Best Practices of Successful Real Estate Investors
Real estate often appreciates in value over time, which can make it a solid investment for those willing to put in substantial work and accept risk. Real estate investing is a tempting pursuit for those who enjoy the challenges and rewards associated with directly controlling their own finances on a large scale.Just consider this firsthand point of view from HGTV star Scott McGillivray, who told Forbes: “I like being able to control my own financial future. Some people may be willing to put their money in an investment where they get some passive return and hope for the best. I’m a bit more of a control freak and like to pick and choose where it goes and have a say in how fast it grows by working harder at it.”
Successful property investors develop habits and behaviors over time that serve them well in the real estate industry. It’s not all glamorous television specials, huge payouts, and setting your own schedule; there’s hard work, legal risk, and never-ending issues to consider. Learning these best practices can help fledglings in the industry establish their footing and avoid common pitfalls that could transform their business into a busy mess.
Know the Market Inside and Out
The five Ws were important in school, and they’re even more important when it comes to property: Who, What, When, Where, and Why. First, you need to know average market price for a given area so you can establish a scale for pricing. David Reiss, a law school professor, suggests looking for deals that are underpriced and investigating why they’re discounted compared to the rest of the market. It’s all about creating an accurate scale that helps you determine when to snap up a property and when to avoid it. It’s also crucial to keep up with market trends and the economy at large as they change.
Perform Due Diligence
There’s a popular saying that decrees “no guts, no glory.” In real estate investing, it’s “no risk, no reward.” Developing a solid system for balancing risk against possible payoff is key for successful buyers. The less exciting side of investing involves sitting down and poring over numbers, reports, and analytics to determine the risk and return for potential acquisitions. Keep in mind that fixer uppers, Tenant in Common, and land parcels can come with heightened risk, according to a Realtor on LinkedIn.
Delegate When Needed
Real estate investors are traditionally very hard working. To accomplish more, it’s not generally a matter of working harder, but rather of streamlining. Sometimes you have to say no to opportunities to ensure that you’re prioritizing quality over quantity. Learn your limits, which include when to take on more responsibilities and when to turn down an offer.
Effective investors often find that delegating much of their day-to-day work to rental property management can free them of many pesky details. After all, making the initial investment is just the first step. The investor must connect their properties with the right people and take care of their listings, not to mention all the screening and paperwork that goes with it. It’s a good idea to develop a surefire system for keeping track of these small yet important details, and delegating appropriately can provide relief.
Work with An Accountant
It’s true that real estate investors must wear many hats, but outsourcing accounting can free up time for other responsibilities and make sure that taxes are taken care of in accordance to strict laws. The fee that you will pay a qualified accountant is usually negligible in the face of all the advantages that this setup provides, and you can sleep better at night knowing that your numbers are all in accordance with the most current laws and regulations.
Sticking to these best practices and adding your own over time can guide you down the right path when it comes to real estate investment. Establishing sustainable habits now will set you up well for long-term growth.