More people plan on making money out of real estate. For one, the growing number of buyers and renters is enough motivation for many to embrace a real estate career. You have an earning potential not limited to an hourly rate and you get to be your own boss. You can leverage existing skills and enjoy a versatile market. There are also many options to choose from when finding the right real estate business for you.
But then, running a real estate business also comes with risks. Just because there is a market does not necessarily mean your success is already guaranteed. One needs to develop habits expected from real estate professionals and avoid the things that can tear their brand down.
If you are in the real estate business, there are things you can do to boost your chances of success. For one, learning the basics is the best way to start. The following dos and don’ts can help you maximize your revenue:
Do Be an Attractive Borrower
Most real estate investors only have a limited budget. They borrowed from a company that offers mortgages to buy their house. Many plans on doing the same to buy more properties under their name.
But for you to secure enough funding when you need it, you need to prepare yourself ahead of time. You need to make yourself look like an attractive loan applicant for lenders. This will increase your chances of getting the best loan for your future real estate investments.
First, make sure to save regularly and consistently for your investments. As much as possible, have separate savings account for your investments and personal rainy funds. The more down payment you have and more money in your savings account, the better your chances of a home loan improvement.
Don’t forget about your credit score and debt-to-income (DTI) ratio. Before you even start your real estate business, establish a high credit score. Keep your DTI ratio low and you will find it easier to get mortgage approval.
Don’t Start Your Business Without a Goal and a Plan
Rarely will you find successful entrepreneurs without a concrete plan and business goal in place. Experts recommend all business owners have a plan and a set of realistic goals to make more sense out of their business. Without these two, you won’t have an idea of how to move the business forward and how you can achieve your goals.
Set specific and achievable goals that are relevant to your business. Determine milestones and ways you can measure your success. Make sure your business plan list a number of strategies and careful action plans on how you can attain your goals.
Your business plan will depend on the kind of real estate business you want to build. Do you plan to be a real estate agent first, build a team, or are you eyeing the idea of founding a real estate brokerage? Once you identified which one you wish to pursue, you can now start writing your real estate business plan.
Do Invest in Properties With High Demand in Housing
When it comes to real estate, location will always be a desirable factor no matter what the real estate market is currently projecting. Properties in great neighborhoods are always in demand because most buyers want the right location for their next investment. This means you should always find properties in places where the housing supply and demands meet.
This only means that as a newbie investor, you would want to stay away from markets whose economies are driven by a single industry. The more industries are thriving in a market, the more stable the economy will be.
As a general rule, choose properties that have common denominators like the following.
- Good walkability
- Have great schools
- Has a low crime rate
- Planned future amenities/commercial developments
- Great access to public transport, medical care, leisure destinations, and other important amenities like grocery stores and restaurants
The more jobs available in the area, the better the location. Remember that people need jobs to pay for their purchases, including big investments like real estate. This will help avoid a drastic decline in the value or properties even if one industry is affected.
Don’t Hesitate to Consider Other Investments
Some real estate investors would only stick to single-family homes and other residential properties. But why limit your investment when you can diversify your portfolio with non-traditional investments? There are other types of properties you can consider investing in, including commercial buildings, warehouses, and even storage unit buildings.
You may enjoy flipping houses. But you can earn passive income by investing in rental properties. This way, you can generate continuous earnings while you live up to your passion for buying and fixing old houses to sell.
Running a real estate business can sometimes be tricky. There are ever-changing market trends to watch out for and a variety of investment options to choose from. It may not be for everyone. But you can succeed if you take time to plan, research, take calculated risks, and allows these dos and don’ts to guide you.