“If you’re so smart, how come you’re not rich yet?” It’s a common adage that many budding entrepreneurs hear during the course of their everyday conversation. The usual retort, of course, is “ I’m getting there!” And hopefully? You are. But if you’re a real estate investor, all you really have to do is show doubters your property portfolio. Typically, that puts such cynicism to rest. And with good reason. After all, shelter is of the great vital necessities in life—even in commercial real estate. And opportunities are in plentiful demand. But it’s a high risk gamble. It’s been estimated that 28.1 million Americans consider themselves real estate investors. And with that number, the obstacles facing entrepreneurs can be relatively high. It’s no longer enough to seize what looks like a great opportunity when 2018 reported a decrease of approximately 7.7 percent in sales of new single-family homes and 10.3 percent in existing homes. That’s the bad news. The good news? With a strategy emphasizing foresight and care, you can eliminate the chance of loss and increase the chance of return. Here’s some of the best tips for entrepreneurs looking to invest in real estate.
It’s one thing to have a general understanding of how real estate markets operate. But it’s another thing to have an understanding of market performance in specific metropolitan cities. And market performance can be predicated on several factors, in addition to historical sales:
If you’re just beginning to look at real estate investment, it’s important to remember that historical sales are never constant. They don’t just change annually, but month to month. What might seem like an ideal opportunity in a buyer’s market could turn out to be the result of high risk potential in any of the preceding factors. Review your targeted neighborhood carefully. Sometimes even high opportunity zones can yield negative returns if businesses choose to invest elsewhere.
In particular, both vacancy rates and construction rates. A general rule to keep in mind is the higher the construction rate, the higher the price range. Frequently, this is a result of a higher demand in up and coming neighborhoods. But the opposite holds true for vacancy rates. Generally speaking, more vacancies in a neighborhood means lower rates. More often than not, this can be due to a large amount of foreclosures—as witnessed in the 2008 housing crisis. And while it might be tempting to take advantage of low priced properties in distressed neighborhoods, keep in mind the sustainability of your investment. Higher vacancy rates exist for a reason, and you won’t necessarily find many interested buyers regardless of the refurbishment you may have conducted.
One area that many beginners in real estate investment frequently overlook is the cost of auxiliary materials. That can include marketing, construction, attorneys, inspection services and title insurance. All of which can wind up costing you more than the bargain you initially anticipated if you’re not careful.
“Early on, I made the mistake of hiring a home inspector who later turned out to be less than reputable,” explains Alex Forrest, an investor from Salt Lake City. “And unfortunately, he recommended some area contractors who ultimately billed me for renovations and repairs which turned out to be entirely unnecessary. Not only unnecessary, but entirely too lengthy. By the time they were finished, I was out $30,000—in addition to legal fees. All on top of a home I thought I was only paying $175,000 for!”
While disreputable contractors are unfortunately not an anomaly, that doesn’t mean you won’t find ones who are not only trustworthy but consistently deliver craftsmanship. You’ll want to review their portfolio. You’ll want to see examples of their work. And you’re definitely going to want to ensure they’re registered with the Better Business Bureau and have necessary certification for residential property renovation.
More importantly, you should look for a mentor who can guide you through the process of investing—particularly if you’re just beginning a career as a real estate investor. Not only can they provide invaluable advice on what to prepare for, they can act as a referral service for brokers, realtors and attorneys who are both reputable and can find you ideal properties at an ideal price.
As we said, shelter is a vital necessity and ideal investing opportunities are in high demand as a result. So are risks. But with some forethought, you can minimize the pitfalls and wind up not only on top but on your way to being a successful real estate entrepreneur. Here’s hoping you simply don’t stumble more than you have to.
Are you serious about a future in real estate investing? The Colorado REIA is the state’s premier investment association, providing coaching, guidance, workshops, networking opportunities and a host of other exclusive member benefits. To find out more, visit us at https://coloradoreia.com/ or call (303) 816-3653
Real estate has been making news for the last few years – good and bad. Many have considered investing in real estate an ideal long-term investment. Property values increase over time and generate passive income along the way. With the right kind of wealth building and investment strategies, it is possible to profit and build real wealth through property investments.
It may not be a simple process, as building real wealth takes many cycles. You cannot simply sit and relax and watch the money roll in. Good investment strategies involve having a set of sensible approaches, from identifying your needs and developing a program that works with your plans.
