The most important skill you need to be successful in real estate investing is to become masterful at finding and buying a property at below market price.
Why do you need to know how to buy a property right? Because the secret to successful real estate investing is :You make money when you buy a property, not when you sell a property.
The same principle that applies to being successful in real estate investing also applies to stock market investing. That is you buy stocks low and sell them when the price goes up in value.
In order to become successful in real estate investing, you must know how to look at and buy a property so that you can-separate the wheat from chaff deals.
You see the mistake most novice investors make is: not knowing the difference between the good ,the bad and the ugly when buying a property. You should not make such mistake when buying a property.
How do you avoid the mistake of buying loss-making properties? You need to start thinking like a successful real estate investor.
You see a successful real estate investor has a different view about how to buy a property for real estate investing from the average person who is buying a property as their home.
A successful real estate investor will buy a property because he wants a decent return on investment (ROI) and appreciation for his money.
To be successful in real estate investing you must buy a property, that has potential for positive cash flow and will appreciate in value.
A successful real estate investor thinks like this when buying a property :
“Am I going to get positive cash flow if I decide to buy the property?”
What are my expenses after buying a property?
How can I reduce my expenses and at the same time earn income from buying a property?
What is my exit strategy when I buy a property?
A real estate investor does not fall in love with things like: the color of the house, kitchen bathroom or driveway.
The truth is that in order to become successful in real estate investing, you must first of all change your mentality.
It is only after you have changed your thinking that you can begin to understand and buy a property like successful real estate investors do. Its like building a new foundation for success in real estate.
As a result you will no longer struggle to find cash flowing properties or lose money from real estate investing.
Let”s now look at what you need to look out for before buying a cash flow positive property.
Find and know the properties in demand
The first step you need towards finding suitable properties is you need to know the types of properties that are in demand, in your local real estate market.
Once you know the types of properties that are in demand then you can start looking for them.
You need to start looking because by looking at these properties you’ll be able to make a better decision when you decide to buy
The power of 100-10-3-1
One of the easiest ways to become masterful at buying bargain properties is to practice the 100-10-3-1 rules
Why? Because the art of looking at as many properties as possible will help you-develop a sense of finding the right properties you can buy that will help you-achieve your goals of financial freedom.
Remember the saying “ imperfect practice make perfect”
Ok what does the 100-10-3-1 rule mean?
It means before you buy property: you need to look at least 100 properties, make an offer on 10 properties, get three of your offers accepted accepted and choose one property you’ll buy.
What should you be looking in these properties?
Cash flow vs. appreciation
You should be looking for two criteria when buying properties: cash flow and appreciation
Why? Because it’s only by having cash flow and appreciation you can build wealth through real estate investing.
You want positive cash flow as soon as you buy a property. You also want to buy property in an area that is up and coming so that you can gain an appreciation for your properties.
No matter how much experience you have as a real estate investor you must keep these criteria in mind from this day forward.
With this criteria firmly established you now want to go to the next step…
You want to know which type of properties to buy.
Start small and slowly at first
In my honest opinion, you should consider starting modestly. Start with looking for single-family residential homes.
Why? Because when you are starting your investing career you are likely to make mistakes.
Mistakes cost money. So if you make large mistakes it may cost huge financial losses that may affect your confidence and cause unnecessary pain for your loved ones.
I want you to take regard my advice because I have experienced the pain of losing money from such a situation. It turned wealth dreams into a nightmare my first investment property.
Bear in mind the reason, why you are investing: that is to create long-term wealth. You don’t want to burn yourself early in your investing career.
Start small and work your way up the wealth ladder slowly. You’ll eventually become financially free
Choose an area
Once you have established criteria for the types of properties you want you now need to find an area to look for such properties.
The area you are looking for must be a location where renters choose to rent. In most cases what renters want are different from what homeowners like.
When you find this location you want to find out the following:
- Why do most people prefer to rent in this part of town?
- What are the average rental prices?
- How long does it take to rent these properties?
- Who are the type of people that rent the properties in the area?
- Who are the largest estate agents that work with tenants?
- What are the amenities that renters are looking for?
- What are the vacancy rates for rental properties in the area?
- How is the area close to major facilities: transportation hubs, shopping mall, and schools?
- Are there any recent local and regional development plans that may affect the area?
- Is the neighbourhood declining or on an upward swing?
The good news is that you easily find answers to these questions on the Internet, classified ads, county appraisal office, local newspapers, bulletin boards, the local chamber of commerce and local real estate investors clubs.
By the time, you have narrowed your search using your criteria you should be ready to take action.
Start jogging or walking around the neighborhood if it’s close to where you live.
You should drive around the area so you can see how the area looks like. Make sure you drive around both during the day and at night.
When you drive around your target area, you’ll see for sale signs as well as for lease. Take note of the phone numbers of the realtors in charge and call them to find out more about the area.
Estate agents are very useful in giving you an idea of the health of the rental market
You can also find out more about an area from interviewing residents of the area than what you’ll get from doing an Internet search.
Very useful resources I have used in the past are: Internet bulletin boards about life in the area.
Start Viewing and make notes
Finally, you need to register you interest with a local agent so you can do house viewings.
When you go to view these properties you need to take, note of their build, their room sizes, and try to find out more about the area from your sellers.
The more you continue to look at houses in the area you want to invest the more you are likely to get a better grasp of whether the area meets your criteria.
As a result, you’ll be become wiser in your knowledge of investing in real estate.
There is another benefit of taking action on your goals to invest in the area: You will get to develop a relationship with most of the estate agents in the area.
When you have a good working relationship with the estate agents in the area, you intend to invest you are likely to get more leads from them about properties in the area
The formula is…
All you need to know about looking at investment properties is this:
Set criteria that you’ll only buy properties that will give you positive cash flow, as well as appreciation.
Choose an area that has a thriving rental market.
Do research on the types of houses available
Start looking at these properties: by viewing at least 100 properties; making an offer on at least 10 properties; getting 3 offers accepted and buy one property
Once you buy your first property start looking again to buy more.
The more you take action on your dreams the more likely you are going to make your dreams come true
Building wealth from real estate starts with your first viewing.
So what’s stopping you? Are you ready? Ok then start taking action today