james d kuhn - tips for new real estate investors
Post on 13-Apr-2017
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Tips for New Real Estate InvestorsJames D Kuhn
Real Estate Beautiful Home
Real estate investing is a businessYou should treat it as such. Start by developing a good business plan, detailing the nuances of starting and running your business, with realistic goals over time frames of one, three, five and 10 years. If you dont know how to write a business plan, you can find help at theSmall Business Administrations website. But real estate investing doesnt have to be difficult or scary. When I teach people how to invest in real estate, my philosophy is to maximize return while minimizing the risks.
Find A Good Bank Or Mortgage BrokerYour area if youre financing your investments. Realtors (real estate agents who belong to the National Association of Realtors and must adhere to a code of ethics) are good sources for recommendations, or you can ask other investors whom theyve used. You might want to do this even before you start your property search. If youre paying cash, youll need to prove you have the funds by submitting a recent bank or brokerage statement when you make an offer.
Check your credit report
determine your ability to finance investment property. Most lenders today require 700 or better FICO (Fair Isaac Co.) scores from borrowers who want to buy investment property. Also, make sure that your total debt-to-monthly-income ratio is low. Often it makes sense to pay down outstanding credit card debt or car loans in order to improve your debt ratios.
Determine The Best Areas For PropertiesSome new investors make the mistake of limiting their search to areas close to their home. But often better rental areas may be located a little further away. New investors may think they need to live near their properties in case tenants call about repairs or other problems. But in reality, if the home is put into good repair before your tenants move in, those calls from tenants should be few and far between.
Talk with other investors about local real estateJoin a real estate club in your area (do a quick Google search to find them). Real estate clubs are great places to network with other investors, lenders, and repair service providers. You can often pick up helpful advice about your local market from other club members. Some communities offer courses on real estate investing through adult education or local real estate brokerages. If you cant find a real estate club or course, consider an online investing forum.
Consider Multiple Sources For Buying PropertiesNew investors may think they can only purchase homes through their local Multiple Listing Service (MLS), or by banging on doors in run-down neighborhoods looking for distressed sellers. But sometimes you can find much better deals on real estate auction sites, such asAuction.com, and these sites make it possible for buyers to easily make purchases in locations beyond their immediate area.
Spend time reading about real estate investingA tremendous amount of free information exists today online about real estate investing. When purchasing a book, look for those that offer practical guides on buying, flipping, renting, and selling properties. Avoid books that claim you can make huge sums of money in 30 to 60 days or 25-year-old books detailing techniques that may no longer work.
Find A Good Realtor To Help You Locate Properties
Not all Realtors are experienced or even adept at helping investors. Before the real estate crash in 2007 and the subsequent onslaught of foreclosures, only a small percentage of Realtors would even work with investors. Since then, many Realtors have taken courses and suddenly claim to be experts on foreclosures. Make sure that you choose a Realtor.
Look For A Return Greater Than 1 Percent Per Month Of Sales PriceAn old maxim of real estate says that a rental property yielding 1 percent of the sales price per month is a good deal. In other words, if the home cost $100,000, you should get $1,000 per month in rent, or about 12 percent annual yield. But in many areas of the United States today, home values have declined substantially and investors can now achieve greater than 1 percent per month returns.
Learn from the bestTo achieve success, model your investing decisions after what other successful real estate investors in your area have done. Search Google for real estate clubs in your city, or try Meetup.com.Above all, remember that like anything else, the harder you work and the more effort you put into your real estate investment business, the greater your ultimate reward will become over time. Good luck.