This is a post by real estate investment coach and strategist, Maya Paveza. In this post, Maya will share 7 actionable tips that have helped her grow numerous profitable investment portfolios, both for herself and clients. Be sure to follow her on Twitter.
Maya Paveza, Real Estate Expert
Real estate investment tips are bantered about all over the web. If you do a search the results are cloudy at best. What content truly provides value? What content is purely created to turn your click into revenue? What content is altruistic in nature and merely wants to help you succeed.
These are questions I frequently ask, no matter the topic within the real estate industry, but more so when it comes to real estate investment strategies.
As an experienced real estate professional I find many of the writings I encounter to be both bemusing and grimace inducing, rarely do I find a true work of ingenious or innovative thinking.
So I wrote my own to share with you exclusively here. You don’t need to spend thousands of dollars on a seminar and strategic coaching to build a solid real estate investment portfolio, you just have to do it.
Here are my top tips to get you moving forward, or keep your business growing if you are already a real estate investor.
#1: Go in with an exit strategy.
No one ever just creates a business or makes an investment without thinking about the ideal end results. You should have an exit strategy for your real estate investments as well. You have invested money into each property, you want to get that back at least, and take advantage of some of the other benefits of property ownership.
Consult with an experienced and qualified real estate professional who specializes in investment properties. They can help you build systems, look at various cost vs revenues models and also advise on a variety of approaches to building your portfolio, or expanding the one you have.
#2: Don’t be an accidental investor.
It happens, you end up with a property whether through inheritance, or your own property when the time comes to move up or downsize. Do you sell? Do you rent? A great number of people are leaning toward renting the properties in the recent market changes, especially in properties that would carry “jumbo” loan products.
Liability issues could arise if you do this, be sure to consult your real estate agent who is also likely qualified to be an advisor as well as a “concierge” of sorts, with a network of people who you “need to know” to do it properly.
#3: Protect yourself, and your family.
Whether you have a single property or 30, it’s best to have a corporation established to hold the properties. This protects your personal assets and limits your personal liability. Your real estate agent can put you in touch with someone who can help you set this up, or I can recommend my personal account Ed Parker in Lincoln University, Pennsylvania. Ed can advise what type of corporation you need, set it up for you, and even makes sure to maintain the corporate paperwork. I love just getting things in the mail or email telling me where to sign and what to write a check for, I don’t even have to think about it. Ed and his staff think about it for me. He focuses on the real estate industry and works with real estate investors.
#4: The Donald Trump Method: Leverage Money to Make Money.
Don’t tie up your own assets if at all possible, use someone else’s money. A commercial lending institution can establish a line of credit which could be secured with your personal property to begin with, then use the investment properties moving forward.
This puts you in a position to keep your liquid assets liquid, act as a cash buyer (the line is not contingent upon a mortgage approval) and gives you reserves to build in the buffer of 10-15% of value on each property toward updates you should consider doing between 3-5 years of ownership, as well as the inevitable work you will need to do at tenant turn over.
It’s a fast way to grow your wealth, faster than the stock market or most mutual funds. If you purchase a $30,000 rental property that rents for $900.00 a month, you are immediately looking at a profit even if you calculate the costs to carry the property for 5 years.
#5: Prepare for the unexpected – Be insured.
Rent Loss Insurance is a great option for any landlord. It will pay you if the property is vacant for the terms stated in the policy. Insurance isn’t an option, it’s essential to protect your growing portfolio. Insurance is taking a definite risk and by paying a premium assigning the risk to someone else. It’s a bit like gambling but I have never heard an investor client complain about having those policies. They are worth every penny. Do your research, and consult with an insurance broker who might have access to a variety of products and who can negotiate rates for you based on the volume of policies you will be purchasing.
#6: Be the Lender.
If you have cash you wish to leverage, but don’t feel like adding to your portfolio. Or you are a first time investor stuck in “planning paralysis” consider being a lender yourself.
You can earn a nice percentage by using your cash to finance someone elses purchase. This isn’t for everyone, but it can be extremely lucrative especially on commercial loans or higher risk borrowers. Talk to your personal banker to learn more about how to do this, and how to protect your investment with things like mortgage insurance.
Even being a private lender for residential mortgages can be lucrative, many Jumbo Mortgage loans are backed by private portfolios and managed by lenders or banks.
A Jumbo Mortgage product is one that is over the Fannie Mae or Freddie Mac Lending limits. For more information on Jumbo Mortgage please visit Bankrate.com.
#7: Stop thinking and start doing.
You’re over thinking it. Trust your instincts and your real estate investment advisor. You might have read all the books available on Amazon.com but until you actually do it, you know nothing. Stay humble and keep alert. Track your spending and keep spreadsheets for properties to watch expenditures and income.
Find a reputable property manager, interview a few, and interview other property owners who use them. The worst mistake is shopping by price, quality does not come inexpensively most often. The old adage “You get what you pay for” is a very good one to live by as a landlord. If it seems to good to be true, it probably is.
There are so many more tips I could share with you, but these are 7 of my favorites. Be smart, be creative and ask questions. If you need help getting connected with a REALTOR who specializes in real estate investments just ask, this blog is a resource for all your needs, and we have the connection to any resource you might need.
Until next time…. keep on holding!