Well, first things first, you are doing your research, which is one of the best things that you can do if you’re considering investing in real estate. If you already have purchased a home you know a little bit about the real estate process but if you’ve been considering investing in real estate either to fix a house up and turn around and sell it or for monthly cash flow income in the form of renting it out, there are some differences you should know about. If you are just starting out in the real estate investing world here are some of the first things you should know before investing.
#1. You don’t need to be an expert in investing.
Many laypeople invest in real estate all of the time and they’re not experts nor have they ever been an expert in real estate. Understanding your limitations and then finding someone that is an expert is really the key to getting the right house for the right end goal. Finding a real estate agent that is proficient in helping investors will put you light years ahead of your competition. You will also understand the process better and let them do the heavy lifting by finding the right home at the right price in the right neighborhood.
#2. Connect with local investors.
One of the best ways to do this is to talk to your real estate agent about other investors they may have helped in the past. Talking to them about the best way to set up financing and the type of home to look for is a great starting point.
#3. Understand the basic math when it comes to the right investment.
This is basic math, not college trigonometry. But you do need to have a general knowledge of good math skills in order to determine if the home is the right option an investment for your needs. Is it better to do your own repairs or will actually cost you less by paying someone else to do it? Real estate investing is a numbers game and if the numbers don’t work, it’s time to walk away.
#4. Treat this as a business.
If you’re planning on being in real estate investment you need to treat it as a business. Keep your emotions out of the transaction, however, using your gut instinct on the right home or pulling the trigger at the right time is invaluable.
#5. Understand the mortgage aspect.
There are a lot of different types of mortgages and benefits that are perfect for real estate investing, however, investors typically must have about 20% to qualify for an investor mortgage. You want to shop around for that mortgage and get the best interest rate. If you’re looking at is zero down home loan you may not get the right rate of return if you turn around and sell it for the same price.
#6. Do you want to be a home seller or a landlord?
What type of investing are you looking at? Do you want to manage a rental property or do you want to take an older home that might need a little bit of fixing and resell it for a higher profit? Talk to your real estate agent and your lender about your choices and your options either way. You might be surprised when you started out one direction and realized the other direction is the better option.
Bottom line: talk to your real estate agent and your lender about your needs, what you’re looking to do and get as much information and education as possible. Knowledge really is power when it comes to real estate investing and listening to those that have gone before and deal with it on a daily basis is really the best way to feel comfortable in real estate investing and to get started.
Talk to me today. I can help you with the right lender for your needs and budget to get started in the investing world.