Successful real estate investing is not a dream but a reality for people who know top 10 secrets on how to become a landlord and live by them every day. Real estate success does not only happen to very smart people with extensive educational background and six figure salaries; on the contrary, anybody who has strong desire to succeed and motivated to take charge of his own financial future can do this. All of us are conventionally taught to study well at school so we can then go to college, graduate and join corporate America work force and start living an ideal American Dream life. A lot of people work hard 60-80 hours a week, earn good salaries but still feel like they are not getting anywhere. Even some very high compensated executives do not have the financial freedom to quit their jobs and start living the life they really desire.
What are the secrets to real estate investing and how can you accomplish a worry-free financial future for your family and finally start living the lives you want? Before we begin, it’s important to remember that estimated 80% of millionaires in America earned their fortunes through real estate investing.
1. Real estate investing is NOT a get quick reach scheme but rather a structured system comprised of investing strategies, clearly defined goals being fueled by immense desire to obtain financial freedom. Understanding what it is you want at the end of real estate investing is one of the most important principles that lie at the basis of any success. Are you a single Mom who wants to spend more time with her children or perhaps you hate your job because you would rather be traveling all over the world instead? Essentially, becoming a successful landlord gives you this freedom of leading the life that you want. Defining these goals and devising your personal realistic plan is the key!
2. Do not be fooled that you can do this on your own. Unless you have the professional training in real estate investing you might not know all the basics, underwater stones and key strategies to real estate investing. Many novice real estate investors try buying their first residential investment property without really knowing what to look for in a property. If you would rather not waste the time and your hard earned money, getting help from professionals is a must. Joining one of the real estate courses is a great opportunity to learn firsthand advice from experienced investors. Not all real estate courses are created equal, look for the ones that offer not only information but a mentoring program. Find out whether mentors own their own investment properties and how successful they are at it. One of the best real estate investor programs is Lifestyles Unlimited based in Houston, TX that offers not only detailed ongoing educational courses and real estate case studies classes but a mentoring program that allows first time real estate investors to learn steps to buying a house and personally coach them on how to accomplish this in their individual situations.
3. Deciding how you want to profit from real estate investing is important. There are 2 major approaches that real estate investors use in order to profit, namely, buying several residential properties and receiving monthly cash flow while holding on to the properties and the second one is buying a property below its market value, fixing it to enhance its value and reselling it. Understanding all pros and cons of both types of transactions will help you decide which strategy to undertake. Either way, the ultimate goal is to find a property below its market value allowing you to receive monthly cash flow and/or profit from capital gains and future appreciation.
4. Never buy a residential, retail property for sale, commercial property for sale or any other type ofinvestment based on the potential future appreciation. What if this appreciation never happens and you will end up losing thousands of dollars? You simply cannot sustain this type of investment if you are not receiving monthly cash flow. Cash flow is an absolute must! Cash flow is the difference between rent money received and mortgage money paid. As a general rule you should stay away from buying properties that are not returning at least 15% on the money you invested in the deal. Walk away from such properties and search elsewhere.
5. Know the buying a house checklist and follow it to a tee! Never buy a residential investment home without an inspection, title insurance, without pre-approval for a mortgage and other important aspects. You simply cannot cheat in real estate investing, it will backfire at you when you least expect it!
6. The secret to successful real estate investing is to not finding a good property but finding a great real estate agent or a land investment companies if you are buying land and establishing a relationship with them. Real estate agents have access to databases on residential, multi-family, commercial and foreclosure listings that you will not be able to find on your own fast. You can certainly browse through some free foreclosure listings but is it really a good way to kill time? Once you find several real estate agents, it’s worth presenting yourself as a prospective real estate investor looking for properties to buy. Specifying your price ranges, property areas and other important information will make you look credible in their eyes. In addition, professional real estate agents can help you write effective and solid property and land purchase agreements.
7. If you have little or no money, there are still a number of ways to land your first investment property. In today’s buyer market there are lots of sellers you paid too much money for their properties and can no longer sustain owning them. You can consider multiple ways of purchasing a property using one of the following, a wrap around mortgage, property exchange, renovations for purchase down payment, life estate and more. Additionally, you can partner up with another real estate investor and use partnership cash flow to fund future investments.
8. Take measures to improve your credit score. A high credit score is your pathway to getting loans at a much lower rate compared to individuals with a poorer credit. First, you need to review your credit report by requesting it online from one of three major agencies, Trans Union, Experian or Equifax. If the information there is not accurate, disputes must be filed in a timely manner. You might be tempted to apply to one of credit repair services or debt consolidators; it’s one of the worst things that could happen to your credit history. Paying your monthly bills on time regularly and keeping your debt load at a reasonable level should help you improve your FICO score over time. For individual with no credit history like young adults (recent high school graduates or college students), it’s highly recommended to get a credit card, paying bills on time, thus establishing a good credit history.
9. Find good tenants. Ultimately, the biggest part to success in real estate is finding people who are willing to pay you money to live in your properties. Doing a thorough criminal background check credit history and requiring a security deposit and first month’s rent in cash before tenants move in are probably three most important aspects on finding good renters. In today’s economy there’s a surplus of renters but not enough high quality residential housing people actually want to move into. However, don’t be too picky about your tenant selection by setting such high tenant standards that you cannot find people to fit into them. It’s OK to rent to families with pets but asking for a larger security deposit is your way to make up for potential repairs if necessary.
10. Re-invest cash flow or capital gains from sold properties into buying more houses or considering larger multi-family properties or perhaps land purchases, or government property for sale By doing this you are building a foundation of wealth that will result in more cash flow in the future.
