There are so many variables when investing in real estate and we need to be prudent wherever we can. I’d like to share three tips for real estate investing that will help you avoid bad deals and not get discouraged.
Three Tips For Real Estate Investing
1.) Know When to Walk Away
Just because a deal is started doesn’t always mean it needs to be done. Deals fall in and out of contract all the time.
The numbers on a property can definitely help with this decision among other things.
Say, for instance you are looking at a property that has really tight numbers. It looks like cashflow will be just positive enough to meet your goal, but then upon inspection you find that the roof is bad and the property has termites.
Meanwhile, seller is not being very reasonable and is low balling on credits for a roof replacement and tenting treatment for the termites.
This has likely blown out your numbers and the property is no longer profitable. You try to negotiate, but the seller is not willing to give the credits you need to have these items remedied.
Plus, even if you do replace the roof and have the termite treatment there is no guarantee that you won’t be dealing with termite issues after the fact or finding additional damaged wood or even a beam.
With the numbers being tight already, don’t talk yourself into sticking with a deal unless you get to the scenario that makes sense. No deal is better than a bad deal that’s losing money the for several years.
We should not be afraid to take on tough projects because that is where the money is many times. However, it has to make sense. Don’t force it just because you have time and energy into a deal.
Not all deals get to the closing table.
2.) Know Your Numbers
I know, I know. I talk about this one all the time and mentioned it above. That should let you know how important it is!
Whether it is a buy and hold rental or a flip that you are doing – your numbers are the foundation to a profitable investment.
Always run the numbers. For rentals you want to see that a positive cashflow is projected after including your typical expenses and allocations for vacancies and maintenance.
You should never buy a property that you have not run the numbers on. Especially with how simple it is now that the ScaredyCatGuide Rental Property Calculator is online!
Use it from your phone while you are viewing a property if needed. You can get access to it here: Rental Property Calculator.
3.) Rejection is Part of The Process
The same as when you walk away from a deal that isn’t working out, you will have many sellers (or buyers) reject what you have to offer.
This is something you need to mentally let go of quick as you will hear “no” much more than you will here “yes” when investing in real estate.
I had a streak of making offers on 22 different properties before finally getting one under contract. In a competitive hot market it can be easy to fall into the hype and over spend on a property.
You need to stick you your guns and not let the rejections alter your game plan.
Additionally, you also need to stay determined. For instance, if you are looking for a portfolio lender for your investment properties. You will likely need to contact several banks to see if they do portfolio loans and then if you can get approved for one.
There will always be “nos” before you get to the “yes.” Keep working toward “yes!’
Learn even more real estate investing tips in my book:
I walk you step-by-step through finding, buying and renting out a property. You don’t need a $10k seminar! The book is your personal mentor!