Most new real estate investors all seem to have one critical element missing straight out of the gate when they start investing. What are they missing? The real estate investor's mindset. Let's break this down into a few simple things every new real estate investor needs to understand.
This is business, nothing personal. Having the real estate investor mindset means above all else, you understand that what you are doing is a business. That means you must look at this with none of the emotion that you attach to buying real estate for your own personal use. This is not a home that you are necessarily buying for yourself. This is merely property that you are investing in to use to benefit your retirement, future nest egg. Perhaps you are using it to develop the available financial resources to send your children to college.
Don't make any emotional purchases. You are not looking for your dream home but an investment. Do not fall in love with any particular property. All of the purchases of real estate should be looked at from a bottom line perspective.
Shop as if you're going to give the property to a family member. By shopping as if you were going to give this away to say your children as their first starter home, this means you need to evaluate a few things that will assist with the eventual sale of this investment.
Most new families are looking for real estate in locations that have good schools, good shopping, easy access to major freeways, low crime rates, as well as a plethora of other services and potential personal meets. Observe the surrounding areas of any potential purchase. Are the streets clean? Are the yards and the other homes well taken care of? Do you notice graffiti? These are things that you must factor into looking at future "curb appeal." That will assist with the eventual sale of your invested property.
Educate yourself. Every good investor works on increasing his education. Not just of real estate transactions or real estate investing purchase options, but of the most important details involved in real estate investing. Those details simply understand what needs to happen to achieve a sellable product in the shortest amount of time in the most financially responsible way.
If you have no construction or contracting background, then you must have a concept or understanding roughly of what the remodel and/or repair costs may be per square foot for any investment property you are considering. If you are looking at an older home, what is the overall cost to do any update work? The cost to do any possible plumbing or replacement of electrical? What would it cost to replace the roof?
Now while this education may work or you may have the understanding of the costs in your immediate area. What happens if you invest outside of your immediate understanding and area? For example, will a handyman in Dallas Texas cost more or less than a handyman in San Francisco? For example, what are zoning laws from state to state for your type of property? What are the permits required to do a room addition in San Diego vs. a room addition in Oklahoma City?
The investor's education is the most the important tool they have.
Real estate investing has always been a team sport. The largest investors in the country have dozens and dozens and dozens of people that work for them. Donald Trump has a staff that spreads into the hundreds of personnel.
No one that is serious about investing can do all of it alone. There are certain people that you must find and have on your team. Take everyone in on an initial trial basis. Use real estate agents; they will know the best deals/best properties available within your area. A good real estate agent is worth his weight in gold. Don't try and arrange purchases on your ownespecially if you are considering a purchase out of your immediate local area of expertise.
You will need to find appraisers, groundskeepers, contractors, plumbers, electricians, and quite possibly a "handyman." The reason for finding all of these various professionals is to have them on call should you find that property and have the available funds to pick up, hold, and refurbish/remodel the property and sell it. Understand that your relationship with these individuals is as critical if not more so than finding the property yourself.
This is business, nothing personal. Having the real estate investor mindset means above all else, you understand that what you are doing is a business. That means you must look at this with none of the emotion that you attach to buying real estate for your own personal use. This is not a home that you are necessarily buying for yourself. This is merely property that you are investing in to use to benefit your retirement, future nest egg. Perhaps you are using it to develop the available financial resources to send your children to college.
Don't make any emotional purchases. You are not looking for your dream home but an investment. Do not fall in love with any particular property. All of the purchases of real estate should be looked at from a bottom line perspective.
Shop as if you're going to give the property to a family member. By shopping as if you were going to give this away to say your children as their first starter home, this means you need to evaluate a few things that will assist with the eventual sale of this investment.
Most new families are looking for real estate in locations that have good schools, good shopping, easy access to major freeways, low crime rates, as well as a plethora of other services and potential personal meets. Observe the surrounding areas of any potential purchase. Are the streets clean? Are the yards and the other homes well taken care of? Do you notice graffiti? These are things that you must factor into looking at future "curb appeal." That will assist with the eventual sale of your invested property.
Educate yourself. Every good investor works on increasing his education. Not just of real estate transactions or real estate investing purchase options, but of the most important details involved in real estate investing. Those details simply understand what needs to happen to achieve a sellable product in the shortest amount of time in the most financially responsible way.
If you have no construction or contracting background, then you must have a concept or understanding roughly of what the remodel and/or repair costs may be per square foot for any investment property you are considering. If you are looking at an older home, what is the overall cost to do any update work? The cost to do any possible plumbing or replacement of electrical? What would it cost to replace the roof?
Now while this education may work or you may have the understanding of the costs in your immediate area. What happens if you invest outside of your immediate understanding and area? For example, will a handyman in Dallas Texas cost more or less than a handyman in San Francisco? For example, what are zoning laws from state to state for your type of property? What are the permits required to do a room addition in San Diego vs. a room addition in Oklahoma City?
The investor's education is the most the important tool they have.
Real estate investing has always been a team sport. The largest investors in the country have dozens and dozens and dozens of people that work for them. Donald Trump has a staff that spreads into the hundreds of personnel.
No one that is serious about investing can do all of it alone. There are certain people that you must find and have on your team. Take everyone in on an initial trial basis. Use real estate agents; they will know the best deals/best properties available within your area. A good real estate agent is worth his weight in gold. Don't try and arrange purchases on your ownespecially if you are considering a purchase out of your immediate local area of expertise.
You will need to find appraisers, groundskeepers, contractors, plumbers, electricians, and quite possibly a "handyman." The reason for finding all of these various professionals is to have them on call should you find that property and have the available funds to pick up, hold, and refurbish/remodel the property and sell it. Understand that your relationship with these individuals is as critical if not more so than finding the property yourself.
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