We believe that it is important for real estate investors to embody and hone in on some skill sets that top real estate investors practice:
1. Real estate investors have homework too.
The more you are able to understand your local real estate marking, best practices, financing processes, and negotiation tactics, the more informed you will be in any real estate scenario. Remember the party that is most aware, always has an upper hand in either securing a better deal, or knowing when someone is trying to hide something. When you invest in your personal skill set, your real estate know-how will become equally sharp. Consider this – take what you read from the gurus and from the internet with a grain of salt. Each market is different and each transaction is unique. Talk to the heavy hitters in your favorite neighborhoods and dig deep in regards to the private information. Really get a firm grasp on how things happen and where to buy.
2. Realist Real Estate Investors
Sure, we are in one of the best buyer’s markets of all times. Yes, there are a lot of distressed properties that need rehab and there are a lot of homeowners upside in their current situations. But that doesn’t mean that every offer you make is going to get accepted. Remember, it is a numbers game in real estate. The amount of contracts you get signed is equally proportionate to amount of offers you make. Tip: If you are not embarrassed to present your offer, then it is too high. If you do this long enough, you will become more comfortable at presenting your offers. From there, who knows what kinds of deals you will find.
3. Get your money straight ahead of time.
It always amuses us how many people spend countless hours scouring the MLS, digging though classified ads, and send direct mail to home owners, and then when it comes down to closing, they are running around like a maniac trying to secure financing at the last minute. If you are a qualified investor and you know these markets, it would be highly beneficial to have your financing lined up and a proof of funds letter in hand to present with your offers. Do you research and find a reputable rehab lender or hard money lender that you can develop a relationship with. There is nothing worse than putting in all those hours to get an accepted contract, and then have things fall apart because you were doing things out of order. This segues back to point 1 – do your homework.
4. Always overestimate your costs and underestimate the after repair value. If you can make money in this situation, then you will make money with this deal. The reason so many investors exit strategies fall apart, is because they over-inflated their after repair value and did not budget for added costs during the rehab.
5. Know what type of property you want.
If you want a bank-owned property, focus on bank owned property. If you like 3-family homes located within a .6 mile radius from your local college, then stick to that area. Remember, lack of focus in your investing will make you feel like you are running around blindfolded. Get focused. Get results. And then scale up from there. Ever met a real estate investor who owns half the block? Think it is an accident?
6. Real estate is local.
Do not pay attention to national markets (unless you invest in national markets). Pick a “farm” – a dedicated area that you want to invest in. Then hone in and focus on the best blocks. Learn as much as you can at that level first before calculating the rise and fall of average home value in the US. Smart investors make money no matter the current state of “the real estate market”.
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