Who wants to be a millionaire? To buy a modest home in some cities, you might have to be! In San Francisco and San Jose, one million dollars is the expected going rate. But if you travel,
8 Reasons Real Estate Newbies Should Not Take My Investing Advice
Calling All Real Estate Newbies: 8 Reasons You Should Not Take my Investing Advice!by MARK FERGUSON on MARCH 23, 2014
Every Market is DifferentThe biggest reason my strategy can’t be copied is my market is vastly different than every other market. Every neighborhood is different in every town. The rents are different, the taxes are different, the prices are different, the houses are different. A newbie has to be able to identify and research their own market and neighborhoods for opportunities. It can’t be done by anyone else, except for possibly a local expert. The problem with a local expert is they will have different skills and goals then you and their choices may not be good choices for your strategy.There has been a lot of discussion about $30,000 properties lately and if they are a good investment. A $30,000 property in one location may be vastly different than a $30,000 property on another location. While a $30,000 property may be a huge headache for 20 years in one area, if you had bought a $30,000 property in my town three years ago it would not be a $100,000 property. This is why it is so important to know your market, although I personally don’t invest for appreciation.
Single Family or Multifamily, A,B or C?In my area I can buy single family much cheaper and cash flow better than multifamily, while other markets are the complete opposite. What type of property you invest in will greatly depend on your market. I like B+ properties, they attract great tenants and have little Maintenance. Other investors like C or A properties for various reasons. Your location, money and goals will help determine what type of property you buy.
Where Are You in Life?Are you about to retire or 20 years old and just getting started? This is a huge factor on how aggressively you will invest and leverage your money. I am a very aggressive investor, because I am young and I have super aggressive goals.
How Much Money do You Have?Money is important, I don’t care what anyone says. I make a great living as a Realtor and a fix and flipper and I am able I buy rental properties with 20% down payments. If you don’t have much money, you won’t be able to jump right in buying multiple fix and flips and rental properties with 20% down. If you have a lot of money, maybe buying properties with cash makes more sense.
What Are Your Goals in Life?I have huge goals, because I want a lot out of life. Others have modest goals or just want enough income to retire on. Your financial goals make a huge difference in how aggressive you want to invest. I want to buy 100 houses by 2023, some people may only want 5, others may want 1,000.
Do You Have a Family?A family can make a huge difference in how you invest. Without a family you may be able to move ten times in ten years and buy ten owner occupied houses that can be turned into rentals. That would be hard to do with a family, sometimes a family can make it hard to buy one investment property.
Do You Hate Your Job or do You Love it?If you love your job, you may only want to dabble in real estate investing to make a little extra money for retirement. If you hate your job you may want to jump into real estate as fast as possible, get your license and make a career of it. This will greatly affect how you invest and how aggressively you pursue real estate.
Who do You Listen to?You should listen to everyone, absorb as much as possible and use that information to form your own strategy. When I see articles or forum posts that tell newbies what type of property to buy, how to buy it or how many to buy I cringe. When I see a newbie ask if this is a good deal I cringe. No one knows what a good deal is except the person buying it. There was a great forum post about mentors a few weeks ago. Many mentors chimed in and the general consensus was the mentor should give as much information as possible, but never make a decision. It is up to the mentee to make the decisions based off what they have learned.
ConclusionIf this all sounds hard, it is. It is not easy to learn your market, create goals, budget, plan and buy properties. That is why investing in real estate is so great, the difficulty scares away 98% of the people and that leaves opportunity for the rest of us. Create your own strategy and do what feels right to you, the only way you are going to truly learn is to do it.
As a Full Time real estate agent for the past 23 years, Sheryll has helped hundreds of home owners in Colorado buy and sell their homes. Sheryll's easy going, no pressure style and her in depth knowl....