When it comes to real estate investing tips, it is very easy to fall into the trap of believing every advice, and every tip that comes your way.
Whether you are a beginner investor, or well advanced into your real estate career, it is no secret that this market is competitive and very dynamic. There is also an infinite list of good real estate investing tips and not-so-good real estate investing tips out there, and to beginner investors, it might be challenging to filter and funnel the list. For successful real estate investors, the more creative and knowledgeable, the better their chances of making money and yielding strong returns on their investments. Even though real estate is regarded as a safe investment, it is crucial investors keep up with the ever-changing market trends and fluctuations to succeed in this industry. Without adapting their real estate strategy to the housing market trends, real estate investors will not be profitable in this business.
Related: Top 9 Traits of Successful Real Estate Investors
The Not-So-Good Real Estate Investing Tips You Should Be Aware of
Before we jump into the best real estate investing tips every real estate investor must know, we will brush up on the worst real estate investing tips hindering real estate investors’ profit potential in a BIG way.
1. Buying your first investment property is a walk in the park
It is safe to say that buying your first real estate investment is far from a walk in the park, and a lot of people pull out in the early stages if they are not fully prepared to take on this role. Without the right knowledge and real estate insight, real estate investors won’t make it far. What will you have to do to make it far in real estate? Acquire and learn as much as you possibly can about real estate investing, seek advice from successful real estate investors, and delve into the culture and the world of real estate investments. Become a real estate expert to reap the riches and long-term financial success.
2. Let your real estate agent do all the work
One of the worst real estate investing tips is to rely fully on your real estate agent. It is not very wise to hand all responsibility to your real estate agent, and/or have someone else be in total control of your money and the decision-making involving your business and wealth. No one is best suited to make the right decisions for your business but you. With this said, we are not saying to discount hiring a professional real estate agent to shed light and guidance, but this real estate professional should not have full autonomy on your real estate investments and business decisions. Our advice to you is to formulate an investment business plan with short- and long-term goals to reach incremental success in growing your real estate business. Once you have specific goals, it is easier to find the best real estate strategy aligned with your business plan.
3. You don’t need money to invest in real estate
If you are looking to finance your real estate business, investors must have initial capital to get approved for a loan. More specifically, around 20% down payment is required to finance a real estate property investment. To make money in real estate, you need money to start with. But keep in mind that successful real estate investors find creative means to use less of their own money to grow the business, i.e., using home equity as leverage to buy more real estate properties.
4. You don’t need to have a financial cushion to fall back on
This one of the bad real estate investing tips is a big no-no! In tandem with the earlier theme, to make money in real estate, you need money. Moreover, to succeed in real estate and grow your investment business, you must have money saved up and set aside to mitigate any financial risk in the form of huge losses, i.e., evictions, vacancy, major repairs, etc.
5. It is all about the investment property, not necessarily the neighborhood of choice
That’s one of the real estate investing tips you should never ever listen to. Location is a vital vessel to grow your cash flow returns and make money in the short and long term. However, paying attention to the macro environment is just as important as the micro. In other words, the neighborhood and the area of choice are just as important as the rental property itself. Before you hone in on a rental property, assess the neighborhood and the quality of life for your potential tenants. Good tenants sustain your real estate business in the long term, while bad tenants bring many headaches and burn a hole in your pocket. Long story short, the better quality neighborhood you invest in, the better quality tenants you are bound to attract.
Related: Why Single Family Homes Are the Best Rental Properties
Best Real Estate Tips You Must Know
Real Estate Investing Tip #1: Invest in the right location, at the right price
This one of the good and important real estate investing tips is pretty straightforward: invest in the right neighborhood before you zero in on a rental property. Use the price to rent ratio to find the best neighborhoods yielding the strongest returns. Mashvisor’s heatmap tool shows real estate investors the best areas to invest in via key real estate metrics, i.e., cash on cash return, cap rate, occupancy rate, and the highest rental income across the country for both traditional rentals and Airbnb rentals. Conduct comparative market analysis (CMA) to decipher good real estate opportunities across the country based on real estate comps. Mashvisor gives real estate investors fast access to all recent real estate comps or recent listings across the US in an instant. You will be able to decipher real estate comps from all the current listings by filtering the city, area, or neighborhood of choice.
Real Estate Investing Tip #2: Be very selective when it comes to choosing the right tenants
As previously noted, it is crucial to reiterate the importance of being very selective in whom you choose to rent your investment property. A good tenant is a better bet to keep your rental property in a good shape and your rental income in sight. To mitigate the risk of bad tenants and/or vacancy, make sure to double down on background checks and references. Interview your tenants and take your time before you make your final decision. It usually takes 3-6 weeks to find the right tenant for your rental property.
Real Estate Investing Tip #3: Hire the right personnel
When we say ‘the right personnel’, we mean the right real estate agent, the right property manager if deemed necessary, the right property inspector, the right real estate lawyer, the right tenant, etc. Treat real estate like a business and make sure your team or all your stakeholders are fit enough to run and grow your investment business in turn. Making money in real estate requires the right human capital, not only the financial means.
Real Estate Investing Tip #4: Enhance your investment property appeal for higher valuation
Landlords and real estate investors have a lot of discretion and autonomy to increase the value of their property in the long term. Do not neglect or delay repairs, stay up to date with upkeep and maintenance. Enhance the rental property appeal from the inside out. A green lawn makes all the difference.
Real Estate Investing Tip #5: Do your due diligence before you purchase your first investment property
This goes without saying: assess, analyze, learn, and relearn. Make sure you do the right due diligence to assess and estimate your real estate investment profit potential and long-term returns.
Real Estate Investing Tip #6: Have the right financing in order
To avoid financial hiccups, make sure you set aside a savings account to mitigate the risk of financial loss and/or major expenses on your real estate investments.
Related: Build the Dream Real Estate Investment Network in No Time
Conclusion
Buying investment properties is a great business opportunity for many. The best real estate investing tips you will ever hear are to conduct the right due diligence and the right real estate market analysis and investment property analysis before you jump the gun and start investing your money in real estate. Meanwhile, make sure to avoid all bad real estate investing tips.
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