Everyone has a thing or two to say when it comes to real estate investment advice.
“Treat your real estate investment like a business.”
“Don’t go for negative cash flow properties- there’s no saving them.”
“Always buy low and sell high.”
If you’ve been in this industry for a minute, you’ve probably heard every piece of real estate investment advice under the sun. But what’s the advice that you can tune out? Which words of wisdom should you follow for success? Here is some of the best real estate investment advice that you NEED to hear.
Start Working on Your Credit Score Today
Being able to leverage real estate is one of the greatest benefits of this investment path. In general, it can help you get a better return on investment. It’s also just a more realistic path for most beginner investors as having the cash saved up to cover the full cost of an investment property is difficult.
While there are a few options for financing real estate investments with a bad credit score, doors will open up if you start taking the time to work on your score now. Typically, mortgage lenders want a credit score above 620. If you want better terms and interest rates, you’ll have to work on getting that score up to over 660.
The reason why you need to hear this real estate investment advice right now is that improving your credit score will not happen overnight. It takes time and effort to do, so it’s best to get started now so you can avoid the headache of looking for alternative financing methods and get that pre-approval ready for when you wish to enter the real estate market.
Read This: How Can You Improve Your Credit Score for Financing Investment Properties
Don’t Just Buy That Property for Sale Down the Street
You could get your real estate career rolling with the property for sale a few houses down from where you live. But is this the best way to get started in real estate? While the answer might be a resounding yes, the point is that you ask that question. Is my local housing market a good place to buy a rental property? Or is it better for fix-and-flips? Does this neighborhood even attract buyers or tenants? How much would I be able to charge for rent in this area? Is the investment property in good condition? What kind of return on investment can I get with it? If the answer to all of these questions is positive, then sure, buy that property. If not, then don’t be afraid to explore real estate markets across the nation. You might find cheaper real estate for sale with higher returns if you do.
Use All the Real Estate Investment Tools at Your Disposal
We’re no longer living in a time where you have to rely on your gut feeling or instincts to invest in real estate successfully. Those days are long gone and now we have all kinds of tools and real estate software to help with choosing the perfect investment property. So why not take advantage of this? Real estate investing is quickly becoming a data-reliant industry. As other property investors take advantage of this, it becomes easier and easier to spot the best investment opportunities. Don’t be left behind struggling to analyze properties and ending up with negative cash flow just because you refuse to get on board with the changes. Get ahold of the latest data and machine-learning software to up your game and find success. It may cost you extra, but it’s worth it when it can make the difference between losing money and making money in real estate.
Mashvisor has all of the real estate investment tools you could ever need. Sign up now to try them out for yourself.
Don’t Cut Costs Where It Matters
Continuing from the last point, my next piece of real estate investment advice for you is don’t skimp where it matters. Yes, you want positive cash flow and that can mean cutting costs here and there. But it’s not a good idea to try and save money in areas of your investment or rental property business that matter.
For example, the aforementioned real estate investment tools are a worth-while expense. Hiring a property manager can be the difference between a failed multi-family rental property and a successful one. Working with a real estate accountant can help you save money as they are experts when it comes to the tax deductions you might miss or not fully understand. Even rental property costs that have to do with maintenance and upkeep can be worthwhile. Getting rid of that lime green carpet in the living room can mean renting out the place much faster.
Essentially, it’s important to review your budget and objectively decide what costs you can afford and which you can save on without hurting your real estate business.
Related: The Best Real Estate Investing Tips for Cutting Down on Your Expenses
Always Focus on the Bigger Picture
Successful real estate investors can visualize the bigger picture and as a beginner, this is a skill you need to acquire quickly.
Short-term returns can seem promising and that’s why a lot of new investors go for fix-and-flips. All they can think about is buying that investment property for $65,000 and selling it for $100,000. But what about the renovation costs? Or the time you’ll have to spend dealing with a negative cash flow property? What about all of the effort you’ll have to put into a project like this?
Many new real estate investors avoid rental properties because all they can see is that next month, they’ll make $1,000 in rental income. Compared to that sweet $35,000, it’s obvious why they choose the fix-and-flip real estate investment strategy. But what about real estate appreciation? What about the possibility of making passive income that’s reliable month to month?
If you don’t think of the bigger picture, you could miss out on some great opportunities, or even worse, end up with a bad real estate investment.
The Final Piece of Real Estate Investment Advice I Have for You
Just get started. This is a pretty common piece of advice but I feel it’s important for you to hear again and again. Of course, getting started in real estate investing doesn’t mean jumping in head first. It means taking the first step of learning how to invest in property, talking to professionals and building your network, working on that credit score, and starting your investment property search. If you never take that first step and keep wasting time toying with the idea of investing in real estate, you’ll never reach financial freedom. It’s as simple as that.
Want More? Here’s The Best and Worst Real Estate Investment Advice.
What are some tips or pieces of advice you think the modern-day real estate investor needs to hear?