So you want to become an investor in Real Estate?
Great, so where do you start? What do you need to learn, absorb and apply and where do you ascertain this valuable and crucial information? Well, one can begin reading books that will give you a basis to start from:
The following links are a great beginning and are best sellers, one by Eric Tyson, MBA and Robert S. Griswold, MSBA, “Real Estate Investing for Dummies,” and also, “Investing in Your 20s & 30s For Dummies” by Eric Tyson, MBA, and “Property Investing for Dummies” by Bruce Brammall and Eric Tyson.
The cost of these books is cheap considering potentially receiving the biggest bang for your buck and return on investment.
By reading, understanding, learning and absorbing, and most importantly, applying, the principles of these books, it will help you build a stronger than normal foundation and minimize the risks, losses and potential failures that many new and even sometimes, seasoned investors potentially go through due to lack of current, pertinent and valuable knowledge.
I am always upgrading and rejuvenating my knowledge and skill sets, going to conventions and classes, for one is never done, until they are six feet under!
As I have said in previous columns, “If you don’t use it, you’ll surely lose it.”
Like a top notch athlete, one must continue to study, learn and train, to keep their edge and stay on top of the new technology and old fashion, “For Service, Before, During and After the Sale.”
Anyone with half a brain can purchase investment property, it’s a no brainer!
However, which ones will produce net income short and long term and also be an excellent R.O.I.; but, understanding the area and projecting its future upside return with some calculated risk, you buy it, knowing the potential out ways the risk.
Older leases can be a plus, since, upon renewal you will some cases raise the rent to become more profitable; however, be careful not to lose an old long term tenant, unless you know you can replace them in a very reasonable time; otherwise your overall increase in rent could be less than if you just kept the current tenant and only increased the rent slightly.
Don’t let greed guide your decision making, which some landlords and investors use; but logic, common sense and of course, expenses and your R.O.I. should be your guide.
One must first decide their comfort zone with respect to price points, borrowing capabilities based on verifiable income(s), down payment/out of pocket money, debt/income ratios, credit scores.
Another important variable one might consider is their location; proximity to your residence or business with respect to easily managing, quality of the local school districts related to the type of tenant you are looking for in relation to the value of your investment.
My personal investment strategy has generally been to find investment property in the best school district that will return solid income.
The quality and level of a tenant will almost always be those that will strive for a top education for their children; however, as I have said in a previous article, even if you do not have or plan to have children, your R.O.I. will almost always be higher in a better school district.
More important, when there is a downturn in the economy, my experience has been the school districts with above average education, higher standards, advanced placement classes, extracurricular activities, etc. will invariably come back faster and stronger than those with below average statistics.
Moreover, in those towns that do have higher standards, it is much easier to rent out your properties, even if the location is challenging and not optimum; my saying has always been, “Location, location, school district.”
Are you considering investing locally or how many miles away will you feel comfortable from your home or business?
There are states with a better return on investment in the current market and towns where prices are increasing at a more moderate pace.
Most importantly, do your homework and don’t let emotion take over our conscious mind and do not jump on the first investment you see without putting all the figures together.
In the current local market, sometimes you really have to perform this operation on a fast track, because those cash buyers are right behind you, so when you feel confident, don’t hesitate to pull the trigger if an opportunity comes along, because if you don’t, someone else will.
Next week, I will get into out of area and out of state investing.
Enjoy a healthy and happy New Year and a more healthier, happier and more prosperous 2016!
Philip A. Raices, President
Licensed Real Estate Broker Consultant
Past President of the Rotary Club
Of Great Neck 2011-2012
G.R.I. (Graduate Realtor Institute)
C.I.P.S. Designee (Certified International
WWW.Li-RealEstate.Com (Search & View over 1,000,000+ properties from Montauk through the 5 Boros, the U.S.A & Internationally!)