Many people just starting out in the real estate investment world are nervous about the amount of money that is involved – and the degree of risk they are assuming.
A lot of the time, they are introduced to real estate investing through slick radio ads that sound like the same hucksters selling snake oil or other tonics 100 years ago, and so they decide to invest elsewhere.
This is very unfortunate.
One reason why HOS Financial opened up our doors was to help real estate investment beginners find their way to properties that make sense and (when applicable) mortgages that offer the best deal in terms of rate and term.
Let’s take a look at some of the most common tips that we provide to those who are new to investing in real estate as a form of long-term financial security.
In Real estate investing you don’t have to be an expert to start.
There is a ton of information out there about real estate investing. There are all kinds of niches and strategies that people use to make money.
However, you don’t have to know about every strategy to start.
It might be that one strategy is more suited to your current financial situation than another.
This is where HOS Financial stands ready to help real estate investment beginners by going over your goals and connecting you with opportunities that will help you grow your portfolio.
There are some “fixer-uppers” that can turn into gold mines.
There are other “fixer-uppers” that turn into absolute money pits.
When words such as “black mold” and “termites” come back, you know to run in the opposite direction.
This is when forming a good relationship with a home inspection company that produces thorough and reliable results is a sound idea.
HOS Financial has relationships with a number of reputable home inspection companies throughout different regions in Canada. It’s worth getting a thorough inspection up front to save money down the road.
Investing in real estate is not a secret science, and many people who have had some success enjoy talking about their success stories with other people. This doesn’t mean that you should deluge their inboxes or their Facebook pages with random requests for help.
Instead, go to local events for real estate investors and build a network with the people you meet there. Over a few cocktails, you will find that successful investors are glad to share their winning strategies with you.
There are some people who don’t think they have the money to invest in real estate.
It’s true that few people have $400,000 sitting around to fund a private mortgage.
Instead, they start by buying into funds that sell mortgage-backed securities at much smaller dollar amounts and then reinvesting the returns that come in each month, quarter and year.
It also means investing more than you think you can. You don’t want to jeopardize your personal savings, but if you can find ways to trim your expenses each month and add to what you are investing, you are going to have a larger pile of money to put to work in the mortgage market – which means you will have more principal bringing you in interest each month.
If you invest in rental properties but don’t figure in any money for upkeep, you are going to see your profits go down the drain quickly.
Tenants tend to be less careful with the places where they live than homeowners – after all, they’re not the ones having to make repairs.
Talk to your realtor about a recommended percentage for upkeep savings in the area in which you are buying properties as an investor.
There are also things such as deductibles (in the case of roof damage or other catastrophic issues) that you need to set aside. If you haven’t done this, you are walking on thin ice financially.
It’s easy to stress out when you are new at the real estate investing game. The dollar amounts can seem large, and finding the right property for your investment needs won’t always happen overnight. Here are some ideas to help you get into the market without overloading on pressure.
What’s the best way to get into real estate investing?
Some pursuits are competitive. Real estate investing is not. There are plenty of properties out there, and there is plenty of money for everyone.
Go to a local real estate investing club and talk to people who have made a good bit of money and are ready to share their success stories.
One thing you’ll learn about successful people is that they are often generous with advice – because they received help themselves starting out – or perhaps because they realize that a large network of goodwill works both ways, and that you’re more likely to pass along helpful tips to them when you get them.
Feel free to reach out to us for a no-obligation risk assessment. Real estate investing isn’t right for everyone. It has to make sense for you short and long term. We can help you collect the facts and make an informed decision.