As a successful real estate investor, you must avoid potential losses that could quickly put you out of business. Knowing what to look out for is therefore very important for your real estate investing business.
Follow these 6 tips to stay safe and profitable as a real estate investor.
1) Buy properties with equity
I think this is the standard rule. Do not buy properties at market value.
Do not expect the real estate market to improve any time soon and your market value to go up.
The real estate market is full of properties with no buyers. You can even get highly discounted properties at deep discounts from banks, sometimes as much as 30%.
If you buy directly from motivated sellers, focus on those properties that have immediate equity even if you use creative means of financing such as lease options.
2) Know your area
Even with equity, you must make sure you buy houses in the right neighborhood.
It also means that if you decide to keep it, you might not get good tenants.
Focus on neighborhoods liked by most people. Can you live there? Would you like your kids to grow up there?
Is the area growing than other local areas and is likely to be even a better neighborhood than it is today?
If the answer is yes, it may be a good place to invest.
3) Is there rental demand?
If you buy houses to hold, you probably need to rent them out. Can you easily rent out properties in that area?
If you were unable to sell your house right away, can you hold it as a rental property? This of course will provide you with a security cushion in case of unforeseen circumstances.
4) Think outside the box
Sometimes even with little to no equity, you could still make money if you did lease options, rent to own or owner financing.
If you have equity in it and can acquire the property on terms, you could be in the profit zone from the beginning and still sell it at a profit eventually.
Consult an attorney regarding the real estate transactions you do.
5) Get in light
If things did not work out as expected, how much money can you lose? The less you invest, the less you can lose if things go South.
This applies whether you get a traditional bank loan or buy on terms.
6) Use private money
A ready supply of quick cash for your deals is a must for successful real estate investing. You are not limited as to the type of properties you can buy or how you finance them.
You can buy a lease option property with private money but not a bank loan.
Get a real estate investor website for seeking private money investors and actively look for them. This website will tell your story for you.
Once you have private money investors, the sky is the limit.
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