Here are 5 quick tips for new residential real estate investors:
1. Real Estate Investing is a Business
When investing in real estate, it is important to treat your real estate investments like a business. This means establishing the right legal entities for your properties, having adequate insurance, spending time to understand the business of real estate investing, having a plan, and hiring the right experts to assist you.
2. Real Estate Investing Is a Team Sport
There are no successful lone rangers in real estate investing. Even the best real estate investors have a team of experts that assist in the various aspects of real estate investing. Here are a few experts that you’ll want to have on your team:
Realtor: When searching for a realtor to assist you with your investment properties, make sure you find a realtor that has experience working with investors and investment properties.
Accountant: You’ll need a good accountant to make sure that you are keeping up with changes to the tax code, to ensure that you are maximizing your investments from a tax perspective, and to make sure that you don’t get caught owing a bunch of money to Uncle Sam.
Mortgage Broker/Banker: One of the clear advantages of investing in real estate is the ability to use leverage in your investments. Having the right mortgage banker will be key.
Attorney: Make sure your attorney assists in doing your due diligence and in reviewing all agreements. The devil is often in the details.
Property Manager: Once you own more than a couple of investment properties, managing them can quickly become a full-time job. Leave the management to the experts so that you can enjoy your life and find additional investments.
3. Build Your Credit
There is a lot of bad advice on building your credit. Having good credit and access to capital for when those good deals come along can be critical to your success as a real estate investor. There are a few resources available in this area for investors build their credit and obtain access to capital.
4. Study the Market
It is important to know what the trends are with interest rates, the economy, rental market, home prices, as well as upcoming and ongoing projects and developments in your market.
5. Find Your Niche
No one is an expert in all areas. Once you find your niche, stick to it. Whether it is a buy and hold strategy, flipping houses, or wholesaling, find what works for you. You’ll also need to find the types of properties you understand and that you can make work in your market.
We hope these 5 tips will assist you in becoming a successful investor in residential real estate.