Becoming a real estate investor is a matter of setting your intention to it. But, becoming a SUCCESSFUL real estate investor is a matter of taking action. Therefore, what would it take to become one of the best investors out there?
We all want to know how to make money in real estate. However, only the most successful real estate investors know the road to making money in the business. Truth is, it isn’t a secret at all. It is only a matter of obtaining knowledge of some real estate tips and putting them into action.
Related: Successful Real Estate Investors Are Not Born, They Are Made. How Do You Become One?
Throughout this guide, we are going to provide you with as many tips as possible. Ones that we feel led to the success of many real estate investors. After we have done that, we’ll leave it up to you as what to do with these tips. So, here we go with our take on the best tips for becoming a successful real estate investor:
Tip 1: Understand profit
In real estate, profit is simply the term you use when the property you invest in gives back more than what you have invested initially. In more professional words, it is what we call the return on investment. The bottom line for this tip is that for the purpose of becoming a successful real estate investor, you should put your money in the most profitable real estate investments.
Tip 2: Real estate cash flow
Putting money under the pillow is definitely not a cash flow investment. The reason is that your money is sitting there not producing more. Therefore, a property is the best investment that generates cash flow which eventually builds up into a fortune. Always aim for positive cash flow property when buying an investment property. You can use an Airbnb calculator to estimate the potential returns from your short term rental property.
Tip 3: Taxes
Fewer taxes mean more growth in your real estate investment portfolio. This is possible because real estate investing gives an advantage to real estate investors in the form of tax deductions. This means that you get to pay fewer taxes and keep more money to invest again and again. So, being aware of what tax deductions apply to you is one factor that is important for becoming a successful real estate investor.
Tip 4: Understand market cycles
No market is stable. Not even the real estate market. Thus, understanding the fluctuations of the real estate market helps you find investments that regardless of the market cycle are still going to generate a profit for you. Yup, that is also a part of becoming a successful real estate investor!
Tip 5: Time
Time is money. No doubt about that. So, what do you do? Put the least amount of time for the maximum amount of profit. You are intrigued and think if it’s even possible. Well, yeah it is. As a beginner real estate investor, you can always find investment strategies that require the least time and that are very rewarding financially. By the way, they do exist!
Tip 6: Forget about the past
The car drive property search is long gone. So, obviously, you should get online. Stop wasting time driving around and trying to contact people who might not have a clue about what you’re looking for. Becoming a successful real estate investor means that you use search engines and type in whatever criteria you are looking for. Guess what? You will get whatever you are looking for so stop wasting time.
Related: 7 Ways To Find An Investment Property For Maximum Returns
Tip 7: Find a mentor
Come on! We all have that habit of reading a couple of articles on the internet and then acting like a know-it-all expert. Well, real estate investing is not the right place for that kind of mentality. Reality is, we are humans which means we do not possess any superpowers. So, don’t think of acting like you don’t need help. Get yourself a professional guru to guide you along your journey. After all, they’ve done it hundreds of times before you even thought of doing it yourself.
Tip 8: Make things happen
You know what, you can sit there all day long daydreaming about becoming a successful real estate investor. Chances are doing that won’t get you anywhere!
Words mean nothing. And as we all know, actions speak louder than words. Being 24 years old and thinking of yourself as “too young” to start investing is not an excuse. There is no time or age limit to when becoming a successful real estate investor is proper. Just get your behind off that couch and do something about it!
Tip 9: Stick to below market value
Becoming a successful real estate investor also depends on your choices when buying an investment property. What you want to avoid at this point is buying above the median property price in any area. Why is that important? You guessed right, profit. The lower you buy, the more equity you build and the higher the return on investment. Remember tip number 1? You want to invest less for more in return.
Tip 10: CMA
CMA stands for the comparative market analysis process. Basically, you compare a property of interest to other investment properties in that area that have been sold recently. These properties must be as similar as possible to the one you are looking into. With this type of real estate analysis, you will be able to determine two major things 1) The fair market value of the investment property and if it’s actually worth the said price, and 2) How much you can charge in rent for that particular property in that particular location.
Tip 11: Save some money
There is no doubt that real estate is very lucrative. However, besides making money, there is the part of property expenses. For beginner real estate investors, the first rental property might not rent for longer than what they’ve anticipated. So, what’s the solution to that? Simply have a savings account with at least 6-months worth of savings. This way you can make sure that your bills along with your rental property are taken care of until you start seeing some profit.
Tip 12: States with low property taxes
Another tip concerning property taxes. Becoming a successful real estate investor is also connected to the amount of taxes you pay. For that, you want to invest in states with lower tax rates on properties. Some states have a property tax as low as 0.5% such as Hawaii. Other states have property taxes up to 2.5%. Feel the difference?
Tip 13: Property management
You can’t dream of becoming a successful real estate investor neglecting property management. Of course, we all know that there are two options: 1) You do it yourself, or 2) You hire a professional to do it. Well, there is also a third option that only the most successful in the business know about: Leaving management to the tenants to perform. Yeah, that’s right. Leave it to the tenant with the lease option. This way you won’t bother with wasting time by doing it yourself. Also, you will be able to save up on property expenses as you won’t need a professional property manager.
Tip 14: Know when to sell
Part of becoming a successful real estate investor is knowing when to let go of your property. So, in short, you only want to hold onto it as long as it’s generating high returns. As soon as it starts diminishing, you want to sell it. Don’t wait until it’s too late. Mistakes like that will make it hard to keep your head above the water.
Tip 15: Partner up
Working with a partner is of great help if you want to grow your real estate investment portfolio fast. Many investors get hesitant due to the fraud and embezzlement stories they hear about partnerships. But, believe us, the growth is worth the risk. Keep in mind though, we are not referring to the risk of losing money to a partner. However, we mean getting into a partnership regardless of whatever stereotypes there are regarding the matter. In fact, partnering with others will double the amount of financial and physical resources you need to grow your business. Moreover, you can always keep yourself on the safe side through the partnership structure (which you should consult with an attorney about).
Related: How to Avoid Problems Arising from Real Estate Partnerships
Tip 16: Build a team
Becoming a successful real estate investor is nearly impossible if you’re going solo. The moment your business starts growing, it will become even harder to keep track of it. Therefore, it would make sense to hire a couple of people to help you out. This actually brings us back to tip number 5: Time. And guess what, you can save time and still be productive with a team. In fact, it might even double your productivity and business performance.
Tip 17: Becoming a successful real estate investor means to keep growing
Needless to say, once you’ve succeeded with one investment and have seen some profit, the one thing you do next is to press rewind and start all over again with new investments!
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