Principles On Real Estate Investing

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					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 can also help. Before all of these, however,
you need to learn some basic principles. Here are six of them.
  1. Build relationships. 2. Understand the numbers. 3. Reduce risk. 4. Be prepared. 5.
Set goals. 6. Learn, and apply what you learn.
  Real Estate Investing Principles
  1. 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. 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. 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 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. 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. 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.
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