Five Essentials For Real Estate Investors
Investing in real estate is a paradoxical mix of being conceptually straightforward yet insanely complex and nuanced. We all know the basic premise behind it: in the simplest of terms, you buy a property and resell it for profit. Even those of you who aren’t yet real estate investors know that it’s obviously not that easy, but for a relatively self-evident concept it requires a surprising amount of work and diligence to make things play out that way.
To be sure, real estate investment does require a lot of work. Equally important, though, is the planning and organization involved. As we often say, you need to have a plan for whatever you do, and a bigger plan into which that smaller plan fits. When you set goals, set S.M.A.R.T. Goals.
Look at the big picture
This is part of setting S.M.A.R.T. goals and having a larger overall plan. Every step you take and every plan you put into place should be in service of a larger objective. Write down your goals and determine if they’re manageable. Sure, we all want to make a million dollars; that’s pretty easy to say to ourselves. But how will you do that? What steps are necessary? How many properties do you need to sell at a given profit margin, taking into account the area and general market trends? How does each property sold move you towards your ultimate goal, and are you organized about planning to buy, renovate, and sell or rent each property within the context of that goal?
Don’t forget about the details, but also don’t lose sight of the larger picture.
Investigate carefully
Speaking of details, this is where investigation and diligence comes in. It should go without saying that you should never, ever go through with a course of action without thoroughly investigating all aspects of it and formulating it into a plan. For example, as the saying goes, if it seems too good to be true, then it probably is. Real estate is a field in which mistakes can be costly. This isn’t always a matter of poor investment choices and monetary losses, either; time is money, and when you lose time cleaning up your own messes or correcting mishaps you’re literally hemorrhaging money as an investor.
Keep your sense of timing keen as well. Markets can change with the wind, and what’s true today may not be the case tomorrow. In other words, factor trends into your plan, and make sure that if any parts of it are contingent on trends staying the same, you plan accordingly. Losing time in an instance like this can cost you even more.
Consider geography
In real estate, location is everything. So pay attention to not only the characteristics of the area you’re working in but also the trends of the local market. Remember, some broader trends may hold true for the market as a whole in a general sense, but it’s always better to know exactly what’s happening on the ground in your area. It’s not just about property values, either. What are the schools’ performances like? How do property taxes look? Have there been recent assessments, and are new permits being issued for development? All of these things affect both the current and future value properties have in a given community, and they should inform your decision-making process when considering investments and purchases.
Focus on relationships
Networking is an integral part of any business, but in real estate it’s especially important. To be sure, it’s crucial to know contractors, realtors, agents, tax professionals, and city employees in your location because you’ll probably have to work with them in some capacity, after all. Still, networking is about more than mere connections. The strength of your business is due in no small part to your professional dealings and how both your colleagues and consumers such as buyers and tenants perceive you. Your reputation matters, and the only way to ensure it remains intact is through sound, fair, and reliable business practices.
Still, the importance of connections can’t be ignored. If you’re working for the first time in a nearby area, get to know local professionals. Make yourself available for advice and assistance, and hire local contractors. Work with local realtors because they’re going to know the lay of the land. Database websites such as AtlantaRealEstateNetwork.org are indispensable for initiating these connections as well as finding other professionals to work with.
Develop exit strategy
In any business plan or investment proposal, there always needs to be an exit strategy. This is usually the most overlooked (and frequently left out) aspect of a business plan. We see its absence in even the most basic of proposals and business plans, whether they’re related to real estate or not. Bottom line: you need an exit strategy for any plan, and you need one for each outcome – success or failure – because the former outlines how you manage gains as a springboard while the latter mitigates your losses.
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– Get It Right Solutions