Real Estate Newbie Investor

People see me as a real estate lord. An overwhelming amount of individuals wants to know how they can make money with real estate. It’s exciting to hear about how a blue collar employee got into real estate without any background in it. I can recall when I was new, everything was frightening. It is the reason why I started slowly. I missed out on deals that were no-brainers and only required one to invest. I was afraid and did not know books were published on this and did not know how to research on market rents.

Most of you believe that you need to know a lot more than you already know to get started. In a display of transparency, I am going to share seven examples of things I didn’t find out till my foot set on investing in RE.

1. You do not need the perfect deal.
Perfection ends up in procrastination. Sometimes it is better to get it done compared to presenting a perfect product. My pursuit of perfection caused me to be sidelined instead of playing because I was not fit yet. The truth is, the value of your first investment is what you learned, and not what you earn. Target on making cash and buying properties in school districts and safe neighborhoods at below market price.

2. Do not undervalue the importance of relationships in RE.
When I was new in the industry, I was penny wise. Here is the fact that most of you do not know yet. People, who are not your brilliance, are the ones who bring you the majority of deals especially if you are new in the game. If individuals know how they can assist you, they will. Make sure that your friends know that you are looking to purchase good deals. To my shame, I didn’t focus on this; I was short-sighted. Make it a priority to help others.

3. It is less frightening than you think.
Lots of people do not get started because they do not know what to expect. All they can visualize is what they stand to lose. While it’s crucial to measure risk, one of the risks individuals fail to measure is what they stand to lose by the lack of investing. The truth is, you will never know everything in the field that you want to venture. You’ll find yourself learning at a high rate once set your foot in the game and own property.

4. Don’t fool yourself into thinking that you are an investor when you are an analyzer
So many people love talking about the game thinking that it means they’re playing it. They play on calculators to see the returns. Real estate is not fantasy football. You do not get points for watching others play and win.

Real Estate Newbie Investor

5. Realize not knowing where the market going is OK.
I spend a significant amount of time thinking if I should buy, sell, or wait. Cash flow is the equalizer in RE. If the market rises, I make lots of money when selling. If the market depreciates, I don’t lose anything if I don’t sell. I cannot predict the market flow, but I know families are going to need a place to stay.

6. You CAN overcome the lack of sufficient reserves.
I didn’t need that much in the past because of my disposable income. However, if you are not acquiring because you do not have enough in reserves, that is no excuse. R E investing is still a business; it’s putting money to work for you while assuming some risk while in the act. If you are trying to use real estate as a way to build wealth but you are not creating wealth with what you have, then, you are not ready for this.

7. Finding a support system is very possible.
Support systems are necessary, but if you are reading this, you already have access to one. Not starting because you do not have a support system is silly. Reaching out and find one like Real Estate Virtual Tours. Your future you is dependent on your present action. Don’t be like the former me.

 

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Create Real Wealth: Real Estate Investing

Investing in a property requires thinking ahead, and you are here, which means you’ve taken a step in the right direction. Not only is it important to consider the type of property, but also how to get out of it – be it to sell for a nice gain, or to back out if the deal is going south.

Many are finding the turnkey property buying method to be among the most effective, and that should be explored when considering your options.

Three Things to Do with Your Property Once It’s Bought

Owning property is not rocket science, so if this list seems simple it’s because it is.

  • Hold
  • Cash out
  • Sell

Holding it provides cash flow for your life and that of your heirs. Cashing out is a means of keeping the property but refinancing so that you can take all of the money, still have the property, and not pay any taxes like you would if you sold it without reinvesting into a 1031 Exchange.

When selling you can do so to a family looking for a nice home, an investor, or a turnkey provider. Each has a different method, but the end result is that you have successfully made your exit strategy. When you sell, do not forget to take the profits and put them into a larger property so that you can avoid taxes.

Before getting into that, though, not all properties make money.

How to Profit When You Exit

When holding the property for life it must have positive cash flow. This means that it is putting money into your pocket rather than taking it out. As one famed investor says, ‘if it costs you money, it’s not an asset; it’s a liability.’

Cashing out requires equity. If the home is going down in value because of the neighborhood, the economy, or because you haven’t done any maintenance in the past seven years, the bank is not going to risk its own money to give to you. The same goes for selling it to a private buyer or investor.

This is why location is so important.

Location Matters

When most people think of location they only consider the city, not the neighborhood. They think of a high-end town like Westbury, New York, but not the fact that Westbury has two different parts, and they are completely unlike.

People also think of Los Angeles, which has areas that young people want to move to, and others that they don’t. This matters when it comes to cash flow and appreciation.

If no one wants the property where you invest there will be no cash flow. The same goes for appreciation. It’s as simple as that. Not long ago there were properties selling in Detroit for less than the price of a used car, but the investment wasn’t a good one because there was no demand for the homes and they required further investment.

Demand is predicated not just by price alone. Factors include:

  • Jobs
  • Job Growth
  • Local economy
  • Population size/trends
  • Education

People can’t live where they can’t afford, and that means they need cash flow for themselves so that they can pay their rent. Also, no one wants to live where the education is terrible. They want good public schools, and they also want at least one college nearby so that their children won’t have to live far away just to have a decent life.

The point is that people have to want to live somewhere for it to be worthy of your investment, or you won’t be able to create wealth or cash flow.

 

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