Advice for New Real Estate Investors

Real estate investment has been known to be one of the most lucrative forms of investment. With the number of home in or nearing foreclosure, real estate investors are taking advantage of bargains that can be found.  If you are considering getting your feet wet in real estate investment keep the following in mind.

One of the biggest mistakes a new investor can make is not planning ahead.  Your primary focus should be an investment strategy before looking for properties.   Instead of buying a property and hoping that it will fit into your plan.  You should concentrate on the numbers and try to make offers on multiple properties.  Seasoned investors are successful because they analyze properties, looking for those that they can buy at least 20% to 30% below the after repaired market value.   This discount allows them to cover expenses such as holding costs and repairs.  

Don't think you can make money quickly.  Seasoned real estate investors will tell you that investing in real estate is a long term project.  With lenders tightening up their guidelines, gone are the days when you could buy and flip in a short period of time.  The average time a home stays on the market has gone from a few days or weeks to over 5 months. Another important tip is don't depend on a strong market for a good return. 

If you are investing in rental properties, you need to be sure that you will have sufficient cash flow for maintenance, property managers, mortgage, taxes, insurance advertising costs.  Failure to plan for these expenses may result in your asset turning into a liability.

Don't forget to do your homework, it is important for you to learn the fundamentals and then venture into investing in properties, another words, don't invest in a property on a whim.  Prior to even thinking about making an offer on a property, it is a good idea to do a title search.   The title will tell you important details including how much is owed on the property, and any existing liens.

Double check estimates when planning on rehabbing properties to make sure you will reap the benefits.  You don't want to find out too late that a rehab will cost more then you can sell the property for, resulting in losing money.

Have an exit strategy, having a number of options at hand for the property you buy is as important as making the purchase.  This helps you to be prepared for fluctuations in the real estate market.  Having alternative plans can help you to cut down losses and be prepared for unexpected situations.

Don't try to do this on your own.  Even successful real estate investors will tell you that having a team of professionals is one of the most important factors in making good decisions.  Your team should include a real estate agent, appraiser, home inspector, real estate lawyer and a commercial lender