Think like a real estate investor, Real Estate Secret #5 Always Be Looking Successful investors know that real estate is a numbers game, How to find a Bird Dog to help you with your real estate business
Real Estate Secret #4 Know how to Attract and Keep Tenants using the Broken Window Rule
Know How to Attract and Retain Tenants Have you ever ridden in a friend’s brand new car and then got back in your car? What was your first thought? If you are like most people, it was, “My car sucks. I need a new car.”
A car that seemed fine just moments ago is suddenly unacceptable. Why is that? The reason is you became aware of something better. So what does this have to do with investing in real estate? When it comes to attracting and retaining tenants, you need to make them aware of “something better.” Now before discussing this, please take this caveat to heart—improve your properties, but don’t OVER-improve your properties.
In real estate class, I recall my instructor covering “over improving” in a neighborhood when doing comparable of home values based on location, functionalities, house age and such. There is a such thing as over improving and not getting the return. If all neighborhoods on the same street of similar square footage are valued around 200k-250k, even if you have upgraded all your counter tops, added an indoor water fountain, decked up the pool and such, with similar square footage and location, its just not likely to price the home a half a million. The same principle applies to rental upgrading.
While everyone loves granite countertops, installing them in what will be a Section 8 rental is probably not your best investment of time and money. So where do you draw the line and what will give you the most bang for your buck? First, keep in mind that more often than not, you will be showing the property when it is empty. This means that every chip in the paint or stain on the carpet will stand out like a sore thumb. Consider repainting your property every time old tenants move out.
This will provide a clean and fresh look to prospective renters. Now while there may not be a need to install new flooring with each tenant, objectively evaluate the remaining life expectance of the flooring and at the very least have the carpets cleaned before showing the property. Another way to think when deciding what to replace or upgrade, is to consider the Broken Window theory.
Social scientists James Q. Wilson and George L. Kelling, who first introduced the theory, put forth that a broken window left unattended increases the likelihood of additional windows being broken by vandals. If not corrected, eventually over time further vandalism escalates.
Successful real estate investors follow the Broken Window theory, but in the reverse. They understand that a few upgrades on a property help tenants see the property more as a “home” instead of a place they are just renting. They become more focused on taking care of the property than they would if the property had discount appliances and builder-grade carpet. This in turn helps keep maintenance and repair costs lower as well as increases how long tenants stay in the property.
While there is no definitive answer to how much or how little to upgrade, you will need to understand the rental market in your area and what is considered standard. By understanding your competition and listening to the feedback of prospective renters, you will get a good sense of what will help you attract and retain tenants.
Unfortunately, it happens to even the best investors. The secret to putting the odds in your favor is learning how to minimize the potential risks that could derail your success. You do this through conducting due diligence before you purchase any property.
Think like an experienced real estate investor. Real Estate investor tips and secret #2 – Invest for Cash Flow, Not Capital Gains
Learn how to start thinking like an experienced real estate investor, learn from other people’s mistakes and start your real estate investing with positive cash flow.
How would you like to learn five real estate insider secrets in the next couple of days to help you think like a sophisticated real estate investor? Yes I mean those who have gone before you and successfully exited the Rat Race. Real Estate Secret
Real Estate Secret #1 – Be Clear on What You Want to Accomplish More people know what they “don’t want” rather than what they “do want.”
They know they don’t want to work for someone else. They know they don’t want to live paycheck to paycheck. They know they don’t want to spend another day in the Rat Race.
However, when asked what they do want and how exactly they intend to get it, they only offer blank stares and shoulder shrugs. Successful real estate investors, on the other hand, know exactly what they want to accomplish and how they are going to go about it.
Instead of knowing they do not want to live paycheck to paycheck, they know how much money they need per month to cover their current expenses. They have developed a detailed plan to generate that amount—and then some—over a fixed time frame through investing in a specific property type or types. In fact, they have determined the exact number of properties they will need to purchase. They also know when and how they will roll their portfolio over into a larger cash flowing property that—according to their calculations—will produce enough passive cash flow to cover all their expenses.
They can even show you the spreadsheets that map out their anticipated cash flow on a monthly and yearly basis along with the number of investment properties required to support those numbers. Now whether or not someone could accomplish this is beside the point. The point is that there is a detailed plan. Maybe an assumption or two is off and it takes six years instead of five.
On the other hand, perhaps halfway into investing they learn how to cut their remodeling expenses, thereby increasing their cash flow, and are able to hit the target in three and a half years. The plan evolves. It is fluid. As markets change and education increases, the new reality is incorporated into the plan.
Nevertheless, you can’t revise something you don’t have. So what is it EXACTLY that you want to accomplish in real estate? Do you know how much you need and how you will get it? How long will it take you to get there? The answers to these questions and a whole host of others are what you need to know if you are going to think like a successful investor.
Positive cash flow is what separates assets from liabilities and makes your exit from the rat race possible. If you know how to create positive cash flow, you are on your way to becoming rich.
Successful Entrepreneurial Secret #1 – You Can’t Make Money If You Don’t Know How to Sell, Successful Entrepreneurial Secret #2-Why pursuing your passion is hard
Compound interest is indeed miraculous and can make everyone rich however it can work against you as well