Nowadays everyone you talk to seems to be an expert on real estate investing. While it is true that real estate investments have made many Americans rich, some of them filthy rich, this doesn’t mean that everyone knows how to make money in real estate. Thus, we have gathered a list of the 10 things that everyone should know about real estate investing before buying an investment property and starting hoping to make money from it.
Things That Everyone Should Know About Real Estate Investing #1: Real Estate Investing Is a Business
Before you start buying properties and making money, you should realize and remember forever that real estate investing is a business and should be treated as such. When you buy an investment property, you make a business transaction, and there is no place for emotions or feelings. Buying a rental property is different from buying your own home and should thus follow strictly business (financial) principles.
Things That Everyone Should Know About Real Estate Investing #2: Successful Real Estate Investors Depend on Numbers
Regardless of whether you are a beginner real estate investor or an experienced one, you should always base your investment decisions on numbers and figures. Thus, you should become an expert on real estate market analysis (also known as comparative market analysis) and investment property analysis, even before you start buying an investment property.
Learn here How To Do Investment Property Analysis to always buy the best, most profitable investment properties in the US housing market.
Things That Everyone Should Know About Real Estate Investing #3: Real Estate Investing Is Leaning by Doing
There is no one who was born an expert on real estate property investments. Regardless of how much you read about and study the field of real estate investing, there will always be so much more to learn once you buy your first investment property and become a real estate investor. Experience is of crucial importance for house investors.
Things That Everyone Should Know About Real Estate Investing #4: Location Is Key
Location location location – some experts say that these are the three most important words in the field of real estate investments. Location is of crucial importance when buying an investment property. Indeed, it is much better to buy a bad rental property in a good location than to buy an excellent rental property in a bad location. Location is the main determinant of the best property type, tenants pool, rental income, rental expenses, return on investment (including cash on cash return and cap rate), etc. Moreover, location is constant; while you can make renovations to your rental property, you cannot just change the location of it.
Things That Everyone Should Know About Real Estate Investing #5: Tenants Are Your Best Friends or Worst Foes
Once you become a real estate investor and a landlord, you have to deal with tenants in order to make money from real estate. Tenants are your best friends as an investor because the rental income you receive from them in the form of monthly rent allows you to make the monthly mortgage payments, to cover all other rental expenses, and to be left with positive cash flow each and every month. Tenants though can also be your worst enemies as they may stop paying rent and/or cause too much damage to your rental property. Thus, screen your tenants carefully before renting out your income property to them.
Things That Everyone Should Know About Real Estate Investing #6: Real Estate Investments Tools Give You (Unfair) Advantage over Other Real Estate Investors
Real estate investment tools are there for you to use to make money from real estate. Any real estate investor in the 21st century needs to learn to make use of the available tools and resources. First and foremost, get yourself a strong and reliable investment property calculator, like Mashvisor’s rental property calculator. Using predictive analytics, this real estate investing tool will allow you to make the best investment decisions each and every time.
Read here to learn about the 8 Must-Have Real Estate Investment Tools every investor needs to get a hold of.
Things That Everyone Should Know About Real Estate Investing #7: Positive Cash Flow Is a Must
There are very few real estate questions which have a straightforward answer on which all experts agree. Whether you should invest in real estate for cash flow or for appreciation is no exception in this regard. But remember, while appreciation is a great thing in real estate investments, you should always go for investment property with positive cash flow. Positive cash flow is the only way to make money with real estate each and every month. The opposite – negative cash flow – actually leads to losing money, and that’s something no real estate investor ever wants.
Things That Everyone Should Know About Real Estate Investing #8: Real Estate Investing Is NOT a One-Man Show
In order to succeed as a house investor, you need other real estate professionals and experts. Thus, you should start building your real estate investment network long before you buy your first investment property. Your real estate investment network should include other real estate investors, real estate agents, real estate brokers, real estate lawyers, property buyers, property sellers, money lenders, professional property managers, handymen, etc. That’s where your real estate partners will most probably come from too.
Things That Everyone Should Know About Real Estate Investing #9: Investing in Real Estate Does Not Necessarily Require a Lot of Money
Many people think that they need to have a ton of money to start investing in real estate. This is not the case at all. There are plenty of ways to buy an investment property with little or no money, including private money lenders, hard money lenders, real estate partnerships, etc.
Things That Everyone Should Know About Real Estate Investing #10: Real Estate Investments Offer Endless Opportunities
One of the best things about investing in real estate is the unlimited opportunities. There are so many property types (single family homes, multi family properties, condos, apartments, townhomes, etc.), locations (close to home or out of state), rental strategies (traditional rentals vs. Airbnb rentals), and investment strategies (rental properties, fix and flip, real estate wholesaling, etc.) that you can choose from. Real estate investing offers a great match for just about anyone’s needs and preferences.
To explore your options to start a real estate investing business with minimal financial resources, read: Buying Investment Properties With No Money.
Now that you have learnt the 10 things that everyone should know about real estate investing, it’s time to take the first step towards becoming a real estate investor. To start your 14-day free trial with Mashvisor and subscribe to our services with a 20% discount after, click here.
