Real Estate Investing is a broad phrase that covers everything from short sales, to tax liens to wholesaling to rehab flips as well as commercial real estate. If you are a beginner, where do you start?
You start by understanding basic fundamental principles before choosing a niche to start out in. Even the more experienced investor is wise to review these basic principles from time to time and conduct a quick evaluation to see if they are following their own criteria for investing.
Below are a few that have been helpful for me over the years and have protected me from making a bad decision on more than one occasion. I hope you find them helpful as well.
1. Invest and Negotiate From a Position of Strength. An example of this would be making a cash offer rather than an offer contingent upon financing. Remember, cash is king. With cash you can negotiate better deals that provide more profit.
If you don?t have cash, then find some private lenders to bring onto your team so you can make cash offers. This site does a great job of providing you opportunities to learn how to get private lenders on your team.
2. Invest in Properties That Provide Multiple Exit Strategies. With multiple exit strategies available, you have less of a chance of getting stuck with a home you can?t move.
When I invest in single family homes for a retail flip, I like to invest in homes that provide me the ability to conduct a rehab and flip, a lease option possibility or a rent to own possibility. This means you must know the rents in the area and if the rents will support the last two exit strategies.
A surrogate to this would be to always plan for the long term. In the above scenario, I have both short term and long term financing arranged through private lenders that provide me the flexibility to do whatever the market dictates. The more viable exit strategies available to you tips the odds greatly in your favor that your real estate investment will be highly profitable.
3. Know Your Market! Conduct your market research before investing in real estate to know if your market is a good market to invest in.
Although most beginners tend to start out in their local market, keep in mind that may not be a good place to start. You need to know the answers to some of these basic questions: Who are the major employers in the area and are they stable? What is the population growth trend? What are the local rents and how are they trending? What are the average and median home prices in the area? What economic anchors does the area have?
These are all factors that can have a direct influence on your investment regardless of what niche you may be in.
4. Don?t Get Emotionally Involved. Again I will say, don?t get emotionally involved. Be willing to walk away from any deal that doesn?t meet your criteria.
Although this may sound a little harsh, remember that other people?s pain is your opportunity. You are looking for opportunities where people have to sell rather than just want to sell. Buy your real estate investment in a way that makes sense for you.
Be strategic in your investing criteria and follow your plan. That is, of course, assuming that you have a plan, if you don?t, then put one together. This will help you tremendously from making emotional decisions.
Following these four principles will go a long way in ensuring that your real estate investments are highly profitable. Feel free to post any additional principles that you feel can be helpful to others below.
About Jay Redding
Based out of Indiana, Jay Redding is a real estate entrepreneur, consultant and educator who invests in residential and commercial real estate. Go to www.InvestmentPropertyMadeEasy.com to find more helpful articles on real estate investing.Source: http://www.thereibrain.com/4-key-tips-for-making-smart-real-estate-investments/2725/
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