4 Things That I Really Like About Real Estate As An Investment

There are 4 things that I really like about real estate as an investment: the social aspect of networking, automated marketing systems, that real estate is a tangible asset and that real estate provides long term predictable financial returns.

Networking

You get to socialize while you build your network. Mind you, half of your network are crooks, a quarter of your network are regular people, and a quarter are the most elite people in society. You get to network using digital technology, in your office, or from the comfort of your home. You can also go to real estate investors meetups, which take place in almost every big city.

You can connect people all over the world to close a transaction. Part of making money in real estate is having a big network of cash buyers and motivated sellers who you can do deals with.

If you are just starting out in real estate as a career I understand how much pressure you could be experiencing deciding how to get involved with such a large financial commitment. You might be thinking about real estate as an investment and not the market that helps you buy and sell and that determines the value of your investment property. The network is the most important part of your real estate career. If you don’t believe me negotiate a multi-million dollar real estate deal and test whether the person whom you are negotiating with is trying to get access to your buyer or seller.

Most people that I deal with are in the middle of the deal. I deal with real estate professionals that are connecting their buyers and sellers for money. Most real estate investing strategies, along with brokering, follow the same pattern of matching buyers and sellers. 

Consider fix and flipping a property. Fix and flipping is when you purchase a property at a discount, make improvements, and sell it for a profit. When you fix and flip, you buy from a seller and sell to a buyer. You need to match the buyer and seller so that the property is not on the market too long. Your holding costs go up when your property is on the market. You need to bring buyers and sellers together.

You might be worried about investing in real estate because you are using your own money and plan on using a real estate professional. Most real estate professionals want to deal directly with the buyer or seller. If you want to become a real estate professional then you better deal directly with your own buyers and sellers.

One of the biggest things to watch out for when investing in real estate is getting cut out of the deal. You need to have your buyers and sellers under contract before introducing them to any other real estate professionals or buyers and sellers. If you do not have a contract with your buyer or seller their contact information will be used to build a relationship with them by other real estate professionals and cut you out of the deal without you being aware.

I’ve interviewed real estate professionals about their biggest problems for the past three years. There is nothing worse than spending two years trying to close a multi-million dollar deal to find out that the buyer is fraudulent. It’s really expensive to put deposits on property that you are planning on wholesaling to a buyer and not being able to find a buyer. I came up with a solution to your biggest problems when investing in real estate. The solution is this real estate marketplace which weeds through bad people and leaves you with serious cash buyers and motivated sellers.

A lot of gurus say that to get rich in real estate you have to invest in your education (and then sell you a $5,000 course). I believe that you need to invest in your network. Real estate professionals believe their network is their net worth and it is.

Even though so many headaches come up when dealing with your network there is a social component to real estate that I love.

You Can Automate Your Marketing Systems

You need to worry about sourcing good enough deals that cash flow. 

Have marketing systems allow you to run your real estate business in a more automated, efficient, and repeatable way so that you make more money with less headache in the long run.

It takes a lot of work to setup an automated marketing system for real estate. Having a lot of money to invest in marketing your property is as important as the cash used to buy the property.

You need to come up with your own marketing systems, which I have written extensively about to help you set up for own real estate investing business:

• You Don’t Need To Be An Agent To Find Good Deals
• How To Build A Buyers List
• How To Get Motivated Sellers Information
• You Won’t Close Out Of State Real Estate Deals Using Social Media
• 8 Benefits of Direct Mail For Real Estate

Real Estate As An Investment Is A Tangible Asset

When you are picking real estate deals to start your career choose local. Some cities are hotbeds for investing activity. Prices are being bid up and I see buyers and sellers there all of the time. Start local and build your reputation so that people outside of your city want to deal with you because they see how expert you have become in the area. They want to see that you can provide them the deals. You can make a cut for bringing buyers together with motivated sellers.

Become expert in your area before branching out. Let your network guide where you are doing investments.

Real Estate As An Investment Provides Predictable Long Term Returns

Even though long term historical real estate prices increase at a steady rate there are a bubbles are a concern in some cities.

When you start your career with out of state investing you can end up with deals with a low cap rate because prices have been bid up. Low cap rate means that your property generates a small amount of cash compared to what you paid for it. Property with low cap rate are not good buy and hold investments.

Something that can happen to you when you buy out of state is that you get drawn to properties which prices are discounted a lot. Price discounts are great but they might be in a bad neighbourhood.

If you aren’t ready to plunge into real estate investing consider investing in a REIT ETF fund. Returns are great compared to the risk you take and the cash flow is awesome. Investing in a fund is still investing in real estate but it lowers your overall risk by diversifying your investment and let’s you invest a smaller amount of money.

I can understand how much pressure you must feel needing to start a successful real estate business because the financial burden that comes with owning a house can threaten your life. Now you are going to be taking the risk with many properties all over the place. 

The four things that I like about real estate as an investment are the social aspect of networking, building and watching automated real estate marketing systems, that real estate is a tangible asset that you can visit and touch, and that historically real estate has provided reliable returns.

What are your favourite things about real estate as an investment?

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