Many people are wondering what real estate investing is all about. Even if you’re a small real estate investor, you will still have high earning potential. If you compare the earning potential in the real estate business to other types of investments, the value of real estate properties don’t decrease in terms of value. If you want to secure your future and perhaps build your very own retirement portfolio, you should consider real estate investing.
Here are smart tips for you to become a small real estate investor:
- Try to find a mortgage broker. There are many mortgage brokers out there. Some are successful in their chosen profession but there are also those who are not that knowledgeable. You should try to compare several mortgage brokers in your area. Talk to them and see that they can share to you. You can learn so much from their past experiences, whether failure or success.
- Don’t just get rid of your investment properties without considering the consequences of such decision. You can resell some investment properties to other real estate investors. Why don’t you try to purchase a certain property which is also attractive to your fellow investors? If you purchase a property that doesn’t meet your expectations, needs, or wants, you may end up doing a lot of work or it may turn into a long term real estate investment. You can get high commissions if you purchase properties that are also of much interest to others.
- Before you make any purchase, you should first research about its potential earning properties. For example, you’re purchasing a property that you plan to rent out. Sustainability is a key factor in choosing among rental properties. Try to check if the rental property requires minimal upkeep and if it’s in firm condition. Location is another key factor because the property should be situated near service providers and retailers. What is the area’s average income? You should choose an area where average rent is high because a low-rent area will also give you low income.
- Do you have your own home? If you want to become a successful real estate investor, you should have your own home. By purchasing your very own property, you will learn about the purchase process. You will also become familiar with the market and property entities.
- Distribute flyers if you plan to purchase properties. You can start in your own neighborhood or you can also do this in other places where you plan to purchase your real estate investment properties. Business cards are also very important. This is an excellent way to let home sellers know that you’re looking for properties. You will also be able to choose among several properties which meet your predetermined criteria.
- If you plan to get rental properties, why not actually live there? By doing so, you can enjoy low-cost living because you’re earning income at the same time. You will also have higher deductions and not only that, you can stay current on the maintenance.
- Find your own personal attorney. Get an attorney who is experienced in the real estate business.
Successful real estate Investor
Consider the following tips and soon you can become a smart real estate investor. Real estate investing is for everybody but since very few people become successful in it, you should learn about the many facets of the industry.
What to avoid in real estate investing
For beginners, real estate investing is never a walk in the park. It has a lot of risks. There are numerous companies that sell property investments for novices but the question would strike you with the trust that they impose. This is a beginner’s investment guide for one to realize the things that he or she needs to say “no” to and what should be regarded as false reassurances.
Tip 1 – Scout the area
Before investing in a property, you must first asses the area. Does it have every inch of it being desirable for a family, a couple or an individual to live in? For beginners, you must first try to settle on the ones that’s “safe”. Ignore those that have risks attached to it. Stick to the properties with good reputation. Areas having good reputations will not cover any mortgage therefore looking for an area where figures do stack up is more appropriate. You have to be very careful with individuals and companies who indulge in selling properties that looks ancient or having lots of deserted houses or was known to be an area having illegal activities like drug trafficking and so on. These kinds of properties are fine but if you don’t have any kind of background yet, stick to the safest areas offered.
Tip 2 – Trust no one
Ask yourself this – do I have the money to afford the property of my choice? Commissions come in huge packages. Individuals or companies have ways of creatively getting your attention and dodging you into agreeing with their offer. Some of the truths are hidden lies that often make you think that you can afford a particular property where in fact, it will lead you to bankruptcy. If you think you can’t afford the property, don’t accept the offer. Turn it down. You will have a certain gut feeling about this, rest assured. Don’t be easily swept with seemingly wise words and sweet nothings. Follow your own pace. However, pushing yourself to achieving your goals will lead you in achieving learning and development.
Tip 3 – Ask
Don’t be afraid to pop out a question especially for those who are saying so much. If an agent or a certain individual offers you something, ask the person if he or she has invested in the property that he or she is offering. If they have, then, it proves that the property is and will be a good investment. But if they haven’t invested in anything that they claim, pop another question. Sometimes, what companies and agents offer will speak for themselves. Think, if what they offer are so fantastic, then why haven’t they invested on it? Until they have satisfied your questions, might as well turn down the offer.
Tip 4 -Be on your guard
There are a lot of people who will go into such lengths such as fooling other people for their benefit. You shouldn’t be fooled by what companies claim about property masters or gurus for these may lure you into believing nothing. In real estate investing, you have to always be on your guard to avoid certain decisions that can lead you into a predicament.
