Real estate investing is one of my very favorite topics to discuss. There is so much opportunity in the real estate investing world. As I’ve taught conferences and workshops about real estate, I’ve heard story after story of people who have changed their lives through this business.
Real estate investors everywhere are making a real difference in the world because of their success. That is why I continue to teach and encourage people to get started in real estate.
But in order to be successful and make a profit in order to make a difference, you have to know some essential tips and tricks. Some of these tips may seem too simple, but don’t skip over them simply because they seem easy. Some of the simplest tips can turn your business around forever, if you follow them!
Here are 8 essential tips for real estate investors:
1. Know where you’re headed.
It’s critical to write out your business plan. Think both long-term and short-term as you do this. For example, think about one year from now, five years from now, and twenty years from now. The goals you set for the one year mark will impact your twenty-year goals.
Ask questions like: Where do I hope to go with real estate? What are my goals? How will I achieve them?
2. Equip yourself…
…with specific knowledge, a knowledgeable team, and capital.
Before you jump in, it’s important that you do your research. Also, make sure you have a group of people around you who will keep you from losing money. With their care and knowledge, they will be able to help you make the best decisions. Finally, consider capital. If you’re serious about growing your income through real estate, you will have to do some saving.
3. You make money when you buy.
I chant this at my workshops and conferences because it’s KEY – you don’t make money when you sell. Rather, you make money when you buy.
It seems backwards, I know. But shift your thinking because when you buy a property, you set yourself up for your profit right away. Because of this, be as prepared as you can when you scope out potential properties.
4. Demand income on your investments.
It’s essential that this becomes your first priority! Real estate is an amazing source of investment income. But you have to make sure that you are demanding income. It’s simple, but make sure you’re collecting rent so that you have positive cash flow for ALL of your properties.
5. Watch market supply.
I recommend making a move when the market supply is 6+ months – that’s when you know you’re entering a healthy market. If supply is above 6 months, you get a great deal because you should be able to buy for less than the asking price.
6. Ask the key question.
The key question is: how much will this property rent for? The cost isn’t the most important when it comes to rental property. What the property rents for is the important part. My suggestion is to make sure you get a 1.5% gross monthly return on the property.
7. Don’t become emotionally involved.
When you’re checking out your first property, make sure to put your feelings aside. Location and price are your guides here. Buy what you can afford, not what pulls at your heart. For example, don’t think about the decorations and the paint colors and the way your grandma’s dining room table would look in the corner.
Look at the property with renters in mind – not your dreams about the potential of a property.
8. Good tenants are worth waiting for.
This might seem difficult to determine, but really, all you need to know is what condition their current residence is in. This will tell you exactly whether or not they’re the kind of people you want to live in your property.
Don’t settle just because you want to fill the bedrooms. Wait on good tenants – or you’ll wish you never started renting property in the first place.
BONUS TIP: Have an exit strategy.
If you haven’t read this post about exit strategies, check it out. Always make sure your investments – real estate or not – are protected with an exit strategy!
I highly recommend real estate investing. With patience, hard work, and equipping yourself with the right knowledge, you’ll be successful. If you follow tips for real estate investors like the ones above – and spend time watching those who’ve walked before you – you will quickly fall in love with the real estate business.
Do you have questions about real estate investing? If you’ve been an investor, do you have a tip to share?
I’d love to hear about it in the comments below!