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Tips for Successful Real Estate Investing
Why did you chose to pursue investing in real estate? Is it because you dislike your job, you want a bigger pay check, or you find it an opportunity to build your retirement future? No matter the reason, you are motivated because you see the big picture, you envision the financial freedom, and you feel real estate investing is the vehicle that will get you there. But if you enter the business with no prior experience, do not rely solely on motivation to succeed. Motivation along with goal setting, education, implementation, and mentorship are key factors to your success.
Goal setting is important. Realistic goal setting is mandatory. Your goals should be carefully thought through. When setting goals, consider your financial abilities and the time you have to invest in your business. Failure to do so can lead to financial set backs and discouragement.
Set a goal of what percentage of market value you will pay for a property. Don’t get anxious. If you decide it’s 65% of market value after the cost of improvements, stick with this percentage. Furthermore, do not be unrealistic in determining a selling price. It is wise to base your profits on the lowest potential list price. If you do not skimp on improvements, in most cases you will be able to sell it for more.
A common mistake of many new investors is to circumvent their goals. They pay too much for homes, under estimate the repair costs, or they become emotionally attached to the property and refuse to sell unless they yield a certain profit. This is where educating yourself comes into play.
Education is important to your real estate investing success. Learn your market area, know how to find properties, understand how to calculate net profits, learn the process for making an offer, know why good record keeping is an important part of the appraisal process, and understand how to price your property at the best possible price for a quick resale.
Educate yourself by familiarizing yourself with the neighborhood. Visit open houses and view similar properties for sale in the same community. Your local experienced real estate agent can assist with the comparative market analysis, submitting a competitive offer, and pricing your property correctly. Do not be mislead by the belief that real estate agents will price it low so they can make a sale. Real estate agents rely on repeat customers and referrals, so it is in their best interest to price the property correctly.
Network with peers in the real estate business. Look for local real estate investment groups and attend their meetings. You will gain valuable information from their seasoned real estate investors. For the names and contact information for Florida Real Estate Investment groups click here.
I’m going to start off the topic of mentorship with an example. Let’s say you made the same new years resolution over the past few years — it was to lose weight. You started off each year by reading up on healthy eating habits, bought yourself a gym membership, but somewhere along the way your motivation fizzled out. Your success was limited. But what if you had a professional trainer such as Jillian Michaels to motivate you? The results would be much different. Why? Because now you have a professional trainer to motivate you and hold you accountable.
Success comes from the support and experience of others. It’s a lot less painful financially and emotionally when you learn from others. They have learned from their mistakes, so you can capitalize on their experience. Your local real estate investment group may be able to suggest a mentor or mentoring program in your area.
Investors view risk differently– an investor is not afraid of it. Potential risks are balanced with the potential rewards. If the rewards outweigh the risk, investors find ways to reduce liability and move forward. This process is accomplished through goal setting, asset assessment, education, implementation, and mentorship. As a beginning investor, do not get discouraged if your first property is not as profitable as anticipated. Consider it a learning lesson and move on with a positive attitude.