The Best Tips for Investing in Real Estate
If you are just getting started with real estate investing, chances are you could use some help and guidance. Real estate investing sometimes seems complicated and confusing, with so many financing options, property factors, and the potential for so many things to go wrong the would be investor can literally be scared off before they start. But if you can acquire the right knowledge and start your investing off on the right foot your chances for success improve greatly. This article will help explain some of the ins and outs of buying properties as investments and the positives and negatives of investing in real estate.
Once you have your investment team in place and have been pre-qualified for financing it is time to start looking for properties. This is where patience and persistence pay off and is the crux of your ability to be successful as a real estate investor. After determining the market value of potential properties with the help of your real estate professional you have to make offers that match your investing goals. Your success depends on finding properties that you can acquire at a below retail cost even after adding in the expense to bring the property up to a marketable condition.
This means that you must be willing to look at and make offers on many properties to find the few that meet your investment objectives. If you would like more information on how to be successful at investing in real estate, give us a call at 415-617-5448.
Real Estate Investing can be a very lucrative business. However, the proper steps, a good amount of patience and the ability to properly analyze each and every home are key ingredients to insuring your success when investing in real estate. The ability to calculate budgets and accurately estimate the costs to repair homes are essential abilities that one must possess to make sure that investment properties will produce a good enough reward to make the risk worth it. Therefore, either being a home improvement contractor or having a good home improvement contractor to work with can be very helpful when preparing to make a bid on an investment property.
Mortgage Broker - Of course you will also need a mortgage broker to help you finance the properties you find. A good mortgage broker knows the best sources of funds for both short and long term financing. Another important facet that a mortgage broker can bring to your team is making sure that your properties can be financed when you are ready to sell. Many novice investors have been surprised to learn that prospective buyers of a property they recently acquired are unable to obtain financing due to poor planning on the part of the investor. A mortgage broker can alert you to these types of pitfalls.
To begin with you need to decide what your objectives are. Do you want to get rich quick? Build a retirement portfolio? Develop a steady stream of unearned income? Depending on your objectives you can decide whether real estate investing can help you meet your financial goals, and which strategies are most likely to lead to successful outcomes.
If you watch the late night TV infomercials you already know that anyone can make big money investing in real estate in their spare time, with no money, no credit, no experience, and with little to no risk. If you believe this, I have some swamp land in Florida in which you might be interested. Real estate investing rarely leads to getting rich quickly, regardless of what you may see on those fix and flip TV shows. You know the ones, where you think 'If that idiot can make a hundred grand in six weeks, why can't I?' Real estate investing is really more of a get rich slowly proposition and requires hard work and perseverance.
CPA or Tax Professional - The tax consequences of buying, selling, and investing in real estate require the services of a tax professional to avoid all of the profits of your investments going to Uncle Sam. Your tax professional can help with decisions on when to sell, how to structure your purchases, keeping capital gains taxes to a minimum, when to use 1031 exchanges, and other ways to keep you profitable by paying less tax.
Various Trades - Do you know a good plumber, handyman, electrician, HVAC repairman, general contractor, etc? When investing in real estate either short or long term one thing is for certain, you will need to make repairs and/or maintain your investment.
Property Manager - Many real estate investors that rent or lease their investments manage their own properties. Do you have what it takes to be a landlord and properly manage rental properties? Are you familiar with Fair Housing laws for example? If not you could find yourself on the wrong end of a Fair Housing law suit just by improperly advertising your property. What about that call at 2:00 a.m. informing you of the burst pipe in the basement? Will you be able to go to court and evict a family that have lost their jobs and are behind on their rent? If you are unsure about how to handle these types of situations you definitely will want to consider professional property management if you decide to invest in rental properties.
Tip number one on real estate investing is to put together your team of experts. Here are some of the professionals you'll want on your team:
Real Estate Agent - A good real estate agent that can be on the look out for properties that meet your investment specifications can be invaluable. When interviewing agents be sure to ask whether they have experience working with investors. Many agents don't have the patience to work with investors due to the fact that successful investors must look at many properties and make many offers before finding properties that meet their objectives.
The biggest mistake real estate investors make is not having the necessary cash reserves to cover for improvement expenses, rental vacancies, and the like. Many successful real estate investors start out small, and gradually grow their portfolios.