15 Tips for Breaking into Real Estate Investing


Real Estate Investing may seem like a risky business, and it can be, but just about anyone who works hard enough and smart enough can use Real Estate Investing as a lucrative way to increase their net worth.

Retirement based on cash flow streams from rental income properties is a very real possibility.

Before you get started in Investing, though, there are several things you will want to take into consideration, to determine which property would be the best investment for your personal financial situation.

If you’re considering getting started with Real Estate investing, consider these fifteen tips for breaking into real estate investing.

1) Look for a good investment

So what is a good real estate investment? A good real estate investment is any real estate property that increases your net worth through a fair rate of return on your equity.

2) Buy cash flow-positive properties

When looking for an investment property, you need to calculate the estimated cash returns on the property for that area to make sure you’ll be getting a good deal.

3) Buy a property that you love

Real estate ownership takes a lot of time and effort. It’s a lot easier to part with time and money on a property you’re fond of.

4) Go from personal residence to rental

A great way to get your feet wet with real estate investments is to put your personal property up for rent. If you plan to live in a house for a few years before turning it into an investment property, you’ll be better equipped to handle repairs on the house. Living in a property and making changes along the way is a cost-effective, long-term solution for getting started in real estate. You’ll also get better interest rates on the property if it’s your primary residence when you buy it.

5) Don’t buy fixer uppers

Fixer uppers are tempting to purchase as a real estate investment because of their lower price point on the market. When looking for a rental property, though, unless you plan to live in the fixer upper first, it’s much more cost-effective simply to buy a solid, reliable home that needs little to no repairs.

6) Overestimate your costs

Things perpetually break down and need repairs in properties, and the home repairs inevitably cost more than you think they will. If you’re looking into real estate investing, make sure you have a fairly sizable cash reserve to cover the expected and unexpected costs of Property Management and repair.

7) Buy in working class areas

Look for properties in working class areas where rental properties don’t last long on the market. For example, if you live in the city, look for a property that would appeal to young graduate students or young workers.

You’re more likely to have your property sit vacant, costing you thousands of dollars if you buy in a neighborhood typically occupied by homeowners. It’s not impossible to rent homes out in nicer neighborhoods, but it’s easier to fill a property with tenants where rental properties have a higher turnaround rate.

8) Pick moderately priced properties

Keep in mind that expensive homes in sought after areas like the ocean front usually have low cash flow returns. You’d be better off investing in a more moderately priced property with a higher cash return.

9) Know the neighborhood

Don’t buy a property in an area you’re not familiar with. Know the history of the neighborhood, and do your research. Find out how the schools rank, what the crime statistics are, and if there is any noise or air pollution that could affect your ability to rent out the property.

10) Buy local

Unless you plan on hiring a property manager, take the travel distance into consideration when looking for a real estate investment property. Sometimes you can go months without having to make repairs or visit the property, but other times you’ll be at the property every day that week. It’s a lot easier to manage a property that is close to home.

11) Buy a one bedroom apartment

There will always be people looking for a one bedroom apartment. College students, bachelors, widows, and single working class people all usually look for a one bedroom unit, since it’s the most affordable housing option. People don’t like to pay for more house than they need.

12) Learn from the experts

If you’re looking at getting started with real estate investing, reach out to the experts in your community. Join a real estate investing Club and reach out to experts online. Invite a local broker to lunch and pick their brain for ideas on your tab. If you want to be successful with real estate investing, surround yourself with successful real estate investors.

Also, constantly read new real estate books, blogs, and eBooks about smart real estate investing strategies.

13) Hope for the best, plan for the worst

When you own a property, it’s essential that you hope for the best but plan for the worst. Between expensive repairs and downturns in the market, you need to have a backup plan and money in savings to help cover life’s unexpected financial difficulties.

14) Plan on long-term investments

The longer you own the property, the greater your return will be. Don’t hop in and out of property ownership. A little bit of patience goes a long way to increasing your returns.

15) Don’t quit your day job just yet

It seems like common sense, but too many real estate investors have gone belly-up with their finances because they relied too heavily on turn around profit or rental streams of income, and then the market took a downturn, leaving them with not enough cash flow to cover their income needs. Until and unless you have enough diversity in your real estate investments to cover downturns in the market or tenants who don’t pay their rent, you’ll need to keep working your day job.

