7 Best Real Estate Investing Tips For Beginners in 2021
Over the past 7+ years of investing in real estate in my home town, I have learned so much about real estate in all areas from financing the deal to fixing up the property, to managing tenants, to handling taxes to save money legally.
In today’s blog article by Nick Foy, of Under30wealth.com, I’ll be sharing the 7 most important real estate investing tips that I’ve learned that are essential for beginner investors to grasp when setting up your real estate investing business.
#1: Stay Grounded, Be Patient, Don’t Overpay
I have bought several deals and each deal has had a minimum of $60,000 of profit in it thus far. I achieve these large real estate investment profits by staying grounded and letting the right property come to me. Every week I check out what properties are new to the market for sale and analyze the numbers to see if any make sense.
I always stick to my analysis and let the numbers talk to me so that I don’t get caught in a situation where I overpay on the purchase price, cutting into profits, and potentially creating risk of losing money on the deal. I like to play it safe and go for cheap purchase prices that leave room for error if the renovations come in over budget or a pipe breaks, costing additional money to fix (which has happened to me).
Don’t rush to buy any real estate property and hope it will work out as an investment. Instead, create criteria and stick to that criteria. Make sure you find low competition properties to invest in that you can offer lower prices to the sellers and not worry about getting outbid from other buyers.
And on properties that appear to make sense and have good upside, expect to get outbid. It took me 2 years of getting outbid of several properties before I finally won with my low offer strategy. But it was worth the wait because that property had $70,000+ of profit in it.
- Real Estate Investing School: How to Retire on Passive Income
- Flipping Houses Made Simple
- Rental Properties Made Simple
- Personal Finance School: How to Maximize Money
#2: Find a Good Realtor to Work With
I chose to get my own real estate license so I could manage the acquisitions, gain access to the MLS system to hunt for deals, and use the MLS system to pull data and learn about neighborhoods in my real estate market.
But if you are working with a realtor, make sure they have experience working with investors and investment property so they can help you analyze potential rental property and fix & flip deals to make sense of the seller’s asking price versus the neighborhoods value. Your realtor should be able to help you negotiate to get the purchase price you work out in your analysis of the numbers for the deal to make sense as a real estate investment.
Your realtor should be quick and attentive to get you showings and submit your offers since it’s a competitive market and new homes for sale go fast.
Your realtor should also set you up with a property alert email so you get notified when new homes hit the market within your investing criteria parameters.
#3: Find the Money to Buy, Once You Find the Deal
If you have cash on hand or can qualify with a bank to get a loan, great news! But if you have doubt in your mind that you can’t be a real estate investor yet, because you don’t have the money or financing, don’t let this stop you from starting.
Once you find a property to fix and flip or buy as a long term rental property, you can use this deal as a selling tool to pitch family, friends, and other people with money to join you as a partner in the deal. Let other people’s money fund the purchase of the deal and renovations.
Your role in this case is being the property manager who makes sure the purchase goes smoothly and then you’ll work on managing the renovations / contractors and getting the property sold for a profit or rented out to a tenant to start collecting rental income.
#4: Find Cheap But Quality Contractors
One way I’ve been able to put more money in my pockets from these real estate deals is by not overpaying for work to be done by contractors. I always get multiple quotes from multiple contractors to make sure I get the best deal possible.
If I feel like I can’t get a good enough price, and it’s not to crazy of a task, then I do it myself (see tip #5).
When looking for cheap contractors, try getting referrals from others through word of mouth. Going with larger, well-established companies in your area usually comes with higher prices. Instead, look for the self-employed, solo business owner who runs a one man crew (himself) since his overhead costs are lower, he can charge lower for the work.
#5: Do Work Yourself to Save Money
Can you handle painting a house? Can you handle cleaning up leaves, mowing, and making the landscaping look nice?
Think about tasks in a renovation that you could do yourself and if you don’t know how, learn by watching YouTube tutorials! I recently in the last few years have tiled 3 different showers and it’s all from learning on YouTube and attempting the first one to get the experience.
I learned how to lay plank flooring using a chop saw, tape measure, and plank flooring material.
I handle the painting of the interior of houses using mostly neutral colors like Sherwin Williams Worldly Gray.
By doing a lot of work yourself, you can save money and make more in profits at the expense of your time you sacrifice. Find spare time on weekends or at night after work if you have a full time job.
#6: Get Tax Smart
Making money in real estate investing also comes down to saving money on taxes. Keep more money in your bank account by using legal tax deductions allowed by the IRA.
Learn what expenses you are allowed to write-off against your income to lower your taxable income.
Find an accountant who has experience with real estate tax laws and can help educate you on how to save money.
The best reason to invest in real estate over other assets like stocks, is because of the huge tax saving incentives of real estate that help you grow your wealth quicker. This is why the ultra rich and wealthy folks love buying real estate.
#7: Get Creative and Learn to Love Problem Solving
Real estate is a creative business where you’ll come into lots of projects that take problem solving and creativity to find solutions and get the job done. But I love the feeling when a property is all put back together and ready to sell or rent. That sense of accomplishment and knowing the hard work that was put in to get to this point.
Build a support team around you of experts with experience you can call on for help solving different problems you run into during the renovations, purchase, and sale of the property.
- General Contractor
- Other Real Estate Investors
Overall, I hope these 7 real estate investing tips help you better understand what it takes to be successful in real estate investing. If you got a chance to watch the YouTube video above going over these 7 important real estate investing tips, please make sure to subscribe to the channel and check out other free videos on the channel.
I also have a real estate investing course I would recommend to beginners to learn all the important things you need to know when starting your real estate investing business.
Take a Course On Real Estate Investing
- How to Fix & Flip Houses
- How to Buy Rental Properties
- Real Estate Investing School – Everything to Learn THIS YEAR
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