Real estate investing has been a reliable road to wealth for countless individuals. However, it hasn’t rewarded everyone who has tried it. While still more art than science, there are a few basic rules to follow to make the most out of your limited capital.
Although COVID-19 has temporarily upended the economy, this might be an excellent opportunity for astute investors to snatch up some distressed assets. Some of the most successful real estate investors focus their time and energy on acquiring the best properties and leave their administration to professional management companies. PMI First SA Properties is a full-service property management company with more than two decades of experience in the San Antonio area. Call them today to find out what they can do for you.
Educate Yourself
There are so many books, seminars, and videos that teach real estate investing, that it can seem overwhelming. It’s hard to know where to begin, and much of the material focuses on specific aspects of the business. Beginners might want to take a look at The ABCs of Real Estate Investing by Ken McElroy with the forward written by the author of Rich Dad, Poor Dad, Robert Kiyosaki. Of course, experience is the ultimate teacher, but take advantage of the wealth of information available to avoid some costly mistakes.
Choose a Strategy
Real estate investing offers different levels of involvement, depending on your goals. For those who prefer low risk and a passive approach, there are Real Estate Investment Trusts (REITs), which provide a secondary method of investing. However, the most aggressive and successful investors search for distressed properties in single-family homes. With the right knowledge and experience, you can buy a distressed property and turn it into a valuable asset by making some needed improvements.
Add Value
Experienced real estate investors know that the best assets are usually a little worse for the wear. Single-family homes that look run down, outdated, and shabby have the highest possibility for valuation and a positive return on equity (ROI). Most homeowners have full-time jobs and don’t have the time or experience to make the structural and cosmetic improvements to their houses.
If you spot an inexpensive scruffy property in a good location, don’t assume that it’s undervalued. Take an experienced contractor with you to get an estimate from him for the upgrades and repairs you plan to make. With his figure in mind, you can get a clear idea of the final price for this property and compare it to the potential rental income or resale value.
Negotiate
Real estate investing is a competitive business, and most investors are using the same strategy as you. The seller of a promising property is going to have plenty of attention, but most of his suitors won’t spend the time to negotiate. Distressed sellers get plenty of low offers, and they are often in dire financial straits. They appreciate ethical buyers with a fair offer.
Consider using a real estate agent to help smooth these negotiations. Some of them are well worth the commissions they charge, even if they seem high at first glance. Soft skills can be just as critical as number crunching for successful business deals.
Real estate investing can be a fulfilling and lucrative career path, but you need to be both careful and courageous. Sometimes, you need to trust your instincts, and other times, you need sound advice. Regardless of your personality or financial means, there’s a niche for almost everyone. Some investors just want to flip houses and collect capital gains. But if you wish to become a landlord, consider delegating the mundane and time-consuming property management chores to the experts at PMI First SA Properties and focus your energy on closing the best deals.
