As a Real Estate Agent entering the field, what prompted your interest? Real Estate agents enter the business for many reasons. Many for the love of working in the industry, while others for the vision of creating lifetime wealth. Looking over a span of 20 years, what I have seen overall are many real estate agents that have built wealth developed in their everyday business.
This article is meant to be an initial step to educate and place you on the path of financial success through real estate. It’s about enriching your career and lifetime goals through the buying and selling of real estate.
To be real, the ride is not all uphill. Many real estate agents have lost homes and suffered financial hardship as a result of their investments. In life, as we know it, there are no guarantees. There is a smart system for investing. And what better way than to learn from those who have seen the highs and lows in the real estate economy and moved through them.
Here Are The 3 Top Investing Tips:
Tip #1 The profit is made when you BUY the property and not solely when you sell it.
We are in an emotional business. You may get super excited thinking that the home you are looking at is a great deal. Now let’s push aside the emotions for the moment and look at the real numbers. Real estate agents find great deals by finding motivated sellers. It takes knowledge, research and time. If every motivated seller advertised, he or she would take a price below market value, then everyone would be rich. This is where your research, homework and negotiation skills come into play.
One of the first things taught about real estate investing is to look for properties priced below market value. That takes a solid understanding of market prices. Having in-depth knowledge of an area is a big plus. As real estate agents, you have access to all the properties that are on the market, and then you need to take it a step further and analyze prices in the area where you are looking.
In today’s market, it is a seller’s market in many parts of the country, so the opportunity to find properties that are priced below the market may not be an option right now.
Many investors and buyers lost their properties when they bought at the height of the market in new construction or buying properties above market value. Their thinking was that they would make their profit as the home increased in value. When the market downturn took place in 2008, many owners and investors rented out their properties since they were unable to sell them and took a monthly loss each month as the rental income did not match their mortgage obligation. Others were not as fortunate and lost their properties to foreclosure. Remember to buy the right way, which is when you purchase the property to alleviate this potential negative outcome.
Tip #2 Where to Search For Properties
One suggestion is to look for subdivisions or areas that near good schools, walking distance to shopping areas, and if the high demand areas are out of financial reach, then perhaps the surrounding neighborhoods. Along with the Multiple Listing Service, here are some other popular ways to locate investment properties.
FSBO’s (For Sale By Owners) are a great source of finding investment properties. You can find them online, or better yet, by driving through neighborhoods and looking for signs.
Foreclosures– RealtyTrac.com is one of the leading sources to find foreclosures. You can search the latest foreclosure listings across the country as well as learn the basics of foreclosures.
Auctions – auction.com is a website that focuses on housing auctions. They auction all types of real estate including foreclosures, REO’s, short sales, commercial real estate, luxury real estate, and new construction. These auctions take place online, locally on-site or in courthouses as well as in live mega-auctions in meeting halls.
Tip # 3 Have A Solid Real Estate Investing Plan
You wouldn’t get into your car without knowing where you were going, correct? The same is true for building a plan to guide you towards your investment goals.
Have a plan in place that includes these important strategies:
Goals – What do you want real estate to help you to achieve? Ask yourself these questions: is the property being purchased for you or a family member to live in and then flip within a short period of time or as a rental investment property? How many do you want to own or flip? Maybe you don’t want to own for the long term and just want to fix and flip.
Timeline – What is your desired timeline to reach your goals? Divide that into yearly and monthly goals.
Financing – How do you plan to acquire your investment properties? Find out what you qualify for from an experienced lender. Are you using cash, conventional loans, hard money, private money, equity partners, seller financing, lease options, or some other creative method?
A recent example of what is possible…Yes, it’s true!
Realtor Purchases Home For $1.00 in Palm Beach County Florida
One Realtor saw a property being advertised in the MLS for $1.00. Sound crazy? It is true. The catch was that the home was in a country club community that required a membership fee to be paid at closing in order to live there. The mandatory membership fee to move in was $70,000. The monthly association fees to live there for this style home was between $583.00 monthly.
How this real estate agent saw this, was as an opportunity to live in a prestigious gated community, and his cost would be $70,000 to live there. Instead of the seller making the money, it would be the homeowners association. He was ok with the high monthly maintenance fees. And just in case you are wondering about the condition, the unit came completely furnished and was in original condition. The buyer was ok with that also.
The wow factor was that not only did he pay a $1.00, this agent was also reimbursed by the seller for 50% of the membership fee. Essentially he only paid $35,000 to live in this community. Plus, he received a commission for his purchase since he was an agent.
Good deal or not a good deal? I think it sounds pretty good!
Today there are many educational opportunities available to build your knowledge, experience and meet other experienced investors. Check out any local meetup groups or classes being offered in your area. The bottom line is that real estate is a proven way to build wealth.
Written for Form Simplicity by Janice Zaltman, a Realtor, LEED AP, Marketing Coach and Writer with more than 20 years of experience in the sales, marketing and media fields.