Stay on top of your investments

Real estate investing can be a rewarding and profitable business endeavor, but it can years for your property or properties to become reliable income streams. Make sure you’re getting a good deal on your investment property and that the property is increasing your net worth.

Do the research, know the area, and ask for help from those in your community that have had success. Once you do make a decision on a property, prepare for when things go wrong, and have cash saved to cover the high cost of repairs or expenses. Stay on top of the market, and educate yourself so that you’ll feel more confident with your investment strategy.

Source: http://www.youngadultmoney.com/2015/12/18/15-tips-for-breaking-into-real-estate-investing/

The Perfect Passive Income Real Estate Investment

A​n investment in REITs offers the benefits of Real Estate Investing without the hassle of buying individual properties. Find out why it should be part of everyone’s investment strategy.

Ever since Will Rogers made his famous quote about Real Estate Investing in the 1930s, people have been lining up for their share of the profits. Few investments have created as many family legacies and created more wealth than Real Estate.

My own experience in real estate investing started in 2002, just after getting out of the Marine Corps. I took a job as a commercial property agent and started rehabbing single-family houses for rent in my spare time. Of all the passive income strategies in which I’ve invested, real estate has been my favorite,

…and also one of the most frustrating.

Promises of a six-figure income as renters pay off your mortgages and investing strategies that involve little more than collecting your checks are about as far from reality as a bad sci-fi flick. I had as many as six properties before selling all but a couple in 2006. Phone calls come in at all hours of the night for repairs and bookkeeping alone can be a part-time job.

I still own a few rental properties but have found a better investment in real estate. One that offers the upside of real estate but without the tenant hassles and large down-payment of buying property.

Besides a great opportunity for real estate-related profits, the investment has beaten the return on stocks over the last four decades. It’s one of the few investments that everyone should put in their portfolio.

Real Estate Investing without the Headaches and Hassles

Real estate investment trusts (REITs) are a special type of corporation established by law in 1960. These companies own real estate properties and do not have to pay corporate income taxes as long as they pay out at least 90% of income to investors.

As you can imagine, not having to pay corporate taxes is a huge advantage and REITs hold more than $2 trillion of commercial real estate in the United States and globally. Companies like McDonald’s and Sears have considered selling their real estate into a REIT and then just renting it back to benefit from the tax advantages.

For investors, this means a strong source of income from your investment. According to the National Association of REITs (NAREIT), the average dividend yield of 4.1% is nearly twice as much paid by stocks in the S&P 500 with an average 2.1% dividend yield.

Most REITs invest in commercial real estate along a specific segment like office, industrial, health care or multi-family residential. The company manages the properties and sells shares to investors just like any company in the stock market.

The great thing about investing in REITs rather than directly buying properties yourself is that you get instant diversification across hundreds of properties and professional management. You don’t have to worry about a drop in the local economy and the rental market, a big problem for most individual real estate investors.

Beyond the cash flow you get from REITs, they also provide a solid return on the price of the shares. REITs averaged an annual return of 13.5% over more than four decades to 2013, well above the 10.2% annualized return on stocks in the S&P 500.


How to Invest in REITs

There are hundreds of different REITs in which you can invest. As with any sound investing strategy, you should diversify your investment across multiple companies so you aren’t overly exposed to problems at any specific one. You’ll want to look into buying REITs that own different types of commercial properties as well as those that hold properties across the country.

One popular strategy for many investors is to buy shares in a REIT fund, an investment that itself holds shares in individual REITs. Buying shares of a fund like the Vanguard REIT ETF (NYSE: VNQ) gives you a share of the 145 different REITs in which the fund invests, immediately spreading your investment out across different property types and different locations.

REITs may not offer the upside potential of owning your own real estate properties and I still like the pride of ownership I get from developing real estate. As for a source of passive income, it’s tough to find a better investment than REITs. Like any one investment, you shouldn’t put all your monetary eggs in one basket but putting some money to work in REITs is something everyone should consider.

Author bio: Joseph Hogue, CFA is an investment analyst and author of The Passive Income Myth: How to Create a Stream of Income from Real Estate, Blogging, Stocks and Bonds. Join the community on PeerFinance101 for more tips on investing, managing debt and reaching your financial goals.


