Real Estate Investing
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| The real estate business |
Whether you are a newbie or a true expert in real estate investing, it’s crucial that you are aware of these 7 Simple Steps for investing into real estate.
Real Estate is definitely NOT a get-rich-quick system. Nevertheless, if you discover the basics and put them effectively into practice, you can earn enough money to make most of your dreams and goals come true!
The real estate business is not going to blow out! However, the real estate market will shift and change - just the way it always has been! What is “hot” at present, may turn “icy” in a few years (or sometimes even in a few months). Despite that, there is always a number of ways to bullet proof your real estate investments. And it’s rather simple.
According to statistics, in 1975 the average home price in the United States was $33,300, whereas by 2005 it increased to $195,000. Historically, the median home price doubled every seven years. A simple math will show you that by now the price should be well over $200,000.
This is to say that the real estate market will CONTINUE TO CHANGE, and what is working now, may not work in the near future. For example, the rental business was quite strong just a decade ago, but has become rather weak over the past few years. The business is about to take a new turn once again.
In fact, Real Estate goes in cycles and, therefore, has a certain degree of predictability. Due to this predictability, you have an opportunity to develop your real estate business into a cash-generating machine, which runs by itself following changes in the real estate industry. In fact, it is feasible to make money in real estate at all times, and now is just as good a time as any other to embark on real estate investing.
However, you should make your investments wisely. Surely, you can make some big money during the pre-construction phase, but what happens when the property market shifts and, all of a sudden, there are 40 almost identical flats for sale in the same building? How long can you sustain a negative cash flow on your property?
What about taking possession of property ’subject to’? It’s definitely a wise strategy and lenders may be tempted to turn the other way and not enforce the “due on sale” clause provided that the interest rates are sufficiently low (be aware that the sellers of a ’subject to’ property usually don’t have the lowest interest rates). E.g., if the interest rates rise to 10-11%, it’s pretty clear that lenders may be much more inclined to implement their option making you pay off the 6.5% note!
To avoid that kind of problems, you must learn the basics - the tried and true methods, systems and strategies, which have proven to work in the past, are working NOW and will likely to work in the future. You need to have all the tools at hand in order to go with the flow and not be influenced by the real estate market shifting and changing (It’s already doing this anyway, in case you’ve skipped the intro!
Step No.1 - Lay down your plan:
Decide what your long term goals for the Real Estate investing (e.g., financially secured retirement and wealth accumulation) and your short term expectations in respect of making money in real estate are. Then, set up appropriate business entities and put the plan to work.
Step No.2 - Decide on your target market:
You cannot possibly try all things on all real estate markets. If foreclosures look attractive to you, start with investing in the foreclosure market. If you decide to become a landlord, concentrate your marketing efforts at out-of-state owners.
Step No.3 - Be unswerving and persistent:
As we said before, Real Estate is not a get-rich-quick business. Real Estate is a way to grow your wealth over time and put some extra cash in your pocket tomorrow. You have to stick to your plan and follow it in order to see some good results in real estate. Besides, you need to continue furthering your education and increasing your experience.
Step No.4 - Do not fall prey to the “Analysis Paralysis”:
Learn how to analyze properties for profit potential quickly. Do not spend too much time on thinking; instead, try to answer these simple questions: How much is the property worth to you? Does it requires repair and how much would it cost? What can you sell the property for? In the end, it’s all about numbers!
Step No.5 - Become an expert in finance:
Real estate is a business that involves both finance and marketing. You should research all available information about mortgages and loan programs on the market. You should learn how to use finance efficiently to negotiate better deals and to sell out your properties.
Step No.6 - Become skilful at solving problems:
You will be able to get deals that other real estate people won’t, if you can learn to solve people’s problems. Anything goes on the real estate battlefield. Watch out and be ready!
Step No.7 - You should continue advancing your education:
It is crucial to keep investing in your education, learning new strategies and tactics that will help you make more money in the real estate business.
