Investing Wisely: 5 Tips to Selecting the Right Investing Strategy
Entering the world of real estate investing can be overwhelming and daunting, and without a solid plan you may find yourself pulled in many different directions. A firm investing strategy gives you a clear vision of where you want your business to go, and what types of things you need to do in order to get there. Whether you are a brand new investor or have been in the game for years, the right strategy can help catapult your business to a new level of prosperity and success. Consider the following five tips to help you determine your strategy.
Write Down Your Goals
Before you start thinking about strategy, it’s important to first come up with goals for your real estate business. How quickly do you expect to see a return on your investment? Are you looking for the fast turnaround the flips and rehabs offer? Are you more comfortable leaving your money in a rental property for years? With all of the options real estate offers, there is no “right” or “wrong” avenue for your business, but you have to figure out what works best with the goals you set. Knowing your goals will help you develop an investing strategy and it will give you a better indication of price points, markets, property values and exit strategies.
Know and Understand Your Options
The majority of investors look for short sales, foreclosures and REO properties but what works for some investors may not work for you. As you figure out where you want to take your business, know that even though short sales may be the most popular there are many other options for you to explore. What kind of homeowners are you looking to work with? Do you want to deal with banks or traditional homeowners? Once you have decided who you want to work with, think about the types of properties you are interested in. Are there specific markets you are interested in? How many units are you looking for? Are you looking for condos, mobile homes or single family homes? Go to local networking events and investment club to learn more about what options appeal the most to you for your business and strategy.
Available Capital
Often, the amount of available capital you have and your goals go hand-in-hand. As you begin to focus on your strategy, you must also take inventory of the amount of capital you have or have access to. Whatever the number may be, it will give you an idea of what you are realistically able to do with your business. If you are using lender financing, you can comfortably hold onto your properties long-term, while a reliance on private lenders often means you will want to turn the property over as quickly as possible. Even if you don’t have a ton of money available, you can still get into the real estate business. There are investment options for any budget and amount of capital, and the type of strategy you develop will most likely depend upon your capital.
Carve out Your own Niche
As you begin to develop your strategy, you will want to look for something that is unique to you. Following the advice or strategies of other investors can be beneficial, but you also want to make sure that you are doing things in a way that is right for you. With the rise in popularity of real estate investing, there is an increased demand which has pushed prices higher and higher. Instead of being one of many investors chasing a property, look at niches in which you can be a leader.
Choose a Strategy That Excites You
One of the most common goals people have is to pursue a career that excites them, and it should be no different as you start in the real estate business. No matter how popular your niche is or isn’t, if you are not excited about the deals you are seeking, the deals will dry up. The most important part of your strategy is to find one that has you excited to wake up every day and head to work.
Your investing strategy serves as a blueprint for your business, and it’s important to put a lot of thought into one that works with you. Once you have a strategy in place, be sure to revisit it every few months to make sure that the work you are doing is what will help you get where you need to go. The best strategy is one that works with your goals, your personality and that excites you every day.