From the moment you became interested in real estate investing and picked up your first real estate education course or book you have no doubt been drilled with the message that you should not limit yourself to what most others consider realistic goals. This is true to a great extent and the size of your success in real estate investing definitely depends on your ability to think big and go beyond. However if you are not realistic about expenses and what people will reasonably pay for the homes you are flipping you could find yourself in real trouble.
Every successful venture needs a business plan no matter how big or small and this applies to real estate investing as much as any other industry even if you plan to do it all yourself. You must be realistic about all of the expenses involved no matter how small they are. In fact you will find that it pays off to over estimate your expenses. That way you will always have a cushion built in and when the expenses come in lower you will be pleasantly surprised at the extra profit you get to put in your pocket.
Another area where some that are newer to real estate investing fail to be realistic is when they are attempting to sell with owner financing whether it is via a lease option or rent-to-own. Many investors build a business model on anticipating being able to move many properties while pulling in 10,20 or even 30% in down payment on these properties. While that may be achievable in some cases most home buyers with poor credit that fall into the owner financing model don’t have that kind of cash to throw down on a home. Otherwise they could probably qualify for an FHA mortgage anyway. So do not limit your over all goals, but do be realistic when it comes to the details of your real estate investing businesses plan.
About Mark Gaston
Hi there! My husband and I both enjoy your blog. We’ve been in Omaha for about four years. We don’t have any intvsement property here, but we did have a very profitable single-family rental in St. Louis.My question to you is this: What areas of town rent the fastest? If we were to look for another intvsement property that was as close to a sure thing as one could expect, where should we be looking? Our preference would probably be a duplex or other multi-unit property for the cash flow. We aren’t immediately ready to pull the trigger on this; just in the research phase for now.
I only do this on Non Owner Occ. properties, in CO we have some new laws that make lfpiping even the LLC or Trust beneficial interest a No-NO .Even if you get an acceptance letter with no resale for 60 days, you just sell the entity. This works for properties your selling to cash or hard money buyers. Flipping to owner occupants getting traditional financing, not going to fly because of the entity they need to close in their own name to get that kind of loan.