Six Keys to Successful Real Estate Investing

Six Keys to Successful Real Estate Investing

Whether you are investing for immediate cash flow, building your retirement income, or building a legacy for your family, real estate investment is one of the most straight forward and self-directed weapon in your arsenal. While there are many strategies and more information than you can absorb in your lifetime about investing, here are six, basic things you can focus on to help you have a good investment experience.


1 Networking and Relationships
All boats rise together. The more investors work together the more we all profit. No would want to own everything. Remember “one man’s trash is another man’s treasure”. Investors tend to become very specialized but that doesn’t mean they pass along a deal that might be right for someone else.

Join real estate investment clubs, talk to other investors, go to meet-ups and learn about investment strategies and, by all means, find partners to work with. Having different team members or contacts with different specialties gives you a long reach and powerful leverage.


2 Market Research and Strategy
It is important to learn all you can regarding not only the property you are thinking of purchasing but about the neighborhood the property is in as well as the city and even the state. The real estate economy needs to be analyzed from the micro to the macro.

Also, it’s important to find and follow a strategy for your portfolio. Whether its BRRRR, Buy-and-Hold, Fix-and-Flip, or Wholesaling, a business plan also allows investors to visualize the big picture, which helps maintain focus on the goals rather than on any minor setbacks. Real estate investing can be complicated and demanding, and a solid plan can keep investors organized and on task.

3 Know your numbers
When you buy a rental property you should have a rough estimate as to what the property's income is. If it is an unoccupied property, talk to neighbors or real estate agents to find out.

Understand that you will incur maintenance expenses, which will depend on the size and the location of your property and which will affect your return on investment.

Once you have a solid grip on the expected rental income and property related expenses (maintenance, insurance, taxes), make sure that the net amount covers your mortgage payments.

Even though you might calculate a low initial return on investment, understand that real estate really is a long-term investment. Owning a debt-free rental property when you retire and being able to access steady income that supplements other investments is a great way of preparing for retirement.


4 Reaching a tipping point
Let’s face it.  Buying a single property is like buying a headache. If your entire portfolio lives or dies by the fortunes and occupancy of a single property you are in for a lot of worry and hand wringing.  The more properties you acquire the more the pressure is spread out. If one property goes vacant then the income from other properties can pick up the slack until you get new tenants.

Following the 80/20 rule, at any one time 20% or your properties are going to be providing 80% of your cash flow. You want that 20% to be as large a number as possible. Our experience has shown that the pressure starts to ease up at between 12-15 properties. This may sound like a lot but getting to these numbers is a process and the rewards are tremendous


5 Patience
Investing is a marathon not a sprint. We’ve talked about building your portfolio to reach a “tipping point” where the returns start to outweigh the stress in your cash flow. Well it takes time to reach this point. Stick to your business plan, do your research and you will inevitably reach your investment goals. Unless you have enormous cash reserves or are very lucky, it’s incredibly difficult and financially dangerous to try and do it all at once. Take your time and be consistent.


6 Quality Property Management
You are a real estate investor. If you are managing your investment business, maintaining relationships with other investors, researching markets, looking for new properties for your portfolio then your day is full. You need someone else to take care of the day-to-day management of each of your properties. This becomes even more important if you are investing in real estate nationally. You need someone you can trust looking after properties that you can’t get to personally. A manager or management company that communicates regularly and has a good track record is vital to your portfolio. Take the time to find a good property manager and get back to doing what you do best.



Memphis Investment Properties

Address: 4701 Summer Ave
Memphis, TN 38122

Telephone: 901-244-5820

Fax: 901-842-0803