30 Important Do’s & Don’ts
that will Make you Money in
Real Estate- Part 2
Welcome back to part 2 of the 30 DO’s and DON’Ts of real estate investing. Last week I walked you through 15 important tips to keep you on the right track with respect to buying investment properties. We covered due diligence, market criteria, contingency, and leverage to name just a few. If you missed last week’s post, so to the blog tab and click on the top post. Let’s cover some more ground and identify another 15 tips that will make you money in real estate.
15 More Do’s and Don’ts of Real Estate Investing
16(a) DON’T buy a property in isolation of its financials.
16(b) DO research the neighborhood in which you want to buy. Look for low crime, good schools, near shopping and transportation routes, etc.
17(a) DON’T just stick to one exit strategy.
17(b) DO have several exit strategies that have positive outcomes to give you flexibility if the markets shift.
18(a)DON’T assume you can ask just anyone for money when you are raising funds for a real estate investments.
18(b) DO make sure you know the rules of investing in your state. There are very strict SEC guidelines to follow. If you are raising money privately, consider obtaining the services of a SEC attorney.
19(a) DON’T chase the “get rich quick” investments with those too good to be true returns.
19(b) DO chase the investments that are based on solid numbers, facts and research. Slow and steady worked for the tortoise!!
20(a) DON’T assume every real estate investment is the same.
20(b) DO understand your risk tolerance and invest accordingly. For example: Many times development work can often have higher risk than a buy and hold property with high occupancy.
21(a) DON’T buy a property without doing an inspection.
21(b) DO make property inspection part of your due diligence. Inspections are not only good for identifying trouble areas, so you know what you are getting into. They are a great bargaining chip for you to negotiate the price.
22(a) DON’T assume all properties are the same and take the same amount of effort and resources.
22(b) DO create realistic timelines for projects. Manage your expectations early so you don’t set too aggressive a time line.
23(a) DON’T accept information or data at face value– (i.e. Pro Forma)
23(b) DO ask questions so you understand everything. Don’t let your ego get in the way of not asking questions. Investigate and prove all the actual numbers.
24(a) DON’T invest based on the current price only.
24(b) DO invest based on potential returns. For example: Just because you buy a property 25% d less than the previous sale, doesn’t necessarily mean it’s a good investment. It depends on the revenue it creates and economy of where you are investing.
25(a) DON’T try to play with the big dogs if you are a just a pup.
25(b) DO learn the ropes and gradually move onto larger and more complex projects.
26(a) DON’T ignore the tax implication of the real estate you buy.
26(b) DO speak to your accountant before you buy to determine the best tax strategy for the property and your short/long term goals for the asset.
27(a) DON’T buy investment property in your own personal name.
27(b) DO create the right entity structures to protect you and any investors with whom you are partnering. This means talking to your accountant, your attorney and tax strategist to determine the best entity from both a tax and liabilities perspective.
28(a) DON’T determine your exit strategy after you buy an investment property.
28(b) DO determine your exit strategy before you buy. Plan, plan …..plan!
29(a)DON’T ignore that there are cyclical trends in real estate.
29(b) DO take the time to research and understand the trends & cycles not only in your market, but nationally as well.
30(a) DON’T know how to analyze property financials?
30(b) DO educate yourself or ask for help until you are comfortable with running the numbers on your own. If you don’t have enough cash flow, then your property becomes a liability when it should be an asset.
So that ends the 30 DO and DON’T tips of real estate investing. It’s a long list, but it is by no means exhaustive. Can you see why buying investment properties can be considered a complex beast? Keep in mind these tips and they will help you make money in real estate.
If you want to know more about how to analyze multi-family investment properties, then sign up for our property evaluation series below. My partner Marc will walk you through the entire underwriting process that we use here at Simple Acquisitions. It’s a very informative series and it’s free so there’s no reason to not get it today.
If you are looking to get involved in real estate investing as a private lender and don’t know where to start, CONTACT US. We’d be happy to walk you through our simple process. You can attain financial freedom with real estate investing. Get your money working harder for you!
Remember, real estate doesn’t have to be complicated for private lenders.
With Simple Acquisitions, it’s smart and simple!!