When you are looking forward to investing your money in productive areas, it is advised that you divide your investment into different profiles. This helps to make your investment portfolio diversified. You must be thinking why to invest in different areas when you can capitalize on a large amount of money in one profile. This division of investment helps in reducing the risk of drowning your entire capital. When you invest in different profiles your risk of loss will divide and you would still have a chance to earn from one business if you face loss in another.
One of the best option you need to avail in investing in the real estate business. This industry is lucrative and the chance of loss in low as compare to other businesses. Real estate investment would prove to be a wise decision as it becomes a source of additional income. You might find trouble in deciding how and where to invest if you are a beginner and have no knowledge about the real estate business. For your convenience, we have compiled a few important pointers that you have to follow to find the best investment opportunity.
1. Know your Exit Strategy
Over the years, I cannot tell you how many real estate wannabe people I have seen get so eager to get into real estate they start purchasing houses in different niche area. This is something I call the collector investor, real estate is a hobby, it’s a trophy to say Yes I have a house in Austin, San Antonio, Dallas, the collector investor merely likes to visit different cities and know they have a piece of real estate in each of them. The pro’s of the collector investor is they are investing in different markets, the downside is they may not always be making decisions rationally based on investing criteria, they may be investing out of emotion.
When starting in real estate, it’s important to know your exit strategy. Are you going to buy , flip and sell? Buy, fix and hold onto the real estate for several years as a rental and then sell?
When you know your exit strategy, you are thinking from a business persective versus emotional buying consumer perspective.
2. Do you want to be a full time or part time investor
Full time or part time real estate investor. You CAN make money with either.
Knowing whether you want to pursue real estate full time or part time is a decision itself. Many people think of jumping into real estate house flipping part time while they do their full time jobs, and wonder why after a year they still have not landed a deal, or why they are struggling. Flipping a house is a lot of hours of due diligence to stay on budget, on schedule and mananging people, quality checks. Unless you have a reliable foreman or contract general, it’s not realistic to think you can be hands off throughout the flipping process.
I have seen the horror stories of realtors trying to do house flipping on their own, only to go way over budget on the remodel and after selling the house they are still at a lost of $10k. Scary stuff.
You’ve seen what it looks like to be a full time real estate investor whether it’s HGTV, List it or Love it, …there are several TV shows that highlight the rigorous process in house flipping. The other part is finding deals, house walk throughs, making rehab estimates, interviewing contractors, checking up on contractor work, marketing the house…etc
So what is passive real estate investing like?
A passive real estate investor understands the fundamentals how to make money in real estate, they look for opportunities to be the investor in the business deal and get a share of the profits. Time spent in the rehab, house flip, marketing, deal finding process? Nada.
Passive real estate investors are sophisticated investors who have capital to invest and collect the payout and checks. Sounds great doesn’t it?
I started out as a single family home active investor, as I got more experienced, I realized time is what’s most valuable. The banker, the money lenders make the most return on time. That’s when I switched gears into passive real estate investing and have never looked back. I can enjoy the same profits, and tax benefits as a full time real estate investor with part time or less hours.
3. Research Future Outlook of location
Before investing in any profile, the first thing you need to start with is research. Read and research about the city and location of the real estate property you are about to invest in. I teach the full version of this in my Real Estate investing course. Real Estate is not day trading stocks, you do not buy it this year and sell it the next. To let real estate fully appreciate, it takes time, and time I mean years. Hence doing a thorough research of what the demographic forecast and economic trends are of the area you are investing in is key.
Just as any business it is import to know its pros and cons. Thorough research will provide you with the needed insight into the industry and how it works. This will help you in finding the right Real estate investment deal that fits your need.
4. Decide Which Real Estate Property Type You want to Invest In
You need to make up your mind which type of property you are willing to invest in. Your decision would be influenced by the amount of capital you have. The options you have in real estate properties are:
- Residential property
- Industrial property
- Commercial property
You can choose anyone based on your interest and the availability of capital. You have to ask the following questions from yourself to know if you are making the right decision:
- Why do I want to invest in real estate investment?
- Which type of real estate property interests me more?
- Do I have enough knowledge to step into the real estate market?
- Do I have enough capital to finance my investment?
Once you have answers to these questions moving further on the investment journey becomes easier.
Look For Potential Properties
Start contacting real estate agents to know about the potential properties that you can invest in. do not hurry and go for the first catch, look around to find a sound project to invest in. Learn how to identify opportunities and exactly what to offer the price as to maximize your profit. Learn more about the possible Real estate investment projects. Finalize the investment after evaluating each and every property.
Benefit from real estate’s repeatability – Once you learn the basics, learning advanced skills is even easier than you might realize. You can use the knowledge you build about real estate investing to repeat the process over and over again, on multiple types of properties, increasing your profits considerably without working harder to do so.
Bold Millionaire, helping you to become knowledgeable about how to analyze and identify profit potential in real estate markets. Your future training will take you to the next level and to those who are committed, the potential for wealth accumulation will be unlimited. Sign Up to get a FREE strategy call.