Is There A Secret To Real Estate investing?
If there’s any secret to real estate investing, it’s this: only a healthy combination of motivation, resources, and strategic partnerships can skyrocket you to a bright future as an investor. There’s no single method that’s better than others, no guarantee of success in any particular city. If you’re ready to take your business to the next level, use our cheat sheet guide to review possible directions to implement in your business.
Choosing the best type of Real Estate Investing Market:
Before considering any type of market investment you must review the actual market. The type of market you choose to invest in will ultimately impact the form of investment you plan on doing. Are you doing a fix and flip? Wholesale? Rent? Here are some tips to review before making your final decision.
Declining markets: Have caution when researching declining markets. Chances are there will be a market with declining jobs and an area that may not be worth the investment. Research the employment opportunity in that area. Are people making more or less than before? Is it a landlord friendly area? Do most people own or rent in this area? Keeping updates like this will help in your decision to investing in that area.
Growing Markets: These markets are rising and bringing more opportunities with being a hot spot to invest. Markets like this are typically a place trending and upcoming. It can become much more competitive, but key is always trying to stay ahead of the market trends and best places if growth. You want to be on the forefront of market trends.
Stable Markets: Markets that stay on a consistent level will most likely not have very much fluctuation on going up or down. This also means there won’t likely be a boost for rapid growth or booming opportunity. It is important to keep this in mind when you are investing in any area. Check out the inventory on the market. What was the length of time recent houses sold took to sell?
Location matters in real estate, but think progressively.
It’s essential to think about an investment property from the perspective of the future renter or buyer, not just from your own perspective. For instance, you may love a big house in a gated community, far from the hustle of downtown life. But if your city is seeing an influx of young entrepreneurs with a taste for old, charming buildings in the heart of downtown, you may be better off sprucing up a centrally-located Victorian or an industrial loft. All of that said, there are certain location-related features that are “evergreen” in terms of desirability:
- Fixer-uppers in great neighborhoods. More often than not, a “bad” house in a “good” neighborhood will yield better returns than a mansion in a run-down area.
- Close to services. Of course, the accessibility of e-commerce and services via the internet has changed commerce and the way people live –– so a house in the middle of nowhere doesn’t necessarily spell doom for investors. Still, proximity to public transportation, gas stations, and grocery stores will usually draw more prospective buyers or renters.
- Scenery. Homes near water, greenery, and hills are often easier to sell than others. Some even say streets named after landscape features make for faster home selling than those without –– even if they’re planted in the heart of the city, without a tree in sight.
Types of Real Estate investing Investing
- House flipping. With ambitious house flippers gracing TV screens nationwide and the real estate market on the rise again, plenty of new investors are drawn toward the seemingly easy money of buying homes at discount prices and shaping them up to turn a profit. One important factor to consider is time. One of the keys to flipping is getting in and out without spending too much time renovating and repairing. The more time you spend you could potentially end up spending even more money. Looking for a flip that doesn’t take up too much time and money to invest is always a solid flip.
- Wholesaling. Wholesaling is a great opportunity for someone to build income without having to spend too much capital or credit. Similar to house flipping, wholesaling involves the speedy turnaround of a purchased property. A wholesaler is the person in the middle of a deal creating a fast transaction for a deal to get done. The process of getting a home under contract by a wholesaler with contingencies will allow them to find investors to take the deal. If they are unable to sell the property before the expected closing date, they can use the contingency to walk away from the contract. The key to wholesaling is finding deals and finding a network of investors to have a rapid turnaround rate.
- Rental properties. Whether you choose a single-family house or high-rise apartment building, rental properties are one of the most popular choices for new investors. One of the most common tactics for investing in rental properties is to charge enough rent to pay the mortgage and basic expenses, and when the mortgage is paid off, the majority of rent becomes profit. Pro tip: to investors looking to find the best city or neighborhood for rental investing, compare the average cost of rent for a three-bedroom home against the average asking price to buy a three-bedroom home. If rent is comparatively high, you have a good chance of turning a profit on a rental property. If rents and home prices are about the same, you may be better off flipping.
- Real estate investment trusts, or REITs. If you’re looking for a low risk real estate investment opportunity, consider an REIT, or real estate investment trust. An REIT is a company that owns or finances income-producing real estate –– everything from shopping malls to hospitals and office buildings. You buy shares in an REIT the same way you buy stock, and it pays out in dividends. If you’re not keen on home repair or property management, a REIT may be a good choice for you.
Start with an investing goal, and stay organized.
Whether you’re an individual investor or a real estate investment business owner, you must set aside time regularly to keep your daily activities aligned to your bigger vision. Spend some time on your strategic vision: why did you get into this business in the first place? When you have a clear vision, you’re more likely to stay focused and confident as you grow your portfolio. Think of your strategy as an investment in your business, an investment that’s just as valuable and crucial to success as your properties. Create tangible milestones. Where do you see yourself in one year? In five years? Don’t be afraid to set tremendous goals –– you’ll find that solidifying these in writing will help you orient your daily behavior toward their achievement.
There’s no fast track to success in real estate investment. However, the only real limitations are your own willingness to put in time, effort, and enlist the best team members and resources in the growth of your business. With a plan and an enduring curiosity about the ins and outs of real estate investing, you can achieve anything you’re willing to work for.