Tips for avoid in real estate investing
Real estate investing is considered by majority of business experts as one of the safest and best ways to make your money grow. Investments in real estate usually pronounces varieties of potential and creative profitable transactions. Beginners oftentimes get a head start through buying and renting another home and consider it as a property for investment. The road to real estate investing is quite challenging but with good faith, one will eventually get through.
Step 1 – Capital
However one sees it and however other people states that money is not the most important asset in real estate, it still is contradictory. Money is a great need in real estate investments. A capital or fund must be produced in order to facilitate the deal otherwise the business won’t work. By talking to someone who can lend you some cash or by going straight to your bank, you can patch up a certain amount meant for
personal investment or savings plan.
Step 2 – Go to seminars
To be able to grasp the environment of property investment, you should attend trainings or seminars concerned with the business. Asses the way it was given out, professionals who hold courses in the top training institutions and convention centers are the ones you should trust. Before looking into the Internet for information, you should first put your attention to books for sometimes, stored information in the net are not entirely true. Some websites are not that reliable when it comes to real estate information. Better in books, they give you more accurate information and detailed data of the industry.
Step 3 – Identify motivational sellers
This won’t be easy but it’s worth it. Identifying sellers who are duly motivated are those who can be trusted with your investment career. A person who is motivated is someone who sell relatively fast and accurately proportionate. From a motivated seller, you can buy a property, like a home, for less than thousands compared to its original market value, turning it into instant profit.
Step 4 – Be knowledgeable
This has been said over and over again not because it is necessary but because it is one of the main keys in real estate investing that makes you updated, aware and adept in making certain decisions that could affect your investment. Through knowledge, there are certain decisions that you can make for yourself without worrying of the risks. One example is assessing the structural soundness of a house that you are interested in investing. If you couldn’t do this for yourself, you can bring someone who can and knows how.
Step 5 – Don’t hesitate to hire
If you still don’t know the drill and is quite confused with how things are turning out, bring someone who can help you figure out the process. Hire an appraiser to have a pretty good idea on the property’s evaluation.
Step 6 – Step on it
If you have already chosen the property you like, immediately produce a down payment or rent it as soon as you have the money. Make the term as long as you can at the rate which covers your entire monthly fees, property taxes and mortgages. This will help you ease out concerns when dealing with real estate investing.
Investing in positive cash flow property involves the act of purchasing property that creates a surplus ore-tax cash flow. The cash flow is the foundation of any successful investment especially those that are starting out.
Zack Childress strategies to finding positive cash flow property
Look for high yielding suburbs:
High yielding suburbs are areas that give a high return on the invested capital. Look for suburbs in your neighborhood that give about 10% and above in rental returns and about 30% in the resale profit on the amount that property was bought.
Buy properties that are 20% or more below the median price in the area:
This is what is called a good deal. Look for property that is below the market price and then rent or sell it at the market prices. It gives you a larger profit margin than any other property in the area.
Target properties bringing multiple incomes:
Properties with more than a single source of income enables you cover the cost of maintenance and a bit of the money invested during the buying of the property. For example, properties with a granny flat.
Renovating and adding value to the property:
Renovating the house adds some value to the piece of property. A valued added house is able to fetch some extra rent due to better features and quality service. You can increase rents for the existing tenants after renovating the house.
Targeting student accommodation:
Student flats have some of the highest returns owing to the few needs, smaller units, and high occupancy rates. If there is college opening a branch in the area, consider investing in hostels and other types of student accommodation. Students also have little problems experienced when managing regular tenants.
The process of buying positive cashflow property:
• Search for multiple properties in different areas
• Research and eliminate different areas depending on average lag in selling property, capital growth rates, and clearance rates.
• Estimate value of the property using the latest sales data and data from comparable properties
• Analyze the property cash flow and the likely growth in the long-term. Make a forecast of the income that the property is likely to bring in the long-term.
• Establish the price at which you are able and willing to pay for the property based on the research that you have done above. Aim at negotiating for a good deal as it increases the return on your investment
Mistakes to Avoid
Investing in a house is a great move. You might be entertaining the dream of buying a house. A slight slip-up can make the experience of a homeownership a bad dream and it can result in losses that cannot be compensated. Those homebuyers, who are taken in by offers and discounts, many a times, forget what they exactly need. Therefore it is imperative to steer clear some of the most common mistakes that you commit while purchasing a house.
