Can you really make money in real estate? You bet you can, but you better beware of what you’re getting yourself into. I have been investing in real estate for years now and I can’t tell you how many properties I have bought from burnt out landlords or young couples that really started too soon.
Like anything the key to being successful in RE investing is education and practice. I have had some really good deals and others I thought were going to drag me down to the deepest of money pits. So for what it’s worth here’s a few observations I think will be helpful to investors just starting out.
Beware of the late night infomercial real estate gurus when they say you can build wealth in RE with only five or ten hours a week. To be successful you need to be on all the time. It’s all about marketing and following through and networking and did I mention marketing. I am astounded every time I meet a so-called investor and ask them for a card and they don’t have one. How is anyone supposed to know you buy houses or invest in real estate if you don’t tell them every chance you get?
Beware of rentals. Land lording is a pain. I don’t care if you have a management company in place or not you are always going to get calls about something being broken or some inspection the city wants to run you through. New investors should especially be aware that almost all of the tenant/landlord laws favor the tenants. If you want a taste of what can happen rent the movie “Pacific Heights” with Michael Keaton sometime. You may never buy another rental again. Remember peace of mind could cost you more than great cash flow.
Beware of contractors who want to be paid by the hour and not the job. Unless you are constantly there with them, they will take you for a ride every time. Make them sign a must be completed by clause and if they don’t complete the job by the said date, your cost should be discounted.
Beware of homes sold at sheriff sales or on the courthouse steps. Yes you can find some great deals there, but make sure you do your due diligence and always try to inspect the house first. Judgments and out of this world repair costs could chomp away at your potential profit quickly. I like buying the foreclosure properties after the bank gets them back. They are still “As Is,” but you can always inspect them and have an out if you use a realtor. Better safe than sorry right.
Beware of taking advice from someone who doesn’t own any investment property, rents or swears he knows of the next big market if only he had the money. I have learned and still believe you can never learn too much about something so when it comes to building wealth though real estate education really is the key.