30 Important Do’s & Don’ts that Will Make Money in Real Estate – Part 1

make you money in real estate

 

DO’s & Don’ts to Make Money in Real Estate-Part 1

 

As most of us know real estate investing can be very lucrative. In my opinion it’s the greatest vehicle out there to help make money in real estate and attain financial freedom.

Real estate, as a concept, seems pretty simple. You get money, buy a property, pay expenses and collect rent. Although it appears simple, it can actually be a complex beast.  If you don’t know what you are doing, you could get eaten alive. That is why it is so important to avoid costly mistakes to help ensure a good return on your investment

What I love about the real estate world is the willingness of investors to share not only their successes, but also their failures in an attempt to educate and help others not make the same mistakes.  So, in the spirit of sharing, I’ve compiled a list of the Do’s and Don’ts of real estate investing.  It’s certainly not all inclusive. However, it will provide some insight into the depth one needs to go into when considering an acquisition if they want to make money in real estate.

As I don’t want people’s hands to cramp from endless scrolling; I decided to divide up this post into 2 articles. Stay tuned for next week’s post, where I’ll walk you through another 15 tips and provide you access to a FREE and invaluable tool that will help you become a better and more knowledgeable real estate investor.

So let’s get started!

Here are 15 DO’s and DON’Ts for successful investing

 

1(a)DON’T take pro forma financials at face value.

1 (b)DO run your own numbers and perform an exhaustive underwriting exercise. Pro forma numbers are often molded by the seller to put the     property into a more favorable light.

 

2(a) DON’T pay too much for a property.

2(b) DO run the numbers and if they don’t work, don’t buy it. There will be other properties out there that work for you.

 

3(a) DON’T skip due diligence on a prospective investment property.

3(b) DO perform due diligence on every aspect of your acquisition; the asset, the documentation, the neighborhood etc.

 

4(a) DON’T pick the least expensive Property Management Company.

4(b) DO spend time interviewing respectable and experienced Property Management Companies.  Ensure they share the same vision for the property as you do, such as increasing the Net Operating Income.  They are the keys to your property’s success so take considerable care in finding one that will deliver.

 

5(a) DON’T buy in a one industry town.

5(b) DO buy in a city that has a diverse economy. This way if a particular industry weakens or fails completely, there is still a wide range of employment that will allow for high rental occupancy.

 

6(a) DON’T buy in a declining or stagnant area.make money in real estate with jobs

6(b) DO buy in an area that has both population and economic growth year over year. People go where the jobs are. If an area is growing there is greater opportunity for higher and consistent occupancy.

 

7(a) DON’T send money to a personal account of the person or company with whom you are investing.

7(b) DO send/wire your investment funds to a trust fund, lawyer or title company. This way your money is protected and secured.

 

8(a) Don’t be pressured by the seller to shorten your due diligence period.

8(b) DO give yourself enough time to do a physical inspection of the property and review all the documentation when you have it under contract. It could be 30, 60 or 90 days. Now, having said that, in a strong market you may need to shorten the due diligence period. Every project is different so do what it takes to make you feel comfortable with your analysis before you pull the trigger and buy. You do NOT want buyer’s remorse.

 

9(a) DON’T just go with the cheapest Contractor to do your property renovations.   make money in real estate with good Contractorcs

9(b) DO get multiple price quotes for Contractors and weight the importance of price, quality, time lines, and experience into your decision.

 

10(a) DON’T inject money into a property just for esthetic reasons to make it pretty.

10(b) DO inject money where it is needed most, where it will get you more rent, such as in bathrooms and kitchens.

 

11(a) DON’T try to be a one man/woman show.

11(b) DO surround yourself with a strong power team of real estate professionals.

 

12(a) DON’T be happy with the status quo of your property.

12(b) DO find ways to increase income and decrease expenses to improve your Net Operating Income all while providing great service to your tenants.

 

13(a) DON’T ever analyze/buy a property thinking you don’t need contingency.  make money in real estate with contingnecy

13(b) DO make sure you have enough contingency funds in your underwriting. There    are always unknowns that pop up and you want to be ensure you have funding available if needed.

 

14(a) DON’T over-leverage yourself.

14(b) DO use leverage as it’s an investing tool that can do wonders for their real estate. Know your limits though as too much can be costly

 

15(a) DON’T buy investment real estate based on emotions or buy on impulse.

15(b) DO buy investment real estate based on detailed market research and number crunching.

 

So that ends the first 15 DO’s and DON’Ts of real estate investing. As you can see there are many things to consider when buying investment property.  Consider these tips when you want to make money in real estate on your own or with a syndicate like Simple Acquisitions. Stay tuned for next week’s blog article where I’ll unveil yet another 15 tips!   Want to know more, but don’t want to wait a week?  Easy!!  Contact us. We’d be happy to answer any questions you have about real estate investing.

 

Remember, real estate doesn’t have to be complicated.

With Simple Acquisitions, it’s smart, secured and simple!

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