aka How to Start on Your Path to Real Estate Investing Success
You’ve probably noticed, on a daily basis on the Real Estate Investor Forum Facebook page we share investment property listings we have found while browsing various sites. These are real estate investment properties we have located by our own search, and that have jumped out at us for one reason or another.
Why we do this
Until you have purchased an investment property, you are not a real estate investor. We meet lots of people who want to get into investing, who read up on investing and follow sites like ours. But some of these individuals never pull the trigger and buy an investment property. Sometimes it’s just because they aren’t financially ready, but many times it’s because they just haven’t put the effort into finding a property to purchase. With a little motivation, we can help these people to ramp up their efforts and make the move to buy an investment. Sometimes, it just takes seeing some of the opportunities that are out there to create that spark someone needs to move forward.
What you should do
An important thing to remember is that these are just listings we stumbled across that we thought were interesting. What you see on the Craigslist post is just the start of the research you should do before buying. It is important to gather the financials and other due diligence to see if it is truly a good investment.
Not every listing we share is a good deal. For example, you may see a property advertised with an 8% cap rate, which is really good for some areas, but through your own research you discover that at 8%, the property is actually overpriced for the area. If you see a listing that you like, follow-up with the seller to get more information on the property.
If the property is a rental, ask for the income and expenses for the past couple years. For larger multi-families, make sure to find out about management expenses too. Especially in the case of properties that are eight units or more in size, the expenses should include some sort of management, even if you plan to manage yourself.
How we can help
If we share a listing that is of interest to you, let us know, and we’ll help you with the analysis. As experienced investors ourselves, we only stay sharp by continuing to do the exercises that made us successful in the first place. We enjoy sharing the tools we use, and helping other investors build their own skill sets and net worth.
Depending on the type of property it is, we’ll help you determine what other information you should gather, and what calculations you need to do. Evaluating a property for acquisition is not hard, but you need to know what to look at in the numbers, in addition to other important activities, like inspections. One of the biggest mistakes one can make when acquiring an investment property is to not do the proper due diligence.
Come up with a plan
Do you know what kind of investing you want to do? Flips, rentals, wholesaling, etc? What market are you looking to buy in? If you’re in a small or mid-size city, this question is pretty easy to answer. If you’re in a larger market, you’re going to need to narrow your focus to certain parts of town. When you’re making your first investment, you want to make sure the property is geographically convenient to you, as you’re probably going to be spending a lot of time there. You don’t want to have to travel an hour or longer just to get to your property, as that becomes a hindrance to your success.
Once you have your strategy in mind, then you can start looking. Follow the listings we share and start searching on your local sites (like Craigslist, realtor.com, etc.). Tell us where you are looking, and we’ll also check out the listings to see if anything jumps out at us.
While you are looking, this is also a good time to make sure your finances are in order. Unless you are paying all cash, make sure you’ve got a lender lined up and ready to finance the deal if you find one. Sometimes the best opportunities require quick action, so you don’t want to lose out if you stumble across a great opportunity by not having your financing lined up.
Once you’ve found an opportunity, and the numbers make sense, write up an offer. You don’t want to get stuck in analysis paralysis, so don’t hesitate to take action once you’ve done your diligence. If you’ve done your analysis, and the returns meet your objectives, don’t second guess yourself. If the deal is a good one, you could lose it to someone else if you take too long.
You can have other help in this process too. Use the Real Estate Investor Forum website to find local mentors to help you through the buying experience. They might not be able to go with you to look at the property, but they can point you to the right resources, such as title companies, property inspectors, and contractors, who can be your expertise.
Share your experience
If you want, you can even share your story with others as you move through the buying process. There are other investors who are also looking to get started, who would be interested in hearing what you do. As a part of our real estate investor community, your experience helps build other people’s success as well.
As you’ve probably seen, we’ve started to get video submissions from some of the other members of the site. Real estate investors come with a wide range of experience, and having someone share their story when getting started is just as important as someone who has made 20 acquisitions.
We want you to succeed
When we share our listing of the day, we aren’t telling you to buy it, we’re telling you to take action towards meeting your goals. The first step towards your success as a real estate investor is making that first acquisition. Use our posts to wet your appetite, and then set your strategy, start your search, and pull the trigger to start on the path to success.