Real estate investment isn't like any other kind of investment. Yes, at the core of all investments there's money and risk involved. But the major difference is that in real estate investing, you are responsible for the work required to make a return on your investment.
If you want to be successful in real estate investing, there are some key pieces of information you need to know. This information holds true no matter what area of investing you get involved with.
How to Locate Properties
Properties are the lifeblood of real estate investing. Without them, there's no money to be gained. Your success hinges on your ability to find and evaluate properties. Not just any property, but solid investment opportunities, better known as “deals”.
Just because a property is up for sale doesn't mean it's a good real estate investment. You'll need to find out a lot more about each potential deal before you can say with certainty whether it's a good investment or not. For example, what condition is it in, how much work is required, what is the cash-flow and return-on-investment, and what is attractive about the local area and economy?
How to Negotiate Deals
Once you start finding investment properties, you must be able to negotiate a deal that works in your favor. Otherwise, you'll make little or no profit, and in some cases, you might even incur a loss.
If you're not good at negotiating, take some time to read a few books on the subject. Once you learn core negotiating skills, you'll have the ability to go into a deal and work out the terms so everyone walks away happy, mostly yourself.
If you're saving yourself time by working with a real estate investment firm, then the deal will have already been negotiated for you. This is a great way for the novice investor to get started because it helps minimize risks while they learn the business.
How to Invest
In its simplest form, investing is all about putting money in and getting more money out. In real estate investing, there's quite a few ways to do this. Some investors like fix-and-flips, some like new- and pre-construction, while others invest in distressed properties or foreclosures. It's best to decide the strategies you'd like to use early on.
Learn as much as you can about those strategies. The better you understand the strategy, the easier it will be to invest in real estate. There's a lot of information available in books, magazines, and on the internet. Use as much of it as you can to learn the skills you need to be successful in real estate investing.
The sooner you learn these key skills, the sooner you can start making money in real estate investing.