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Make Money with Real Estate Investing Part 2
Owning real estate is a great way to achieve your financial freedom as seen in Part 1 of this article. To achieve these goals, a person needs to understand the fundamentals of real estate investing. In the real estate game, there are no quick buck schemes. The most important thing about investment is time. Everything comes with time.
Real estate is like a business and it takes time to build your business. Especially if you're a beginner, you are limited in your resources. This is okay because you can build you wealthy slowly.
First thing you need to do is spend time building a vision. Be specific about what you want. Then be sure to act on your vision and keep yourself motivated. Do not spend time with negative people who will down talk your vision. Next, you will need a game plan. Here is a list of important things that you should consider:
A good support team - don't wait until you have a deal on the table before you look for competent professionals. You will need an attorney, title or escrow company, insurance agent, contractor, mortgage broker, cpa, sound partner and mentor. Get to know your support team and work with them on repeat jobs. You should be able to get a discount.
Be persistent - most deals fall through on the first try. Most deals are booked by persistent individuals who follow up with a fifth and sixth try. If a deal is really good then have a follow up and keep track of conversations. Perhaps you will eventually come to an agreement and close the deal.
Stay informed - if you make mistakes it could cost you a lot. Ignorance can cost you more than it would cost you to be knowledgeable about new developments in your new field. Try attending seminars. You might learn something to keep you from landing in trouble.
Treat this like a business - treating your business like a business is the best thing you can do. Remember it takes time to develop customers, associates, partners and so forth. You need to be disciplined and professional and with time your business will flourish into a profitable business.
Novice investors should begin with single family houses. Financial institutions feel more comfortable lending a higher percentage of value on the property. You can maximize your potential when you stack, stacking entails using more than one of these methods. Some strategies for single home investments are:
Buy and hold strategy - this is the starting point for most investors. The goal is to buy the property with the intention of renting it. You have to purchase under a set price and terms that allow for a positive cash flow. The rent has to be higher than the mortgage payment.
Buy low and sell high strategy - buy a home in an area with high sales activity. Fix it up and sell it fir a higher price than what you paid. Keep in mind the purchase price must be low enough to cover your repairs, holding and resale costs and then have room for a good profit.
Leasing strategy - you can control property without owning it. Look for property you can lease under favorable terms, where you give the rights of use, enjoyment and occupancy to a tenant who agrees to pay a price higher than your own lease. The longer the term the more value your position holds.
Don't expect to go through investing without making any mistakes. There will be a learning curve. You can only learn by being active and getting to understand the buying process. To be successful you need to learn the market, learn how to locate property, inspect property, and negotiate your deals, contract to buy, finance the purchase, and close transactions. You can't learn all this at once, you will have to go through situations to come to an understanding.
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