This has been a busy month with lots of information about real estate investing. Simply put, there is more information about this topic than you or I will ever be able to read. Many entrepreneurs offer tips and tricks, secrets and strategies. But, having been in the business for many years, I’d like to offer you my ten secrets for success as a real estate investor.
If you’re just getting your feet wet, these ten secrets are great to keep top of mind. And if you’ve been in the business for years, read through the following list and adopt any principles that are currently missing from your investment strategy.
10 Tips Billy Wants to Share about Real Estate Investing
1. Positive Cash Flow is Key
If you are a real estate investor and are not making positive cash flow through your business, it’s time to take a step back and re-evaluate your long-term goals. I think it’s important to get a 1.5% gross monthly return on the full acquisition and rehab of the property. You can read more about positive cash flow here.
2. Take Advantage of the Tax Benefits
This is one of my favorite tips! There are huge tax benefits for real estate investors. One of the tax benefits is depreciation. You can deduct approximately 1/27th of the value of a property, not counting the land, on your taxes. Read more about the tax advantage here.
3. Don’t Rule Out Any One Type of Property
I have seen many people lose out on big profits in real estate because they wouldn’t look at purchasing vacation properties, moderate-income neighborhoods, or even section 8 housing. These “specialty” areas can be daunting at first, but they generate generous cash flow. Read more about this here.
4. Always Prequalify Your Tenants
…and I mean always. I think it’s essential to require a credit check. Also, don’t be afraid to have strict rules about the potential renter’s credit score. You can read more about finding good tenants and maintaining a great relationship with your renters here.
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5. Invest in Continuing Education
It seems too simple, but if you’re going to be successful you must be motivated to constantly learn more. There will always be new information and legal advice. Stay up to date. One of the best resources for ongoing education as a real estate investor is my Real Estate Mastery DVD set.
6. Be Resourceful
Finding a bargain property, fixing it up, and renting it out is the best way to build your real estate investing business. Be resourceful along the way and I have confidence that you will succeed.
7. Prepare for the Long-Term Costs
It’s a fact: holding real estate takes money. There are going to be times when you have vacancies, unexpected repairs, and unpaid rent. These things just happen; it’s part of the real estate risk. You must handle your property prudently and make sure your managers are being thorough.
8. Consider a Partner (for help with a downpayment)
If you need help coming up with a downpayment, partnering up with another entrepreneur is one of my favorite ways to get started. While you handle the real estate part, your partner puts the money up. Put the mortgage in your name or your partner’s and split the profits. Basically, you bring the knowledge in how to invest and oversee the rehab. You also set up the manager if you buy and hold, or you handle selling the property. And your partner is the one that is making it all possible by financing the endeavor. This is a win-win for many entrepreneurs.
9. Remember that You Make Money when You Buy
This is one of my very favorite secrets. In real estate, you make money when you buy – not when you sell. Not understanding this is one of the biggest mistakes a real estate investor can make. You always want to buy a property at a lower cost than what it’s worth. That’s a no-brainer.
10. Pay Attention to the Real Estate Market
If you are trying to grow a successful real estate investing business, you must pay attention to the market. Ask yourself some important questions. You can read more about what kind of questions to ask yourself here.
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Like I said, there is a ton of information about real estate. There are books and classes. There are even conferences and workshops. I encourage you to take these ten secrets and put them into practice.
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