Investing in Real Estate – 4 Steps to Success

Real estate investing is traditionally a safe and sure way to make money. When the real estate market is hot, dozens, if not hundreds, of real estate seminars begin rolling across the country, and thousands of people spend thousands of dollars for investing education hoping to make it big and retire early.

You may be surprised to learn that of all those thousands of eager folks who attend these seminars only about 5% end up investing in a single property. Why is that? The real estate gurus sell the “sizzle” and make profiting from real estate sound easy. While the concept of real estate profiting is simple, the process is FAR from easy.

I’d like to discuss some basic principles so you can start your journey on the right foot. These four steps should create a firm foundation upon which to build your real estate empire, and don’t cost thousands!

1. Understanding how to Buy Homes Below Market Value

Depending on the market conditions, you can still find sellers willing to part with their property for a price below the market value. The key is to understand that most home owners have their limits. If your offer is too low, they won’t be able to pay off their mortgage or can find someone else to buy it for more. The discount rate will vary depending on the market, the sellers’ motivations and other factors. 

The successful investor learns to find home owners who have no choice but to sell for less than market value. How do you go about this? Find a Real Estate Agent you trust to help you identify those home owners, cull public records for informed decisions on properties, and start writing those offers!

2. Find Motivated Sellers

Like any business, real estate investing, requires planning. As an investor, you are selling your skill as a home buyer to people who must sell. You are there when they need you and you have the skill to help them solve at least part of their problem- selling their home. 

How do you find these home owners?  Again, talk to your realtor about what is the best route in your market.  Perhaps door knocking will work, and simple face to face conversation.  You can always watch public notices for the announcement of foreclosure sales, and seek out properties in pre-foreclosure.  Other public notices that provide buying opportunities include probate, divorce and bankruptcy.

With your agent, you can call the owners found in these notices or perhaps you can create a letter/postcard campaign. The goal is to get in front of the home owner and convince them that you are the right buyer for their needs. 

3. Framing Your Offer

After you’ve found a motivated seller you must understand how to frame offers that provide benefits for both you and for the home owner. This is another opportunity where your agent will be helpful.  As the market and real estate expert, they can guide you into writing an offer that is amenable to all parties and creates a satisfactory transaction for all.  You should know that real estate investing is not about stealing property, but rather solving problems in a way that benefits both parties. 

4. Plan on Investing for Profit

Never make a purchase until you’ve carefully determined exactly how you will get to your profit. If you hold it as a long-term investment will the monthly rental income more than cover the monthly mortgage payment and expenses?

Will you:

• Sell the deal to another investor for fast cash?
• Do some fix-up and sell the property for full value?
• Quickly trade it for a more desirable property?

Have a plan before you buy.  Not sure what the plan is?  Try starting with this goal setting strategy, and make sure to include your realtor in the conversation. 

Having a real estate agent during the process, that you can turn to for advice, is priceless. You may not need their services all the time, but if you are loyal to ONE agent when you do need help, they can be a valuable resource to you. An agent can help determine the marketability of a project or future resale value of the property, explore renting and long term income opportunities for the property, and help guide you in the best way to maximize your investment dollars.

Now that you have four steps that even a part-time investor can execute in three to four hours per week, what’s the missing ingredient, the fifth step? Your determination and perseverance. If you will unfailingly follow the plan for a few months you will be well on your way to financial independence.

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Are you looking to buy, sell or invest, but don’t know where to start? If you are in my service markets of Northern Virginia, Frederick, Loudoun, Clarke, Warren and Shenandoah Counties, I’m happy to help! Outside of this area? Contact me and I will connect you with a real estate professional in your area at NO COST TO YOU!!! We are here to help you get one step closer to your goal and set you up for success!