If you’re new to real estate investing, you’re probably having a hard time navigating your way through the confusing contracts and the “dos and don’ts.” Real estate investing is one of the most profitable investments if done correctly. Stick around long enough and you’ll discover that successful real estate investors have their own language. If you ever talk to these investors, most of them will quickly resort to the three primary categories and rules to rise to the top.
Let’s explore the three words that causes you to push your abilities and how they contribute to the success of your real estate investing career.
The all-important concept that keeps you on a clear, purposeful, directed path is a focus. We are all focusing on something at every moment. For example, right now you are focusing on this article. It’s great to be able to hone in on a specific thing but how often are we focusing on the wrong thing? The key (obviously) is to be focusing on the right thing. If you carry a lighted flashlight that is pointed up instead of down at your feet, what would be the odds that you would trip in the dark? The odds, I say, would be fairly good. The flashlight is pointing at something; it just might not be pointing at the right thing.
For example, successful real estate rehabbers focus on the process, the rehab process, not the product. The product is a natural outcome of doing the rehab process well. Real estate achievers focus on implementing a duplicatable process to keep their business growing. Non-achievers lack focus and haphazardly rehab the home. If the renovated house turns out good enough to sell, they credit their lucky stars. If the house is a dud, well, their lucky stars were not aligned just right.
Focus is the act of actually doing those actions that lead to the desired outcomes that you have chosen for yourself. Make a plan that will help you accomplish the day to day operations that will eventually lead to the bigger picture. If needed, make a calendar with benchmarks that you need to hit in order for you to become profitable. Focus on the right things and you will get the right results.
Fix and Flip
Fixing and flipping properties is one of the best ways to realize substantial profits without using too much of your own money if you are able to budget well. You start by searching for motivated sellers who need to “get rid” of their house quickly. This could be because of foreclosure, a sudden emergency, etc. Once you acquire the house, you fix it and quickly add value through a systematic rehab process. Then you resell the house quickly for a profit.
To successfully implement a ‘fix and flip’ strategy, you don’t need perfect credit, but you must have access to some cash. Preparing a real estate business plan to present to prospective lenders will vastly improve your chances of getting all the money you need to purchase the property including the repairs. If you find yourself getting carried away with your spending when going through the fixing process, remember your budget to ensure that you will have a profitable return. The last thing you want is to spend more money than you need to and having it sell less than what you put into it.
After you purchase the property, the average turnaround on a ‘fix and flip’ property is approximately 90 to 120 days from the date you purchase the property to the date you cash out on the property. This timeframe is based on 30 days to fix it up, 30 to 45 days to sell it on the market, and usually, 30 to 45 days to close. This process can be done faster, of course, under the right circumstances and with a good team by your side. Don’t be scared to ask for help from reputable contractors that can help you get the job done and factor in their pay into your budget. The process of fixing and flipping a house can also take longer if you don’t get the property up to market standards and in selling condition in this time frame.
Real estate is one of the best and easiest ways to create wealth. More millionaires have made their fortunes in real estate than anything else.
Generally, most individuals are looking for ways to get ahead financially and give some serious thought to real estate investing. Many succeed when starting out in real estate but why do so many that take the plunge fall short of their financial goals?
Well, there are plenty of reasons to go around, but the principal reason centers around unrealistic expectations. Many new investors are unwilling to pay the price. All worthwhile endeavors require some sustained and focused effort. In other words, some real work.
But many of us are searching for the magic key that will open the “real estate treasure chest” to instant wealth. Is it possible this magic key exists? The sad fact is, no, it doesn’t.
Real estate is an incredibly rewarding investment to get into, but if you aren’t good at managing your money and planning ahead, it can quickly go in the opposite direction of what you want. When it comes to finances, calculate every possible cost that could happen with this investment and then add on an “emergency” amount just in case. You don’t want to purchase a property thinking that it will sell or rent out quickly and then have it sit there for long periods of time because your renovations are unfinished or not up to par.
You’re Now An Expert
If you will make focus, fix and flip, and financial freedom a part of your vocabulary, you will be on your way to reaching your financial goals. Remember to plan ahead and don’t be afraid to hire contractors onto your team. You can’t flip a house realistically by yourself, and you shouldn’t! Calculate the risks and make sure that your finances are in order.
Learn how to beat the real estate game before jumping in feet first. Education about the niche you’re going into will save you time and money in the future. Know the market and your limits and then go and conquer some real estate investments!