up, or never try? The first thing that comes to mind – fear. Fear to fail. Fear of losing your hard earned money, even if it’s as tiny as a check for depositing some serious money. Fear is a natural feeling, but all hope is not lost. There are steps you can take to overcome this fear and increase your chances of success as a newbie or veteran in real estate investing.
One of the most common reasons to invest in real estate is to earn money passive income or achieve Financial freedom. Investing in real estate can be very profitable, whether it’s your full-time career or outside employment alongside your nine-to-five job. It is crucial to understand the risks involved and to be 100% committed to the idea.
Here are a few quick tips to increase your real estate investment chances:
- Understand your market
- Choose your real estate investment niche
- Build your team
- Connect, observe and grow
- Explore real estate crowdfunding
- Estimate your costs in advance
- The buy and hold method
- Do you have one (or more) exit strategy
- Never stop learning
Understand your market
To start with, it’s imperative that you take the time to learn about your market or niche. Buying a property is a breeze, but what you do with that property determines your success. When looking to renovate, understand what a buyer loves about a property and evaluate the price based on the median price in your neighborhood.
Being well informed about current market trends such as the median rent, interest rate, unemployment and crime rate will keep you informed and better plan for the future. Eventually, you will be able to anticipate the market and stay one step ahead with your investment.
Choose your real estate investment niche
Instead of doing eight things badly, choose one thing and focus on doing it well. It takes investors a while to gain a thorough understanding of their niche in order to be successful. Are you doing your homework to understand which type of investment is right for you? Is it a rental property, house flipping, real estate crowdfunding, real estate limited partnership, owner-occupied home or something else?
While investing in your neighborhood or city can be beneficial, don’t limit your investment potential by limiting yourself to a small geographic area. It is a good idea to diversify your investments and reduce your chances of losing money based on market volatility.
Build your team
Real estate investments require expertise, planning and focus. The best and easiest way to be successful in real estate investing is to seek advice from an investment professional who will get you started. It can be worth your time and money. Similarly, navigating property taxes can be painfully boring and confusing for many; Consider investing in a certified accountant to do your bookkeeping.
Connect, observe and grow
There are thousands of real estate investor groups across the country. Join some who pique your interest and provide informative content. Another way to find your local networking group is to put your state and the Real Estate Investor’s Association (REIA) into Google. Don’t underestimate the power of networks. Talk to a few investors, or better yet, listen! A professional network can provide important support to both new and experienced investors.
Investing in real estate relies heavily on experimental learning. You learn from your mistakes, but it is smarter to learn from the mistakes of other people who have already overcome the challenges you face. Take the opportunity to network; You could find your next investment partner or maybe a mentor to turn to for a new perspective.
Explore real estate crowdfunding
If you’re interested in real estate investing but managing a rental property and dealing with tenants aren’t your thing, investing in a Private Real Estate Deal or Real Estate Investment Trust (REIT) through a crowdfunding platform could be a good alternative for you. This investment opportunity has the potential to generate a steady stream of passive income, but the increase in value can be relatively slow.
However, as with any other investment, you should make sure that you are doing your due diligence.
Estimate your costs in advance
If you are a newbie it is important that you know your costs beforehand. In addition to the property price and brokerage fees, you will need to pay for closing costs, insurance, utility bills, immediate repairs if any, etc. It can be difficult to budget for property repairs. To fix important issues, you need to get approval and get things done on the code. It’s not something to work on on the weekend. If you don’t get it right, you can lose money on a deal. Before you consider investing in real estate, build a Rainy Day fund.
The buy and hold method
An excellent way to build wealth with real estate is to hold your wealth. The flipping scene might not suit you, but you can certainly rent a small business and start your own working to get that mortgage off. By now, most of us have heard how crazy the housing market is right now. The buy-and-hold strategy could be your best friend amid this nationwide investment boom. Buyers get into bidding wars and lose multiple bids before getting a slightly overpriced property.
A buy-and-hold investment strategy can add value and equity to your portfolio and go well beyond a one-time payout. Depending on the market trend, this strategy can defeat inflation. You may also see some tax benefits from your buy and hold investments and in some cases be eligible for a reverse mortgage. Some things to consider when buying a property – real estate document validation, valuation and changes of ownership, lien, legal liability, etc.
Do you have one (or more) exit strategy
Always have a backup plan in case the market fills up. For example, if you’re a pinball machine but the market isn’t that hot, then plan to rent it out every month for solid cash flow to keep building wealth. And when the opportunity presents itself, flip it for a killer return on investment. If you’re just starting out and don’t have enough capital, mitigate your risk by evaluating properties with enough potential to work as a rental property with no upfront upgrade costs. Real estate market trends are constantly changing, so you have an exit strategy in case things go sideways.
Contrary to stock market investing warnings, property investors are advertised how easy it is to make money from real estate. However, prudent real estate investors understand the potential risks and legal implications involved, and optimize their business plan to minimize those risks.
Never stop learning
Henry Ford once said, “Anyone who stops learning is old, whether they’re twenty or eighty.” No matter what the television commercials say, you don’t have to spend hundreds or thousands of dollars on coaching and seminars. There is a lot of free or inexpensive teaching material available. Find sources you like, like videos, podcasts, books, and learn something new every day. Find out about new real estate laws, regulations, and trends that could affect your business.
Summary
Investing in real estate is a journey. Educate yourself with the best investment knowledge available and connect with your fellow investors. This step won’t remove your concern, but it will certainly help you feel more confident and prepared. Because how do you know if you will ever be successful if you don’t even take the first step? Ultimately, all of this investment advice is just advice until you act on it. Take that leap of faith and start anywhere, anywhere. Good luck!!
