4 tips for real estate investing

Ginger Dean

December 30, 2013

By: Ginger Dean, Home Finance Specialist

In:

If you're investing in real estate, then having a strategy is essential to your success. You can't just go into the market and decide to wing it - that's a recipe for disaster. If you don't want to join the multitude of real estate investors who have recently suffered huge losses, you have to go in prepared. The following tips should help you do just that.

  1. Entrance and exit strategy - You need to determine what you want to do from the start. People make money off of buying and flipping properties, rehabs, commercial buildings, apartment complexes, vacation homes, mobile homes, and storage facilities, just to mention a few. Where and how you enter the market is important. Depending on how much capital you have available, you can choose one or more entrance strategies. However, always make sure that you have multiple exit strategies in case one doesn't work and you need a fall-back plan. Popular and proven exit strategies include flipping, renting and flipping, rent and hold, property leasing, and wholesaling.
  2. Short Term Goal - Smart investors typically have both long and short term goals. Both have their benefits, but you need to see which is right for you. If you are thinking short term, building and flipping, rehabs and flips, or investing in rental properties might work better for you. Most short term real estate investment goals are arguably more for profit than for wealth building.
  3. Long Term Goals - As mentioned above, long term strategies are more for wealth building than profit. Investors interested in long term real estate investing will be more inclined to rehab and lease apartments, buy and rent homes to tenants, or build and lease office spaces to companies and organizations. Bottom line, you'll most likely be looking for options like equity building, long term appreciation, and value growth.
  4. Financing - Proper financing is crucial if you want to succeed in real estate investing. There are so many options to choose from. While some use cash, others prefer using credit and financing options like traditional mortgage from mortgage brokers, FHA loans, 203k loans, partner financing, government backed loans like Homepath Mortgage, owner financing, hard money financing, private money financing, home equity loans and lines of credit, commercial loans, Roth IRAs, and in some cases, life insurance. They all have their pros and cons. To decide on the right option for you, talk to qualified financial adviser.

Jumping into real estate investing can be risky - but understanding the game and the players while developing an entrance and exit strategy could be your keys to success.

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