More and more would-be entrepreneurs are becoming interested in real estate investing. Partly, this may have to do with the amount of space that real estate investing is given in the media. Real estate tycoons show up in gossip pages alongside celebrities and their stories are held up as the American dream. It seems that everywhere you look, there are people willing to share their own story of how they made it big with real estate. While investing in real estate can create a good passive income, though, you need to go into this type of investing with your eyes open. To succeed, you need to make sure that you:
1) Start small and low-risk. Reality shows about real estate investing suggest that investors take huge risks buying and selling properties that make huge profits very quickly. This is not entirely accurate. In fact, most successful real estate investors start small. They buy inexpensive properties that are being sold below market value. They then sell these properties at a healthy profit after they have renovated and lived in the properties for a while. Another good option is to buy a home that already has tenants and continue renting to the same tenants. While small and low-risk investments may initially not seem very glamorous, they are the path to true wealth and a good passive income. As an added bonus, low risk and small investments will allow you to get your feet wet without owing millions of dollars into debt. They are perfect for investors who are just getting started.
2) Study, study, study. When investing in real estate, it is imperative that you carefully study each property before you purchase it. You must study the condition of the home, home prices in the area, the neighborhood, and much more. Going over everything twice ensures that you don’t get stuck with a dud. You should also be researching real estate investing in your area. You should become familiar with contracts, tax laws, real estate opportunities, and much more. The more you know, the more likely it is that you’ll find great real estate investments.
3) Get a mentor. No successful investors invest completely by themselves. They either try out courses or books that are created by successful investors, or they take the time to actually seek out successful investors who can give them advice. Networking is an essential part of real estate investing, because it allows you to learn about investing from experts who know how it is done.
4) Make it a business – complete with a business plan. Real estate investors are professionals. They run their investments like a business. They have a separate phone line for their business dealings, they dress the part, and they design a business plan that tells them where they are headed. Real estate investors also set goals for their businesses, rather than just hoping to make “some money” from properties. The more professional you are about your business, the more likely you are to succeed.
5) Always do the math on paper. You may think that something it a terrific real estate opportunity or a great investment, but is it really? The only way to know for sure is to add it all up on paper. What is the total cost of purchasing, renovating, and managing the property? Also, how much can you reasonably expect to receive for the property? Until you do all the math on paper and estimate reasonably, you can’t really tell which real estate deals are good and which ones are duds.
These basic tips are what real estate investors use in order to turn properties into real investment opportunities. Use these tips and you will be well on your way to successful investing as well. lentor hills residences