The game of hockey has specific rules. If you want to play hockey, you need to know what the rules are and be willing to play the game by these rules. Can you imagine what would happen if you tried to play hockey with tennis rules? It wouldn't be hockey and it wouldn't be tennis. It's the same in real estate. You can buy real estate with consumer rules and you can buy real estate with investor rules. What happens when you attempt to invest in real estate with consumer real estate rules? Often, you will end up with a result you don't want.
Are there really consumer money rules for real estate? The most important rule is that you have to qualify to buy the real estate. This means that the most important considerations are whether you can pay for the real estate with your own money and whether you can qualify for credit. As a consumer, you will need great credit and enough money down payment. For a consumer real estate purchase, it is first of all about you.
When you want to become a real estate investor, you will find that those consumer money rules often get in the way. They hinder you from making money in real estate. One of the primary reasons people are unsuccessful when they attempt to invest in real estate is that they think they have to invest in real estate the same way they invest in their own personal property.
Many people don't have enough money or credit to buy their own homes. If they can't buy their own homes, how can they afford to buy investment property, using their own money and credit? This is especially true when property values are expensive. And in such markets, it is usually impossible to collect enough rent from a property to cover the mortgage. This means that when people try to buy investment property using consumer money rules, most people can't even get started.
It is possible for people to build real estate portfolios following consumer rules. The problem is that buying real estate this way ties up your money and depends on your own credit. As a means to create financial independence, this is a long and laborious way to build wealth.
Investors live in a world that is different than the world of consumers. Even though we're all living here on the same planet together, investors think differently. They know that there are different rules of money.
This means that the first money rule of a successful real estate investor is to invest with investor money rules. When you buy property as a consumer, the focus is on you and your money. When you buy property as an investor, the focus is on the deal itself. It's not about you. It's about whether the deal makes sense. This means that you don't necessarily have to have a lot of money or excellent credit to invest in real estate. You do need to know the difference between consumer rules and investor rules. This is very good news for people who want to invest in real estate, but don't have much money or great credit.
Real estate investing is a long-term business, so you have to think beyond the nearest transaction. A real estate investor may become a millionaire in a couple of years, that's true, but only if his or her reputation remains flawless. And it means there are some iron rules you must never break if you want to be a successful real estate investor.
Surprisingly enough, they are not about numbers or specific business tricks. They are about your business ethics.
1: Only make promises you can keep Why? The reason is simple: if you promise a lot (say, 50% return of investment) and then provide only a fraction of what you say (for example 15% return), you will quickly be marked as an irresponsible. When you say you can do something, you always have to be 100% prepared to do it. It's much better to be modest in assurances and then exceed someone's expectations than make ridiculous promises.
The point is that the words go around quickly in the world of real estate investing. If you break a promise, you may soon find out that your other business partners - sellers, another real estate investors or even banks, are less inclined to make deals with you. And the more promises you break, the more serious problems you can expect.
2: Keep to your word When you say something, do it (say something ONLY if you intend to do it). If you are about to say things you can't or won't do, remain silent. You do not want to be known as a liar, especially in the real estate industry where the trust is everything.
Breaking your promises is the fastest way out of the real estate industry. No one will deal with the investor who first promises to buy a property, then vanishes.
3: Care for everyone involved You have to make your best to care for everyone involved in the deal - from the seller and the lawyer to the rehabbing professionals you hire and the real estate agent that sells the property. Everyone should be at least moderately happy with his or her part of the operation.
The reason for that is simple: people who have enjoyed doing business with you are be more inclined to (a) do another business with you in the future, (b) do their best to help you and (c) step down from their price the next time you need their cooperation. Moreover, if you try to squeeze too much profit from the transaction at the cost of someone else, you risk that someone will back out in the middle of transaction (not unheard of) or at least remain uncooperative.
Successful real estate investments may be easily turned into disasters by uncooperative attorney or renovation professionals who do ONLY things that are expressly written down in the contract.
Care for everyone - you will soon profit from it!
The bottom line: Be honest. Don't exaggerate, don't lie and try to build long-term business relationships. This will make your business go smoothly and let you concentrate on making your real estate investing business grow rather than dealing with the negative results of your own words and actions.
Both Kalinda Rose Stevenson Ph.d. & Sal Vannutini are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Kalinda Rose Stevenson Ph.d. has sinced written about articles on various topics from Property Investment. How would you like to know the money rules investors use? You will know when you read a about the world's most popula. Kalinda Rose Stevenson Ph.d.'s top article generates over 74000 views. to your Favourites.
Sal Vannutini has sinced written about articles on various topics from Property Investment, Diamonds and Real Estate. Discover exactly how Sal Vannutini combined two of the easiest (yet brutally powerful) real estate investing strategies and made an insane $31,510 Profit In Just 49 Days... And How You Can Do The Same! Visit. Sal Vannutini's top article generates over 74000 views. to your Favourites.