Real estate investment sounds like big bucks to outsiders; however, for those in the business of buying and selling property for investment, it really is an art that takes several years to master. To be successful in real estate requires hard work, commitment, patience and an appetite for risk, without which it is not possible for an entrepreneur to really make a name in this rewarding yet volatile industry.
If you’re considering setting up a real estate investment company, here are three tips that will help you get started.
Consider if you want a home flipping company or a long-term investment business
House flippers buy homes in need of extensive repairs, renovate and repair the property, and sell it for profit within a short period of time. On the other hand, long-term investors look for ready-to-live-in homes that require little or no work, buy them as an investment and often rent them out to earn income on the side.
Before you draw up a business plan, consider which option would get you greater returns at minimum risk. Also think about what you’ll enjoy more: being a flipper or a landlord.
Consider where you’ll get the funds to buy real estate
Whether you intend to buy fixer-uppers or purchase homes for investment, you’ll need to arrange a consistent and reliable source of finance. If you’ve not inherited a big fortune, you’ll likely need to borrow funds to kickstart your home buying venture.
Experts say it’s always better to avoid investing your personal money in real estate, which leaves you with two options: either take out a bank loan or find a wealthy partner who’d be willing to pay for the investment properties. Both routes have their pros and cons, so take the time to make an informed decision.
Lastly, wherever you get your funding from, your aim should be to arrange sufficient capital that will not only cover the cost of acquiring a property but also the refurbishing and repair expenditure. If buying for investment, remember that a well-finished property will get you a higher rental.
Consider the legal aspects of a property investment business
Many newbie investment buyers make the mistake of buying properties in their name instead of registering a legal business entity. Before you take the plunge, seek professional advice from a real estate lawyer and a financial expert, and then incorporate your business. Also, it is critical to purchase adequate insurance cover for your property business to protect it from unforeseen events.
While business acumen is essential to be successful in professional real estate, Danny and Melissa Johnson at the leading home-buying company Danny Buys Houses are driven by the goal of helping people sell their homes fast and hassle-free. With an astute sense of business and integrity and transparency as their core values, Danny and his team have established one of the most successful home-buying companies in San Antonio, Texas—a model every new real estate entrepreneur can emulate with closed eyes.