Hey there, I'm Erica Brown, a real estate investor, homeschool mom, and serial entrepreneur. Welcome to another episode of Wealth Within Reach, where we dive deep into the world of wealth-building, especially through real estate. Today’s post is packed with insights and tips that I wish I had known when I started investing, shared not only by me but also by other experienced investors in our community.
In the world of real estate, there are two main types of investors: accidental and intentional.
Accidental investors often find themselves in the landlord role without planning for it. Perhaps you moved to a new city and decided to rent out your old home, or maybe you and your partner moved in together and kept one of your original homes as a rental property. If this sounds like you, congratulations – you’re already a real estate investor!
Intentional investors, on the other hand, dive into real estate with a clear goal: to build wealth. Whether it’s your first, second, or fifth property, you’ve made a deliberate decision to invest in real estate.
No matter which category you fall into, there are valuable lessons to learn.
One of the most critical skills in real estate investing is knowing how to accurately calculate your cash flow before purchasing a property. Many investors, myself included, have subsidized mortgages from their own pockets because they didn’t properly estimate costs and potential rental income. Understanding your expenses and potential rental income upfront helps determine if a property is a good deal before you even make an offer.
Building wealth through real estate requires multiple properties and a long-term strategy. The initial cash flow might not seem worth it, but over time, the appreciation and accumulated properties can lead to significant financial freedom. It’s important to stay patient and persistent.
Real estate investing is not a solo endeavor. You need a reliable team, including a property manager, real estate agent, attorney, contractor, and possibly a financial advisor. A solid team can save you time, money, and stress.
Understanding the local market is crucial. Researching rental demand, property values, and economic factors can significantly impact your investment’s success. Real estate is very much a local business, and what works in one market may not work in another.
Unexpected repairs and vacancies are part of the landlord life. Having an emergency fund helps you manage these costs without financial strain.
Real estate investing comes with various tax benefits and liabilities. Working with a knowledgeable accountant can help you navigate the tax landscape and maximize your benefits.
Knowing how and when you plan to sell or manage the property in the long term is crucial. A clear exit strategy helps you make better decisions and avoid potential pitfalls.
One essential lesson is understanding that no one cares about your property as much as you do. Whether it’s your tenants or property managers, you must have a plan to manage and maintain your property. This means regular inspections, choosing the right tenants, and being involved in the property’s upkeep.
Renting to family and friends can be particularly challenging. It’s important to set clear expectations upfront and consider how they handle responsibilities in their personal lives. Start firm and professional, then ease up over time if appropriate.
Real estate investing is not a nine-to-five job, but it’s also not entirely passive. Emergencies and maintenance issues can arise at any time. However, with good systems in place, it becomes more manageable and can be more rewarding than a traditional job.
Contractors can be one of the toughest aspects of real estate investing. Start small with new contractors to test their reliability, budget adherence, and quality of work before entrusting them with larger projects.
Learning from others’ experiences can save you from making costly mistakes. Surround yourself with a community of like-minded individuals who are also building wealth through real estate. The Owning and Living community is here to support you.
I’m thrilled to announce that I’m giving away a fully renovated house at the Owning and Living Experience, November 1-3 at the Intercontinental Hotel in Buckhead. You must be present to win, so get your tickets at experience.owningandliving.com before prices go up. I can’t wait to see you there!
What’s one thing you wish you had known when you started investing? Or if you haven’t started yet, what resonated most with you from today’s post? Share your thoughts in the comments. Thanks for joining another episode of Wealth Within Reach.
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