Source: http://www.makingsenseofcents.com/2015/10/the-perfect-passive-income-real-estate-investment-reits.html

6 Amazing Tips on Turning Real Estate Into a Real Fortune

At least 30 U.S. billionaires made their money from Real Estate; some say that it’s the greatest way to create real wealth and financial freedom.

These six tycoons and members of The Oracles suggest how you can invest $100,000 or start with nothing.

Tai Lopez

Image credit: The Oracles

 

1. Start small.

Although I’m a businessman first, I’ve always been a part-time real-estate investor. You can do both, too. Have a business or career that creates positive cash flow, which you can diversify into part-time Real Estate Investing. I’ve done it for many years.

If you’ve never invested in Real Estate, start small and don’t use all your money. No one’s ever looked back and said, “My first deal was my best.” You’ve got to learn how to read the contracts, build your network of specialists—for example, lawyers and realtors—and develop a good eye for it. This only comes from experience.

The beauty of real estate is that you can learn the ropes while starting small: find some cheap properties, like single-family homes, renovate-and-flips, multi units, or commercial properties. Try to commit as little as possible while you get some notches under your belt. Joel Salatin, my mentor, always said, “Make your mistakes as small as possible without catastrophic consequences.”

If you have zero cash, maybe do wholesale deals. A business partner, Cole Hatter, and I created a real-estate program teaching you how to put a property under contract for very little money down, sometimes less than $1,000; you sell that contract to another buyer before the contract expires. Worst case: you just lose under a grand. Best case: you make $5,000-15,000 positive cash flow that can be reinvested in long-term holdings. —Tai Lopez, investor and advisor to many multimillion-dollar businesses, who has built an eight-figure online empire; connect with Tai on Facebook or Snapchat.

Grant Cardone

Image credit: The Oracles

 

2. Think big.

It’s easy to give up on the real-estate game because you don’t have any money, but it’s the deal that matters, not how much money you have. Chase the deal, not your budget.

I know a guy who saved $50,000 and started chasing $200,000 deals. First of all, you can’t buy more than four units with that budget. The problem with four units is that each can only produce maybe $1,000 or $2,000 per month. And that’s only after you’ve done thousands of dollars in work around the units to make them rentable in the first place. That math isn’t difficult—there’s just not enough money to make it worthwhile.

That’s why you’ve got to go big from the start—with 16 units, minimum. Don’t buy less. Without 16 units, you can’t have a manager, and if you can’t have a manager, you’re going to either dedicate all your attention to the property or to your full-time job. To get 16 units, you will need to wait and save more money or use other people’s money (but you’ll need to learn how to sell). —Grant Cardone, top sales expert who has built a $500-million real estate empire, and NYT-bestselling author of “Be Obsessed or Be Average”; follow Grant on Facebook or YouTube.

Phil Pustejovsky

Image credit: The Oracles

 

3. Understand the economics, then find a mentor.

The real-estate deals that look the prettiest and are easiest to find—such as buying a property that has a tenant and management in place, joining a crowdfunding website, or buying into a publicly-traded real estate investment trust—yield the lowest returns. The most profitable opportunities are the ones no one else knows about, which you find and create.

Due to a strong economy, high consumer confidence, historically low inventory levels, and extremely low interest rates, it’s the best time to flip houses in the past 40 years.

High consumer confidence and a strong economy give retail buyers the feeling that “now is a good time to buy” rather than retreat in fear and continue renting. Low interest rates allow retail buyers to purchase more of a home than if the rates were at historical average levels, like 6 percent. Low inventory levels create bidding wars by retail buyers, which increase the prices that investors sell their flipped houses for.

So, if you can find the deals before the competition, you can transform a little bit of money into a whole lot in a relatively short period by flipping houses.

If you’re seeking tax-advantaged passive income, thanks to the rise of the sharing economy and services like Airbnb and HomeAway, short-term renting of residential properties is producing the highest returns. (It’s not uncommon to obtain more than a 20 percent return on very nice properties in beautiful areas.) The majority of my real-estate holdings are now in short-term rentals.

