Things Every Rookie MUST Know Before Investing in Real Estate

Things Every Rookie MUST Know Before Investing in Real Estate

 

Before you start investing in real estate, it’s important that you get educated. There are many ways to get educated and increase your knowledge. As a rookie to REI, you want to choose your real estate niche and strategies, create your real estate business plan, find the best investment properties, financing your real estate investments, mastering real estate investment marketing and knowing and executing your exit strategies. If you can master these, you will increase your chance of becoming wealthy through real estate and minimize the risk of loss. Here are some key areas you must know before stepping into real estate investment.

Things Every Rookie MUST Know Before Investing in Real Estate

Real estate investing, even on a very small scale, remains a tried and true means of building an individual’s cash flow and wealth.
– Robert Kiyosaki

Appreciation – How much your property goes up in value.

ARV (After Repair value)

Cash Flow – How much cash is left over from your rental property.

Direct Mail – Postcards to Home Owners

Driving for dollars – Looking for deals from motivated home buyers to sell     for-sale-sign

FSBO (For Sale Buy Owner)

MLS (Multiple Listing Service Listings)

NOI (Net Operating Income)

OCC (Owner Occupied)

REO (Real Estate Owned / Bank Owned)

Best place to find deals

MLS – is the best place to find real estate deals.

  • Only licensed real estate agents have access to the MSL ( Super Power)
  • Good to have your real estate licensed when you flip houses.

For Sale Buy Owner (FSBO)

  • Not very Good deals

Direct mail

  • Best for wholesaling

Driving for dollars

  • Look for deals from motivated sellers

Best places to search deals

Websites:

Analyze Deals

  • Cash Flow – How much cash is left              For-Rent
  • Appreciation – How much it goes up in value (Icing on the cake)

Ten mistakes real estate rental make

  1. Not doing an analysis at all.
  2. Forgetting to plan for cap X 3% – 5%.
  3. Forgetting to include vacancy cost or holding costs.
  4. Not planning for property management.
  5. Relying only on the pro formula from the broker.
  6. ARV (After Repair Value)
  7. Counting on appreciation to bail you out.
  8. Overestimating the after repair value or rental income.
  9. Not including closing cost.
  10. Relying too heavily on the rules of thumbs 2%, 50% and 70%.

12 ways to finance a rental property

1.Cash

2.Conventional loans

3. Portfolio loans (Small Banks) Best loan

4. FHA loans – 3.5% down (Live in the property at least one year). Mortgage-Application-Form

5. 203K loans – 3.5% down

6. VA/USDA loans 0 % down (Rural area)

7. Seller Financing

8. Partnerships

9. Hard money High-interest rates 10%, 12% or 15%

10. Private money – Family, Friends or Partners

11. Syndication

12. Creative Combinations (Everything in one)

Tips

  • Very expensive areas NY, LA, and Chicago
  • 2 Hours drive for investing in good deals
  • Flipping instead of buy and hold
  • Turn key company investing at a distance
  • Buy a condo (Not recommended)
  • Talk to lawyer for a good LLC
  • Townhouse are like condos

 

There are a lot of great sources for real estate education out there, such as this website, books, courses, etc.  But if you want more information on REI, attend you local REIA. One of the first things we did when we were thinking about getting into real estate investing was to start going to our local REIA group. REIA stands for Real Estate Investors Association and nearly every major city has one. REIA offered some great speakers, courses, and programs that really helped us get going down the right path. If you don’t have a local REIA group near you, maybe you can start one.

 

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We hope you enjoyed our post if you would like to include your own info, tips or suggestions on Things Every Rookie Must Know before Investing in Real Estate. Please do so in the comment section.

 

If you are interested in learning more about real estate we recommend Biggerpocket.com. Bigger Pockets is a huge community of investors that will answer any questions you need to know about real estate. Joshua Dorkin the founder of Bigger Pockets and Brandon Turner Co-Host of The Bigger Pockets Podcast also provider a load of information every week with special guest who shares their experience as real estate investors. Check it out! 

 

Must Read Book

The Millionaire Real Estate Investor by Gary Keller

 

Recommended Podcast

Bigger Pocket Podcast

 

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