How To Master Real Estate Investing

Want to learn how to master real estate investing? Read about the 8 steps you must take to buy successful investment properties.

 

KEY TAKEAWAYS

Learn how to master real estate investing in 8 steps.

1. Identify and evaluate real estate markets;
2. Find investment opportunities.
3. Analyze potential deals.
4. Obtain funding.
5. Build an investment team.
6. Buy properties.
7. Rehab and renovate.
8. Becoming a landlord.

 

Mastering Real Estate Investing

 

Follow these 8 steps to master real estate investing.

 

1. Evaluating and Identifying Real Estate Markets

 

Certain factors you must consider to identify a strong market include:

• Ideal neighborhoods as locations determine whether property values rise and make it easier to find good tenants;
• Rent prices determine the quality of tenants you desire. Low-income properties make money, but higher-priced rentals attract different investors;
• Vacancy rates affect profits as desirable rentals attract many tenants and fewer vacancy periods create greater profits;
• Local job growth indicates a strong local economy which makes rentals investments more attractive; and
• Housing supply keeps purchase prices lower under the supply and demand economics.

 

2. Finding Investment Opportunities

 

Every investor has individual goals and a target market. Consider these types of investments:

• House Flipping – Do you want to buy fast and flip properties? Fix and Flip houses is a short-term investing strategy allowing you to become engaged with the house while making a quick profit. If you do read one of our Realtor’s blog posts “Should I Flip or Rent Homes?”; or
• BRRRR Method – Learn how to Buy, Rehab, Rent, Refinance, and Repeat by reading this blog post from one of our BBR Realtors “What is the BRRRR method in real estate”; or
• Long-Term Rentals – Is a buy and hold strategy that earns you income while you wait for the right time to sell; or
• Multi-Family Investing – Whether you focus on small or large multifamily properties learn how to do it correctly by reading our “How To Invest In Multi-Family Real Estate”.

Once you know your goals and the target market you need an essential team member.

You need to team up with an experienced local investor-friendly Realtor to discover hidden gems in the local MLS database, off-market properties, and FSBOs.

 

3. Analyzing Potential Deals

 

Your Realtor should know how to calculate which properties offer the best value over time. Of course, you can verify the calculations by using one of these Free Online Valuation Calculators:

• Investment Property Calculator from Financial Mentor includes over 30 different factors;
• Free Real Estate Property Investment Calculator from Nexus is simpler than the one above covering income, monthly expenses, and profit by month and yearly; and
• Rental Property Calculator from Calculator.net includes purchase price, income, and recurring operating expenses.

Whichever method you calculate, it must include:

• Rent prices;
• Cash flow; and
• Projected appreciation.

 

4. Obtain Funding

 

Nail your finances ahead of time. Unless you are an all-cash buyer, you must line up ways to get the financing you need to buy properties.

Investopedia recommends the following loans for the 5 Best Investment Property Loans in 2022

1. Best Overall: Quicken Loans;
2. Best for Single-Family Homes: Citibank;
3. Best for Veterans: Veterans United Home Loans;
4. Best for Rehab Loans: LendingOne; and
5. Best for Ground-Up Construction: Nationwide Home Loans Group, a division of Magnolia Bank

 

5. Build an Investment Team

 

Most investors are not a jack of all trades. Your skills and knowledge to succeed in real estate investing require:

Knowing federal, state, and local Housing Laws – Avoid running into trouble with anti-discrimination fair housing laws. Team up with a local experienced real estate attorney. Run all your legal questions and issues by your lawyer before you act. This will keep you out of trouble. Legal issues include:

• Federal, state, and local Fair Housing laws;
• Local Zoning laws;
• Legal Liabilities of owning rental properties; and
• Choosing the right Legal Structure to own your investments.

Knowing Taxes – Several taxes arise with owning and renting properties. For instance, federal, state, and local income taxes, and property taxes. Team up with a CPA who knows real estate investments.

Knowing how to Renovate Properties – Don’t commit yourself to buy a property with hidden defects that turn into a Money Pit. Team up with a Contractor who can inspect a property from top to bottom and advise you about the time and costs to renovate the property. If it’s too much, don’t buy it.

As mentioned above, work with a local Realtor to save you time finding ideal investment properties. Also, the Realtor can negotiate with sellers and write the purchase contract and get you through the transaction closing process.

 

Got Questions?

 

 

6. Buying Properties

 

Don’t waste your time trying to find that diamond in the rough.

Work with your Realtor to locate the right property, negotiate with the seller, and get a faster closing. Realtors are trained to look for the right properties based on the client’s goals and needs.

Big Block Realty offers experienced Realtors to team up with every type of investor in the greater San Diego region. Contact us before you begin searching for properties in San Diego County.

 

7. Renovate and Rehab

 

Don’t expect diamonds in the rough to shine like the ones in a jewelry store. You need to work with a contractor before buying a property to see how much work needs to make it livable and rentable and at what cost.

Knowing your purchase and closing costs and your renovation costs helps you to know your bottom line.

Keep costs down by focusing on strategic updates to increase value.

If your goal is to flip properties you won’t have to make expensive renovations. Just focus on safety issue repairs and some cosmetics to add appeal.

Short-term rentals attract singles, wanderers, and vacationers. Get the rental up to code and make it safe and livable without any fancy updates. Short-term renters only expect the basics.

Long-term rentals for professionals and families require greater care. They want a functional, safe, and livable entire family home to stay in for many years.

 

8. Become a Landlord

 

Owning rental properties requires time and effort devoted to the development, management, and operation of your investments. Tenant management is a skill most investors don’t know how to acquire.

Learn how to become a successful landlord to manage your rentals for profit. Read these blog posts teaching you how:

• “How To Become A Landlord In California”;
• “How to Successfully Manage Your Rental Property”; and
• “Get Started As a Landlord”. 

 Alternatively, if being a landlord takes up too much time and causes you stress consider hiring a local professional property management company. Read these articles about choosing the right property management company:

• “Advantages of Using Property Management Company”;
• “When You Need a Property Manager”; and
• “Questions Before Hiring a Property Management Company”.

 

How To Master Real Estate Investing – Conclusion

 

Our 8 steps on how to master real estate investing focus on:

1. Understanding your real estate market;
2. Locating investment opportunities;
3. Analyzing potential deals;
4. Finding funding sources;
5. Building a top investment team;
6. Buying the best properties;
7. Rehabbing and renovating houses; and
8. How to become a successful landlord.

 

Want to Buy Investment Properties in San Diego?

 

Big Block Realty provides you with experienced investment-friendly Realtors in San Diego County. No matter if you seek single-family homes to rent or multifamily buildings our Realtors can help you find the best deals.

Top 50 in the U.S.: Big Block Realty is recognized as the 49th Best Independent Real Estate Brokerage in the U.S. out of 106,000 real estate brokerages by The Wall Street Journal partnering with Real Trends Rankings.

Best in San Diego: Big Block Realty is also recognized as the best brokerage in San Diego for four straight years (2018 – 2021) by the LocalBest.com site.

We back up our awards with facts. Check out our two blog posts verifying our awards with screenshots and links sources:

“Big Block Realty Named in Top 100 RE Brokers in The United States”; and

“Best 100% Commission Real Estate Broker San Diego 2022”

Contact us before you start looking for investment properties in the greater San Diego region. We’ll save you time and money!

 

Steven Rich, MBA – Guest Blogger

 

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