So, you’ve bought your first real estate investment property. Congratulations! You’ve made the jump and realized how profitable this new venture can be. As exciting as it is, the beginning of this journey to more wealth may leave you a bit dazed and confused.
What Beginner Real Estate Investors Should Know
We want you to find success in your endeavour, so we want to give you some tips about real estate investing. Put them to good use, and you’ll be a pro in no time!
Tip 1: Get out some paper, and write down a business plan. It doesn’t have to be anything formal, but writing it down makes it easier to stick to and follow. What is your end goal with this investment property? Do you want to flip it in five years or hold it for 20? How are you going to get to your end goal? Without a map to follow, you’re likely to have some detours.
Tip 2: Don’t blindly listen to someone who has more investing experience than you. They are a good resource to tap into, but what works for them won’t always work for you. You may be in a different market, have different resources, and have different skills. Do what works best for you, not someone else.
Tip 3: Budget for a property management company. Even if you don’t plan on using one, budget for it just in case. If you can’t earn revenue while still paying a property manager, you aren’t buying an investment; you’re buying a job, and chances are you already have one of those. If you choose to manage your property, that’s great, but don’t by another job.
Tip 4: You aren’t in a competitive sport. It’s ok to ask for help from other experienced real estate investors. Build relationships and learn from them.
Tip 5: Triple check your math. You need to calculate like your life depends on it because it does. Once you’ve crunched the numbers, crunch them again. Be conservative in your estimates, and don’t fudge the numbers; that will be no help to you in the end.
Tip 6: Make sure your spouse is on board. If you plan on managing this property yourself, say goodbye to a lot of your free time. You’re going to be dealing with tenant complaints and inspections instead. If your spouse doesn’t support this decision, it can lead to stress, fighting, and resentment. Get them onboard or wait. Your marriage is worth more than your net worth.
Tip 7: Do business with like-minded people. When you buy a real estate investment property, ensure you’re working with the right people. Surround yourself with an experienced support system of attorneys, property managers, rehab crews, realtors, and maintenance people. These are the teams that will help make your investment property successful.
Tip 8: Look for the bargains. Don’t make the mistake of purchasing an investment property for more than it’s worth. You don’t make money from your investment when you sell. You make money when you buy. The perfect time to buy an investment property is in an economic downturn, not when the economy is booming. If you buy when people are having a hard time, you’ll get a steal of a deal. Don’t rush into buying just because everyone else is.
Tip 9: This is a new venture for you, and you won’t know everything about it. You will have drama, problems, and stress. Know that it will come eventually. When it does, receive it like you’re catching a water balloon. Remember these things are puzzles, not dead ends. Find a way to work around them.
Tip 10: Your business isn’t a hobby, so don’t treat it like one. Create rules, processes, and systems that govern how you do tasks. Those processes will eventually change when you find better ways of doing things, and that’s ok. Having some kind of structure will benefit you.
It’s ok to make mistakes along the way to reaching your end investment property goal. There will be some bumps in the road; that’s normal. If you follow these tips, though, your journey will be smoother. Good luck with your new investment property!