10 Rules of Successful Real Estate Investing

Investing in real estate can be tricky. I’ve come across people who had invested their life savings in real estate without proper guidance or knowledge and lost half or more than half of what they had invested. Over the period, I’ve followed the most successful real estate investors and got a chance to work with a few. I learned a few things from them and today I’m going to share those things with you so that you can also become a successful real estate investor. Below are the rules of successful real estate investing.

Acquire Knowledge

Knowledge is Power. If you are well educated and well informed, you’ll be able to make the right decision. If you don’t have enough knowledge, people are going to take advantage of you and you might end up bearing a loss.

Set Goals for Investment

If you want to become a successful real estate investor then you have to set goals for yourself and try your absolute best to achieve those goals. Set long-term goals and to achieve those long-term goals, break those down to short-term goals. Every time you finish one short-term goal, you become one step closer to your long-term goal.

Select and list down the number of properties you want to invest in and calculate all the related costs, the annual cash-flow which can be generated through those properties, etc.

Focus on Long-term Investment

In real estate, patience is the key to success. If you run after small short-term gains, then you are going to miss out on the opportunities on which the return is higher.

Invest in properties with positive Cash-Flow

Cash-flow is the money inflow and outflow in a business. Positive cash-flow means more inflow than outflow. Investing in properties with positive cash-flow is always beneficial as the cash which is coming in can cover the expenses for that particular property and generate some extra income for the owner.

Location is important

Choosing a location is very important as the price trend varies from location to location. The real estate market in Lahore is different from that of Karachi. Even within a city as big as Karachi, prices vary from area to area. Each area here is independent due to many local factors of that particular area. Invest in a market that you understand fully and you are sure about it. If it doesn’t make sense to you, don’t put your money there. Simple!

Organize your property search

When searching for a property, go for a wide-to-narrow approach. First, choose a city in which you want to invest. Then look for the best areas or neighborhoods in that city, areas with all the basic infrastructure, amenities, schools, parks, etc. When you select a neighborhood, look for the best deals available there.

Investing in multiple markets

Diversify your investments, but focus on one market at a time. Once you have a couple of properties that are generating income for you in one market, move onto the next one. This usually means investing in another city or even province. As discussed earlier, the real estate market of each city moves independently. This means that when we are diversifying our investments, we are reducing the risk associated with one market.

Don’t manage your properties

Unless you have experience in property management, do not manage your properties. Hire someone else to do this job for you. If you are busy solving your tenants’ complaints, how are you going to focus on expanding your investment portfolio? Therefore, it is better to hire someone who can do this job for you and you can work on expanding your portfolio or give time to your family.

Don’t hire someone to manage your investments

You are the one putting your money at risk so it should be you who decides what to do with it. Whether you want to rent it, sell it or purchase it, don’t rely on funds or partnerships, take control in your hands.

Smart Investment

There are two ways you can invest your money in real estate. The first one is buying a property and paying the total amount the property is worth. The second way is you put down the down payment and pay the remaining amount in installments. You can own multiple properties by the second method. You can rent out the properties and pay installments from the rent income. This way, your tenants are going to pay for the property which you are going to own.

These were the 10 rules of investing successfully in real estate. Visit our blogs frequently for more tips and guides regarding real estate investment.