Investing Basics is where you will start and every successful investor needed help with investing before they made their money. If you build a good foundation you will be miles ahead of everybody else so grab a cup of coffee and let’s start.
Real Estate Investing is not about property but about people
The first thing you should know about Investing Basics is that Real Estate Investing is not about property but about people. Yes, people. Never assume you know why a person is selling their house, ask them and you might be surprised.
I bought a property from a nice couple that was immigrating so they just wanted to sell their house as quickly and painlessly as possible. So I made them a fair offer and they accepted it. They were happy because they sold their house quickly, and I was happy to buy a bargain and make a nice profit.
So try to find out why someone is selling a property and you could be buying a profitable investment.
Your tenant may never be one of your friends or family
The next important thing about Investing Basics, let’s say you happen to have a vacant apartment the exact same time your friend Fred happens to be looking for a place to stay now that he has returned from his overseas travels as a backpacker.
You think this is a great opportunity to get a good tenant and he is thinking what a nice landlord you would be. This is not completely true. What you are actually thinking is that you will have a tenant that will pay his rent on time and keep your property in good condition. He is thinking that you will give him a “rent break” over Christmas and that you probably won’t mind if he keeps a few interesting pets he found on his travels.
The fact of the matter is that your friends that still only know how to be tenants don’t know how much work and money you have put into your real estate business. And as soon as you start charging him penalties all your other friends, that are also friends with Fred, start treating you like the bad guy.
A final word on friends and family as tenants, there are a lot of investors out there that did not take the time to learn about real estate investing and end up having to sell their investment property at a lower than market price, because Fred did not pay what he owed. This of course is an opportunity for you to get your hands on a bargain so keep your eye on those property listings.
There is more than two real estate investing methods
Another Investing Basics topic is the question of “What is the best Real Estate Investment?” the answer is simple, there is none. All of the different techniques have their advantages and disadvantages.You find real estate investing gurus that will tell you that residential real estate is the only way to go, another will say that flipping and fixer upper real estate investing is the only way to go, or rental properties and capital growth.
Be careful who you listen to, you will miss great real estate investing opportunities if you only focus on one type of investing but it is a good idea to listen to as many different “Gurus”, that way you will learn all the different real estate investing techniques out there. Always find out who these “Gurus” are before you believe everything they say, remember that bad advice can cost you money.
When you start investing in real estate it is of course a good idea to start with one type of investing, but as soon as you understand the basics learn another technique, and that way you will grow to become an ultimate real estate investor.
Don’t believe everything your future tenant tells you
This is probably one of the most important topics of Investing Basics. Your future tenant will lie to you.
It is very importance that you do thorough checks on future tenants. Check their references, make sure that the businesses they worked for exists. Check their drive’s licenses and phone previous landlords they had dealings with.
If you skimp on this section you will have tenants from hell. They will not pay their rent on time and damage your property. Cross reference everything. A good tenant will help you build your property portfolio, a bad tenant will destroy it.
Never stop learning
Another important topic for Investing Basics is that Real Estate Investing is a learning process that never ends. You have to keep on top of what is going on in real estate.
When I started I didn’t have a clue what to do in real estate. Now I know how to protect my assets through trusts, how to ensure that I don’t over pay in taxes and how to find the best deals out there. The best of all is that I am still learning new things I can use to be a successful real estate investor.
Remember, make it fun and learn as much as you can. Go to real estate investing seminars, read real estate investing books, but most of all get started, you learn the most through experience.