Have a Plan - To often people work backwards when buying a home as an investment. They buy what they think is a good deal, without deciding first what they are going to do with it once it\'s theirs. Before even making an offer on a home, you should know exactly how much you\'re willing to spend, and exactly what you intend to do with it.
Think Career - You\'ve probably have seen the infomercials on T.V. that make it look easy to get rich quick by investing in real estate. You can just through that idea out the window. Being a full time real estate investor is hard work, and you need to be prepared to put time into it, and make it a full time career.
Building a Team - You\'ll never see the amount of money you\'re capable of making if your spending all of your time doing all the research, fixing leaky faucets, and negotiating every contract. There are people out there that can do all this for you more efficiently, while at the same time freeing you to do more important things. At a minimum, you should develop a strong relationship with at least one real estate agent who understands the different needs and goals that an investor has. To expand even further on your team, I recommend adding to your transaction team; an appraiser, home inspector, closing attorney (where needed) and a lender. You should also consider putting together a maintenance and repair team.
Choosing a Price - The trick is to keep emotions out of the equation, and be focused on the bottom line. This is a business after all. Make sure you\'ve done all your homework, have a plan for the property, and have made sure that plan is going to be profitable. Also, it\'s a good idea to be making offers on multiple properties to keep you from getting attached to a single property.
Do your Homework - I can not stress this enough. Remember, every investment comes with a risk. Get out there and educate yourself on what it takes to become a successful investor. There are countless sources of information out there that can help you decide if this is something you want to get into.
Due Diligence - Make sure you have all the information possible about the property, the transaction, the costs, and the current market conditions (see Understanding Local Markets). If you are working with a team of professionals, they should have done all the research for you, and can provide you with a summary of that research. Make sure you review it. Even if you have the utmost confidence in your team\'s judgment on whether or not you\'re making a good investment, it\'s still your money, and it\'s still you taking the risk.
Understanding Cash Flow - If you are looking to invest in rental property, you need to have an understanding of all your expenses. You will more than likely want to enlist the help of a property manager. However, most people don\'t even think to start interviewing any until after the purchase. If you\'ve never dealt with a property manager before, you may be surprised that it can be hard to find one that\'s willing to help you with a single-family home. Most prefer having several rentals, or at least a large multi-family rental per client. Also, be prepared for fees between 7 - 10 percent of the monthly rent. You also should be taking into account maintenance expenses, as well as what it\'s going to cost you during vacant periods.
Volume - You are going to experience marginal deals and in some cases you\'ll see a loss. This is why it\'s important to get yourself to a level where you have a sufficient volume of deals closing so that the good ones can balance out the bad ones in order to see a profit.
Exit Strategy - Always plan for the worst case scenario, and give your self multiple exit strategies. For instance, you may purchase a home in order to rehab it, and then flip it back on the market (see Profit with fixer upers). But what if the market takes a dive? Always make sure you\'re prepared for other alternatives. You may end up needing to turn the property into a rental or offering a lease-purchase option to a buyer. If push comes to shove, you can sell it at wholesale. Meaning you sell it to another investor below-market value. You may not see a profit, but at least you can cut your losses and move on.
Multiply your Estimates - After doing your homework, and determining what your expenses are going to be on a particular home, double it. You never know what unforeseen events may happen to drive those expenses up. If you believe you can still turn a profit at double the amount, then you probably have a good deal worth investing in.
Should you have any questions or need further information, please don\'t hesitate to contact me,(775) 220-1630 Or visit my website at http://www.SellingNorthernNV.com
Joshua Talayka Chase International Office: 775 850 5900 Toll Free: 877 922 5900 Cell: 775 220 1630 Fax: 775 850 5901 985 Damonte Ranch Pkwy, Ste. 110 Reno, Nevada (NV) 89521
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