Residental Real Estate Investing is still one of the best vehicles for building wealth. It was true when I started in 1997 and is still true today. In this short article I’m going to share with you my best residential real estate investing tips.
After you read this, you will be able to take action on one of the most lucrative buisnesses on planet earth.
Here’s my first tip; Don’t buy houses, buy situations. Yes, I gave you one of the best residential real estate investing tips right off to get you thinking. Now for the rest of the story.
Residential Real Estate Investing Basics
There are literally hundreds of ways to invest in residential real estate. This is good news because you can choose the type real estate investing strategy that’s right for your personality.
Although there are more ways to invest in residential real estate, I will stick with the top three.
- Buy and Hold
Buy and Hold
Buy and hold real estate investing is for building long term and wealth. This is the one I like the most because it continues to earn month after month.
If you are a hands on person, buy and hold is a great way to start. You will have to manage the property, or hire a management company. You can choose to hire someone to do the repairs or be a “do it yourself” landlord.
Buy and Flip real estate investing is for short term high gains investing. Like buy and hold investing, it’s a very hands on strategy.
Basically, you find a distressed or outdated house in a good neighborhood, renovate it and resale it. If you have experience in construction, flipping could be perfect for you.
However, you don’t have to do the renovting yourself. A lot of house flipping investors hire contractors to do the work.
Consider this, mixing the flipping strategy with the buy and hold strategy. This is a great way to build both short term profits to reinvest in buy and hold long term profits.
Wholesale Real Estate Investing
If you like doing deals for quick profit, wholesale real estate investing might be right for you.
Basically, you find deals, contract them and then sell them to flippers for a quick profit. No out of pocket money is neccessary.
Wholesaling is not for everyone. But, if you like wheeling and dealing it would be a great way to get investment capital. Then, roll your investment capital into flipping houses or start your buy and hold real estate investing portfolio.
It’s all about the numbers
Now that you’ve decided which real estate investing strategy is right for you, let’s talk about making deals.
In a moment we’ll talk about how to find deals. But, I think it’s better to talk about your mindset and emotions first.
When looking at potential deals, you want to stay objective. In other words, check your emotions at the the door. It’s all about the numbers, either they work or they don’t.
Real Estate Investing Tip #1 Build report with the seller
Build report with the seller. No one likes to feel like they are being taken advantage of. If they see that you are genuinly trying to help them solve their problem they will deal with you.
Real Estate Investing Tip #2 Destroy expectations of high profits
When looking through a property with a seller, gently destroy expectations of high profits. Do little things like, stare at outdated countertops with your arms folded. Touch an area of concern like a broken handrail etc.
Don’t be rude. By doing little unspoken things, the seller gets the message.
Real Estate Investing Tip #3 Find out the real reason the seller is selling
Ask the right questions. I cannot stress enough how important it is to ask the right questions. Because, this exposes the real reason they are selling.
Remember, earlier I said we buy situations, not houses. Learning the real situation opens up some amazing potential deals. You might be surprised how good of a deal the seller will give you if they are in enough pain.
You might be wondering:
What could be so bad that the seller would sell at a bargain?
Here’s the deal:
In a perfect world, no one would sell at a bargain, they would just wait for someone willing to pay their asking price. But, we don’t live in a perfect world.
Here are a few circumstances; divorce, double mortgages, inheritance, relocation and job loss. The list goes on, but you get the picture.
All of these circumstances have a degree of pain associated with it. The greater the degree of pain, the more fexible the seller will be.
At the end of this article I will provide a link to the questions and why you should ask them.
Real Estate Investing Tip #4 Go Home
Yes, that’s correct go home after you view the property. Why, you ask? Because, you need time to think of what you’ve learned and to do the numbers.
Below I will provide a link to a property analysis spreadsheet for you to use and familiarize yourself with.
Real Estate Investing Tip #5 Be a problem solver
Money is not always the solution. For example, maybe someone just needs to hire a mover to help them move out. Pay a mover with a credit card or just move them yourself.
Maybe they just need out from under their mortgage payment.
Most sellers don’t think outside of the box. They don’t realize that they can let you take over their property subject to the existing loan. Did you know that?
Real Estate Investing Tip #6 Make an offer that helps them and makes financial sense to you
After you’ve come up with ways to help them solve their problems, it’s time to do the numbers.
Let me start by saying, if the numbers don’t work, walk away. But, you can usually find a way to make it work for yourself.
Get in the habit of writing offers. Set a goal to write a number of offers per week. Then leave the ball in their court.
Real Estate Investing Tip # 7 Write write write until a seller bites
You see this is the key, write, write, write until a seller bites. The more offers you write, the more deals you will make.
Practice writing offers until you get comfortable with the process. It’s actually fun once you understand the process and begin thinking of ways to make a deal happen.
