Real Estate Investing Tips: All You Need To Know
Real estate investing might be simple but definitely not easy. You see, people can really complicate things, ad a matter of fact, they can complicate anything. When it comes to real estate, there are a few things you need to keep in mind.
Having a motivated seller
You should not waste time trying to make deals out of deals that barely even exist. Sellers are usually motivated to sell real estate properties by three things only.
- Economic conditions
- Property conditions
- Change in personal situation. Sellers normally become very motivated to sell the property when they can no longer afford it or if they make personal changes in their lives that drives them to sell. Some of these reasons could be anything from divorce, relocation, job loss, illnesses, etc.
Evaluate the deal
When you find a motivated seller, you need to evaluate the seal and decide if it will work for you. In real estate investing, it all comes down to the numbers and there are five factors you will have to consider before you invest in the property.
- Location: if the property is located in a prime location close to all amenities, the score will be much higher than that of a property located in a rundown area with abandoned properties.
- Condition: Similar to location, the better the condition of the property, the higher the score will be. For example, a new house will definitely have a higher score than one that is run down and in need of repairs.
- Price: The lower the price you can get the better because your goal is to buy real estate property foe as low as possible.
- Financing: Again, real estate comes down to the numbers and if the person selling is willing to give you flexible terms as well as low rates, you will not have to use your own money. This is better than when the seller asks for the full price upfront.
- Seller motivation: Using a scale of 1to10, gauge how motivated the seller is to selling the property and the more urgent the situation, the better for you because there will be a high motivation score.
Write an offer
When you are done evaluating the property and the numbers, you need to put everything on paper. Now, before writing the offer, you need to make sure that you have two exit strategies. In doing this, you see to it that you are not left with a property you can neither sell nor let. There are numerous people who have tried real estate investing. They jumped to a preconstruction deal with the hopes that they will get rich very fast only to emerge on the losing end. YHou should try to submit at leat three contracts to the seller on the same property but with different terms and prices then ask the seller to decide what works best for them.
Line up your finances
When the seller agrees to one of your offers, this is the time to seal the deal. If you decide to wholesale the property, you should find an investor buyer. If you decide to close on it, you can line up your finances through a conventional lender, line of credit or a hard moneylender. You should also start looking for a tenant or even a tenant buyer if you want to build a long-term portfolio. The key here is to have the financing ready in accordance with the exit strategy.
Follow through with your plan
Numerous real estate investors buy property with the plan of selling it and they write the offer based on a specific price as well as plans to renovate. Then after they close the deal, they over improve then try to sell it for far more that its worth and eventually decide to rent it.
Calculate profitability– You should avoid relying on general statistics as well as hunches then hoping that you will have profitable investments. Before you invest, examine the property values closely as well as the location and rent prices of the property.
Be realistic– The fact that one investment plan was a success does it mean so will the overall investing strategies. Before you actually invest, you have to consider things like taxes, cash flow, accountancy fees as well as many other little expenses that tend to add up, pretty fast. This is one of the reasons why you need a mentor investor, so you don’t lose track of what’s important.
Specialize– Getting good returns in an investment gets a lot easier once you decide to stick to one type of investment and learn everything about it. Foreclosures, apartment buildings, commercial real estate as well as all other types of properties that could bring you profits. Jumping around from one area to the other means that you might not get what you need. This means that you do not really need to learn everything about real estate.
Do not buy sight unseen: You might find an incredibly cheap property and feel really tempted purchase it but regardless of how much you are buying it for, do not purchase it without an inspection.
Come to terms with taxes: Doing taxes can be an extremely exhausting process but doing them correctly will see to it that you are successful. Actually, it can make a big difference between making a lot of money and losing a lot of it as well. When it comes to taxes, the best thing you can possibly do is hire a professional accountant so that they can keep everything updated. Doing taxes yourself will only give you a headache and leave you even more confused and frustrated so best to just hire someone to do all the taxes.