Real Estate Investing: Creating long term cash growth.
I Deeply enjoy real estate investing. Their are so many engaging elements to a completed deal! The purchase, rental, growth, and value are all aspects I find fascinating! When I get approached about real estate investing, I have several key pieces of advice that ring true for anyone looking to start investing! Before I launch into my dissertation, I feel the need to be clear: DO YOUR RESEARCH. Real estate investing can be incredibly profitable, and you need to know what your getting in to! Finding a trusted local agent can save you a ton of heartaches down the road. Working with an investment Realtor, you can be assured your property will be profitable for years to come. I own many investment properties and follow our regional market closely to ensure my rentals generate the most profit possible. An investment Realtor, combined with your research will keep you out of trouble and ensure success in your Real estate investing endeavors! A few tips (other then the above golden rule) I start everyone out with are as follows:
- Be Prepared. Real estate investing is not for the faint of heart. You will be trusting your investment to a few different parties (renters, property managers, etc.) and you need to be prepared for the bumps along the road. We will keep the bumps to a minimum as you watch your investment value grow. Can’t state this enough!
- Find an Investment Realtor. You can test out the markets on your own, but finding a real estate Agent focused on investing is a great step! Most real estate investors (hopefully yourself included) don’t purchase one property. You will want to spread your risk over several different properties and a Realtor will help your investment plan. Make sure you hire an investment realtor. There are many different focus points in real estate, and you need to hire a specialist. There is a lot of “lingo” in the business and knowing how to calculate value curves (how much money you will make over the investments lifetime) is invaluable! Your Realtor will become an asset to your investing future, so choose wisely!
- Consider Reading some Investment Literature. Real estate investing offers security unparalleled in other investment fields, but it still carries risk. Knowing how investing “works” can be a great asset when starting out! There are tons of free resource guides on the internet, and many great books. Investing is a field where sitting back with a book can help grasp difficult concepts and there are several I would recommend. Rental Property Investing Made Simple is a great place to start, and Real Estate In Your Twenties helps develop some of the deeper concepts of wealth accumulation. Reading a book will also give you time to relax and deeply consider your investment decisions. Doing your research helps prepare you for the investing future!
- Connect with Other Investors. Investing is often a topic for discussion around the coffee table. Everyone loves to talk about the ins and outs of the “latest and greatest investing idea.” Tons of real estate investors love sharing their knowledge and experiences as investors. Its a great idea to learn from the success of others. It also gives you the chance to avoid making big mistakes! Other investors will provide great advice as you embark down your own investing path. A little online research or Facebook are great places to find an investing group! Always ask for permission to show up at an event, they will appreciate it and love to have you!
- Trust the Math. Numbers in real estate are very clear and simple. When we lay out your value plan, there will be minimal amounts of deviation. Anyone can manage the pluses and minuses required for basic real estate “figuring!” When we create our investment plan, trust the numbers! We will account for incidental repairs, taxes, renter “accidents,” and the like. The numbers will tell you exactly how much to target for your investment goals.
- Draft up a Plan. When you work with me, I will create a draft that shows you the profit/loss report for your potential investment property. In conjunction with your Comparative Market Analysis and rental history, we can create a close estimate of mortgage to value. With the difference in numbers you can create a plan with your spouse or family to insure the investment works! Take a whiteboard, pro’s and con’s out the options, and be sure that you are making the best decision for your family. Planning is always good!
- The Big Secret: You can Start Small. A secret in the industry is that you can start out small! You can buy a 1 bedroom, 1 bath condo and have the numbers work! After we “run the numbers” on our end, there is usually an affordable great place to start investing. Most people can’t jump into a 25 unit complex! We all start with one house, and build from there. If you have some spare income that you want to put to work, don’t think its to small! You will be surprised how little you need to get started!
- Consider a Property Manager. Most of the stress from real estate investment is tenant management. Finding, serving, and removing tenants is most of the work for your real estate investment! When I prepare an estimate for you, it will include the cost of property management. We can typically include the fees in the cost estimate and still have the property producing income! If you want to self manage, make sure you have the time/desire to handle your tenants. You will want to make sure the additional income is worth it! As the owner of Windermere Property Management, I have to recommend hiring us, its cheaper then you think!
- Treat your Investment as a Business. Like with anything, you need to be serious about your investment. Keeping track of the costs, revenues, and expenses is important for the investment property’s success. Ensure you have the systems in place to properly manage your real estate investment. You will be happy you did in the long term!
- Prepare for the Long Term. Real estate investing is not a get rich quick scheme! Together we will be able to create a long term wealth plan that requires dedication and hard work. Real estate investing is a secure long term investment and you want to plan accordingly.
That is a great start to real estate investing! If you are interested in learning more, please drop me an email! I would love to answer any questions you have, and I love real estate investing!