You can tell real estate is hot, when you neighborhood grocer is thinking about switching his line of work and becoming a “flipper”. If you are new to real estate, “flipping”, a word that will become familiar to you, in no time, is the process of buying an investment property and selling it, soon thereafter. Usually, the property is put up for sale after sprucing it up with some paint and upgrading some fixures in the bathroom and kitchen.
The crazed real estate market over the past 5 years has nudged “wannabes” into the real estate arena. Our former federal reserve chairman described it best, when he coined the now famous term “irrational exuberance”. In other words, speculation with no backbone.
So can you really make money in real estate?
Yes. Without a doubt!
An experienced real estate investor does not fear dips in the market because their actions are not based on speculation. They invest by doing their homework and truly understanding, what they are getting in. If you are considering getting into the real estate market, follow these tips:
1. Read as much as you can about the real estate investment industry. When you think, you’ve read enough – read more. People who excel in any field, never stop learning.
2. Find a mentor, who can teach you the ropes. Maybe you can ride with them as they scout properties, draw contracts and settle on real estate deals. Gain knowledge about how they find the “gem” deals. The difference between a serious investor and an amateur is that a guru can find a deal that is a guaranteed winner,an amateur may find a deal that they think is a winner but the deal may turn sour. Do your howework.
3. Join your neighborhood Real Estate Investment (REI) club. You will meet many experts as well as newbies, that are in your shoes. This is your chance to build relationships. Every business centers around relationships – especially in real estate. Infact, this may be how you find mentor.
The first deal will be the most difficult. You will ease into the process after your initiation. You will also start building wealth through accrued equity in your properties. You can either “flip” your properties or you can hold on to them and become a landlord. Both have their advantages. One offers instant gratification and the other allows you steadily accumulate properties.
If you are a homeowner, you can finance your real estate investments with equity in your home, by getting a HELOC, home equity loan or doing a cash out refinance.