8 Tips for New Real Estate Investors

concept of real estate investmentAre you just getting starting in real estate investing? There are many complex subtleties that make it very different than other types of investing. However, when done correctly, this type of investment can yield a much greater return on your hard-earned money.

Of course, the ultimate goal of any investment is to minimize your risk while maximizing your return. If you enter into the real estate arena armed with the knowledge and tools you need, this can be one of the best long-term avenues for building wealth in the investment world. To help you down the road of successful real estate investing, take a look at these helpful tips:

  • Planning is Key. Real estate investing, like any other business, is most successful when there is a plan to follow. Remember, crucial to any business plan’s success is to make sure your goals are realistic and to develop a plan for the current year as well as five and 10 years out. Here are ten FREE online sources for business plan templates.
  • How’s your credit look? Pull your credit report in order to be prepared to answer lender questions. Most lenders like to see at least a score of 700 and they will also look at your income to debt ratio to establish you as a viable loan candidate. CreditKarma.com provides not only your credit history, but also your score. And, it really is FREE—1 report per year.
  • Looking for a Lender. If you know someone who is also involved in real estate investing, asking them to make a recommendation is a good idea. One benefit of working with a real estate broker is they can give you access to all the reliable lenders they have built relationships with over the years. It’s a good idea to contact a lender even before you start your search so that the financial components of investing are clear; you know what you can afford and you have established a relationship with a lender which will make for a smoother overall transaction.
  • Where should you look? Once your business goals are established, you know your price point, and you’ve qualified with a lender, then it is time to start looking. Note that the search is very different for a short-term investor who is looking to fix-and-flip versus a long-term investor who is looking at both monthly income and appreciation. The knowledge of an experienced broker can really help you shorten the time it takes to search for your ideal investment property.
  • Downtown Raleigh NC at nightConnect with other investors in the Greater Raleigh Area. Triangle Real Estate Investors Association is the largest group in the Triangle area, but there are others. You can also search on LinkedIn and find a group to join that fits your needs. Perhaps you’d rather take a course either online or through local adult education programs. Engaging in one of the many online forums may be of assistance. At the very least, buy a good book on real estate investing or look for online “How To” guides. Make sure they are up-to-date as the industry quickly changes.
  • MLS (Multiple Listing Service) is not the only place to look. A qualified real estate agent can set up a personalized search for you to save you many hours of looking and looking. They also have access to multiple databases that are not available to the public. Plus, a savvy broker will have their finger on the pulse of the Raleigh market and will be able to guide you in your search for an investment that makes sense for your business goals.
  • What to expect – Return on Investment. Rule of thumb nationally is 1% per month (12% annually) of the purchase price is a healthy return. In the Triangle area, where unemployment is low and the growth rate is steady, investors could see much higher ROIs depending on the property. Investments near college campuses are a good source of steady income and have seen an average of 5% increases in rents over the past 12 months.
  • Work with a knowledgeable, local broker. When looking for a broker to help you weed through the available properties, find one with a good track record, one that has been in the Triangle area for a number of years and understands the market. It would also be beneficial to have a broker who understands what it takes to be profitable when investing in real estate; someone you can share your business goals with in order to find just the right property.

Partner with Craft Commercial

As a trusted name in real estate in the Triangle, Craft Commercial seeks to deliver extraordinary results to commercial property investors. If you are purchasing and managing property in the Raleigh, Durham, and Chapel Hill areas, contact the specialists at Craft Commercial at 919-446-5000 or info@craftcommercial.com.

15 thoughts on “8 Tips for New Real Estate Investors

  1. Interesting article and some good points. Another great resource I found on learning Commercial Real Estate is.

  2. There are different types of property namely the residential property and the commercial property. Let us talk more about the commercial real estate investment properties. As a real estate investor or as an investor in general, finding out the potential value of a property is a necessity. Weighing the price if it is a good investment is also very important. A lot of people tend to focus on the value of a property now and forget to look out for the potential value when these two should be done together.

    1. Absolutely right Mark! Potential value is often ignored. Thanks for commenting. -Sonya

  3. I didn’t know that a 12% annual rate of return on a commercial real estate purchase was the national average. That sounds like a decent amount, since it would double your investment every 7 years or so. I imagine that working with a real estate agent who was skilled in commercial real estate would be a good idea as well.

    1. Thanks Bradford for your comment. Stay tuned for more to come! – Sonya

  4. Amazing tips! I am very impressed with your article regarding tips for new real estate investors. Through this article, I learn how to invest, plan in a well-manner way and how to choose a broker. Well done and thanks for this knowledgeable post.

    1. Marek,

      Thanks very much for your comment. Subscribe so you can receive all of our posts! – Sonya

  5. I really like what you had to say here about real estate investing! Just like you had to say here, you need to be able to answer some questions that the lender has for you regarding your credit. My fiance and I are hoping to buy a home this summer, but we might have to make some payments first in order to raise our credit. Thanks for the post!

  6. I gotta say, one of the biggest things for me was really building a local network of other investors, wholesalers, and lenders. The one thing that I learned about our industry is that everyone generally LOVES to help. It’s like real estate investors are the biggest group of people that believe in blue ocean, or that there’s plenty for everyone to benefit. It’s really something amazing.

Leave a Reply

Your email address will not be published. Required fields are marked *