How To Purchase Chicago Properties Like A Professional Investor

Many people today want to add real estate to their portfolios and call themselves a real estate investor, but they do not necessarily understand the ins and outs of real estate investing or where to start the process. Some of those people probably perceive the industry as being too complex to participate. Real estate investing is much different from investing in the market of stocks, bonds, and CDs and can seem overwhelming to brand-new and rookie investors. With that in mind, below are 9 tips to help you successfully launch and navigate your budding career in real estate investment.

Investing Is Serious Business—Map your goals and make a plan

Your investment portfolio is your business and so it should be treated like a business. Developing a good business plan is a great start, detailing the operations of starting and also running your business. Set realistic goals over one, three, five and 10 year spans. If not sure where to start with creating a business plan, there are many good examples to be found online with a quick search. If you are unfamiliar with business plans in general, it may be best to do your research before getting started.

Know Your Worth—Start out with your eyes and ears open

Determining your credit score will bring your financial situation into the light of day. This will be important to determine your ability to finance an investment property, so you do not get blind-sided by any surprises that might inhibit your purchasing. Careful as to not repeat the lending market bust in 2008, lenders today are looking for credit with a 700 or better score from investors who want to buy investment property. Unless, you plan to purchase in cash, of course—cash is king and your credit score is not relevant. Keep in mind, when going the lender financing route, it will be helpful to make sure that your total monthly debt-to-income ratio is on the low side. In order to improve debt-to-income ratios, pay down car loans, outstanding credit card debt, and reduce overall credit spending.

Invest In Education—Your brain is your most valuable asset so invest in it, too

High-level employees at any successful corporations are sent to numerous educational seminars, trainings, conferences and more, so they can stay knowledgeable and sharp in our ever-changing world. It makes sense that their superiors would encourage this behavior as it makes them a greater asset to the company. Think of your brain as your human capital, your top-performing employee, and strongest asset—invest in it. You can find loads of information on real estate investing online for free. If you do purchase a book, look for one that offers practical guides on buying, renting, flipping and selling properties. It would be best to avoid books that claim “get rich quick” or books that are 25+ years old explaining techniques that may no longer work, as market fluctuations and trends have both changed drastically over the decades. Beware to keep your research comprehensive early on, until you get the lay of the land, so to speak. Misinformation can be remembered just as easily and can be just as hard to forget.

Leverage Your Network—Seek out those who have had success and stay in touch

Putting yourself in the best position to succeed is one aspect of purchasing property for sale like an investor. To do so, model your investing decisions after what other successful real estate investors in your area have done. Seek out opportunities to learn from the best. If you don’t know the best, find them. One place to find other investors is a real estate club in your area—a quick online search should help. These clubs are great places to network with other investors, lenders, repair service providers and others apart of the real estate industry. Many times you can expect to pick up helpful advice about your local market from other attendees and even other investment opportunities.

Another place to network is to see if your community offers courses on real estate investments through local real estate brokerages. If you are having difficulty finding a real estate network or course in your area, consider checking out an online investing forum. Finally, Chambers of Commerce can be excellent for finding the movers and shakers in a very local area. There may be a fee to join, but adding the right person to your network quickly becomes invaluable.

Know Where You Want To Be—Educated research and digging can uncover diamonds in the rough

Rookie investors can easily make the mistake of limiting their property for sale search close to where they live. However, better rental areas might be located a little further away. New investors may think it’s necessary to live close to their properties in case tenants call about repairs or other issues. However, with proper preparation, the home will be in good shape before your tenants move in, and those repair calls from tenants should be few early on.

Professional Experience—Find an investment expert

Although the education is out there so anyone can learn to become successful real estate investors, not all Realtors are experienced, savvy and confident when it comes to helping investors get started or even to keep moving. To ensure you are partnering with someone who understands the real estate investment industry, make sure the chosen Realtor has a recent history of sold investment properties (the more, the merrier), like foreclosures, and also understands concepts such as debt service, return on investment (ROI), and net operating income (NOI). These are the kind of Realtors that will be understanding and mindful of your goals, and may even help you to adjust your path to reach them more quickly!

Bank Or Broker—Find someone reputable and knowledgeable

If you are planning to finance capital for your investments, Realtors may be able to introduce you to someone—or you can ask other investors for their expert recommendations. Even if you have to start cold, this is a search that might be beneficial prior to your future portfolio. If you are planning to pay upfront with cash, keep in mind, you will need to prove the liquidity of the funds, and that they are in your possession by submitting a recent bank or brokerage statement when you make an offer. Experienced mortgage brokers and bankers are invaluable partners to make and keep.

Look All Around—Make a list of all possible listing resources and keep up with them

New investors might think it is only possible to purchase homes through the widely known Multiple Listing Service (MLS), or even by knocking on doors in neighborhoods with For Sale signs. Consider your next investment opportunity property might be found on other various sites, like Auction.com or Craigslist.com. It is possible you might be able to find much better deals on these sites, and sometimes easier for buyers to make purchases outside their local area. Casting a wide, wide net will always work out in your favor if you stay diligent, vigilant and organized.

How Does It Measure Up—Identify the rate of return to determine a good deal

An old rule of thumb in real estate that still rings true today says that if a rental investment property yields one percent of the sales price per month, it is a good deal. Utilize an investment property calculator for number crunching prior to buying property. For example, if the purchase price of the investment property is $100,000, you should expect $1,000 per month in rent, or about 12 percent annually. However, in some areas of the US today, where home values have declined, investors might be able to net returns greater than one percent per month.

As you can see from the tips listed above, real estate investing does not have to be difficult or intimidating. The best philosophy behind how to invest in real estate is to maximize return while minimizing risks. When investing is done correctly, real estate is one of the safest and best long-term wealth-building tools available. As with anything that is worth your time and energy, the harder you work towards and the amount of effort you put into your real estate investment business, the greater your ultimate reward will become over time.

However, you may still not want to go it alone. That’s pretty smart of you, because here at Lofty, we feel pretty good about our ability to grow your investment portfolio for you. Whether you want a consultant to guide your decision-making and assist your education, or someone to work in your interests while you spend your time in other ways, Lofty wants to see you succeed and we have the means necessary. Talk to us today and see how we can help you to live the life you deserve.

Speak with one of our experts to find out how we can supercharge your investment strategy.

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