Real estate investment can help you fund your next business idea, current business or future retirement. RE investing is attractive, since returns are often on an upward trajectory, despite occasional downturns. Successful real estate investment can earn you monthly income, while your equity and property value increase over time.
Use these tips to help you get started in real estate investing as an entrepreneur.
- Consider your goals. Do you plan on going into the real estate business? Or are you using these investments to fund your business in another field? Optimize the time you spend on selecting and managing your investment properties, so that you don’t neglect your core business—unless that business IS real estate.
- Don’t get stuck in seminars. Some books and real estate seminars may be worthwhile, but you can also sink significant time and money into them. Endless research delays you in buying properties that could be making money for you.
- Explore the local market. Look at homes, multifamily properties and commercial real estate that may be available. Avoid buying what you might like living or working in, and concentrate on the profit potential of investments you’re considering.
- Rely upon the math. Run the numbers to determine when you’ll break even and begin to profit, keeping in mind the cost of readying your new property for renting or resale. Along with looking at what else is going on in the neighborhood (comparable properties, vacancy rates), your calculations generally include: net income, cash flow, ROI, cap rate, CoC (cash-on-cash return) and total ROI.
- Look for motivated sellers. They’re more likely to bargain, especially if property has been on the market for awhile, and already been reduced.
- Dive in. Waiting for the ideal investment needlessly delays you from entering the market. There is no ideal property that will be a perfect real estate investment for you. If a property has the potential (after running the numbers) to meet your set goals, don’t keep waiting for something better.
- Revisit number 1.
NOTE: This blog post does not constitute investment advice, which must be tailored to your specific financial situation and future goals.
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