Tips To Becoming a Real Estate Entrepreneur
It's always exciting to become a Real Estate Entrepreneur! Almost all markets are both highly active and profitable. Here are some tips on how to start your entrepreneurial venture:
1. STUDY THE BROAD MARKET
Try to figure out if your interest and skill set is most suited in commercial or residential Real Estate. Typically, new entrepreneurs begin with residential because it's less complex than commercial. Also, most people have some experience in residential Real Estate from buying/ dealing with their own home.
2. PASSIVE OR ACTIVE INVESTING
A Passive investor might hold a private loan not secured by Real Estate. Other passive investing is done through seller financing, tax liens, and hard money lending
With active investing, you must learn about and decide among several investment strategies. If you strike out as a landlord, you need to understand your options between single-family houses, duplexes, triplexes and quads. Anything less than 5 units is considered a residential property. Do you want a turnkey property or rehab? If it's turnkey, you are going to need to ask yourself if you are going to personally manage and maintain it. Otherwise, you can hire a property manager to look over it. If it's rehab, are you planning to do the work yourself? If not, are you willing to manage subcontractors? Or maybe hire a general contractor? Upon the completion of the rehab, will it become a rental or a flip?
3.DEVELOP A BUSINESS PLAN!!
Before you jump in as a Real Estate Entrepreneur, you need to come with a solid business plan. In fact, it's a good idea to have a plan deciding what segment of real estate investing you will start with. Start off with creating a list of your strengths and weaknesses. This includes your current knowledge of Real Estate investing, your work habits, and your skills. Creating this list might seem complicated but it's pretty easy AS LONG AS YOU ARE HONEST WITH YOURELF. The goal is to come up with a plan that exploits your strengths and bolsters your weaknesses OR minimizes your exposure to your weaknesses.
The next important section of a business plan is the business' opportunities and threats. An opportunity might be a chance to buy inexpensive property in a neighbourhood being revitalized. A threat could be a major infrastructure project that will disrupt the neighbourhood for months or even years.
Other elements that go into a sound business plan are financing, income projections, marketing, and resource funds!
4. UNDERSTAND THE LOCAL MARKET
Here are some questions to ask yourself in order to understand your local market:
- Who are your targeted renters or buyers?
- Can most of the local population afford what you plan changing for rent or selling?
- Does the school district appeal to your target prospect?
- Neighbourhood amenities?
- What does the local employment picture look like?
- Is the property in a plain (ex: a flood plain) that could be susceptible to some sort of damage (ex: weather damage) ?
5. YOU MAKE YOUR MONEY WHEN YOU BUY
The big benefit that comes from the studying and planning is that you'll know when you find the right property to invest in. Whether you're renting, flipping, or financing, you'll know when all of the required elements are in place. However, always have a plan B. If your flip doesn't work as planned, you need to be able to turn it into a positive cash flow rental. If you finance and the buyer defaults, you need to be able to foreclose quickly and sell at a profit.
6. JUST DO IT!
The flip side of jumping in without a plan is forever procastinanting! Now is the chance of a lifetime to become a real estate entrpreneur!
Have Questions regarding Real Estate? The Iris and Evelyn team are here to help! With their countless years of buying and selling Real Estate Properties, their experience and knowledge can help you make the right choice!
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