Investors who want to be successful need to understand the three tenets of real estate investing. These are deals, financing and management.
The first thing you need to do as an investor is find the good deals. If you’re wondering how to find them, there are a number of different ways. You can start online and use the MLS as well as sites like Zillow.com and Trulia.com. Check out listings that are for sale by owner. You can find wholesalers who are willing to bring you deals and you can also work with banks to explore their foreclosure properties. Check the newspaper and see what kind of auctions are available, and consider working with a real estate agent. When you work with an agent who is experienced with investors, you can tell them exactly what you’re looking for, and they’ll bring deals to you.
Financing looks different depending on what you’re buying and how you’re paying for it. As an investor myself, this has always been a bit of a struggle and a constant hurdle to get over. You really have two options when you’re buying investment property. You can either pay cash for the property or finance it and use the property as collateral. Many investors go through banks and do a typical mortgage. There are also hard money lenders that will get you the money to finance properties at a higher interest rate. The bonus is that you won’t have to worry about a mortgage like you would with a bank. Owner financing is another great option. The owner will have the note and finance it for you while you make payments.
Once you have found the deal and you got a good price and have procured financing, it’s time to make plans for management so you can cash flow the property. Decide if you’re going to take care of the management yourself or hire a professional management company. Either way, you’re paying for it. If you do it yourself, you’re paying with your time. If you hire a management company, you’re paying with money. There are four things that you need to pay attention to when you’re thinking about property management; leasing the property, collecting rent, accounting for income and expenses, and handling maintenance. These are the things you need to get done, whether you’re doing it on your own or with the help of a professional.
We have a class once a month for investors at CrestCore University, where we talk more in depth about these three tenets of real estate investing. If you’re interested in that class or the services we provide, please contact us at CrestCore Realty.