Do not purchase a house if you are on the move
A majority of the people is taken in by the idea of purchasing a house and they succumb to the impulse although they know that they will be moving soon. On the other hand, many people do not just opt for paying the landlord continuously and prefer owning a house with the idea that it is a wonderful investment.
When a homebuyer is not very sure about staying rooted in the place for more than two years, purchasing a home is not a viable option. There are other costs that come into play such as closing costs, property taxes, etc. Those homebuyers who make a shift soon might incur a loss which is more than the equity that they are paying. So, in this case, it is a must to think and decide.
Do not stick to a set budget
In the television, the home purchasing is made to look alluring. But, as a matter of fact, those who buy houses create a budget and ignore it when the prices shoot up.
But still, the budget might have been set with a reason in mind. When emotions are not to the fore, the budget was made taking into account the logic and financial constraints. It is very important that the homebuyer does not get overwhelmed by emotions.
As budgets could be extended and expenditures sorted out, a majority of the home buyers do not consider instances when there is plummeting down of income. Or, the case might be that the real estate market declines. When such a thing occurs, the redesigned budget will end up being a blunder.
To prevent such a mistake from occurring, confirm that you get a loan before you start looking for houses. When such a thing is done, a ceiling is created and homes below the limit are considered.
Consider the costs
In fact, buying a house is not as simple as it appears. There are a number of hidden and added costs that are involved. Yet another aspect is that homebuyers never consider the maintenance costs that are incurred.
With the involvement of the hidden fees, there is every possibility that a house within the budget might add up to the expenditures. It is important that such facts are taken into account when you make a decision regarding buying the house.
To make a purchase decision, make enquiries regarding average maintenance, other costs and the expenditures for insurance in the location. Include these costs with the monthly mortgage to get a picture of the actual cost of homeownership. Adding up to everything, acquire a precise estimate of the mortgages, and this is done with the help of a mortgage calculator.
Zack Childress, the real estate icon, has written a number of articles that could give you a clear picture of the real estate scenario. Also, his videos give an answer to realtors regarding the complaints that they might have. His seminars enlighten you on the process of getting a scam-free real estate deal.
What Every Real Estate Investor Need To Know About REIT-Zack Childress
REIT- real estate investment trust… REITs’ are companies that have possession of income-producing real estate …Without much trumpet call, real estate investment trusts, or REITs, have turn out to be one of the past decade’s fastest-growing investments. To make it more clear, in the recent years, real-estate investment trusts that invest in all types of commercial real estate, have been contributing adequately for investors and there are certain things that you need to know about REIT’s and this article will reveal what every real estate investor should know about REIT.
REITs aren’t lackluster, steady investments, but they do fluctuate meaning they go up and down and sometimes stridently move in and out of good turn with investors.
• Not like buying a house:
Some people have a mistaken impression that REIT’s are like buying a house, but the fact is that they are nothing like traditional homeownership. To put it simple, it is much like a specialized mutual fund that may invest in any of an extensive assortment of companies that put up, own and manage commercial real estate.
• Strong long-term performance:
As a matter of fact, REIT’s had a long history of producing good returns and from 1975 through 2014 there have been favorable market conditions.
• Short-term performance effect:
While strong long-term performances are said to have a favorable circumstance for real estate investors, short-term performances of REIT’s can have adverse effects.
As a professional real estate investor, you should know about the qualifications of a real estate investment trust. For a company to make the grade as a REIT it must be an entity that is taxable as a conglomerate and a bare minimum of at least 75% of the company’s total assets should be invested in real estate. In addition, it should draw from it, at least 75 percent of its gross earnings from rents from real property, interest on mortgages financing real property or from sales of real estate. With that said, it should have a minimum of 100 shareholders and shall pay at least at least 90 percent of its taxable income in the form of shareholder dividends each year, while not having more than 50% of its shares held by more than four or fewer individuals which should be administered by a board of directors or trustees. The aforesaid eligibility criteria’s sometimes differ according to state laws and rules.
Hope this article was helpful. If you are looking to learn more about real estate concepts in detail, then without further ado consider attending Zack Childress’s seminar which will be helpful to you by all means. Zack Childress is a real estate mentor who helps aspiring realtors to become more successful by teaching them real estate principles, markets, and finance. If you ever wanted to excel by building your knowledge and skills, keep tuned to Zack Childress seminars and camps that will help you to build your skill base and take a client-oriented approach to your business.
Following these simple tips will definitely guide you into having a more profitable and risk-free deal. These tips will give you a head start.