As a real estate investor, you’re in this business to turn a profit. Remembering this will help you maintain a balance between money going out and money coming in. Investing in opportunities outside the guidelines you’ve set for your business might cause you to tap into capital set aside for the right types of investments and when a targeted opportunity comes along, you might not have access to funds. Worse yet, if you decide to gamble on an opportunity or act on emotions, you might not recoup your investment. You might have to start all over again.
Successful investors learn everything they can prior to getting into the business. Education is important because you want to know how to make the best investments; those that will offer the best return on investment (ROI). Finding potential investment properties attached to motivated sellers is the best way to maximize ROI.
All aspects of the real estate investment business have specific guidelines that when you follow will help ensure your success. Know what you want and which opportunities will be most lucrative. AGAIN, the best way to maximize your investment is to locate a motivated seller. That goes for every facet of the business.
For instance, consider a tax lien certificate investor. These folks identify and purchase homes—often for pennies on the dollar. Property owners fail to pay taxes and let go of their homes; relinquishing them to the county. Tax lien investors are able to purchase properties for the tax bill alone. Someone who will let go of a property to avoid paying a tax bill is definitely a motivated seller.
Successful real estate investors set goals of freeing cash for future investment opportunities. If you want to flip or move the property quickly, don’t be greedy. Buy low and sell low. Greed will slow you down.
In all legs of the real estate investment business, you’ll maximize your investment by thinking things through before you make an offer. If you don’t plan on keeping the property and prefer to sell the contract or flip, certain criteria will help you evaluate the opportunity before investing.
What will you do? Keep it? Sell it?
If your goal is to keep the property and rent it there will be specific things to look for. Know what you’re getting into. Being a landlord involves more than just collecting a check on the first of the month. Sure, you can use the monthly income to increase your personal cash flow, but how much will you need to reinvest when something breaks or repairs are needed? More importantly—who’s going to do the repairs?
If you’d rather not have to deal with the responsibility of homeownership and you’d prefer to invest and then resell, there are a couple of things to keep in mind.
First, what kinds of repairs or renovation will increase the value of the property? In some cases, you won’t have to do much. Sometimes a little superficial grooming is all your property will need. You’d be surprised at the difference planting flowers and painting the shutters can make. See any loose trash? Pick it up and then sweep the driveway. Hiring someone for these minor improvements might cost a couple hundred dollars, but they could make you thousands. Again, keep in mind all you can do to maximize your ROI.
Successful real estate investors set goals of freeing cash for future investment opportunities. If you want to flip or move the property quickly, don’t be greedy. Buy low and sell low. Greed will slow you down. Price the property to sell quickly and your money will be freed. You’ll be ready for the next investment opportunity in no time.