Investors need a solid collection of actionable advice, whether they’re thinking of rental properties, flipping, or building a long-term portfolio. These are real world, digestible, and are all great resources to better preparing your for your real estate investing journey ahead!
Start with a Clear Goal
Are you looking for cash flow, appreciation, tax benefits, or a mix? Strategies can change depending on if you opt to flip, rent, BRRR (Buy, Rehab, Rent, Refinance, Repeat), or build passive income.
Know the Numbers Cold
Cash-on-cash return, cap rate (net operating income / property value), and the 1% rule (monthly rent should be ~1% of the purchase price) are all crucial formulas. Remember, do not rely on appreciation alone - buy based on today’s numbers, not hope.
Location > Everything
Look for areas with: job growth, population growth, low crime rates, good schools, easy accessibility to transit and amenities, and keep in mind that a great property in a bad location is still a bad investment.
Start Small, Learn Fast
Beginning with duplexes, condos, small single-family homes, live-in flips, or house-hacking (renting out a part of your home) are all recommended newcomer strategies.
Build a Solid Team
A good investor needs a real estate agent with knowledge on investment properties, a lender familiar with investor financing, a CPA or tax advisor, a contractor or handyman, and a property manager (if you do not intend on self-managing).
Financing is Key
Shop investor friendly loans (Conventional, DSCR, portfolio, HELOCs, hard money), and keep a good credit score and DTI ratio to stay loan-ready.
Have a Reserve Fund
Always set aside money for repairs, vacancy periods, and emergency expenses (3-6 months of operating costs is a safe buffer).
Understand the Tax Benefits
Investors can deduct mortgage interest, depreciation, repairs and expenses, and property management fees. Talk to a professional - smart tax planning = more profit.
Be Emotionally Detached
Treat your investments like a business: do not buy based on how it “feels” - buy based on numbers.
Keep Learning & Adapting
Real estate markets shift, so staying educated on local trends, zoning laws, short-term rental regulations, interest rates, and financing options can keep you ahead of any future scenarios you may need to overcome.
Real estate is a popular investment option, but due to the commonly high up-front costs, it can cause indecisiveness and crippling refrain. There are no concrete answers as to what the future holds from one property to the next, but these points are meant to best prepare you so you can succeed with an investment property and aren’t blindsided by some of the more minute parts of real estate investing.
