Have you ever seen an ad for a course that claims to be selling you a course to teach you the secrets of real estate investing? You know the ones. Super successful guy in his fresh pressed shirt. Maybe standing in front of a fancy car that is parked next to his mansion. They conclude with a “never to be offered again special offer” that is still unrealistically expensive. Now, I’m not saying that this guy isn’t going to give you some good tips and a good base to grow on. All I am saying is that for free, you can easily get the ball rolling by acknowledging a few key areas that you need to avoid when you are about to engage in any kind of real estate transaction. This can be when buying a home, a commercial space, a self-storage facility, and the list goes on.
Number 1: Don’t Overpay!
The idea behind investing is to find and purchase properties that are undervalued. Do you know how to tell what is undervalued verses overvalued? Well, without getting too technical in a blog post, you need experience. You wouldn’t buy a car without knowing if you are overpaying, right? It is advisable to pick a market and stick with it. This will give you the best experience and will help you to become an expert in that market. With experience comes knowing what questions to ask and will help you to determine if what you are looking at is a good buy.
Number 2: Know the Market
It isn’t just going to fall into your lap! You are going to have to work for it! With this though, you are really just using common sense. Executing that common sense is where the payoff comes in! How is money made in real estate? Most basically put; buy low and sell high! From the very first step you should have identified the trends in the value of the property you want to buy. This will help you in finding the undervalued ones. If you acquire that undervalued property, you are going to make a profit from it simply by selling it to someone at a higher price. How? Most markets will appreciate over time, so you could just wait it out. Alternatively, you could do some updates to the property which will raise the value. Think of what the market wants, not what you want!
Number 3: Know Your Budget
It may seem like people manage to go through life on a whim and succeeding just fine. Real estate is serious business, not something you attempt in a lackadaisical manner. There needs to be diligent financing and budgeting. This isn’t saying that you need to be a finance wiz, but you will need to be disciplined and know what you budget is from the get-go. Think ahead to what is need and try to anticipate what things are going to cost.