A few more days and its already 2015, start of another fiscal year for businesses. For real estate investors in Edmonton, it’s the start of another great season to make more money. If you’re thinking of investing in real estate in the next few months, here’s a few pointers that would help in prepping up you up for the venture ahead.
AVOID #1: NOT TAKING IT SERIOUSLY
Real estate investments should always be taken seriously. The most common newbie mistake is not treating it as a serious business. This form of investment vehicle poses a lot of potential risks so you must always be alert both mentally and physically.
Planning is key to an investor. You must have full understanding of the profit margins, potential losses and taxes. What separates a successful investor from the others is the business plan, you must lay out your goals and strategies from the very beginning in order to have a clear and concise idea of what you need to do and how you can move forward.
Take note, you must be a “numbers guy”, make decisions out of those cold, hard figures, instead of your emotions. The real estate market is just like the stock market as it has cycles, ups and downs, booms and busts-you have to understand how it works-and make decisions accordingly.
AVOID #2: BLINDLY BUYING PROPERTIES
That means not doing your research when purchasing a real estate investment! Don’t get charmed or swayed so easily-remember, make decisions out of cold, hard figures.
Many people always try to follow the flock. They buy out of the hype that marketers present-a big NO-NO! These types of investors would always fall on the losing side as they tend to only see the short term gains. When the property values and rental rates are on the rise and interest rates are low, they pounce not thinking of the long-term consequence. A good example is the American real estate bubble-yup, I love watching the Youtube documentaries about that one. Avoid this trap by crunching the numbers and looking towards long-term goals. Do you research diligently in order to find the best possible properties!
Cash flow is king so keep in mind to always include in the equation the strength of the cash flow. Do not, I repeat, do not settle with breaking even. If you do, then might as well stop reading right---here.
A good strategy to follow is having multiple properties. You may liken it to spreading the risk in different baskets. The more properties you have, the higher the chances that you would be able to survive a terrible downturn in the market. Those extra rental incomes from different properties could and would help you generate enough cash to cushion any crash!
It’s risk management at best.
AVOID #3: THE BUSINESS IS OUT OF WHACK
Last, but not the least, making this a business without having systems in place. This complements our #1 item on the list. As we have said, planning is key. The systems you place could determine if you would have a successful real estate investment career.
You can avoid losing money buying creating processes that would help in decision making. For example, make strict move-in and move-out process that you would follow for every single tenant. This process would then help you expand the business as you will be able to apply it when you acquire new properties.
Creating your own system would provide you with peace of mind, from property maintenance, acquisition and tenant management.
Failure is a part the winning path, yes, we agree, but if we try to follow the knowledge mentioned above, you would have a winning path with lesser failures and more profits, agree?
Well, then, do check out the newest properties to hit the Edmonton real estate market here.
Subscribe and get the daily news, updates and latest trends in Edmonton real estate.