Investing in real estate is like going on a long hike to an awe-inspiring outlook. When you hike, you probably need a map (unless you want to get lost or injured). This is why as real estate investors, we need to establish goals and accountability trackers for our investments, our teams, and ourselves. If you’ve never owned a rental property before, you may not know what the best goals are or which are worth tracking at all.
Real estate networking brings more benefits than people think. It isn’t just about going to local meetups or joining online forums, like BiggerPockets. Networking allows new and experienced real estate investors to share stories, bounce ideas off of each other, form partnerships, and recommend quality vendors. Without a proper real estate network, you face an investing career where you’ll have to make the same mistakes many others have already.
It may be your first time buying a property—or your first investment property. Whether you’re house hacking, setting up a short-term rental, or just doing the regular “buy a house and rent it out” strategy, you’ll want to make sure you have a quality lender who can get the deal off the ground.
As a new investor, you may be investing in a different area of your country, state, or even city. And even if you’re investing down the street, you want an agent who knows about neighborhoods, building structures, and different types of deals so you can close quickly on your first investment property. It’s always best to find an agent who’s happy to help an investor like you.
When we talk about real estate farm areas, we aren’t talking about chickens and pigs. A farm area is a demographic of geographic area in which a real estate investor, agent, or professional “farms” leads. Farming can establish you in the area as a real estate professional who wants leads, needs great contractors, and has (or will have) rental properties ready for rent.
If you’re in the real estate arena, you’ll often hear investors talk about how they “can’t find any deals.” Of course, this isn’t true—if it was, the entire real estate market would come to a dead halt. Here are some of the best methods and techniques to find profitable properties, whether you’re looking to flip a property or buy a cash-flowing rental.
Without deal analysis, you’re walking into an investment without any knowledge of cash flow, appreciation, renovations needed, timelines, or other metrics that could help you decide whether or not a home is worth purchasing. That is why this step is so crucial for every successful buy and hold investor.
Home inspections are an inexpensive but incredibly valuable way for you to find out whether or not your investment property prospect is worth the price (or the effort). Inspections not only allow you to do another walkthrough of the home, but with the help of professional inspectors and specialists like plumbers and electricians, you can see exactly what is wrong in a home, home much it will cost to fix, and whether the issues are large or small.
You’ve found a great property. It's in a good neighborhood and your profit margins look large enough. Now it’s time to make an offer! Your offer doesn’t need to be the exact asking price, but should be cognizant of factors such as how hot the local market is, how many offers you expect the seller to receive, and more importantly, what will be the highest price you’re willing to entertain in order to ensure a profitable transaction.
Almost all home buying experiences will involve some kind of negotiation. The main difference between negotiating a residential property and an investment property is the lack of emotion. When you’re buying an investment property, whether for flipping or as a rental property, you have defined profit margins you need to hit for the deal to be worth it.
When you’re buying a new car, you take a look under the hood... and under the car itself. You may even take it to a mechanic for their opinion. That’s due diligence: Making sure that the owner is correctly representing the vehicle.
Estimating costs on a rehab can be challenging, especially if you’ve never managed a renovation before. This section may not pertain to those buying out-right turnkey properties, but it’s important to understand the factors of estimating rehabs, since you will inevitably have to do them if you’re a long-term real estate investor.
Executing a successful rehab or renovation relies on a few things. You’ll need to make sure your contractors are on time and working with efficiency, demolition is happening correctly, and the independent contractors managing systems like plumbing and HVAC are following the timeline.
Having a rental property is great, but there are some less-than-fun aspects, too. Having to call maintenance, negotiating leases, and advertising your rental might not be your strongest qualities. Frankly, you just may not want to deal with those types of things. Thankfully, we have property managers, who can act as the backend team for our rental properties. They help us scale our portfolios, focus on other aspects of our business, and handle less five o’clock toilet calls.
You have a couple main options after you purchase your first rental property: hire a property manager or self-manage. When you’re self-managing, you control everything from hiring out contractors to picking up rent checks. When you have a property manager, you’ll deal less with the day-to-day actions and focus instead on big-picture items. That being said, you may still need to manage your managers.
Many new investors forget that they can refinance rental properties after a certain amount of time. A refinance allows you to lower your mortgage rate, take cash out of the loan, or change the loan terms. It may make sense to switch from a 30- to a 15-year loan if you’ve increased rents—or cash out if you have a couple hundred thousand in equity sitting in your home.