1. Plan your actions and set realistic expectations
A lot of people invest in the real estate market with the false belief that it’s a passive investment. In the case of real estate investment planning, a thorough plan and realistic expectations is essential to be successful. As CPA as well as real estate investment expert Brandon Hall emphasizes, “Everyone should own real estate because it’s a great asset class.”
He also explains that it requires consistent effort and commitment, explaining “I’ve seen people jump into real estate only to realize it’s not passive like social media influencers would love for you to believe, and then think I need to liquidate this.”
When you’re considering making a real estate investment, it’s crucial to make a plan of action that contains real-world goals, a precise investment plan and a thorough knowledge about the marketplace. Finally, you need to be prepared to work hard to achieve success.
2. Make a great team
A solid team can help you in the areas where you are weakest will ensure that you don’t fall into common traps, maximize revenue and, ultimately, meet your long-term financial goals.
In the words of Brandon Hall notes, “A lot of the clients we work with struggle when building a team. They know how to manage professionals, but when you move into real estate it’s a completely different ball game – you need to know how to build a team.” In the realm of real estate investing the presence of an experienced team of experts with knowledge in a variety of areas can make a huge difference.
Sharon Lechter agrees saying, “One of the most important things is building that team. Don’t assume you know everything there is to know about real estate.” It’s important to understand that investing in real estate is a multifaceted and complex venture that requires a wide range of knowledge and skills. According to Lechter says, “The people that succeed are the people that find the right people to support them. The right management person, the right accountant and tax person.”
When you’re selecting a good accounting or CPA Lechter recommends “Ask them how many real estate clients they have because you want to make sure they’re not learning on your dime.” It is essential to partner with experts with years of knowledge of the field of real estate and are able to offer valuable insight and advice.
Along with accountants and real estate agents, investors in real estate should consider other experts like property managers, lawyers contractors, realtors. A team of skilled and knowledgeable professionals can assist investors make better decisions, limit risks and maximize the return.
3. Be aware of the market
Investors who are successful in real estate will usually gain a complete knowledge of the markets they are targeting. This requires narrowing the focus of their investment to specific geographical regions and deciding whether or not to invest in commercial or residential properties, short-term rentals, or land.
It is also essential to keep up-to-date with the latest trends, such as changes in the patterns of consumer spending and mortgage rates, as well as unemployment rates, the population statistics of the region you’re in and much more. This way they will know changes in trends which can create favorable opportunities for investors well-prepared.
4. Make sure you know the numbers
Real estate investing is in the end an numbers game. It is important to choose an asset that can increase with time, and earn some money through cash flow. But, it’s not enough to identify and analyze the best deals. The real work is done once you’ve completed the deal.
Rents are business-related and, as Sharon Lechter told us, “You have to be aware of what’s going on. What I see a lot of people doing in real estate is they buy it, hiring a management company, and then they forget about it. They take their finger off the pulse.” As a result Sharon stated, can be generally a decline in revenue. “One of the things we’ve learned along the way is when I’m looking at the numbers I’ll think, something doesn’t look right. And this means I’ve got to have a conversation with the property manager to find out they’ve started adding this upcharge without talking to us. And those are the kind of things that can slip through if you’re not paying attention,” and ultimately affect your business.
Brandon Hall echoes this sentiment in his statement, adding “Our most successful landlord clients are the ones in small partnerships,” because in this arrangement “somebody’s going to ask about the finances on an ongoing basis.”
While it’s not the most attractive aspect of investing, keeping track of your finances, keeping track of expenditures, and recognizing possible issues early can save you from costly errors and ensure the long-term viability of your investment.
5. Focus
For many investors the income from real estate isn’t that much relative to their daily work, and as a result of it, it’s often something of an incidental thought. As we’ve stated, investing in real estate takes a lot of effort, time, and focus on the details for you to see your investments perform as efficiently as they could be. As a property owner it is essential to concentrate upon your property and plan your time in line with. This includes taking time to periodically review your properties, maintaining positive relations between tenants in order to ensure that vacancy rates are reduced as well as getting together with your team and keeping abreast of trends in the market.
In the article, Brandon Hall notes, “If you’re becoming a landlord at a point in your life when you don’t have time to focus on your properties, then you need to be okay with not making nearly as much money as you could have during that period.”
If you’re an investor with a short time to work, Brandon Hall suggests keeping it simple. Concentrate on one category of assets (at minimum) to limit your workload. you have to accomplish. However, you must ensure that you’re taking the time needed to take care of your properties in a proper manner.
6. Keep yourself informed
Real estate investing is an extremely complex and nuanced area that requires you to know the basics before you dive into. In the words of Sharon Lechter notes, “You need to educate yourself, you need to know your numbers, and you need to understand them and be able to react accordingly.”
The education process can take a variety of forms including studying books and articles about real estate investment to attending networking and seminars. It’s also crucial to study from professionals who are experienced in the field as well as look for mentors who are able to offer guidance and assistance.
Some areas to consider expanding your scope of knowledge are:
- Be aware of your financial numbers and indicators which include Return on Investment, Cash Flow, Cash on Return on Cash and much more.
- Know the federal and state laws governing landlords and tenants and rules and
- Find out the best practices for identifying as well as screen tenants
- Find the most effective practices to real bookkeeping in the estate industry along with the financial report
- Keep up-to-date with tax law and comply.
If you are educated on every aspect of real property investing, you will be able to make educated choices and avoid costly errors. With the right information and skills, you’ll be able to recognize opportunities, minimize risk, and maximize the value of your investment.
7. Be creative and curious
It’s a flex asset that is worth pondering further ways to generate new streams of income. According to Sharon Lechter notes, “There are always ways to increase cash flow. In times of crisis, you need to get creative and curious.”
One method to achieve this is to think out of the box and experimenting with new possibilities for your property. For instance, as Sharon Lechter shares, one of her clients has parked in her RV and currently earning money off of the RV.
Discovering new and creative ways to utilize your property to earn a profit could mean looking into different types of rental arrangements, like short-term or holiday rentals or experimenting with other possibilities for your property like making them co-working spaces, or event venues.
When you look into these less traditional ways to use your property, you could discover an entirely fresh source of income.
8. Make use of the top tools
Utilizing a comprehensive program like Landlord Studio can assist real estate investors simplify their property management processes which allows them to work on developing your portfolio and pursuing new ways to improve the flow of cash. With the capability to easily monitor income and expenses investors are able to better comprehend the performance of their property and make educated decisions on how they can improve their return.