Beyond the purchase of a family home, real estate investing is not for the faint of heart. Instead, it requires patience, discipline and a certain amount of hard-headedness. In addition, whether you plan to be an active or a passive investor in real estate, there are a lot of concepts and details that you must master to be successful.  Here are three of the most fundamentally important:

1. Understand the Deal

Real estate deals can become quite complicated but that does not mean that they are lucrative or that you should get involved with them. It is always wise to start with projects that you understand and, if you don’t, have someone explain the details to you. Then progress to more complicated deals. In short, the only wrong time to ask is after you have already made the investment.

2. Always Be Protected

There is a reason for paperwork and it is not trivial. It memorializes the terms of a deal so that there is no confusion in the future if there is a disagreement and it should protect the borrower as well as the lender. Protecting yourself also means doing the proper due diligence. Independent inspectors and appraisers should be used to get a truly objective assessment and valuation of the property.

3. Remember… It’s Your Money

This is the one thing that you must absolutely remember. It is a simple fact of life; no one, no matter how well-intentioned, will ever care for your interests as well as you. With a passive investment, you certainly need not concern yourself with the everyday aspects of the property but it also does not mean that you should be satisfied with getting your monthly or quarterly payment.  Instead, you should also stay in touch with the borrowers and try to anticipate any future problems with your cash flow.

As you can see, investing in real estate is not the simplest of tasks. In fact, there is wide range of specialties that contribute to a successful real estate deal. Still, for the investor with the right risk tolerance, loans for investment properties can be quite lucrative.

While these deals can be found through individual channels, it is often more efficient to look for private money lenders who specialize in these types of deals. In addition to bringing deserving ­borrowers and qualified investors together, private money lenders also scrutinize their deals and have the necessary resources to finalize the deals in a convenient and cost-effective manner.