Strategic wealth – How to start investing in real estate

Strategic wealth – The hardest part of doing anything is the beginning. Like everything else, real estate investing is a risky endeavor and needs a strategic wealth planning. Taking time to think about what types of investments to pursue or how much to invest is critical before starting a real estate investment business. However, don’t let the analysis become paralyzing. Real estate, as an asset class, represents a much safer strategic wealth investment in most areas than stocks. Furthermore, an investor can directly affect the bottom line of his/her investment.

Start Investing Today

Now could be the best time to start investing in real estate, says strategic wealth expert. With the market already substantially off of its highs, the downside for new investors is fairly low. One of the biggest mistakes new investors tend to make is paying too much or renovating too much. In this market, the low prices offer a buffer for those two particular issues.

Avoid Overpaying

Paying too much is traditionally a problem with new investors because they do not have a good understanding of the pricing in their market, according to strategic wealth planning. This can be avoided by simply comparing lots of properties. Beyond strong pricing data, that exercise will help investors get a good understanding of their competition.

New investors also have a fear of offending a seller. This fear is simply irrational. Not only do buyers and seller rarely meet, but in this market sellers want to know that someone is interested in their property at any price. Even if its insulting, a low offer can help a seller in various ways. First, they know that someone is interested in their property at some price and second, they might realize that their home is price well beyond the market. In declining markets, sellers put their price on the market at one price. That house might be on the market for six months and by month seven better houses are coming on the market at 10 or 20% discounts. Any bid will aid the seller, so don’t be afraid to bid below the market.

You can also use real estate crowdfunding to offset and optimize your investment. So, what is real estate crowdfunding? It’s a method of raising large sums of investment capital from multiple investors. Now, this might sound a bit like real estate syndication, but there are differences and nuances between the two. Crowd funding is specific whereas syndication is more of a narrow set of specifications covering a single investment operating under certain rules. Crowdfunding offers different types of investment opportunities with accredited investors. Whether you’re looking for short or long term investments, real estate crowdfunding offers flexibility and a large investor pool that can help with developing a long term wealth building strategy.

Avoid Over-renovating

The other problem new investors face in strategic wealth is putting too much money in the property. Thorough property tours will offset one aspect of this problem. Make sure that renovations reflect the competition. Investors should try to create a home that is slightly better than most of the competition, but by no means the best on the block.

The other problem is underestimating the cost of renovations. When looking for an investment in need of cosmetic repairs ensure the property doesn’t need a new roof or a new foundation. Big ticket items could seriously eat into the budget.

Wealth Builders – Flipping Houses With Cash

Many wealth builders individuals want to invest in real estate because there is money to be made in the housing market. When prices are going up it is time to grab it before it goes higher, and when prices are going down it is on sale.

Difference Between Investors and Traders in Wealth Builders Strategy

An investor wants to purchase a piece of property for the long haul. Not only does he want to make money from the investment, but he wants to do so forever.

A trader wants to get as much money as possible out of a piece of property within the same year he buys it. This is where flipping a piece of real estate comes in. While an investor buys something with long-term potential, a trader looks to see what can be turned over immediately.

Flipping Houses Should be Done With Cash

When traders buy homes with a mortgage, they incur extra expenses, such as closing costs. When this is done the profits on the trade are cut down significantly and the only one that wins out in the end is the bank that facilitated the loan.

For this reason, flipping a house should be done with cash. While an investor can make money over the years through good renting and then make a significant profit from the sale of the property, traders do not have this luxury. They need to maximize profits in every way.

Traders who use Cash to Flip Homes Make More Money

A $100,000 loan can cost $5,000 to close on. If the trader puts up $25,000 of his own money plus the closing costs, he will have to sell the home for $130,000 just to break even. Plus, he’ll have to pay for home owner’s insurance.

While home owner’s insurance is a smart thing to have, a person flipping a home within 30-60 days may feel confident to live without the expense, but this will not be a possibility if the home is not owned outright.

Many homes that are bought to flip are in need of repairs and updates. If $10,000 was put into the home to fix it up and it was sold for $150,000, then there would be a profit of $10,000 made on this deal. This profit is nice, but it could have been $15,000 if the property was bought with cash.

By using cash to buy a home to flip, traders can increase their profits substantially, says wealth builders expert. In this case, the difference was 50%. If there were 10 deals like this made that 50% would equal $50,000 that went to banks instead of the profit of the person structuring the deals.