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5 Things you need to know, before you start investing in real estate

By
Real Estate Broker/Owner with Missouri Real Estate Exchange

5 Things you need to know, before you start investing in real estate


1) Not everyone is making money

The late night TV infomercials make it seem so easy.  “No Money Down” & “I made $50,000 on my first deal”.  Don’t believe it. I have investors every week in Kansas City contacting me to either sell or purchase their properties, because they are in, or are getting ready to be foreclosed upon. You can make money and a lot of investors do, but a large percentage, are not.

2) No money down, doesn’t really exist

Unless you have a private investor that rolls all the payments and points into the loan and also cuts you a check for all needed repairs and doesn’t require an appraisal upfront or insurance paid upfront. Or I guess if a homeowner just gives you the deed to their home and doesn’t need any moving money and there isn’t any repairs whatsoever to do and you just happen to have a buyer in place where you don’t need to do any advertising . Then I guess a no-money down deal does exist. But from my experience, there’s always at least some money needed in a deal.

3) You make your money when you buy

Chris, I thought I made my money when I sold the property. No, you are actually just receiving the profit that you produced through the negotiations when you bought the property. I’m no rocket scientist but I do know it’s a lot easier to sell a property by lowering the asking price below what others are selling for than it is to ask for more than the comps show. This is accomplished by buying the property at the lowest amount possible not by raising the asking price when you sell.

4) Build a team

I know, you think you will save some money by doing everything yourself.  More times than not, you will actually end up losing money and time. Hey if you are good at painting, then do it. If you’re good at accounting, by all means do it. But if you’re not, let a professional do it. I recommend finding a good accountant, attorney, contractor, mortgage broker or lender, and a real estate agent. And don’t just hire Uncle Larry because he is the only contractor in your family. Get references from other investors. The circle of real investors in a community is not as big as you might think, they know who to stay away from.

5) Find a mentor

I probably should have added a mentor to my team, but I felt that a mentor needed a whole section, to itself.  That is how important I believe they are.  If you are wanting to get somewhere, you need someone to show you the right way. The mentor that you want is someone who has been there and done that, and is willing to show you how they did it.  I don’t believe in paying a mentor, but their time is usually limited so what you need to do is find what you can do to benefit them in exchange for knowledge. Never expect anything for free, but there are other ways to pay for your knowledge besides money.

 

Chris Elliott is licensed real estate broker with KCRED, LLC and a full-time investor.  KCRED is a Kansas City based real estate brokerage that specializes in the acquisition and disposition of investment properties. “We sell the best, and buy the rest”

www.kcred.comKCRED Logo
Chris Lengquist
Ad Astra Realty - Olathe, KS
Kansas City Real Estate Investing
Welcome to AR.  Hope you like your stay.  By the way, your kcred.com link is not operative.  Also, you may want to joing the Kansas City group.  Good luck!
Sep 28, 2007 02:59 AM