Being a successful real estate investor requires many different qualities. In this article, we’re going to give you 5 Tips On Successful Real Estate Investing.
1. Delegate & Outsource Effectively
In the beginning, most real estate investors are going to wear many hats. However, the most successful ones are the ones who do what they are best at and delegate or outsource the rest.
To become successful at real estate investing, one needs to have a solid team. This can be deal finders, attorneys, wholesalers, contractors, anyone who can help the real estate investor focus on their genius, their lane.
This is a skill that takes time to build. Many investors have been burnt by contractors and other individuals on their team, but, this is all apart of the journey to the end goal.
2. Learn How To Appraise Correctly
For successful real estate investing, you have to know the value of the properties you are going to invest in.
This includes knowing how improving certain aspects of the property affects the value. For example, in multifamily real estate, an increase in occupancy, directly affects the value of the property as a whole.
If you don’t pay attention to the appraisal value on how different aspects of the property affect the value, you can underestimate the value of the property when it is time to sell or refinance.
Another way to appraise properties is to gain access to the MLS. If you are investing in single family real estate and you don’t have access to the MLS, build a relationship with a realtor that does. On the MLS, they can pull a list of homes that recently sold in the same neighborhood as the property you are looking to invest in.
3. Take Advantage of Leverage
One of the main benefits of investing in real estate is the concept of leverage. With leverage, you can purchase a $400,000 property for $100,000 and finance the rest.
For more savvy investors, they can purchase properties with little to no money of their own because of leverage. This is great because if your investment is producing positive cash flow when you buy it, your return on investment can technically be infinite.
On the downside, leverage can also bankrupt investors if they don’t know what they are doing. Always do research before buying an investment property and play out best case and worst case scenarios.
Decide if you want to invest for appreciation or cash flow or both. It’s completely up to you.
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4. Limit Your Risk
There are many ways to limit your risk when it comes to real estate investing. One way is to pull your money out as soon as you are able to do so.
This can be by refinancing, through cash flow, or even through selling the property. Once you get your money out of the property then any additional money that comes from the property is profit.
To limit your risk when investing, you must know the local market where you are investing. Different cities have different rules and trends, so you increase your chances of investing successfully in an area if you know the market.
Also, you should be paying attention the national real estate market as a whole. The real estate market is cyclical, just like the national economy, pay attention to the signs and you can set yourself up for long-term real estate success.
5. Know Your Exit strategies
Lastly, know your exit strategies. Before you sign and close on any property you should know all of the different exit strategies you have at your disposal.
Do you want to refinance in 3 years? Do you want to sell in 5 years? Do you want to hold on forever and pass down to your kids? Ask yourself questions like these and determine which strategy you want to use.
Take in account that your strategy may change after you purchase the property, so account for this when buying your property. Every successful real estate investor knows you make money on the buy so think of all possible exit scenarios before closing.
Thanks for reading 5 Tips On Successful Real Estate Investing.