If you have ever contemplated becoming a Real Estate Investor, there are things that you must understand. Once you cross the line, your life will never be the same. You will have crossed to the ‘dark’ side of making money. A 2% savings return will look paltry. Of course, just getting back your initial investment might also look like a windfall.
Things you take for granted now, will forever be gone. But you will persevere, for you know that the fruit will be there to harvest at a later date. Sooner or later, you will be able to pick the fruits of your labor and enjoy them. And no one will tell you that you have to wait until you are 62, or 65, or 67 or 70.
Your view on other properties will change. How much can you buy it for, how much can you sell it for. A distressed house on your own block becomes an opportunity, not an eye sore. A friend with money may become a partner, not someone to envy. A junk toilet sitting in your backyard becomes a trophy, not a piece of junk (not right away anyway…).
When a new large store is being built, you hope it is a home improvement store, not a clothing store. You look at all the colors of paint on the color wheels, and know that only one or two would you ever buy. You realize that many of the paint colors should be illegal to sell.
You are a Real Estate Investor!
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How have your views, on anything, changed once you became more involved and in tune with the activity? Have you ever thought “I will never think or do something like that”, and then a few years later you want to “think like that”?
I get emails and calls all the time about people wanting advice on how to invest in real estate. People want to be a Real Estate Investor, and do not know where to begin.
It is sort of flattering, like I have some sort of insider knowledge of the markets or what property or type of asset is the best investment today. But I am always willing to share my knowledge. Even more interesting are the investors who say something like, “If you find a property that I can make a quick $50K on, call me. I have the money to invest.”
If I see a property with a $50K potential, it’s mine — and no one else’s if I can help it.
I get people who contact me with things like this. “I have a goal to have 100 rental properties within 10 years. I have $10K to invest now. How should I start?” I admire the goal setting, and I appreciate the fact that someone can think big. Unfortunately, if that is your way to riches in real estate, your bubble will soon be popped.
Do You Have What it Takes?
There are many different ways to invest in real estate. I personally do rentals and have done a flip. I have also sold real estate. All my rentals had to be 100% remodeled after I purchased them, so I know a lot about rehabbing. If you are thinking about any self-managed real estate, you also need to know a bit about rehabbing. Once you can rehab a property, the world of real estate can get very interesting and more financially rewarding.
There are many aspects to investing real estate. Some require no money down, but most require a significant amount of money to get into. And after you get into them, some require even more money. Failure to be properly capitalized or being under capitalized could cause you to not only lose your entire investment; it could cause you to lose your personal assets, too.
Never underestimate the amount of capital that it will take to be a successful real estate investor. I see many people embark on an RE investing career, and think they can spend their last dollar attempting to “strike it rich.” There are no quick paths to riches, and with a higher return comes more risk, every time.
5 Reasons You NEED to Be Properly Capitalized for Real Estate Investing Success
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Have you ever had an investment that costs more than you thought? Or thought about an investment but decided against it because you did not think you have enough money?
Remember, landlording is a game of probabilities and statistics. By targeting your market, you can maximize profits, that is simple Marketing 101. If you want to maximize your income, targeting your market is key.
There are good tenants in every category, but you are looking for the highest probability of success, not the needle in a haystack. Success is defined a tenant that pays rent, leaves the unit in good order, and you make money. Continue reading “Targeting Your Market to Maximize Income”
My twelfth investment property was one that was almost by accident. By the time the fourth quarter of 2013 was coming around, I was not anticipating a property purchase for 2013. Things were about to change on November 8, 2013… Continue reading “My Twelfth Investment Property, Property Flipping the Right Way”
In Minnesota, we have a fairly involved foreclosure process. After a sheriff’s sale, the owners has 180 days to redeem the property, and prevent the property from returning to the lien-holder. This was my first sheriffs sale purchase, and my sixth investment property purchase.
Continue reading “My Sixth Investment Property and First Sheriffs Sale Purchase”
Predict profits for your rental property.
Let’s assume that your property is renting for $1000 per month. Let’s also assume you collect a $1000 security deposit. Continue reading “Risk vs. Reward, How To Predict Profits”