Unfortunately, real estate is full of pitfalls. Getting educated through reputable online sources can help, but an article, book, or how-to video will be of little assistance in answering the most important questions you’ll have in the heat of a deal. That’s where the right real estate mentor becomes an invaluable resource. —Phil Pustejovsky, founder of Freedom Mentor, bestselling author of “How to be a Real Estate Investor”, and #1 YouTube channel on real estate Investing with nearly 20 million views.

Mark Bloom

Image credit: The Oracles

 

4. Learn, then earn.

Before throwing money away on the HGTV pipe dream, educate yourself! Don’t spend thousands of dollars on coaches and seminars. No matter how shiny they make it or how much you’re told you need an expensive education, you don’t. Information is inexpensive and plentiful. Find it or someone specializing in investment real estate, like me.

Holding assets is the way to build wealth through real estate. Shelter is a basic need. Dirt, in and around major metro areas, is a finite resource, and demand is constantly increasing. By owning a rental on that dirt, you have a small business that works to pay off your mortgage. Flipping is over glamorized, in my opinion. Rent and hold for the win.

Boomers and millennials want smaller housing, closer to cities. Additionally, real-estate investors commoditizing American suburbs and re-gentrification has pushed lower income families out. Because of this, America’s suburbs have seen a 57 percent increase of people living below the poverty level in the last 15 years. Buy your cities.

Don’t blow your budget. Most projects have surprises or overruns; it’s just part of the business. Keep a cushion for the unexpected. Lever your funds to increase returns and reduce risk. Start with one project. Get your model set, tweak, then buy two. Continue and progress until you build a solid portfolio.

Educate yourself, hustle, and create value. Take massive, determined action daily. Talk to brokers, call contractors, view open houses, and go to meetups. Learn! And when you’re ready, door knock! The best deal is the one that isn’t for sale. Find it, then find someone like me and close it down. —Mark Bloom, President at NetWorth Realty

Com Mirza

Image credit: The Oracles

 

5. Start today.

In building over $100 million in real estate, I’ve personally used three strategies many times.

One: Purchase a low-income property, typically for $35,000 to $55,000. Costs are low but yields are consistent. Hand over all management to a third-party company, and collect your monthly rent passively, bringing in annual returns of 8 percent to 10 percent. If you purchase two to three properties like this per year, you will have a portfolio of 20 to 30 in a decade.

Two: If you can fix things yourself, do a “live-in flip.” Buy a house that needs a little work at a great deal; live in it for one or two years while you rehab it. Then flip the house for an appreciated value and profit. Doing this five times in 10 years could generate $300,000 to $500,000 net profit. That would let you buy your own house in cash! Or reinvest into rental properties, which would cover your cost of living anywhere in the world.

Three: Joint venture on a deal. People have money; they just need the right opportunity. Find a good deal and tie up the property with a contractual clause, pending financing approval within 30 days. Then find another investor to partner on the flip with you. Explain that you secured the property and just need the funds for a specific period, and the return will be split between you both.

Make enough calls, and you’ll find a joint venture partner easily. Just ensure you correctly calculate the cost of rehab and expected sale price. Most people mistakenly underestimate the rehab cost and overestimate the sale price, killing their margins. — Com Mirza, “The $500 Million Man” and CEO ofMirza Holdings; failed in eight companies back to back and today, runs a nine-figure empire with over 600 employees.

Roy McDonald

Image credit: The Oracles

 

6. Profit is in the purchase.

Source transactions that contain some core elements: they take the shortest amount of time to complete, and provide the maximum amount of profit while minimizing risk and the amount of cash you invest initially.

Before really embarking, solidify your A Team (advisors whose opinions you trust) and B Team (associates who turn the gears).

Once you have a plan, pull the trigger. Don’t just have a backup plan—ensure that even the most airtight scheme has at least five exit strategies. Experience has taught me that the winds of a favorable real estate market can shift rapidly; the last thing you want is to be anchored to a dozen unsellable investments.

Finally, know the difference between buying, holding, and trading. Buying is a no brainer, but it’s what you do with a property that determines your success. My primary strategy has been holding onto commercial real estate for the long term and trading out residential pretty quickly. Know your market.—Roy McDonald, founder and CEO of OneLife

 

Source: https:/www.entrepreneur.com/article/296937