When seeking real estate investments that will bring in a good steady cash flow, you should consider low-cost rental properties. Read why not listening to the opinion of inexperienced forum individuals, and instead, taking advice from real estate geniuses such as Robert Shemin, is a safe and smart path to take when it comes learning more about low-cost rentals and their success rates.
This guest post by Michael Cornetet of Advanta IRA offers valuable information on why moving your 401K funds into a self-directed account will help you obtain more flexibility to invest where you see fit. Read more to learn how this strategy can assist you in becoming financially free.
If you’re planning on opening a separate bank account for your real estate business, you will want to ensure you select a bank that fits your needs, along with one that does not charge fees that cut into your ROI. Take a look at this post to gain a few insider tips on the subject.
As a property investor, a 1031 exchange could be one of the most profitable tax strategies you can utilize. Take a look at these 6 IRS guidelines to ensure you are on the right track when moving forward with a 1031 exchange.
I would venture to say that most investors hold misconceptions and make mistakes when they're starting out. I know that I did! Many of us learn through this process. You shouldn't beat yourself up if you overpay on your first rental or make extraneous renovations. What's important is that you learn from those mistakes, and get your strategy on the right path.
Today I'm sharing five things I wish I had done correctly the first time around! Follow these five tips and you'll avoid a lot of headaches:
- Fall in love with ROI. Return on investment is the number one metric that will make you successful as a real estate investor! It doesn’t matter what the house looks like. All rental homes are simply four walls and a roof. Effective investors fall in love with ROI, not a cute little bungalow with beautiful landscaping in a charming neighborhood.
- Purchase properties in the right rental markets. New investors might begin searching for properties in their city on Zillow, or drive around their neighborhood looking for local homes for sale. But successful investors know that the most profitable, worthwhile investments are most likely not located in their backyard.
- Hire a property manager. Hiring a property management team makes real estate investing simple and passive! A skilled property management team is an indispensable part of your success, and will make your business scalable.
- Overestimate expenses. In my ROI formula, I remove 40% for vacancies, repairs, and expenses. Expenses are inevitable in any business, and real estate investing is no exception. Be conservative with your numbers, and ensure you can cover any expenses that should arise.
- Realize cash flow is the end goal, not the first step. Understand that gaining cash flow is a process, and there are a couple phases to go through before you reach your ultimate goal.
My mission is to make real estate investing passive. That's the whole point! I don't want this to be a full time job. That's why I help other investors with turnkey real estate. Purchasing a turnkey property provides enormous benefits, but requires the investor to be hands-off. For some people, it can be hard to relinquish control and trust the process.
I always advise new investors to think about the kind of lifestyle they want to live. Are you getting into real estate investing as a job? Or are you trying to create passive income and more time for yourself? There’s no right or wrong answer, but you need to be honest with yourself.
Do you want to pick out paint colors? Do you want to manage the rehab process from start to finish? If you enjoy those tasks, then turnkey investing is not for you. If you can’t let go of those small details, you’ll probably want to be hands-on with property management too.
Part of turnkey investing is letting go. It’s supposed to be passive! Your job as the investor is to trust the process, put your faith in the team, and then sit back and collect the rent checks.
If it's not in your personality type to let go of those details, I have a suggestion for you. You can harness that energy in the right direction. While you can't pick the paint or the tenant in a turnkey property, you CAN be incredibly meticulous in your bookkeeping and organization. Check out our podcast episode on how to organize your real estate investments.
Naturally, many people think that the best way to initiate real estate investing is to connect with a real estate agent. However, more often than not, realtors know very little about things like seller financing and purchasing distressed properties.
Don’t get me wrong: I love realtors. My dad is a realtor. My wife has her real estate license. I understand and appreciate that realtors work very hard. But... they simply are not always well versed in the world of investing. The issue is, the main role of a realtor is to help individuals and families purchase their primary residences.
That’s a whole different ball game than real estate investing! Most realtors simply do not know about investing, including turnkey investing, finding wholesale properties, and what it takes to make a solid investment. Investing is an entirely different business.
Unfortunately, most novice investors have no idea about this disconnect. It seems like if you want to purchase a property, the natural place to start is with a realtor. But a realtor most likely is not going to be able to help you find a property under market value; their job is to help their clients get the most for their property!
One of the best ways to ensure that you'll make a high return on your investment is to purchase a discounted property. Unfortunately, more often than not, a realtor can't help you in this department. In general, my advice is to skip the realtor, and go after ROI.