Nowadays, there are many investors, who want to add Real Estate to their investment portfolio, what they don’t understand are the complex nuances of Real Estate investing, and how to start the process.
Read more about Real Estate: Pros and Cons.
Investing in Real Estate is considerably different from investing in stocks, bonds, and certificate of deposit (CD).
Real Estate may seem overwhelming to brand-new investors. However, investing in Real Estate does not have to be difficult or scary especially for the new investors.
Today, we will show you 10 tips to help you successfully launch your career in real estate investing.
1. Investing in Real Estate is a Business
When you invest in Real Estate you should treat it like a business. You should begin by developing a good business plan, detailing the nuances of starting and running your business, with realistic goals over time frames of 10 years or more.
2. You Should Know the Best Areas to Look for Properties
Some of the new investors make the mistakes of limiting their search to areas close to their home. But sometimes a better rental areas are located a little further away. The new inventors may think that they need to live near their properties in case tenants may call about repairs or other problems.
You have to make sure that before your tenants move in, the house should be in a good condition so they won’t bother calling you for problems like repairing such things in the house.
3. Always Check your Credit Report
Check your credit report daily to determine your ability to finance investment property. Most lenders today are requiring 700 or more scores from borrowers who wants to buy investment property.
You should also make sure that your total debt-to-monthly-income ratio is low. It also makes sense to pay down outstanding credit card or car loans in order for you to improve your debts ratios.
4. Go and Talk to Other Investors About Real Estate
If you are planning to invest in Real Estate, you have to join a Real Estate club in your area. Real Estate clubs are a great place to connect with other investors, lenders, and repair services providers.
You can often pick up helpful advice when it comes to your local market from your other club members. Some groups offer courses on real estate investing through adult education or local real estate brokerages.
You could always consider online investing forum, if you can’t find a real estate club or course.
5. You Should Find a Good Bank
If you are financing your investment you should find a good bank or mortgage broker in your area. One good sources of finding great recommendations are the real estate agents or realtors.
You can also ask other investors whom they have used to get a good bank. You should do this even before you start looking for your property. Especially if you’re going to pay with cash, you should prove that you have the funds by submitting a statement from your recent bank or brokerage when you make an offer.
6. Look for a Good Realtor that Could Help you Locate Properties
Not all realtors have experienced or even adept of helping invertors beginner or pro. Only a small percentage of Realtors would even work with investors, when the real estate crashed back in 2007 and the subsequent onslaught of foreclosures.
Since then, many Realtors have taken courses and started to claim that they are “experts” on foreclosures. You have to make sure that the Realtor you choose has sold a large number of investment properties and understand the concept such as return on investment, net operating income, and debt service.
7. You Should Consider Multiple Sources When you Buy Properties
Some of the new investors think they can only buy homes through their local Multiple Listing Services. But sometimes you can find much greater deals on real estate auction sites. These sites can make it possible for buyers like you to make an easy purchase in locations beyond your immediate are.
8. You Should Look for a Return Which is Greater than 1 Percent of Sales Price
Some old maxim of real estate says that a rental property yielding 1 percent of the sales price per month is a good deal. If the cost of the home is $100,000, you should get $1,000 per month in the rent or about 12 percent annual yield.
However, in many areas of the United States today, the value of a home have declined substantially and investors can now achieve greater than the 1 percent per month returns.
9. You Should Read About Real Estate Investing
There is a lot of free information about real estate investing on the internet today. If you are planning to buy a book, you should look for those who offer practical guidelines on buying, flipping, renting, and selling properties.
You should avoid books that are saying you can make a huge amount of money in just 30 to 60 days or old books detailing techniques that may not work today.
10. You Should Learn from the Best
To be a successful real estate investor, you should model your investing decision after what other successful real estate investors in your area have done. Or, you can turn them into your inspiration until you reach the top.
There are different kinds of investing and often times they are hard to begin, which is why there are some tips that can guide you through the process of succeeding in the investing business.
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