Investors are attracted to investing money in real estate because the potential for profit is tremendous. However, the possibility of losing it all is always lurking in the back of investors' minds because, as with any investment, there is risk involved.
Successful real estate investing is achievable at any point in time, despite the economic conditions. Although change is inevitable, the risk involved is manageable, as long as the investor continues to follow a few basic principles when investing money in real estate.
Tips for Novices: The single most important first step for aspiring real estate investors is to determine one’s exit strategy when investing money in real estate. There are quite a few options, but the two basic and best investments strategies are to buy and hold properties, or to become a flipper and hopefully make a substantial profit upon the sale of the property.
You need to ask yourself what characteristics will make that exit strategy work. You need to buy the right property to be successful.
Like any investment, real estate investing requires an action plan. Once you decide you want to scale it, it is important to look at the funds, the time, your credit and your long-term goals so that what you want to do with your real estate investment is achievable and realistic.
It’s recommended that novices join a local investor’s club and get to know the people there. It’s rare that you can find somebody who can start up in real estate without some guidance. It’s advised that new investors join an association, find seasoned investors, buy them lunch and present your plan. Ask them to poke holes in it.
The other side of the fence in this business is that people get sucked into these $40,000 to $50,000 boot camps. Don’t do those. You’re going to end up buying things you don’t really need. If you’re new in the business, the best advice we can give is to go to a local bookstore and read through books on real estate investing. Find the best one or two books and buy those.
Tips for Seasoned Investors: As for veteran investors of purchaing Cape Coral real estate, they should have plenty of money put aside to act as a buffer of sorts. Once an investor has scaled out to a larger portfolio of properties, it is important to have enough cash on hand in order to rehabilitate 10 to 15 percent of those properties every year.
Be prepared. Plan for the best, but prepare for the worst. Insurance is true asset protection. Investors should insure themselves as if the world is coming to destroy them and insurance is their only defense.
In the end, true enemies to wealth creation include greed, procrastination, laziness, imagined fears and lack of information and education, to name a few.
From a flipper’s perspective, seasoned professionals need to stay focused on location and price. The best advice is don’t overpay for what you’re buying, because you’ll get squeezed on the back end by buyers. If you overpay and overrehab, you’re not going to make the profit you need.
Buyers still want a good deal in this market, so they are being pickier when investing money. They want to see more properties, and time is on their side so they are not pulling the trigger as fast. They want to make sure they have a good location.
In addition to building personal relationships with real estate professionals, potential deals can be found when investing money using online resources such as the RealtyTrac.com and Auction.com, as well as local and national listing services.
To learn more about investing money in real estate, contact a member of the Asset Quest team at (239) 541-8448.