There are several resources online that provides offer to purchase real estate forms. How to write an offer goes beyond the scope of this article. But, there are real estate books out there that provides all the tools you need. This is the focus of our next topic.
Best Way To Learn Real Estate Investing
For those of you who know me or have read my “about me” page, you know I read one short book then jumped right into my real estate career. The book was Building Wealth by Russ Whitney.
The cheapest education money can buy
I actually heard an advertisement on the radio about a seminar on buying real estate. So, I attended half of a session, seen the book they were selling and went directly to “Books a Million” and purchased a copy.
I went home, read the book, put it down and said to myself, “I can do this.” I immediately took action with the purchase of my first rental property a couple of weeks later.
Books are the best way to learn real estate investing. This is probably the best of the best tip I can give anyone. READ BOOKS BY AUTHORS WHO’VE ACTUALLY SUCCEEDED IN REAL ESTATE.
Don’t listen to the nay sayers. Makes no sense to listen to people who’ve never done it before. Listen to successful investors, they will guide you through every step of the process.
Best real estate books and audiobooks
There are a lot of real estate books and courses out there. All though they have some unique ideas, mostly they are just repackaging old, tried and true techniques. So, I’m just going to focus on the books I think will give you the best real estate investing techniques.
- Nothing down for the 2000’s by Robert G Allen
- This book has been called the “Real Estate Investors Bible”.
- Packed full of techniques, how to’s and forms.
- Contains very comprehensive strategies
- Buy here on Amazon
- The book on Rental Property Investing by Brandon Turner
- Brandon Turner is an accomplished investor and prolific writer.
- Updated teqniques leveraging today’s technology.
- Buy here on Amazon
- Finding & Funding Great Deals by Anson Young
- I keep a copy of Anson’s book on my shelf for referrencing.
- Anson shares his approach to real estate investing and answers questions every investor asks as the title suggests.
- Buy here on Amazon
The above books are more than enough to get started in real estate investing. But, I do have a couple of other books I feel that every person should read whether they choose real estate investing or not.
Grasping the concepts of these two books can change your life.
- The Richest Man in Babylon by George S Clason
- Written from clay tablets from ancient Babylon
- Age old wealth building principles that still holds true today
- I don’t know why this is not taught in public schools.
- Buy here on Amazon
- Rich Dad’s Cashflow Quadrant by Richard T Kiyosaki
- Written by the author of Rich Dad Poor Dad
- You have a choice, which quadrant you choose will determine your focus in life and ultimately who controls your time.
- Buy here on Amazon
Join a Community of Real Estate Investors
Surrounding yourself with like minded persons is a great way to immerse yourself in real estate investing. The best place to do that by far is the Bigger Pockets website. BiggerPockets.com
On a local level you can get in involved with your nearby Real Estate Investor Association (REIA). You usually find local movers and shakers there. Networking with this association can open doors with potential partners, sellers and buyers.
REIA often host guest speakers from banks, insurance companies, title companies etc. Knowing which products are available to you as an investor and who understands your needs and caters to them can be invaluable.
Best Way To Start Real Estate Investing
Obviously, educating yourself is the first step in getting started. But, I will warn you that you should not fall victim to “analysis paralysis.” This means you always read thinking your not ready to take action yet. Don’t get stuck in analysis paralysis…TAKE ACTION!
Keep it simple, don’t let all the information in books overwhelm you. It’s not necessary to apply the more advanced techniques when you first begin. You can litterally make a fortune with very simple techniques.
Here’s what I recommend for getting started.
This one simple teqhnique is all you need to get started finding deals. It’s super simple. Just drive the area you want to invest in and look for “For Sale by Owner” signs.
Stop or call and set an appointment to look at the house. Do a walk through applying the tecniques described above. Go home and do the numbers and find ways to solve their problems (the real reason their selling). Make an offer.
Wash, rinse and repeat. It’s really that simple. Driving for dollars is the best way to start real estate investing. This simple strategy gives you face to face, hands on experience. It get’s you out of the books and onto the street where deals are happening.
I think you’re going to be surprised at what happens.
Here’s a link to the property analysis spreadsheet I promised you earlier. Click here
And… Here is a link to my article “Questions to ask a seller of real estate”.
Get educated by buying books from successful investors and don’t forget the audiobooks. Audiobooks are a great way to learn on the go. I would recommend getting both audiobooks and real books. Real books are great for referencing information you want to refresh in your mind. Also, Real books contain illustrations and forms that you can’t see with audiobooks.
I hope these residential real estate investing tips act as a primer for your journey into the lucrative world of real estate investing.
As always, I want to hear what you think. If you have any questions feel free to leave them in the comments below and thank you for taking the time to visit me here.
And hey, if you do a deal based on anything you’ve read here, man I would love to hear about it in the comments.