Here are a few wealth-building strategies that will help investors – new and experienced – achieve their end-goal
As one of the most common approaches being practiced today, home ownership has become a motivating factor for many. It serves as a base while you continue to live your lives. Owning a home, when held and sold, serves as capital-gains tax-free profit. Properties appreciate over time, so when the time comes that your children move out, you can sell the bigger home and settle in a smaller one. That leaves you with a bigger return on investment, and you can use the equity from the sale to start on other investments and earn income.
Invest in a budding real estate market. Research where most young people move to nowadays. These are the markets where the value in that area will increase as its residents’ earning powers increase. If you realize that rents go up drastically, do not sell your property. Instead, rent it out and use your property as an income-generating property. The money will continue to roll in and you can use the profits for more investments.
The essence of true wealth is not just about building stock portfolios or money. In achieving lifelong wealth, one needs to understand and discover their “whys” and use it to help others. It should be your passionate motivation and life’s purpose. Planning is key, especially if your “why” leads you to launch or invest in a business. Look at all the resources available to you and have a clear idea of your goals, as well as an exit strategy.
Most successful entrepreneurs build and shape the purpose of their business by fully understanding their journey, from start to finish. Success metrics are something that can be measured; otherwise, it will be difficult to manage your investments. Once you have a clear understanding of your “why” and learn to empower people along the way, real wealth will soon follow.
The real estate market may not be as booming as it was before. However, one of the best investment strategies to build real wealth is by investing in properties you can actually rent out. In reality, no matter how good or bad the economy is, people need a place to live in. Apartments, condos, duplexes, single-family homes, and townhouses are easy to finance, sell or rent. In the event of a downturn, these properties still maintain their value.
Another reason why this is a good strategy is that residential properties offer more flexibility than any other kind of real estate. For example, if you lose a tenant in a commercial real estate, the value of your property goes down. A residential property, on the other hand, holds and even increases its value, rented or not.
This strategy is almost the same as property development, where you buy a building and build two or three dwellings to sell, finance, or rent out. In this case, you need to build a second dwelling or a granny flat on a property. You can partition an existing residential unit and create two dwellings. This gives you two rental incomes from one property. This is one of the wealth-building strategies that is considered a high-yield method because it has an opportunity for strong capital growth once sold.
Investing in high scale markets like real estate always involves risks and has a potential for financial losses. Before making such a huge decision, always seek professional advice and guidance from a licensed and accredited financial advisor.
Contact us at Colorado REIA for more information how to build your wealth and live a happy and financially stable life.
If you’re looking to invest your money and diversify your portfolio in new ways, real estate can offer you several avenues for doing so. Real estate can help you increase your assets and provide additional income streams. The choice to invest in the field of real estate can be rather lucrative if done right.
One of the hardest parts of breaking into real estate investment can be figuring out the best place to begin. With a defined strategy and clear vision you can embark on your own path to success. Below are five key ways to invest in real estate and diversify your portfolio.
A great starting point to becoming a successful real estate investor is by taking advantage of the space you already have. Whether you’re subdividing your home or renting out a spare bedroom, there are several paths to bring in steady income. There’s also the prospect of renting out your living space using app-based services such as AirBnB.
This avenue gives the investor an opportunity to try out being a landlord without a huge upfront monetary commitment. Renting out rooms through a third party booking service such as AirBnB offers the protection of a basic level of screening through their registration and ratings. It also offers a host guarantee that helps cover any basic damage that may occur.
One of the more tried-and-true forms of real estate investment is becoming a landlord. Buying and renting out properties or space to tenants is a practice as old as time. Whether you’re buying out commercial space and signing long-term leases to corporate tenants or renting out apartments to families, being a landlord can be quite a lucrative investment opportunity.
Of course this method has drawbacks of its own. This form of investment requires significant cash upfront to purchase or mortgage the property. There are also costs associated with rehabilitating and maintaining it. There are also risks associated with dealing with tenants and their potential impact on the property. Until you have the revenue to develop or hire a property management company to deal with some of these headaches, it’s important to remain mindful of the risks.
Another well-tested method for growing your wealth is fixing up and reselling homes. Popularized in reality television shows over the last couple of decades, the idea of purchasing an undervalued home and renovating it as economically as you can isn’t always as glamorous as those shows make it out to be.
It’s important to have a solid understanding of what it takes to successfully rehabilitate a home or to find a partner that does. You’re looking to invest in a property that is undervalued and in need of only minor cosmetic upgrades in order to raise the resale value to potentially earn a profit. Not paying attention to the market overall or knowing how to find potential structural issues can quickly take a property from a prospective goldmine to a complete bust.
