We wanted to quickly give you a short list of things to think about as you build your system and team to make your real estate investing journey a little less bumpy.
#1. Focus on what you love and what you know.
There are endless strategies and types of real estate to get involved with. If you watch any of the real estate flipping shows on cable TV, then you know that house flipping can be very lucrative but also a little risky if you don’t know your numbers.
Buy, hold and rent works well for many investors, as long as you have a solid plan, and a great team, to help you deal with tenants.
This is actually a very good strategy in our current market, as many cities are experiencing a shortage of rental home inventory.
The bottom line here is, do what you really love to do even if it doesn’t make you rich really fast. Focus on your long term goals.
#2. Build a team of reliable people who help you succeed.
The most successful investors that we know all have a reliable team to cover the basic aspects of what they do.
If you are doing fix and flips, then you would want a reliable and honest contractor, unless you are doing the repairs yourself, a good private money lender so you can close fast and even help with funds for repairs, a good real estate agent or one of those DIY brokers who will post your home to the MLS and let you take care of the paperwork and showings.
It also might make sense for you to go out and get your real estate license and sign up at an association and for the MLS.
This gives you the power to list your homes and be your own agent plus you can scour the MLS for good deals.
They do pop up on occasion out here in the Phoenix area.
You will also want a good title company.
Many title companies will give you a decent discount if you bring all your deals to them.
Every penny saved counts in the real estate investing game.
You can also get “contractor accounts” with some utility companies that saves you money on the turn on and offs.
Ask your utility companies if they have these types of accounts.
#3. Cash flow rules the day
If you are doing a buy and hold strategy cash flow must be calculated properly.
The rents must cover all of your costs, mortgage, insurance, taxes, etc., plus provide some sort of income and a little extra to save for emergency repairs.
#4. Finding really good deals
This is the magic you must master.
While on occasion you might find a really good deal on the MLS or in the newspapers, most really good deals will be found when people desperately need to sell and before they hit the general market.
This is why bandit signs and billboards work well.
When people need a little cash and need to sell fast, they will typically take much less for their home then the market would bring especially if it needs a lot of repairs.
#5. Never let greed control the deal and if it looks too good to be true, it is!
This is the “gotcha” part of real estate investing. And also where having direct access to the MLS can be a blessing.
If you find a deal being advertised as a killer property and as a steal, be very weary.
First off check the MLS and compare upgrades when it is in an older area.
Many towns where home prices are higher due to the area will see people listing their homes higher than what the market will bear.
A home might have sold for $350,000 but check out if the home you are looking at is comparing apples to apples.
Many times if you don’t have MLS access you might not know that the higher priced home had a pool, or all brand new cabinets and flooring put in.
If the home is for sale at $280,000 but needs $50,000 in upgrades to be comparable, it is not a good deal. Do your math and then do it again!
This is where many new investors fail.
They over pay for a property and then lose money trying to get it rentable or ready for resale.
Good luck with your next deal.
If you are in Arizona and need cash fast for that super deal you just found call Mike & Mike at LM2.
We can fund in as little as 24 hours.
Yes really we can fund that fast!