
Are you really considering becoming an investor in real estate? In the search for quality info, remember you’re going to through a lot of poorer quality sources as well. When you are listening to investment advice, be careful of the source you gather your information from. There are all different sources who will give you answers to your FAQ for real estate investors but not all of them are of equal value.
Ask yourself honestly and sincerely if who is giving you that advice is really using their own personal real estate investment advice to earn their money in real estate. If the answer is “no,” then you better take that advice with a grain of salt.From now on, start taking your investment advice from investors who have done what you are trying to do.
Whose advice should I be watching out for?
You’re going to see that a lot of your friends, family, agents and even attorneys are going to give you advice but a lot of it is laden with misinformation. In all seriousness, if they knew all the real life answers to what worked and didn’t work in investing in real estate, they’d already be using their own advice to become financially free. Your mom’s life advice can be brilliant but her real estate advice will not be based on facts. If you could only ask one of them your real estate question, would you ask Donald Trump or your mom for real estate advice? Who out of the two of them do you imagine would give you better real estate advice? My mom is an incredible woman but her real estate advice isn’t something you’d pay money for.
Since chances are all those people have probably not fully figured out investing in real estate, you’ll probably want to look for more qualified sources for your advice.
The Honest FAQ Told by a Real Investor
Q: Does real estate investing really make people wealthy?
A: Ahh… Everyone wants to know can you make money real estate investing? If you look at stocks for instance, you’ll find boatloads of people who can’t make a return and people who even have returns in the red and yet there are still those people who make a fortune from it. For the people who don’t succeed, is it that stocks don’t work or that the people using them don’t all possess the right knowledge and skills?
It’s ironic everyone is a “self made man,” it’s just only the wealthy who own up to it. The rich are what they are because they have applied knowledge and skills that work. Have you ever actually looked at the independent statistics? Do you know what they always reveal? Over 90% of wealthy individuals can directly attribute their wealth to real estate. Does it really work? It really works better than any other system of business to generate lots of cash with the right knowledge and skills..
Q: What are the right and wrong techniques?
A: Unfortunately, there is no “cookie cutter” answer to that question. In the United States of America, bank short sales and lease-purchases are great techniques to begin towards producing sizeable cash reserves. In other parts of the world with more stringent banking practices, you may need more extensive knowledge on how to start private capital funds and other similar business ventures to get around having to have out of pocket cash.
Q: How much money do I need to start?
A: Donald Trump once said that using your own money in a deal is just “lazy.” If you really get how to create a steep discount than the money sources are probably a lot easier than you think. There are always banks, private money partners, hard money lenders and other money sources willing to back a “secure” deal irrespective of income and/or credit. Besides, no matter who you are, eventually your access to capital runs out and so you have to learn how to raise capital in order to build and sustain wealth. No one ever got really well off using only their own bank acount.
The single biggest misconception is that having “debt” is a bad thing. Nobody ever achieved wealth without loads and loads of debt. It’s true however that high interest credit cards and consumer debts are a bad idea. However, all businesses use loans and private capital debts that produce more incoming profits than the debt requires them to make payments for. That is the only conduit to wealth. There is no limit to the quantity of money making debts you can afford.
Q: Where is the best place to get started?
A: There are tons of free resources online that will teach you the basics you will need to proceed forwards with making money from real estate. I would strongly urge that you simultaneously learn some marketing skills as you will observe that most investors come up short not because they have a shortage of techniques that work but simply due to their inability to understand marketing. Marketing is 90% of every business. You cannot achieve permanet financial success in any business without strong marketing.
Q: What is the best geographical area to purchase in?
A: There is another gross misconception that you need to buy real estate in the right location. Learn to invest your fund in great deals, not the best areas. If you’re looking to buy a second property and you desire to hold it for a long period of time, then I’d strongly urge you to check out Matthew David’s Fundamentals of cash flow. However, if you learn to purchase property with significant discounts built right into the purchase, you will be not affected by almost any local market conditions. To successfully make money in real estate you need to understand how to buy significant equity at the moment of purchase and then sell that equity. The “best area” to accomplish that is anywhere you can find such a great deal. That’s why all true investors know that making money in real estate occurs when you buy, not when you resell.