The internet has served as a monumental platform that has shaped the core of our economies and society itself in remarkable ways. From automated banking to the rise of cryptocurrency, the internet has changed the core foundations of markets as we once knew them. With the advent of crowdfunding investment platforms, the ability to begin to invest in real estate has never been easier.
The SEC has traditionally regulated crowdsourced investment platforms similarly to syndication. This means that you had to be an accredited investor with a decent amount of capital to invest. Thanks to recent changes in regulation, non-accredited investors can begin investing with as little as $500 thanks to platforms such as Fundrise and RealtyMogul. These sites prescreen and only accept a minimal amount of projects proposed to help ensure the highest returns on your investment.
Real Estate Investment Trusts, commonly known as REITs, give investors an opportunity to break into the market without needing to be as involved as other methods. REITs are public or private companies that own a portfolio of real estate holdings. They tend to pay out high dividends and make a great form of passive income.
REITs can come in a variety of forms depending on the company you’re investing in. Publicly traded REITs tend to trade on exchanges like stocks, while private non-traded REITs may be harder to sell. The type of REIT you choose to invest in can help determine your risk, so it’s important for you to carefully research where you choose to invest your money.
An evolving and growing market allows you to get into real estate investing easier than ever. From renting out the spare bedroom in your condo to investing in real estate investment trusts that have vast portfolios, there are more chances for you to grow your wealth now more than ever. Pay attention to new trends in the market and for any new opportunities that may arise.
Please feel free to visit Colorado REIA for more tips on real estate investment.
Buy and hold real estate investing is one of the most common real estate investing strategies. It refers to the process of purchasing a property and holding on to it for an extended period, usually 5 to 7 years. The buyer may or may not sell the property down the line, but it is considered to be an excellent way to build wealth over time.
According to the National Association of Realtors, statistics show 51% of buyers found the home they purchased online. This shows how powerful digital can be in your marketing efforts as a real estate investor. If you are looking to scale your real estate investing business I highly suggest using digital marketing to do so.
With the tough competition in real estate these days, the ability to stand out from the pack is crucial. This is where effective marketing strategies come in handy. However, as a real estate investor and professional, trying to figure out which strategy works and what doesn’t is time-consuming.
When people speak of success, they often talk about how they got their career started and how far they were willing to go to reach their goals. One of the ways to reach your goals is to find someone who will personally guide you. Remembering them this month is one thing, celebrating the success you reached with their guidance is another!Continue reading
Why do people invest their money? People think that their finances automatically grow whenever they invest in real estate. However, that’s not always the case. A first-time real estate investor need to do their research to make sure they invest in the right properties.
If you are a company with a big budget for marketing, you could just invest in big advertising campaigns to boost your company’s sales. However, if your company is just starting up and is still small, you wouldn’t be able to do this. You need to figure out where you should put your marketing focus on.
There is the mistaken belief that simply putting up ads for their company everywhere will help bring in loyal clients. This is often not true.
Let’s start with a dating analogy. You are a guy, looking for someone. You meet a girl at this party through a friend. You’re introduced and you’ve been told that the girl is great, has a good job and personality and more. Won’t you feel reassured that the girl you met is supposed to be great? Compared to meeting some random stranger without someone else’s perspective, you would prefer to meet someone your friend already knows.
Trust is a big thing and it’s built as you get to know someone. The same is true in advertising, as overloading people would be useless for your business. You need to build trust to get clients.
You could invest in Facebook Ads or Google AdWords. However, meeting with the people in your community will bring value to your business as you build relationships with them. These people might one day be a client.
What’s important is learning how to make someone into a client through trust in your services. How do you know if someone will become a client? How will you earn people’s trust and convince them to use your services?
This is where face-to-face marketing comes in as the most efficient way to generate trust in customers. Marketing companies all over the world know that people who have already experienced their product will be more likely to buy it again. For some brands and companies, product samples help increase their sales by 2,000 percent. However, real estate is not a product, it’s a service. How can people sample a service? Below are some examples.
For real estate agents, you are the service. The homeowners as the prospective clients get to talk to agents. They get information from and network with others through their agent. Homeowners achieve their goals together with their agent.
As previously stated, face to face communication is great. Talking to people face to face allows you to know their unspoken reactions, through body language, the tone of voice, and facial expressions. Here are tips for when you have face-to-face conversations with your prospective clients:
To build trust with your prospective clients, be open to “sample” your service. Build your relationships well and provide valuable service without asking for anything in return. This will lay the foundation of trust and comfort for those prospective clients.
This is why face-to-face marketing is important. To learn more, visit Colorado REIA.