invest

Owning your personal real-estate company is a great method to attain your financial independence. But to accomplish these milestones, a personal investor needs to recognize the ground rules of profiting in real estate. Possibly the most vital aspect of real-estate investing is the concept of time. An experienced investor knows that in the real-estate game, there is no "quick buck." Everything comes with time.

The secret isn't money... it's time!

Real estate, similar to a business, is a great form of investing, but it requires a lot of labor and time on your part. Especially if you start with limited funds. But that's okay because you're going to create your wealth one "brick" at a time.

The primary thing you need to spend time on is developing a solid plan. You should be exact about what things you would like for you and your family. Then you have to make certain that you can take action on your vision by motivating yourself. What do you want Real Estate to do for you? Spend some time thinking about it because money really isn't sufficient.

The aspiration to make a million dollars won't get you going. It is things such as new cars, vacations, better health, superior housing, and upgrading your lifestyle that will encourage an individual to succeed.

The most awful thing that you can do — particularly while planning — is surround yourself with negative people who will crush all over your vision. Once your vision is recognized, you'll need a game plan to help you attain it effectively.

Have a plan

Once you apprehend that unlike the stock market, investing in real estate is for the extended haul, you can begin to develop your plan of action. Here is a list of the imperative things that you must consider:

1. Get a good support team. Don't wait until you have a deal in the works to find a supporting team. The idea is to get the knowledgeable professionals on your side. And by bringing them repeat business, you can negotiate for better prices. You have to to get the following players on your team:
   • Real Estate Agent — One that specializes in real-estate deals for him/herself as well as others.
   • Title or Escrow Co — Don't deal with big-name companies; find one that specializes with real-estate investors. Make sure they identify with double closings and land contracts.
   • Insurance Agent — Just like the Escrow Co, find one who focuses on real-estate investors and who comprehends land contracts, landlords, and so on.
   • Contractor — Always deal with one who offers free estimates and can recognize how to "cut corners" in the right places.
   • Mortgage Broker — Find one who is resourceful, savvy and skilled in dealing with real-estate investors.
   • CPA (Certified Public Accountant) — Look for an aggressive individual who owns real estate himself.
   • Sound Partner — from time to time you have limited assets such as cash flow or skill. This is where you might be required to bring in a partner.
   • Mentor — Someone who's been in the industry for some time now and knows how to level out the rough spots, or who can give you smart advice for sticky situations. Maybe even a possible partner.
2. Be persistent. Very few deals are made on the first effort. Most deals are actually booked by unrelenting individuals who follow up with a fifth and sixth attempt. If the deal is too good to pass up, have a follow-up system (schedule follow-ups and keep a running record of conversations). Eventually, you'll come to an agreement and seal the deal.
3. Stay informed. You can lose a lot of money thanks to an investment error. Lack of knowledge can cost you more than what it would cost to stay up to date on new developments within the real-estate market. Consider attending seminars every year. You can typically learn something that either increases your profits or prevents you from landing in trouble.
4. Treat this as a business. Real-estate investing is a big business like any other. It takes a long time to build up customers, associates, partners, and so on. You need to be disciplined and professional, and with much effort — and of course some time — it will prosper into a lucrative business.

Where do you start?

Michael personally advises that a beginner real-estate investor start with single-family residences. Why? Because they have the two biggest players in the market. Whereas apartments only have investors playing in the marketplace, single-family residences have both investors and owner-occupants. For this rationale, financial institutions feel more relaxed lending a higher percentage of value on the property.

Single-Family Home Investment Tactics

The subsequent is a list of three tactics used by many investors who deal in the single-family home market. The idea is to take on one at a time and ultimately combine several strategies with your investment plan, also known as stacking.

Stacking involves using more than one technique at a time, either in combination with, or in addition to, the other techniques. You are exploit your potential when you stack.

1. Buy and Hold Tactic: The initial point for most investors. The objective is to acquire the house with the sole purpose of renting it. For this method to be successful, you must purchase under some set price and terms that allow for a healthy, positive cash flow. The rent has to be higher than the mortgage payment.
2. Buy Low-Sell High Tactic: Acquire a home positioned in an area with high sales activity. Make the essential cosmetic and structural repairs and then sell the house for a higher price than what you paid. Keep in mind that the buy price must be low enough to tolerate room to cover your repair costs, holding costs and resale costs... plus, leave room for a healthy profit.
3. Leasing Tactic: You can control property without truly owning it. Look for property you can lease under favorable terms, where you give the rights of use, enjoyment, and occupancy to a tenant who agrees to pay a price higher than your own lease (sublease). The longer the term of the favorable underlying lease, the more value your position holds.

Final tip

Don't be expecting to go through real-estate investing without making any errors. Like most dealings, there is a learning curve. You will only learn the real-estate game by being active and understanding the buying process.

To be successful, you need to study the market, how to locate property, scrutinize property, negotiate your deal, contract to buy, finance the purchase, and close the transaction. You can't likely learn all this at once; the only way you'll ever be prepared to understand, is by, in fact, going through the motions.

Want more information?