by: Michael Zari
Real estate investing is an activity that needs to be mastered to maximize returns. It takes a great deal of knowledge and experience before one can be a “pro” in this field. This is not saying that your have to be a pro in order to realize returns; you just have to do the things that a Pro does. There are many books that discuss the habits of successful individuals in different fields. Being a strong believer that you can learn a lot from successful people, I have gathered up a list of insider tips that I am sure that you will find useful.
Below are the top seven insider tips that we have found can help anyone to be successful in real estate investing.
#1 – Have a Plan
In everything we do there should always be a “game plan” to make sure everything works well. As a real estate investor, you should have a plan on your individual investments as well as an overall plan for your entire portfolio. Your plan should answer questions such as: What are the incentives? What are the benefits of going through a wholesale group? What are my options for exit strategy? Note that your criteria for an “excellent investment opportunity” should also be outlined in your plan. This way, when an opportunity crosses your desk (or computer screen) and meets your criteria, you can act quickly and there will be no time wasted.
Investing in real estate is also a form of business and there should be a good business plan in place before making that investment, whether it is your first one or not. You should include not only the benefits and projection of cash flow but also the possible risks in taking the investment. You should be able to think of appropriate course of action should your investment fail and put those details in your plan. That way, you will not be caught unprepared when such misfortunes happen.
#2 – Timing
As the adage goes, “the early bird gets the worm,” which I believe is especially true in real estate investing. One common element I’ve seen in successful real estate investors (and stock traders as well) is their ability to execute and completely follow through in a very timely fashion. They have broken down their investing into a system and once they know that something meets their criteria they do what it takes to “get ‘er done!” Once something meets their criteria, they do whatever it takes to get the investment. These people act fast from completing the necessary documents for reservation to following through on the entire process.
Getting in first through preconstruction opportunities also results in more incentives. Usually, if you take advantage of the “first day” price, you will pay less than the subsequent property buyers down the road. This, in some projects, even happens within the preconstruction phase; there are stepped price increases in the project. So in investments like this the early bird not only gets the worm, but also the extra built inequity as well! Therefore, it will be advantageous to you as an investor to get the right investments at the right time; and doing that is easy once you already have a working plan with all the criteria to look for in a good investment.
#3 – Do Your Homework!
On every investment that you make, you should do your homework, or in other words, know your project. Get all the necessary information about the project which include its location, developer and all the details about the property you are investing on. If possible, make a visit to the site as well. Remember that the price of an airline ticket is cheap compared to the size of your investment and you can pick up so much more information by putting your “boots on the ground” as well.
Since you are investing in a preconstruction project, you may want to check out other existing projects from the developer to see the kind of quality their properties have. It is also important to know if they are reliable and if your money is safe with them. A couple more things you need to know are: When will the building construction start? And how long should you expect the property to finish?
There may be a lot of things that need to be researched about the project but it is necessary that you have the right information so you will have a great feeling about the project right from the very start.
#4 – Create a Team of Experts
Every successful business person will tell you to surround yourself with experts. The same holds true in Real Estate. As a real estate investor, you should gather up a team of experts who will be able to give you good advice and suggestions on every investment that you make, tell you which is a good investment and which is not (and why), and be able to provide some help in such cases where an investment fails. You can also turn to these people if you have questions or if you need advice in areas where you feel you need a little more help on such as financial or legal aspects of investing.
How do you find your team? Start off with recommendations from fellow investors. Contact them, interview them, etc. It may a bit of time to complete and round out your team, but it is definitely worth the effort!
#5 – Knowledge is Everything
Ask! Ask! Ask! There is no harm in asking questions. If after reviewing all the materials and information that you gathered on a project, you still have some questions in mind, go ahead and ask. Being the investor, you are entitled to have the answers to all your questions. You may start with the source of the information you initially received, whether it is an agent or the developer themselves. They may be able to make everything clear for you, especially on project specific questions. If after consulting them again you feel that there are still some gray areas, feel free to ask your team of experts. They most likely have the answers to the things that you are looking for.
#6 – Know Your Financial Strength
No one else knows your specific financial situation better than you do! An exception to this might be your accountant or a financial advisor, if you have any. It is recommended that you personally assess your current financial situation if it can make you qualified for the project before going too far down the road. Perhaps you already have a bunch of properties and are tapped out? Whatever the reason, check it out. This can save you (and others) a lot of time if properly done up front.
Your buying power will have a huge effect on the decision of lenders, should you apply for financing on the property. But even if you do not seek financing, you still have to do your personal financial assessment. Of course, you wouldn’t want to end up being burdened with debt from your investments in the long run.
#7 – Seek Out Education
Your education as an investor is key to your success! Successful investors do not only study when they are planning to purchase something, they broaden their knowledge in investing by seeking out to learn everything about real estate investing all year round. It is not difficult to get more information that will help you in your investing adventure. A quick search from the different search engines will give you many articles about investing in real estate.
You may also benefit from attending web events and tele-seminars where you can hear information and have the opportunity to learn more about a particular preconstruction project or real estate subject. If self-studying is your thing, you may want to get some e-books that discuss how you can make a start in real estate investing and learn how to be a successful real estate investor.
Preconstruction real estate is getting more and more popular to the public these days. However, getting quality preconstruction deals is not as easy as buying items from a high end store. Whether you are a novice or an expert in the field of real estate, following the above insider tips will definitely spell success in your investment. Also, you should not hurry things up. Mastering preconstruction investing is not an overnight thing. Sufficient amount of time is needed to learn the strategies that real experts in the field do.
Copyright 2006 GetPreConstructionDeals.com
About The Author
Michael C. Zari is a founder of http://www.GetPreconstructionDeals.com , a real estate investor and entrepreneur. His works have been referenced in many venues including the New York Times and USA Today. To continue to get weekly thought-provoking articles, go to http://www.GetPreconstructionDeals.com and sign up today!