Six Pointers for Newbie Real Estate Investors
Real estate often wins over stocks, even in a bad economy, and that's what makes the business very lucrative. After all, people will always need a place for a myriad of reasons, so the industry is basically just a supply and demand game.
If you're planning to invest in real estate, here are six things to keep in mind:
Setting Financial Goals
Before purchasing that first property or doing your first analysis, know your objectives for investing. Should you need references for this, go to the site at http://www.huffingtonpost.com/scott-yancey/real-estate-investment-ma_b_8071862.html for some. What do you expect to gain from this project? Keep the "time vs. money" dynamics in mind: when you have more of one, you will need less of the other to reach your financial goals.
If you're not confident about your ability to create financial goals, seek help from a financial advisor.
Getting to Know the Industry
Books and CDs on real estate investing are great, unless you put them all in a shelf. Knowing the basics is, of course, crucial. So yes, you have to study those notes, but don't make this an end in itself. Instead, write down all the things you want to know about the real estate industry here, and look for the materials that provide the answers.
Exploring Different Properties
It's never a good idea to just grab the first property you lay your eyes on. Instead, take a look at different properties out there so you have a whole selection. So many investors purchase a property just because it looks good to them, unwilling to see what else is available. Remember, you're not going to live there, so don't base your decision on your personal preferences. Begin with a number of options, and then narrow down your list based on the criteria or goals that you have defined.
Knowing When to Strike
This is the flip side of the third tip. Sometimes, beginning investors spend too much time waiting for a "better deal" that they end up wasting time. This can backfire dramatically, making you lose what would have been a great deal if you hadn't been too picky. The whole thing may feel overwhelming, but you have to realize that there's no such thing as a "perfect deal." It's better to act on a deal that satisfies most of your criteria than wait for something with great uncertainty.
Making a Thorough Financial Analysis
Be realistic because it's what works. Review your different alternatives to know which of them makes the most sense, financially speaking. Buy something only if the price and terms are along the lines of the results of your analysis. Stay away from sellers who overestimate the property's value with pro-forma or estimated data. A pro-forma is nice to start the conversation with, but it's important that you know the real numbers before you make a decision.
Real Estate Investing vs. the Real Estate Business
As an entrepreneur, you already own a business and investing in real estate can be a way to support that business, not replace it - except, of course, if that's what you want to happen. In short, don't get so caught up with your transactions to the point that you end up compromising your core business. Unless real estate is your business itself or you're trying to transition into it full-time, note that these transactions are only a means to an end, and are not ends themselves. Read about Jody Kriss on Linked In, an expert in real estate properties.
Real estate often wins over stocks, even in a bad economy, and that's what makes the business very lucrative. After all, people will always need a place for a myriad of reasons, so the industry is basically just a supply and demand game.
If you're planning to invest in real estate, here are six things to keep in mind:
Setting Financial Goals
Before purchasing that first property or doing your first analysis, know your objectives for investing. Should you need references for this, go to the site at http://www.huffingtonpost.com/scott-yancey/real-estate-investment-ma_b_8071862.html for some. What do you expect to gain from this project? Keep the "time vs. money" dynamics in mind: when you have more of one, you will need less of the other to reach your financial goals.
If you're not confident about your ability to create financial goals, seek help from a financial advisor.
Getting to Know the Industry
Books and CDs on real estate investing are great, unless you put them all in a shelf. Knowing the basics is, of course, crucial. So yes, you have to study those notes, but don't make this an end in itself. Instead, write down all the things you want to know about the real estate industry here, and look for the materials that provide the answers.
Exploring Different Properties
It's never a good idea to just grab the first property you lay your eyes on. Instead, take a look at different properties out there so you have a whole selection. So many investors purchase a property just because it looks good to them, unwilling to see what else is available. Remember, you're not going to live there, so don't base your decision on your personal preferences. Begin with a number of options, and then narrow down your list based on the criteria or goals that you have defined.
Knowing When to Strike
This is the flip side of the third tip. Sometimes, beginning investors spend too much time waiting for a "better deal" that they end up wasting time. This can backfire dramatically, making you lose what would have been a great deal if you hadn't been too picky. The whole thing may feel overwhelming, but you have to realize that there's no such thing as a "perfect deal." It's better to act on a deal that satisfies most of your criteria than wait for something with great uncertainty.
Making a Thorough Financial Analysis
Be realistic because it's what works. Review your different alternatives to know which of them makes the most sense, financially speaking. Buy something only if the price and terms are along the lines of the results of your analysis. Stay away from sellers who overestimate the property's value with pro-forma or estimated data. A pro-forma is nice to start the conversation with, but it's important that you know the real numbers before you make a decision.
Real Estate Investing vs. the Real Estate Business
As an entrepreneur, you already own a business and investing in real estate can be a way to support that business, not replace it - except, of course, if that's what you want to happen. In short, don't get so caught up with your transactions to the point that you end up compromising your core business. Unless real estate is your business itself or you're trying to transition into it full-time, note that these transactions are only a means to an end, and are not ends themselves. Read about Jody Kriss on Linked In, an expert in real estate properties.