Ask a seasoned real estate investor when is the best time to invest in a property, and invariably the answer will be “20 years ago.”
This cheeky response acknowledges that real estate appreciates over time, even when you buy in an up market, says Clint Bartlett, co-owner of Dynamic Properties, a real estate investment company in Omaha, Nebraska.
The second, more serious response, is “right now.”
Bartlett shares a few investment insights he has learned over the past several years running Dynamic Properties.
1. Educate Yourself
Bartlett spent two full years listening to podcasts and researching what makes a good investment (and successful investor) before making his first purchase.
“Start soaking up free knowledge from the experts,” he advises.
There are numerous podcasts on the subject on real estate investing, whether you are looking to flip a property or holding onto it as a rental. Join a local real estate investment group, he also suggests, to network with experienced investors.
“The learning curve is steep,” Bartlett says. “The knowledge you gain will increase your success exponentially.”
2. Do Your Homework
Knowledge of your local market is also essential. This includes comparable properties in the neighborhoods where you are looking to invest to determine the value of your potential purchases.
Establish your price range, and shoot for price points at the lower end of the range, Bartlett says. Ideally, you want to purchase properties at 75% of market value minus repairs.
For instance, if you are looking at a house worth $150,000, aim to acquire it for around $100,000 or lower to accommodate the repairs you will have to make. Considering the age of the property will help you assess repair costs, with older properties often requiring more major overhauls and newer ones already outfitted with high-ticket items, such as vinyl windows.
Bartlett describes Omaha as a “steady eddy” real estate market that is not subject to large market shifts. “There are no huge gains on a flip, but the Omaha model is more predictable, less risky. You are more in control of the outcome.”
3. Know Price-Influencing Factors
Bartlett says there are numerous factors that affect property cost and thus the value of the investment.
Buying on terms, meaning the owner finances the transaction, means you can often negotiate favorable buyer terms, like lower interest rates.
Location, location, location is a common real estate mantra. Rental properties tend to do better in neighborhoods that cater to families (three bedrooms and two baths) and boast good schools.
Considering the age of the property will help you assess repair costs. Older properties often require more major overhauls compared to newer ones already outfitted with high-ticket items, such as vinyl windows.
Price is king, however.
“Deep discounts, regardless of location or state of the property, are generally the best way to make money in the end,” says Bartlett, whether you retain the property as a rental or sell to another investor.
4. Who Should Invest?
Bartlett cautions that real estate is not a “get rich quick” scheme. It requires patience. Thus, it is geared toward those looking to add to their passive income to create wealth over time.
If you have a little extra cash you want to creatively put to use, real estate is a solid option.
“It doesn’t take a lot of money, just a good deal, perhaps a partner, and some sweat equity,” says Bartlett
Similar to most investing, real estate investors must be able to stomach some level of risk. But, doing your homework prior to investing helps mitigate risk. Bartlett suggests starting out slowly, such as doing an experimental flip.
Real estate is an appealing option for those who want to be in control of their investment. Because it is a tangible asset that you can insure, you have a built-it safety net to recoup, at least some of, your money. And, returns are much higher than other forms of investments. The average flip makes $20,000 over a 90-day period.
The current climate is ripe for real estate investing. Bartlett projects that Dynamic Properties will double its 2020 projections. If you are looking to sell a property and want to learn more about Dynamic Properties, visit their website.
Are you thinking of dipping your toe in the real estate investing market? Jeff Cohn, founder and CEO of Omaha’s kwELITE real estate brokerage, recently sat down with Real Estate Investor to talk about his path as a real estate investor and the unprecedented opportunities the market is currently presenting.
Follow Bartlett’s advice and start educating yourself now by checking out the recent article here to ensure your success in the future.