It is never too late to get into real estate investing. Yet, as with many things in life, you must study and be diligent to be a successful real estate investor because, mind you, real estate investing is not as easy as some make it sound on TV: there are plenty of aspects that could go wrong when buying a property as an investment. In what follows, we give you some tips that might prove helpful to you whether you are a proven investor or are just considering getting into real estate investing.
Tip 1. Study a few books on real estate investing and/or enroll in a specialized course.
Real estate investments are just like any other type of investment: you need to know what you are doing to make money. In that sense, you need to understand the industry and the market (in real estate investments, markets are, generally speaking, local markets; nationwide trends might not apply to your property) and, as usual, know when to buy, sell, and/or hold. You can pick fundamental knowledge online or in books on the subject. You might also consider enrolling in an extension course in your local community college or university. Apart from the knowledge, you will acquire in a class; you will create a network of like-minded persons, something really useful in the business world.
Tip 2. Specialize in a type of property.
Our second tip is that you should decide what type of real estate you want to invest in residential, multi-property, commercial, light industrial, land, or another category that might be common in your area. There are nuances you will need to address that are specific to each type of property.
Tip 3. Write a business plan.
Write down your plan and do your best to follow the procedure. If you don’t know what a business plan must include, do some research online. Part of the business plan will consist of financial projections that take into consideration the amount of money you have available to invest. If you don’t know how to do them, make sure you take an online course using Excel and basic techniques of writing a financial budget and forecast.
The reason to write the plan is that you can always come back to it and revise your assumptions if, in practice, said the program isn’t working or yielding the profit levels you expected.
Tip 4. Research local ordinances and regulations.
It might sound daunting at first, but make sure you know what is and is not permitted as far as real estate is concerned in your local area. Go to the local authorities and request they inform you on building ordinances and the formats you must fill out, and the requisites when submitting them for their approval. Become knowledgeable on building standards, building permits, fire codes, parking regulations, and others.
You might want to start building a “legal file” to have all documents ready for when you need them. It might be necessary to find a licensed local contractor for some types of repairs that your investment property might require.
Tip 5. Build a list of local repairers.
You might want to start by asking neighbors and friends to recommend experienced maintenance specialists who have a reputation for doing high-quality work. In this sense, build a directory of electricians, plumbers, carpenters, masons, tile installers, among other specialties. You want to be ready to move forward fast once you have purchased a property and it needs repairs before you can put it to work for you.
Tip 6. Work with a local realtor.
Do not shy away from using a local realtor that is familiar with helping local investors locate good values in properties. There are a lot of realtors that will be more than happy to help you along just by simply asking for their help and advice. Rember, realtors don’t charge the buyers… they work for buyers and investors totally free of charge. Property sellers pay for the realtor’s time and effort.
Tip 7. Find a financial ally.
When crafting your Business Plan, you can allot some time to research if you can leverage some debt (for example, via a mortgage or a working capital credit line). Leveraging some debt will free up some of your capital for either more investments or a larger-sized one.
As a real estate investor, you must:
- Know your local real estate market very well.
- Know how to carry out financial projections to evaluate the attractiveness of an investment opportunity.
- Learn to interact with municipal government entities that issue work permits.
- Have the patience to negotiate with and supervise maintenance specialists.
- Manage your projects promptly while ensuring that repairs and remodeling are done with good quality.
If you have decided to invest in real estate, choose to consult with AMI Lenders as we are one of Houston’s fastest closers and could become your financial ally. We fund our own loans and can move as fast as the law allows. Borrowers in Houston will also have difficulty finding lower rates for hard money or private loans than those we offer. We want our customers to succeed and take advantage of the financial opportunities provided by investments in real estate. Visit our website today and fill out an application for a real estate-backed loan.