My father-in-law owns a retail shop in our community and has logged countless hours building his business through the years. Four of his sisters taught school and he’s been always been irked by the fact that they worked 180 days per year and had all their benefits paid for. The scenario has made for some “interesting” discussions during family gatherings. Nothing changed when one of them bought a few rental properties. She was still viewed as someone who had ample time in the summer to pursue real estate investment, not a “businessperson”— just a person who bought houses for additional monthly income because the pursuit didn’t grow from there.
Many people start out in real estate investing by sticking a toe in the water. Some folks continue to dabble, some grow, and some fail. Buying and selling houses as a business had always been my full-fledged intent when I acquired my first rental property. I sought to shed the burden of the 9-5 life and gain some financial independence. Like my wife’s Dad, I soon found out that running a real estate investing business, or any kind of business for that matter, demands a lot more of my time than I originally bargained for. But the business belongs to me. I am my own boss and the revenue provides security for my family.
Building a Business By Buying and Selling Houses
I think a lot of people hold the views that my father-in-law held before I started buying, renovating, and selling homes—that it’s a sidelight and not a principal path to earning a living. That’s not necessarily so. If done correctly, the rewards can be plentiful in real estate and investors can shuck their corporate jobs for full-time work. But, before diving in, there are some basics you should consider.
Know Your Strengths
Running my business means that I wear a lot of hats. Some look good on me and others don’t fit. My strengths have always been people skills and a good amount of financial wherewithal. I like numbers, but some people don’t. Right from the start, you should evaluate your strengths.
Ask yourself which facets of the real estate investment business you can handle and which need to be delegated. For instance, I can do some basic landscaping and painting but when it comes to electrical and plumbing work, forget it. Yet, these skills are vital to making my investments in distressed houses viable. Fortunately, through my connections to other investors, I have developed a network of efficient contractors. Their reliability helps me to meet the deadlines that are critical for me to realize optimal returns.
I would advise no one to tell their boss goodbye before ensuring that current income can be supplanted by self-employment income. Buying and selling homes isn’t as easy as TV celebs make it seem. This business involves a considerable amount of time and effort, and you don’t want to start by biting off more than you can chew.
Whether you find a lead through personal contacts, foreclosure auctions, or pre-foreclosure actions, you’ll want to pay the lowest possible price to boost your return on investment. But, even if the property seems like a good deal at the outset, take a close look at how much rehab work needs to be done. Of course, you’ll need to run the numbers to see if the rehab costs still leave you with some money on the backend of the deal but that shouldn’t be your only consideration. If you’ve never rehabbed a house before, you don’t want to buy a major project. Start small, building your experience—and business—on solid footing.
Finding the Funds
Ah, yes. Dollars and cents should definitely be a central focus. I only ever had experience with traditional lenders when I bought my own home. I thought that was the only option out there. As I began to flip houses, however, my lenders bristled at the notion of financing distressed properties that I wanted to rehab and sell quickly. Banks understand the concept but most don’t care to be a party to it.
Research led me to get a hard money loan. These private lenders understand the business of flipping houses and are more than willing to evaluate your deal. If the numbers look good, they can finance not only the acquisition price but also the repairs and upgrades that a distressed dwelling requires. As a bonus, they sometimes close deals in under 30 days so you can close on a good property fast when you see one.
Growing For the Future
Successfully buying and selling houses can be a grind—albeit a fruitful one. When I bought my first investment property, I admittedly was scared and excited at the same time. That’s a natural reaction when spending time and money on a new venture. Capitalize on that exciting part and mitigate the anxiety with a support network that can help you turn your part-time passion into your own reputable business. Believe me, I learned this the hard way.
When my first couple of deals didn’t pan out the way I’d hoped, I knew that there would be no way I could walk away from my day job to start a real estate investing company if I didn’t find some help. With HomeVestors, I got more than I anticipated. As an independently owned and operated HomeVestors® franchisee, I have plentiful leads on investment opportunities—thanks to the nationally-known “We Buy Ugly Houses®” marketing campaign—and proprietary tools for evaluating deals. If I ever have a question about how to move forward, whether it’s about financing or real estate investment trends, my network of other franchisees and a seasoned Development Agent are on hand to provide perspective.
Contact HomeVestors now to begin a lasting relationship with professional real estate investors who want you to grow and prosper.
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