Whether you’re purchasing your first an
income-producing property or adding to your portfolio, you want to make sure
that you’re making a good investment. This is especially true considering the
market instability of recent years. To help you make a sound investment, you’ll
want to make sure you incorporate the real estate success factors into your long-term
plan.
1. Market
Research: To be successful in
real estate, you need to know the market. This not only includes being familiar
with local property values and mortgage rates, but also means identifying
economic trends and patterns locally, regionally and nationally.
The
overall health of the economy is a good indication of how other markets –
including real estate – are functioning. Since real estate is a cyclical
market, being able to identify market troughs and peaks can help you predict
the optimal time to invest in or dispose of a property.
If
you’re purchasing an investment or rental property, you’ll want to become
familiar with local rent averages and occupancy trends. To make sure you'll get
a "cash flow" on a property -- meaning that the property is actually
making you money after the mortgage and other expenses are covered -- you'll
need to figure out what those expenses are prior to purchasing the property.
2. Logical
Thinking: When you’re dealing
with real estate, it’s very easy to get emotionally invested in the transaction
and in the subject property itself. However, this can be detrimental if your
primary goal is to make a sound investment. An emotional attachment can make you more likely to pay too much or
settle for unwise financing options. Keeping a level head can be a key success
factor for real estate success because it enables you to see the transaction as
an objective party.
3. Networking:
Often, the best real estate
opportunities arise through your personal connections. Think about who you
know! Establishing a network of savvy
real estate acquaintances and colleagues can help you not only learn the ins
and outs of successful investments, but can also give you opportunities you may
not otherwise find.
You might also find like-minded
investors willing to pool their funds to purchase an investment property and
share the proceeds when it’s resold.
Friends or business acquaintances successfully buy and sell commercial
buildings as partners. If you pool funds, the buying group needs to have a
legal document that covers such things as your share of investment returns, how
your share is determined as well as provisions on how a member may leave the
group, disposing of the investment (such as who negotiates on behalf of the
group), and other operational issues concerning the investment and the group’s
members.
4. Patience:
Finding success in real estate takes a whole lot of patience. Like most
sound investments, real estate fortunes aren't usually made overnight, nor do
they come from impulse buys. Waiting for the ideal investment for your
circumstances – even if it means delaying your purchase or walking away from a
property you love – can increase the chances of making the most from funds you
have on hand and any funds you leverage in the purchase.
Putting
in the time to properly care for and manage your property, along with waiting
for the optimal time to sell it, patience is a determining factor in your level
of real estate success.
