The most common issue for new real estate investors is how to get started. They tell me it’s a combination of too much information and opinions from the internet, and confusion over which strategy works best and is easiest.
My answer is that investing in real estate is extremely personal and can be confusing. If you’re married or have an investing partner it can be even more complicated. The two parties need to be on the same page. You’re committing your hard-earned money, and you want to do it right and make a profit!
Here are my Seven Smart Keys to getting started in real estate investing:
1. Pick a strategy that matches your investing goals and risk tolerance.
2. Learn about the best financing.
3. Know the numbers well, and use a formula that helps you calculate acquisition costs including incidentals and expenses. The formulas are different depending on your personal strategy.
4. Do proper research on the geographic area, the property, rehab costs, rents, market, and MORE.
5. Examine the details on your investment. This is called “due diligence” and is much more than a physical inspection.
6. Know your exit strategy at the time of the purchase. In real estate, you make money on the BUY. If you buy wrong, you won’t make money.Y
7. You must have a business mindset. This isn’t as easy as it looks on DIY TV.
It irritates me that on some of the house fix-up shows, they never share the full expenses of a flip. What about holding costs, financing costs, realtor fees, etc.? What if it takes six months to sell? What if the price has to be lowered? And who’s minding the books? Do they REALLY make a profit or is it just a show?
I’m an Associate Broker at Realty Group here in the Twin Cities and have a great Encore Investment Team of Realtors who specialize in investment property. Meet my team members–Tammy Love and Eric Janson. Any one of us can help you figure out the best strategy to BUY – SELL – INVEST!