When you are starting out in real estate investing, one of the biggest concerns is how you can hedge your bets to secure success. The best way to ensure it is to have a carefully laid plan. Without a blueprint for how you intend to execute your business model you can easily get lost in the process.
Buying real estate for investment is a business, and you must approach it as such. Mapping out your specific goals and knowing when to be flexible and make changes is essential. While there are no guarantees, there are proven strategies. No matter if you are a new investor, or have an established property portfolio, here are four valuable tips that can strengthen your investment game.
There is an old saying, “He that thinks he knows anything knows nothing as he ought to.” Truer words have never been spoken. You will never be knowledgeable enough in real estate to not have the room or need to learn more. The industry is constantly changing. Just as you think you have mastered an area, the climate becomes different and new strategies are needed.
Education should be the foundation of your business model. It will empower you to secure more deals and avoid pitfalls that can lead to trouble. You will feel more comfortable during the process when you know you are well versed in the ins and outs of it. That confidence will fuel what it takes to close and profit from your deal, beginning to end.
While closing a deal has a lot of moving pieces, you do not have to be an expert on everything. However you do have to have a clear understanding of every aspect. Education is a process you should commit to daily. The goal is to work the muscles you will need when it becomes time to execute.
Ideally we would all like for deals to just drop in our laps in steady succession. It is possible to achieve a regular stream of options, but experience will teach you that does not just happen magically. You will either have to put in time and invest money on a strong marketing campaign or build through networking. If you are seriously driven, you will do both.
No one person or company holds all the real estate in your area. New blood is being infused all the time. When you are thinking of buying real estate or selling real estate you need to get familiar with the players in your market. It will allow you to mingle with people and foster relationships that can support your businesses growth.
Most markets have a few clubs specifically for networking. The clubs are a resource for meeting investors, agents, brokers, contractors and even builders. Making one or two good connections can completely change the face of your business. Another option are clubs specifically geared toward real estate investing. There you will find access to the people making deals at the local level.
While it can be intimidating jumping in unfamiliar water, networking is a more pragmatic move than trying to generate leads organically. Besides, you won’t be able to avoid it, ultimately you will have to network. It is the nature of the beast. That said, it is better to be proactive about doing it so the connections can be on your terms.
3) Market Knowledge
It is surprising how many people jump into real estate investing without being familiar with their market. If you are considering buying real estate you should start by understanding the local market. The market is as important as the property itself. It impacts:
- The improvements you will have to make
- The after repair value
- How much demand there will be for the property
- Rental rates
It should be your aim to have a clear understanding about the current listings and recent sales in the area. Also look into what the market trends are and what they have been historically. Aspects to give consideration include:
- Area employment rates and significant increases or declines
- Amount of inventory on the market
- Foreclosure rates
- A six month screenshot of new housing permits
That is not an exhaustive list. The point is to avoid being caught off guard by unforeseen issues in the market you could have researched beforehand. This is especially true if you are financing real estate. You do not want to be stuck with a loan on a bad deal. Part of your process should be becoming a marketplace savant.
The measure of your success is not about buying real estate or selling real estate. Going for numbers when closing deals can give a superficial picture of your accomplishments. However when looking more closely, it is the quality of the deals you close that matter.
It is always better to put your time, money and attention to closing fewer deals that yield greater profit and results, than many deals of low quality. It can be frustrating closing deals that don’t produce measurable or significant profit. Lower profits mean less money for your next investment.
Time is money. Literally. You can end up in a situation where you are tied up in a poor deal when a better deal comes to the table. This could mean you miss out on the more profitable option. Remember it is not about acquisition, it is about making money. Your scoreboard is not to have high numbers of locations, it is to have high numbers in your bank account. Focus on quality over quantity.
As we mentioned before, the game and players of real estate investing are always changing. However, the processes remain much the same. If you focus on the tips above, you will lay the groundwork for a business model of success.
At Flip Out Academy, our goal is to help you succeed and grow. We want to make a positive impact by providing tools new and seasoned investors need to wisely engage the market. We encourage you to contact us for a complimentary 30 minute strategy session with one of our coaches today.