Are you increasing your interest in getting involved in real estate investment properties? Maybe you have already gotten started with your investment properties are looking to enhance your business to increase your lead generation. Whatever your goal is, you are heading in the right direction. Real estate investment has been a critical contributor to many of the world’s wealthiest individuals. Investing in property is a wise decision if you do it correctly. However, If you don’t have a strategy in place, you could subject yourself to significant financial risk. Here are some tips to help you build a successful real estate investment strategy:
Pay down personal debt before you purchase
Purchasing rental properties is not for those who have a ton of debt. If you have student loans, unpaid medical bills, or children who are attending college on your dime, a rental property might not be the best decision just yet. If you can quickly pay down the debt, then you can consider investment properties. If paying off debt, however, takes away your financial cushion, investment properties are not a good option for you at the moment.
Analyze operating expenses
Like anything else that generates income, you will want to calculate your operating expenses. Operating expenses on your rental properties will be between 35 percent and 80 percent of your gross operating income. Operating income is what measures the amount of profit realized from a business’s operations, after deducting operating expenses such as wages, depreciation, and the cost of goods that are sold. If you charge $1,600 for rent and the costs of the property come in at $700 per month, you are at 40% for operating expenses. To keep it simple, use the 50% rule and expect to pay half of the rent you charge for costs.
Find the right location
The success of your investment properties has a high dependency on the location. An excellent rental property should be in an area with affordable property taxes, a good school district, and desirable amenities. Amenities are especially crucial because it will give your renter a reason to choose your property as a desirable location. Some desirable amenities include excellent restaurants, parks, shopping, or scenery in the area. Additionally, you will want to choose a safe neighborhood that has a low crime rate and a decent job market.
Hire a team of cold calling experts
If you are counting on your real estate investments to generate income, you will want to find the best opportunities out there. When you work with Call Motivated Sellers, you benefit from a team of cold calling experts who will call people who have an investment property in the US so you can continue to grow your revenue with investment properties.
Sometimes, we will come into contact with someone who might not want to sell their investment property. In that case, our team will forward the owner’s contact information to you, our client. This information could be used as a potential opportunity down the road if the person decides they are ready to sell their investment property.
Choose the right financing
The right financing decision depends on your real estate investment goals. Are you interested in generating monthly income, or are you looking for long-term appreciation? The type of finance you select will affect the money that you bring in. If you choose to pay a higher mortgage, for instance, you can expect to see lower income each month. The most significant benefit of owning real estate is as long as you have a property in a growing area, you can expect to see income coming in. Additionally, the longer you own a property, the more it increases in value.
Know your property expenses
Each rental property is different, but one thing remains the same: they all have expenses. These costs vary with each property, but here are three things that you should account for:
• Property taxes: Property taxes differ in each state. Sometimes even cities or townships have their share of tax revenue from property owners. Property taxes can be expensive, which is why it’s a great idea to review any potential investment property with your accountant.
• Money for unexpected repairs: If you have ever owned a house, you already know that things break when you are least expecting it. Renters expect fast resolution when things go wrong, so have funding and resources in place and ready.
• Safety net: As mentioned earlier, it’s always a good idea to have some financial cushion. The real estate market is one that is continuously changing. You should never rely on income from one property. There might be times when the market drops, and the property may remain vacant for quite some time. It’s better to be prepared than encounter financial trouble down the road. To be ready, we recommend having at least six months in expenses saved for that potential rainy day.
Invest enough to be cash flow positive
We can’t stress enough how unexpected critical expenses are. If you are constantly dumping money into a property, it becomes challenging to remain cash-flow positive. The best way to minimize your risk and increase your chances for success is to make sure you are putting down the right about of money to be cash-flow positive. Invest in solutions (new water heater) instead of masking the symptoms (repeating water damage), for example. By doing so, you will be able to stick it out through the tough times when the real estate market drops, and you can hold on to the property long-term.
Focus on the properties you have
As a real estate investor, you should be doing what you do best: managing your properties. If you own more than one property or are looking to accumulate more, you already have quite a bit of work. You should ensure that each rental property is taken care of and doesn’t require your attention. Chances are, there is enough work to keep you busy.
Call Motivated Sellers:
Upping your investment game
Leave it to Call Motivated Sellers to generate more leads while you focus on being the best property manager. By doing so, you will be able to demand more cash from your rentals and keep your business flowing successfully.
If you’re ready to make this year the best year yet for your investment properties, contact Call Motivated Sellers so we can take on all your cold calling as you focus on your investments.