Over the next several weeks I’ll be diving deeper into each of the three strategies for real estate investing. I’ll uncover some of the advantages and disadvantages within each path to help you make more informed decisions as you continue to develop your business and grow your portfolio.
Last week I wrote a post on the 4 basic steps to getting started with real estate investing. The framework for your future business. You can read that complete post here but for those of you already familiar with the article, we’re going to focus on the first strategy I referred to in step #1.
- Long term rental (buy & hold)
This week I polled a handful of experienced investors, all of whom have used Revestor to find buy & hold deals and asked them a series of questions. The information presented in this post is a collection of that feedback and my hope is that it helps you make well informed decisions.
When is the right time to invest in real estate?
When it comes to buy and hold real estate investing you need to think “get rich quick slow”. The benefits to buy and hold real estate investing do not come in the form of a quick buck but rather in the form of appreciation and passive income. Not to say you can’t make quick money by walking into a property with built in equity but you need to adopt the marathon vs. sprint mentality. I also received a lot of responses about “being in the know”. Simply put, decide when to get in based on the numbers, market trends and as much factual data that you can gather. Knowing the numbers is the key to mitigating risk in any real estate investment. One of the main benefits to using Revestor is that we allow you to run the numbers over actual listed properties. Be sure to get familiar with these key indicators to help you make more informed decisions.
Just a reminder for those not familiar with some of this terminology, you can find the definitions on our site here.
What should I look for in a potential property?
Doing your due diligence goes beyond knowing the market trends and numbers; especially when it comes to acquiring real property. A savvy investor always wants to acquire property with built in equity. This doesn’t mean getting your agent to write countless lowball offers until someone accepts but rather have a vision of what your property can be. For example, can you add a bedroom or bathroom? Can you update a kitchen or the exterior? These changes don’t require a lot of money or major renovations but they can fetch you higher rents and increase the overall value of your property. It’s also important to be thorough with your inspections. A cracked foundation, faulty plumbing or a deteriorating roof can cause crippling expenses to inexperienced investors. Make sure the property you’re purchasing is in sound shape to help minimize future surprises.
One of the most common buy and hold strategies for new real estate investors is with multi-family properties. In this case, you the owner, occupy one of the units while renting out the other units to help offset / cover the cost of the mortgage. One of my good friends and one of the most successful real estate investors I know has used this method to build a small empire. He acquired properties by coming in with all cash (hard money loan), giving him the advantage over other buyers. Once he had possession and rented all but one of the units he would take out a mortgage, pay back his hard money loan and begin rehabbing the unit he occupied. He was creating equity and instant cash flow this way.
Create a FREE account on Revestor, get familiar with the terminology and start gaining knowledge. By creating an account you will be able to…..
- Search nationwide
- Set your own investment criteria
- Save searches
- Save properties
- And more
Creating an account with Revestor allows you to filter and find properties that work for you saving you time and money. You can create your account here and clicking “Sign Up” in the top right corner.
Next week I’ll be going over the basics of short term buy & hold for you vacation rental owners.