Q: What are the best types of properties to buy?
A: The best types of properties to acquire are much like what are the best areas to buy. The best types of investments to buy are ones that generate for you significant equity right at closing. That should mean that you are buying it for much lower than the rest of the local market would value that real estate for. The best types of properties to buy are the ones that offer the steepest discounts with a fixable problem to why they were sold to you for that low. That can be any type of property. An impending foreclosure is a perfect of that but it is not the only one.
Q: Should I “flip”/rehab properties?
A: You have most likely heard a lot on Television about this way of investing. There are many people who get rich knowing full well how to invest in high risk stocks and there are many people who are content getting 4% in a bank account. Most generic ideas that are sold to the public produce “slow, steady, gradual, and safe returns.” They may yield some returns but they will not ever achieve wealth.
When you rehab or “flip” a property, you’re really just exchanging your money for time. Having said that, you will never get an unlimited amount of time to rehab and fix properties. While you can certainly produce a profit this way, it is almost unheard of for people to become wealthy from “flipping.” I have actually seen investors who knew not enough about buying with equity put their time and sweat only to walk away not even breaking even with 6 months of labor and time lost. I would suggest you learn to fix contracts and financing rather than learning how to swing a hammer. The former is much more profitable and it consumes a lot less time.
Q: Where can I get my investment advice from?
A: There are many “gurus” who offer $2500 two day boot camps and expensive mentoring. The bulk of what they will teach you is motivation. While motivation is a necessary part of your success, you will probably not get any return on your investment. The best investment advice will always be located at your local real estate investment club. There you will meet real investors who are using techniques that work. If you don’t waste their time, you will usually get 15-30 minutes of their time to hit them with relevant questions about how you should focus your efforts. Just be sure to not waste their time.
Q: What is the most important real estate course to buy?
A: There are many great courses out there that will help you achieve lasting success. Be wary of courses that use endless “up-sells” with expensive boot camps, personal coaching and more detailed courses on the same material. Watch out for hype and seminars. A true real estate course should be a complete guide from beginning to end so that you can complete the type of investment you are trying to accomplish without the need for additional courses. A good course will also include a good money back guarantee if the course is not entirely what you are looking for.
Q: What skills do I require to be a real estate investor?
A: Most new investors are capable of grasping the techniques but they do not have enough pre-qualified sellers to apply their techniques with. As with any business, you will need to have strong communication skills, good technique knowledge and creative marketing knowledge. It will take time to learn these skills but the great thing is that you only have to learn them one time to become wealthy.
Q: How many rental properties will give me enough cash flow to live off of?
A: This is a great question because most people believe that having rental properties is a great thing. Rental properties are for the uninformed. Instead know how to create real estate paper, write creative contracts, master creative financing or have rental properties managed in bulk. The banks gets rich from your property with very little interaction and hands on management. You can’t become financially free if you have to do stuff like plunge a toilet or worry about the hot water tank every other night. Learn methods to get around having to dedicate your personal time and efforts towards property management.
For instance, if you purchase a home and your total payments are $1000/month and you rent that property for $1100/month you receive a total positive cash flow of $100/month. You are still liable and you will be required to deal with any ongoing issues with the property. If you sell that same property under creative financing conditions and you hold a mortgage note as a 2nd lender, you can make the same $100/month acting like the bank without any of the hassles. In the latter example you are sacrificing the equity you build insanely slowly over time but you do not have to manage the property. You will save years of head aches and hassles by using a creative investment agreement instead of actively managing the property. However, if you buy your equity at purchase as suggested on this site, the equity lost over 30 years is almost insignificant.
Q: What if my credit sucks and I have no money?
A: Ok so then you’re majorly screwed… kidding. The first and most obvious thing you’ll need to do is to repair your credit and start creating funds without using your own cash. Despite all that you may have heard, it has never taken credit or capital to profit from real estate.
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