If you are looking to build a sustainable real estate company, you need to treat it like the business you want it to become. Every detail matters, and you need to make sure you are doing the small things that have a substantial impact. The same holds true for those that are just starting out, and even seasoned investors. To that end, everyone should focus on certain things when they are just starting out. The actions you take in the first six months of your business can impact the next year, and well beyond. If you are looking for the best way to start your business, look no further; here are five areas that you need to pay special attention to:
1. Credit: Regardless of how you plan on financing your properties, your credit score is important. If you are looking at any type of loan product, they are all predicated on having a strong credit score. Loan standards are weakening just a bit, but they still need an above average score. To that point, it may be difficult to receive approval with any score under the 680 threshold. This means that every new account you open can change your score. For starters, you need to know where your credit stands. Start by getting a copy of your credit report. Not only will this give you your score, but will give you an idea of all liabilities you have. If there are duplicate items or accounts that have been paid off, you can work to remove them. Everything you do in the real estate business has some connection to your credit score. Do everything you can to protect it.
2. Financing: How do you plan on financing your purchases? Are you going to use traditional lender financing, or do you have a hard money outlet? Do you have a friend or family member that is willing to offer private financing? Whatever option you want to go with, you need to know everything about it. This means finding out the down payment and closing cost requirements for each. It means understanding the interest rates and guidelines for hard money loans. It can mean knowing the work allocation and potential profit splits on private money loans. When all is said and done, you need to know and understand all the financing options made available to you. You won’t use all of them on every purchase, but you should at least have an understanding of what you can do. Even if you have cash available, there are times when financing could be a better option. Your real estate business won’t get too far off the ground without financing. You need to know your options, the costs and all of the terms associated.
3. Investing options: There are a handful of ways to invest in real estate. The most popular method is currently investing in rehab properties. However, while rehabbing is the most popular method, it is far from the only one. Between wholesaling, buy-and-hold rentals, tax liens, multifamily properties, condos and mobile homes, there is an option for everyone. Every option, for that matter, has its own unique ways to acquire properties. You don’t need to be an expert in every one, but you should have at least some understanding of what they entail. It is impossible to cross an area off your list if you don’t know how it works. Spend time to research these options, and find as much information as there is available. The more you know, the better investor you will be.
4. Find a good real estate agent: The most common method for finding new deals is by using a real estate agent. Between short sales, foreclosures and bank owned properties, they can have access to quite a few deals. Even if you are looking for buy-and-hold properties, they can use the MLS to alert you as soon as a deal becomes available. A good real estate agent will also help you with putting the deal together and protecting your best interests at all times. There are hundreds of agents out there, but it is important to find the best fit for you. Working with an investor is not the same as working with a traditional buyer or seller. As long as you and your agent are on the same page and have a clear vision, odds are you will have a more productive relationship.
5. Network: You should do something every day to grow your business. Networking for example, is one of the best thing you can do as a real estate investor The minute you stop networking, your business will stop growing. Fortunately, real estate networking has never been easier. There are local real estate investment clubs in almost every area. Most markets also have weekly networking groups. You can also utilize social network to increase your local presence. Finding deals through your network of contacts is the easiest way to give your business a boost.
Growing your business will not happen overnight. If things aren’t going your way in the first few months, you can’t get frustrated. Do something for your business every day, and remember these five areas when you are just starting out.