Practical Real Estate Tips
Real estate property investments are a risky field. Most "Flip this House" shows state they have the best advice for making it a profitable investment. Many of these statements are just myths and will not benefit your money in the long run. Here are some tips that actually work and every investor should take note of.
Experience Needed
An individual does not need extensive financial credentials to invest in real estate. A lot of blue collar workers assume they cannot handle investing in property because of their deficiency in experience. However all a person actually needs is some practical business sense, and confidence when starting arrangements with a mortgage broker or loan officer.
Connections
Although it is not a pre-requisite to have extensive financial experience, it helps to have friends or contacts in the property field. These people can connect you with more authentic or knowledgeable people in real estate or give advice on how to manage your property. Though some may not agree to help, a good number will be more than willing.
How Much Should a Person Know
Another myth is that a person needs to know a lot about properties and property management before investing. Opposing this famous belief, most individuals start out with only basic or slight knowledge of the industry. After all the research is finished, experience is still the number one teacher.
Taking that Big Leap
It is not always smart to keep it safe. Many first time investors would rather invest in tiny properties. In reality, it’s more rewarding to take a risk on something with large potential. The greatest thinkers and inventors in the past were thought to be fools in their time. Just like them, you’ll have to take a risk to reap the rewards of your investment, but Confucius does say, always look closely before leaping off big cliff.
The Money Involved
A person doesn’t have to be wealthy to invest in property. Though most key players have acquired significant wealth, most of them engaged in risks with their money. A business endeavor is always a risk. Either you win some or you lose some. Going into business is different from setting aside money for your personal property. Distinct from savings, investing enables you with returns which let you pay your mortgages. Money will be involved but you will have ways of getting it back by collected rents, and property appreciation.
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Comments (5)
I would venture to say that it is wise to understand the laws as any type of investor. A rehabber not aware of the new lead based paint regs could quickly be in trouble. Not understanding the new SAFE regulations and the impact on seller financing could be devastating. Is it wise to purchase from a senior in the nursing home and if so what precautions should be taken. Can anyone just go out and bird dog? I believe that it is always a good idea to understand what you are investing in. Know the legal environment. Understand some of the risks. It is also a good idea to understand how to analyze a property to insure that the price paid is likely to allow sufficient room to yield a real profit after all expenses are incurred. Action is important, but it pays to be informed and to know where you might find answers when you need them. Jumping in without knowing the consequences can lead to financial or legal trouble. Of course trying to learn everything before getting involved may mean someone never purchases a deal.
Account Closed, over 14 years ago
I probably should have kept it more at the Investing to flip level - not the "renting" or property management level, which is what I was trying to convey. I do appreciate the professionalism with everyones reposonses, however. That's what makes this such a great "blogger's community". Yes, I do manage properties, many of our our own properties, and there are many laws that need to be followed - not for someone who does not understand them, especially for someone who is licensed in real estate. However, if one is looking to invest in properties to buy, repair, and sell, one needs only to have a strong business sense, and this is what my post was referring to. apologies for the confusion :)
Liz Voss, over 14 years ago
Real esate is not really like inventing. It is the second oldest business in existance. Not too many people are inventing a new way to do things. If people think you are a fool for buying something, you are likely a fool especially if you are one of those people that you talk about who dont know a lot about properties or property management. I feel badly that three landlords came in here an beat your article up. It is good that you are writing an article. It is just very realtor (my new adj.) or very PITI.
Jeffrey K., over 14 years ago
Unbelievable! Trial and error will land you in court and maybe having to sell your property to payoff the judgement owed the tenant! That might work for someone with money to buy an apartment building and turn it over to a management company. If they spend their own money and have no business knowledge the management company can just reap the benefits and let the owner have the liabilities, but there are two angles on that, one, most people who can buy an apartment building probably already have a little business background and secondly, if it's not a good deal the lender won't make a loan. So I guess there are safeguyards built into the advice given. Bill
Bill Gulley, over 14 years ago
It is generalized articles like these that espouse how easy it is to make money investing in real estate that do more harm than good. While some of your points are fine, others that encourage people to jump in and invest without having the knowledge or capacity to do so is very dangerous. Statements like these are very troubling to me: "Another myth is that a person needs to know a lot about properties and property management before investing. Opposing this famous belief, most individuals start out with only basic or slight knowledge of the industry. After all the research is finished, experience is still the number one teacher." As a landlord and someone who has seen countless people harmed by doing just what you mentioned -- jumping in to be a landlord without the tools to do it correctly -- I have to say that landlording is not a game to learn by doing. You must have a fundamental understanding of the laws, paperwork, and management techniques to be successful; trial and error is a terrible way to go! I see that you're a real estate broker, Liz. Have you run your own landlording business?
Joshua Dorkin, over 14 years ago