Real Estate Investing: Five Tips for Success

Investing in real estate is one of the most common and profitable of all investment strategies. Most people who do invest in real estate are beginners and think that buying cheap properties or fixer uppers are the way to go. Many people lose a great deal of money using this philosophy. I have made numerous real estate investments alone, and with partners. Many have been losers. The few that I have made money from have been because I followed a simple five part plan that I will share with you. These are simple and easy to follow ideas that everyone should use when they invest in real estate.

Step One: Buy Small and Stay Small

Buying small housing units or rentals are the way to go. Just because you think a large apartment complex might bring in more money, you also have to realize, that it comes with a large amount of maintenance and headache. After a typical tenant leaves the average apartment, there are usually a lot of renovations that need completing. From painting to carpet cleaning and some drywall or appliance repair, these really add up, and when you have multiple tenants coming and going, the prices really add up. A small duplex or triplex can be a small investors best bet. It's easier to control who rents and who doesn't and you can get on a more personal level with the renters. There's less maintenance and more cash coming in as well as less overhead for employees and care takers.

Step Two: Pay for good renovation talent, not the cheapest bidder

It takes a lot of talent and hard work to keep up with your real estate. If, for instance, you are buying a home that needs some work, it's probably not a good time to use someone who's just learning how to use a screwdriver. That includes you as well. Just because you can roll on some paint, doesn't necessarily qualify you for a job. Try to find someone with good references and is licensed and insured. Remember, those few extra dollars you spend can be recouped by adding it into the total sales or the rent you charge.

Step Three: Buy in the Best Location You Can Afford