Investor 101

Becoming a Real Estate Investor 101

Money can be made in any kind of real estate market. A experience real estate investor makes money when prices are high and when prices are low. A beginning investor should beware of some common mistakes that are made when they start out in purchasing property.
No matter what the condition of the market: don't never buy high and expect to make money waiting for prices to rise.

Beginning investors buy high expecting prices to rise, and when the prices drop they are left owing $200,000 on a house that is now worth $100,000. So as a real estate investor always buy low.

All over the country there are properties selling for below market value. There are many homes in average neighborhoods that need a few thousand dollars worth of cosmetics.

A good example of this, take a house selling for $100,000. Your real estate agent states that it could easily sell for $145,000 or more if it looked better. Buy the house, spend $2,000-$7,000 fixing it up, and sell it for a sizable profit.
Never spend a pile of money to completely renovate a house. Just do cosmetic changes such as painting the inside and outside, putting in new carpet, fixing broken doors and repairing leaky faucets. Only do the basics to make the house presentable.

Professional Real estate investors recommend that you start out buying single family homes. These are the most in demand and so are the easiest to re-sell. Buy in neighborhoods that are nice. You do not want to buy in a war zone area that is to rough to live. The easiest way to find these homes is to work with a real estate agent. Why work with a real estate agent? Agents have 85-90% of the properties for sale. They also have access to the M.L.S. Only licensed agents can use this database. If you are going to rent out your properties be sure you do the math. Will you be able to rent out the house for more than the monthly expenses? Becoming a landlord is tough work. What if you don't have no money or good credit to get started?
Start out working with a real estate agent locating property. Also you will need to put together your other team members, in addition to an agent, that can be a real estate lawyer and an accountant. So you have your goals, you have a great team, you know your niche, and now it's time to make some offers. As stated, most beginners make one purchase with every 50 offers. If you make $25,000 on that one purchase, then in effect you are making $500 each time you make an offer. So never think that you are wasting your time making those other 49 offers. Just as important as having written goals, a great team and a niche, you need to have the right frame of mind to deal with success. So many who want to invest in real estate actually cause themselves to fail. They self-sabotage their success. Believe you can succeed. Learn how to handle money wisely. Educate yourself by reading and attending seminars. Surround yourself with people who have the same goals as you and who are achieving their goals. There are many real estate experts out there, so find a good one, attend the seminars on learning how to think about money and be financially responsible, and begin your journey to buy and sell properties.
Leverage is your ability to magnify your returns by using somebody else’s money, usually a lender’s money. When you buy a piece of property, you usually only put up around 10 to 20% of the purchase price, and then the lender lends you the rest.

When you consider that on average, most real estate doubles in average about every 10 years, you can soon start too see how that 20% deposit can multiple into triple figure returns.
The first thing to look at when considering any investment is the potential ROI or return on investment. If an investment promises some astronomical ROI rate, it is almost a sure bet that it is very risky. Stock options, for example, carry potential for a huge ROI, but also carry significant risk.

Learning to weigh the risk against the ROI is the most important investment basic a person can learn. It is not something that one wants to learn “the hard way,” however, since the hard way can involve significant loss.
There are many ways to invest in property, and the aim of this site is help you discover which method suits you. Tour the "Investor Resources" page and you will find hundreds of articles, tips, tutorials and strategies to help you understand the ins and outs of property investing.
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