90% of millionaires around the world build their wealth by investing in real estate. Their residential and commercial properties are sources of consistent passive income through long term rentals. Some of them turn their residential assets to Airbnb private rooms or shared houses that attract short term renters who need vacation homes.
Unlike stocks, real estate is not so vulnerable to market fluctuations. Multifamily apartments in upscale locations are guaranteed to appreciate in the future. Having a place to live, and a space to lease is a constant necessity for individuals and businesses. These benefits lure a lot of people to rush in buying properties and often make bad decisions. These reminders will help you to avoid these mistakes and guide you through the zigzags of real estate investing.
1. Keep calm
The thought of making millions might give you the adrenaline rush to purchase the first beachfront property that you saw online. But quick decisions often lead to remorse. You need to stay calm, patient, and cautious so that you understand the property’s potential for cash flow before putting down all your savings. Do your research and, when in doubt, always ask the professionals. Patience will save you from making expensive mistakes resulting in financial disasters.
2. Start small and simple
A lot of rookie investors dream of building instant wealth, so they purchase ten homes all at once with all their cash. But real estate investment takes time before you gain profit. Investing is not all about buying, holding onto your property, and waiting for passive income. It’s purchasing an asset and improving it to add value that will not only increase the rental fees but will attract more clients.
If you’re a beginner, it’s a good idea to start with one rental property. Starting small will lessen the financial risks as you navigate and familiarize yourself with property management. Once you become comfortable with your role as an investor, you can buy several real estate assets and hire people to manage your properties. It’s not wise to self-manage your rentals for a long time as it will make your business unscalable no matter how clever and hardworking you are.
3. Build relationships
The key to being a successful real estate investor is not about what you know but who you know. Real-estate investing is not something that you do alone. It’s a relationship-based industry, and you need to build relationships with the right people.
You need a team of professionals who will help you make informed decisions and guide you in growing your business. These experts include real estate agents, lawyers, home inspectors, and technicians. You also need to create a good relationship with people whose jobs have a connection to your real estate business. For example, you need to have the best relationship with mortgage lenders in case your company needs a business loan. Or you must nurture a close bond with reliable contractors so you’ll get the best pricing for your building construction.
Real estate investing gives you unlimited options to grow your money. But it takes time, patience, experience, and the right strategy to build your wealth.