You've probably heard lots of success stories of how people raked in millions from a real estate venture. And these are usually ordinary people who stumbled on a good idea, invested on the opportunity, managed it well, and succeeded. Now, while some of you may be doubtful to whether or not these stories are true, some are already on their way to becoming successful, well, millionaires. Below are 18 tips that might help you get started to becoming one, too!
1. Buy low and sell high
It’s advisable to buy properties when the market is down since it’s when the sellers are more desperate to sell than you are to buy. You can negotiate for lesser prices and you have more time to browse through properties. Come market boom, you may sell them for a higher price. (Tip: Take a look at Foreclosure listings.)
2. Good credit
Although not the rule, it’s only logical to pay off accounts that reflect negatively on you. This will help you gain a bank's trust when applying for a loan.
3. No need to quit your job
You don't have to go full-time. You may still keep that job you love and invest on the side, enabling for a steady income (read: long-term bank financing privileges). It’ll help you with that bank loan plus whatever profit you make from investing can be used for reinvestment rather than personal-expense purposes.
4. Invest even when broke
The only question here is whose money you’re going to use. This is where OPM (other people’s money) comes in. You can keep the money rolling by becoming a real estate agent, mortgage broker, appraiser, resident manager, etc.
5. Networking is a lifestyle
There shouldn't be an off-switch. Now, this doesn't mean that you have to talk about real estate every time. It just means that you relate to people as much as you can in the best possible way. You never know who you could be talking to next.
6. Master one
Becoming a jack-of-all-trades may not be the wisest thing. Choose your investment niche/vehicle (e.g., single-family homes, REITs, commercial) and the corresponding investing strategy you’ll need. Become a master at it. This will give you an opening to the industry where you can start building yourself, then branch out.
7. Start from the familiar
Start near where you live (somewhere within driving distance) so it’s easier to know the market, create your network, and know the players.
8. Proximity reigns
Buyers are looking for properties that have access to certain amenities (e.g., schools, public transportation, public and recreational facilities). The rule is, as you move from the outer to the inner suburbs, the property value increases. Look for emerging suburbs. Properties close to a major city are always desirable.
9. Buy and hold
Hold a property for renting or until there is a substantial amount of gain in the future to sell.
10. On flipping houses
Follow the 70% rule where you buy a house for 70% of its current value, minus rehab costs. Speed is essential to maximize profitability and minimize maintenance expenses (e.g., property tax, utilities, etc.).
11. Find ugly ducklings
There’s value in properties in good and physically sound locations but with aesthetic/mismanagement and inexpensively fixable issues. You would want to be in areas where new developments or redevelopments are headed. It’s good to note that simple improvements such as gardening or a new paint job can already increase a property’s value.
12. Listen to the market
Let the market tell you where to invest. Look at employment, income, and population growth rate. A growing population improves infrastructures, making the area more desirable. See where the opportunities lie.
13. Secure funding
While you can get into the business even without having any money (or getting OPMs), cash reserves are a must to survive.
14. See from a buyer’s perspective
Kitchen and bathrooms are crucial to potential buyers. If you yourself won't buy what you're selling, chances are, so will your potential buyers.
15. Seek professional help
For renovation concerns, fixing the problems yourself won't necessarily save you money. It may even cost you more in the end.
16. Be practical
Choose practicality and quality over the “wow” factor to avoid overspending (especially on repairs).
17. Take action
You can only learn so much. Don’t get caught up in Analysis Paralysis. The time will come when you’ll just have to do it.
18. Always have an exit strategy
Lots of it. While these are helpful tips, they don’t guarantee your millionaire dream. It all depends on what you put to the table. Real estate is no get-rich-quick scheme. It’s a business pursuit that demands a great deal of time, hard work, and dedication.
Real estate investments are manageable and profitable, if done the right way. Educate yourself with books, articles, seminars, and online sources available to you. Interact with your peers and learn from the pros. These will certainly help you on your road to success.
Get yourself aboard to the future's big business!