While real estate investing is not for the faint of heart, it can be successfully navigated by a prudent investor who does his homework, objectively evaluates deals and uses the vast array of resources available from expert sources.
Most investors will choose a smaller deal for their first foray into real estate but all of these deals share some inherent similarities. Here are a few tips that will increase anyone’s ability to succeed as a real estate investor:
Travel the Neighborhood
It is essential to understand what you are getting yourself into. As an active investor, you may be required to travel to the property and deal with tenants and their issues. The same goes for collecting rent. If you are uncomfortable doing these things in certain areas, you will have a difficult time reaping the benefits of your investment.
Pre-Inspect the Property
Sellers are legally bound to disclose a whole host of issues with a property and they will. They will not, however, disclose any “undiscovered” problems. If it is not plainly evident, it will become your problem as the new owner. Be sure that you or your agent and a certified inspector (that you choose) make a thorough inspection of the property before you negotiate price.
Evaluate the Market
It is a simple fact that the same property has a different value for different people in different economic circumstances. If the rental market is hot, an apartment complex owner may ask for a higher multiple of earnings while a single homeowner in a redeveloping neighborhood may ask for more than the value of the house since it can be considered a “teardown” with a much more valuable residence built on the lot. The point is that the price must make economic sense to you.
Leverage Expert Resources
There is a multitude of resources available to real estate investors; from the one-dimensional abilities of brokers and inspectors to the overregulated atmosphere of traditional lending institutions. While each of these can certainly aid a real estate investor in becoming successful, none match the ease, reliability and security of private money lenders.
Private money lenders bring high-return deals along with their borrowers – both scrutinized by the private lender – to qualified investors. It is a passive investment deal that comes without the headaches of active management, and the added bonus of offering a higher return than ordinary investments.