Secrets of Successful Property Investment

There are many different ways to invest in real estate, but we’ll focus on single family residential rentals for our examples. I’ve been investing in Austin Texas real estate for almost 20 years.  In 2003, I started with zero experience and about $30,000 and twenty years later I now own an eight-figure real estate portfolio and it was all done with very little financing. I have learned many secrets along the way and here is a tiny bit of what I have learned.

The hardest part of real estate investing is convincing yourself to take the risk.  Being a financially conservative person, I always took the time to evaluate the risks vs the rewards to reduce the chance of failure but less risk usually means less reward. Had I known then what I know now, I could easily have a nine-figure real estate portfolio.

A property investor can choose to be hands-on or hands-off and either way can be successful.  The hands-off investor may get a smaller return than the hands-on investor, but hands-off can be done while still maintaining a full-time job in another field.

The hands-off investor

The hands-off investor can simply start buying single family residential properties.  Use the best non-owner-occupied (NOO) financing you can find.  Hire a property manager to lease, manage and maintain the properties. Buy a few properties, pay the mortgage and cash the rent checks and twenty years later, you have a multi-million real estate portfolio.  It really is that simple!  Now, there are hundreds of secrets that one could apply to maximize the return, but you can also be successful with very little involvement and very little knowledge.  If you fail, give the properties back to the bank, repair your credit, learn from your mistakes and do it again.

The hands-on investor

The hands-on investor has many more variables to consider to maximize profits.  A few of the things that come to mind are:

  • The location is usually more important than the floor plan.
  • Buy when everyone else is selling and sell when everyone else is buying
  • Figure out which way your town is growing and buy in the growth path
  • Buy in good school districts
  • Maintain the properties good enough to prevent deterioration and to attract decent tenants
  • Take the time to check your tenants enough to make them think you are on top of things
  • Single story properties are usually easier to maintain
  • Buy properties that are in desirable locations near human amenities
  • Buy properties that may have unique and desirable features, usually defined by the property not the structure.

Some common mistakes made when investing in property (and how to avoid them)

The easiest way to avoid mistakes is to find a mentor.  Find someone you trust that has already been a successful property investor and seek their advice.  Other things to consider are:

  • Managing your properties and tenants
    • There are books written on this subject but the easiest way is to find a good property manager with good reviews.
  • How to buy investment properties significantly below market value
    • This usually has to be done when everyone else is selling.  Buy when the demand is low and keep it rented while the market recovers. Real estate is usually a long-term investment. 
  • How to plan and undertake a thorough risk assessment
    • The information available on the internet makes it easy to estimate property value, rental income, taxes, mortgage expenses, management expenses and maintenance costs.  With this information, it’s relatively easy to estimate an operating income or loss.  It’s OK to have a monthly income loss if it is outweighed by good property appreciation.
  • Choosing your mortgage and property
    • All lenders do the same thing.  Shop the internet and compare mortgages by the Annual percentage rate (APR), which is the true cost of obtaining the mortgage.  One trick that can save on borrowing is to convert your primary residence to a rental and buy another primary residence and repeat again every two years.
  • What type of property to buy to maximize your profit potential
    • Most new investors will start with single family residential properties.  They are generally the least expensive, the most common, the easiest to keep occupied and the easiest to borrow money.
  • Where the best places are to look for property to buy
    • Choose healthy economies with fast growing cities.  It’s all about the jobs.  No job growth means little or no property appreciation.

Whether you choose a resale home or a new construction home, buying a house is an exciting investment! Make sure you consider the options to make the best choice for you so that your new house becomes a great home. To help you consider all of the things that you should examine before buying a home, contact ROCK Properties Realty and we’ll help you make sure that your home buying experience becomes a wonderful experience.

Each and every day ROCK Properties Realty strives to create confident buyers and delighted sellers, and to offer world class service anchored by our experience and our unrelenting pursuit of excellence. Our fresh and responsive approach to real estate enables our clients to enjoy a higher level of customer service through talented agents, team-based systems, and cutting edge technology.

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