No doubt there is money to be made in real estate. Whether a person invests in commercial property, buys residential rental units, or even develops land from scratch, profits are waiting to be made. Yet no real estate investor can make a long-term go of it by doing things haphazardly. Success requires planning and discipline. It requires utilizing the right strategies.
Actium Partners is a Salt Lake City, UT hard money loans firm that specializes in helping real estate investors acquire new properties. Over the years, they have worked with investors of all skill levels. They know what it takes to succeed in the real estate game. With that in mind, here are five things Actium says every new real estate investor should do:
1. Learn How to Research
The most successful real estate investors spend as much time researching as they do closing deals. An investor’s ability to make money is heavily dependent on their ability to research. So step one for every new investor is to learn how to research.
New investors need to figure out where they can find qualified information. They need to learn what counts as qualified information. They also need to develop a list of resources from which they know they can always get reliable facts. Without adequate research, investing in real estate becomes a shot in the dark.
2. Get a Handle on ROI
Next, new investors need to get a handle on return on investment (ROI). ROI to an investor is like margin to a retailer. If a retailer’s margin is not high enough, doing business might not be worth it. The same goes for investment ROI. Too low an ROI makes investing less worthwhile.
Think of it this way: you can make money with both savings accounts and T-bills. On a $100 investment, a savings account might yield a paltry $2 per year. Sure, you are making a profit, but is that profit worth it? On the other hand, a T-bill might yield a $5 profit. Making 5% on a T-bill is not earth-shattering, but it’s a better ROI than the 2% you would make on a savings account.
3. Develop Relationships with Lenders
New real estate investors should make every effort to develop relationships with lenders. As time goes on, every investor realizes just how critical strong lender relationships are. Strong lender relationships give investors the confidence they need to pursue deals in a competitive market. Without those strong relationships in place, investors need to be more hesitant because they cannot be sure it will be able to lineup sufficient financing.
4. Settle on a Niche
While it is possible for real estate investors to diversify broadly, it takes a while to get to that point. New investors should settle on a niche and start from there. One investor might want to pursue distressed strip malls. Another might want to focus on multi-unit apartment buildings. The idea is to settle on a particular type of property and start building one’s portfolio. With a solid foundation, an investor can then start branching out.
5. Ask A Lot of Questions
Finally, it’s not unusual for new real estate investors to not ask questions. They don’t want to appear ignorant or not up to the task. Never mind that they really are. If you’re new to real estate investing, don’t make this mistake. Ask plenty of questions. Pick every brain you can find. Be a voracious consumer of all the investing advice you can find. You can never have too much knowledge. Combine that knowledge with the other four items on this list and you’ll be good to go.
