Tips For Real Estate Investing Success In 2018
Real estate is a great way to invest your money and help reach your long-term goals—but the market has changed with the times. So here are some tips for real estate investing success in the modern age.
Successful real estate investors come from many different angles—there's no one, secret formula to succeeding in this market. But there are definite guidelines to follow and many things to consider, for new and experienced investors alike when aiming for real estate investing success.
But with the right planning, dedication, and strategies, diving into the real estate market can be a lucrative way to reach your long-term financial goals.
In order to be successful in real estate investing, you need to have concrete goals, and concrete plans for reaching them. You first need to take stock of your current financial situation, and decide how much you can afford right now. But then, even more importantly, you need to look ahead at your long-term goals, and decide what exactly you want your investments to do for you in the long run. This will guide many of your investment decisions, both immediately and your long term investment options and strategies. You also want to make sure you don't limit yourself to near-sighted endeavors in your area: you should decide what kinds of investments you want to make first, and then hold out until you find the right place, even if that means going a bit farther out.
Don't let your emotions run you.
You don't want to be robotic about your investment decisions, because your instincts and gut feelings can often be extremely valuable tools. But you also want to avoid making decisions based on emotions like sentimentality or fear, and blind yourself to the realities of the market or your own assets. You should try not to make any decisions without being able to form a sound argument with the numbers and concrete data you have. This doesn't mean you should approach investing like a machine, doing nothing but running algorithms, but you should be sure that you understand the impact that your decisions will have and are prepared for the outcomes of any moves you make. The best way to do this is simply to make sure that all of those decisions are backed up by numbers.
Keep an eye on your taxes.
Taxes can make or break you, and a lot of people aren't maximizing their options when it comes to write-offs, depreciation, and other ways you can save on your taxes. If you're not sure what the best moves are, it will probably behoove you to hire someone, but even if you decide to do it yourself, make sure you do your research. You can probably save quite a bit with little to no change to the way you run your investments, and maximize your cash flow simply by putting the right things on paper.
On the flip side, you also want to make sure you're budgeting for taxes and that you're completely squared away, legally. You don't want to end up deep in the hole because you weren't paying attention to your tax situation.
It can be tempting to go all in when you invest, and try to maximize your earnings by putting everything forward from the get-go. But you can't forget about your expenses, as well—it costs money to maintain properties, and the process isn't always completely stable. Unexpected damages, rental turnover, and renovation costs can throw a real wrench in your plans and seriously limit your real estate investing success—if you're unprepared. So make sure you don't overcommit, and that you have the funds to keep up your property when you go to invest. And make sure your ongoing means guide your investing decisions, so you don't end up draining away all of your available funds on basic upkeep.
It's about who you know, not what you know.
Your ability to successfully network will play a huge role in your real estate investing success. In any business, you have to get to know a number of different kinds of people, and be able to work with them with trust and authenticity. Even if it is solely 'your' business, you're going to rely heavily on your ability to find the right contractors, bankers, accountants, etc—investing in real estate is not a solitary endeavor. And you may be surprised where your useful connections can come from: make use of social media like LinkedIn, real estate investment courses or meetings, even reconnecting with old friends and acquaintances to grow your circle and forge valuable relationships that you can use in your endeavors.
Stick to what you know best.
You don't have to be a jack-of-all trades to have real estate investing success. In fact, trying to do too much—or too many different things—is usually very counterproductive. It can be tempting to go for the latest new idea, or a move you hear about in the industry that paid off for someone else, but it's usually best to keep your investments simple, and stick to what you know. Having a good, deep understanding of your investment style and your particular market niche is the best way to keep your investments secure and your profits steady.
Don't be a robot.
You don't want to make decisions on a whim, or based on fear or sentimentality, but that doesn't mean you should try to be a machine - or worse, let a machine make all of your decisions for you. You want to make your decisions on a rational basis, with the numbers to justify them, but you may also be surprised by the accuracy of your instincts and gut feelings. So it's okay to listen to those tugs and pulls on top of your numbers-based analysis, because the truth is, even in the modern era of technology, a lot of real estate investing success still comes from the guidance of those kinds of instinctual feelings.
A good rule of thumb when it comes to real estate investing success is to invest in proportion to your experience. If you're just starting out, you don't want to make costly mistakes on major investments while you learn the ropes—you want to be sure that you can weather a few losses while you figure out the best ways to maximize your profits. It can be tempting to dive in head-first, especially when you see an incredible deal or hear that 'now is the time to...', but any such quickly made decisions are major risks. Patience and level-headedness are crucial to real estate investing success.
Do your research.
In order have true real estate investing success, you have to know and understand the numbers. Before you invest, you need to do the research for yourself and make sure you have a complete picture of your actual and potential finances. This is crucial to avoiding pitfalls like tax errors and overcommitting, which can cause real harm to your income. You also want to make sure you do your market research, and decide what kind of investing is right for you: the flip and sell approach, for example, might work very well in some areas, but not so much in others. You want make sure that you have a picture of things the advantages of owning vs renting in the area, if this is the kind of decision you need to make. And of course, make sure you're always taking into account your own personal financial needs and budgeting for some otherwise unexpected expenses.
Watch the market.
As with any market, the real estate market is constantly fluctuating and cycling. You want to keep an eye on these patterns and changes, and don't fall prey to hype, jumping into a market at its highest and losing out in the end. This is another reason it's recommended that beginners start out small, with conservative investments, and learn the ways that the market changes and how to spot the best deals and times to be purchasing property. By starting small, knowing where to invest in housing, and doing your research, you can minimize your losses and maximize your gains.