The TV shows about flipping houses and investing in real estate make it look easy, but the producers of these shows just want viewers. Watching people gradually save money while they acquire the necessary knowledge for a stable investment portfolio does not make for good TV.
Everybody enjoys daydreaming about being a successful real estate investor, and that is why these shows are so popular. However, very few people are willing to do the proper research and take the steps necessary to be a successful real estate investor. If you are serious, these four steps will get you started in the right direction.
1. Determine your area of specialization
Successful real estate investing requires knowledge. There are many different types of real estate investments. Don’t kid yourself into thinking that you can master all of them. Your time and capital are both valuable and in limited supply. Determine the type of investing that best matches your strengths and approach it with focus. Trying to dabble in a bit of everything will prevent you from ever gaining the expertise needed for long-term success in all economic climates.
2. Know the numbers
There are mathematical formulas for each area of real estate investing that determine whether you should or should not invest in a particular property. You have to know that the numbers work and that the property will make money for you before you invest any money.
You don’t get the option of following your gut instinct to make real estate investment decisions. You have to understand the investment formulas for your type of properties, and you have to take the time to conduct a proper analysis of any property you seriously consider.
3. Develop strategic partners
As a real estate investor, you will need counsel and advice from experts from time to time. These include attorneys, contractors, inspectors, mortgage lenders, and realtors. Your business is valuable to each of them. Develop relationships with these professionals so you can call upon them when needed and have them respond quickly. As they get to know you and understand your objectives, they can help you avoid hidden pitfalls and hard-learned lessons.
4. Identify the right opportunities
The best baseball players wait for their pitch. The best poker players know that being successful requires folding a lot more hands than they play. You cannot make the market what you want it to be. Just because you are ready, willing, and able to invest doesn’t mean the time is right. It means when the right opportunity does become available, you will recognize it and be in a position to capitalize on it.
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