After reviewing my numbers for 2013, about 1/3 of my business this year has been from an investment standpoint. Whether it was to flip, rent, or even buy for a 4-5 year college student, all of these represent real estate as an investment other than a personal residence. I personally like to work the investment side of real estate and have worked with a few “newbies” this year, so here are some basic tips for other new investors who may be looking to get started.
- Consider forming a LLC – This is especially important if you are working with rental property. You do not want to expose your personal finances or your family to any sort of issue that could result in litigation. They are also beneficial to help keep your accounting in order for tax and write-off purposes. LLCs are inexpensive to set up and information can be found at the Secretary of State’s website.
- It’s all about the numbers – Real estate investing only works if there is a gain to be made in some fashion. A saying among the investment crowd that is VERY true is that you make your money “when you buy.” You have to look at the return on your initial investment plus any debt you take on to own it. The same goes with flipping – a flip only works if you know exactly what it will cost BEFORE going in, and then getting the property at the right price. If you can’t get it at the right price, move on to the next one.
- Know your tolerance for risk – Unlike stocks in which you can move in and out of positions very quickly, real estate investing requires more patience and composure. Your reward is the higher potential return on your investment in sometimes relatively short periods of time, especially if you are flipping. Know what kind of investing personality you are – conservative, moderate, aggressive? There are are real estate investment options for all three types, which leads to tip #4…
- HIRE ME for your real estate investing – I have worked with investors of all types, from novices to high-volume professionals. I have loyal clients who return to me consistently to provide information, do market and investment analyses and to place bids FAST. Not all real estate agents are a fit for the investing client because of the unique demands required to do it properly. You need to hire someone who is aware of the investing market, experienced in navigating distressed properties (a main source of investment property), and willing to go the extra mile to ensure your investment is the right one for YOU. Call me at my number below and I’ll help you get started for 2014!
David R. Madaffari, Realtor
Keller Williams Realty – First Choice
Cell: 225.772.3283 (DAVE)
37325 Market Place Dr. Ste D
Prairieville, LA 70769
Each office independently owned and operated