6 Real Estate Investing Tips to Give You an Advantage Over Your Competition

There are real estate investing “tricks” and techniques that you may know, or want to know.  There are new ways of doing things that are worth learning.  Knowing about the latest types of financing is another way that can also help.  Before all of these, however, you need to learn some basic principles.

Here are six key real estate investing principles.

1. Build Relationships

Real estate investing is about relationships. People are your most valuable resource, and the more of them you know, the more likely you are to find good properties to buy, or buyers for your properties. ask people for their names, and if your memory is poor, take notes. Know the right people too, including a real estate agent who gets many listings of the type you are interested in. Wouldn’t it be nice if you were the one he called first?

2. Understand the Numbers

Know and understand the relevant numbers. When you look at a rental property, for example, you should be thinking about the income, the expenses, and the capitalization rate, or “cap rate.” Imagine how certain changes would allow you to raise the income, and what that would do to the value. A “feeling” about a property, without understanding the numbers, gets many investors into trouble.

3. Reduce Risk

Look for and use methods to reduce risk. Have inspection, financing, and other contingency clauses in the offer, so you’ll get your deposit back when a deal falls through. Consider your exit strategy before you buy, and have a “plan B.” Value real estate using comparables or cap rates, not “hunches.” Buy through your corporation or LLC.

4. Be Prepared

Be prepared for real estate investing. Have business cards, pen and paper on you at all times. You never know when you’ll see a property for sale, or hear about one. Sometimes, when you mention that you invest in real estate, sellers, buyers and other investors suddenly appear with information, opinions, and sometimes even good deals. Be prepared.

5. Set Goals

Create action-oriented goals, not just wishes. For example, require yourself to look at a certain number of properties per week, and maybe even to write a certain number of offers each month. Set goals for all sorts of little steps, like making six phone calls per week, checking online listings twice per week, and so on. Action creates momentum. Repeated action creates habits, and good habits lead to more successful real estate investing.

6. Learn, and Apply What You Learn

Keep getting educated, and using that education. Learning more from books, magazines and even tapes or CDs is a great idea, as long as you spend as much time doing something as reading about it. Some of us let the interest and enjoyment of reading about investing get in the way of actually investing. Good information is crucial, but it should lead to good real estate investing.

Real estate investing is a great way to acquire wealth and become financially independent.  If you want to get in the game, you will have competition, but to get in the game, you need to understand the basics.  Like investing in the stock market, real estate investing can seem intimidating.  It’s really not though.  These are just some key fundamentals you need to know to succeed.

Bill Manassero is the founder/top dog at “The Old Dawg’s REI Network,” a blog, newsletter, and podcast for seniors and retirees, that teaches the art of real estate investing. His personal real estate investing goal, which will be chronicled at olddawgsreinetwork.com, is to own/control 1,000 units/doors in the next 6 years. Prior to that, Bill and his family lived in Haiti for 11 years as missionaries serving orphaned, abandoned and at-risk children.