Tuesday, February 19, 2013

10 Rules To Becoming A Successful Real Estate Investor In Phoenix

10 Rules To Becoming A Successful Real Estate Investor in Phoenix

Being a real estate investor is not an easy task - but involves hard work, knowledge, dedication and doing the 'right' things. 

So can you handle this? If so, here are 10 rules that are almost guaranteed to make you a successful real estate investor.

The Phoenix Scottsdale market has awesome opportunities for the real estate investor -- and for the next 6 to 7 years. If this of interest to you, please feel free to drop me a note or call me.

Rule #1
Being a real estate investor is a business. So you have to think like a business person and act like it. It's not an emotional process. You make business decisions right from the beginning, analyse the numbers, and act accordingly. You develop a business plan and a strategy by property.

You have to be hands-on and locally present. You don't delegate to other people and expect to get the desired results. You get involved. You review the property yourself, do your calculations, obtain advice and recommendation from your partners and make the decisions. If anything happens, you take responsibility. It's your call.

Rule #3
Hire a competent and experienced Realtor in the business. Someone you can trust to tell you the right time and the way it is, no matter how brutal and true it is. Treat it like a partnership. Follow the advice of your trusted Realtor with whom you develop a relationship. It's more than the purchase, it's also advice on the remodeling if you buy-fix-flip, advice on the approach to identify and put in a great tenant if you are going to lease the property for cash flow and capital appreciation, and it's also on the future sales side. Always have the same competent trusted Realtor on the purchase side and on the sale side if you are flipping.

Rule #4
Hire a competent and trusted contractor for your fix and flips. Someone as well you can trust to tell you the right time and the way it is. Treat it like a partnership. The best approach is a contractor that your competent Realtor will recommend. Don't have one? Call me or drop me an email note.

Rule #5
Don't cheap out or try to 'squeeze' your partnership with your Realtor, your contractor or any other vendors in the process. Your professional service providers - your 'partners' are your allies - and you want to keep it that way. You want a fair return on your investment, so do they. So it keeps everything in balance and honest and they'll want to work with you and participate in achieving all the objectives. It's business, remember? You start playing games and act selfish and greedy, the tables will be turned on you. And eventually, the word gets around too... you'd be surprised how fast.

Rule #6
Don't make the common mistake of inexperienced investors. I see this all the time and a dead giveaway of a shaky approach. Make sure you don't do the following:

1. Never buy on price. Buy on current value and future value after renovations for fix-flips.

2. Select the location of the property strategically.

3. With your competent Realtor-partner, comp a target property, never make the deal-killing mistake of 'comping' the future value at current comp values. It simply does not work that way - you need to understand how the market works. You have to think value-added and how an improved property can 'up-sell' in the market, especially in a seller's market.

4. Don't buy with the belief that you are paying 80 cents or less on the dollar. Really, think about this... why would anyone sell you a property at 80 cents or less on the dollar...??? Because they want to lose 20 cents on the dollar??? The value of the property is determined by what you pay for it. You get what you pay for. And don't believe the ones that tell you anything about buying the property 'wholesale' - that's a lot of  baloney.

5. But make sure you do this: for fix-flips, develop a successful formula for the renovations. Read my other blogs below.

Rule #7
Dump the investment gurus - you know... those talking TV heads from the 3am shows, direct mail advertisements and the seminars at hotels - the ones that sell you these programs. In real life, it really does not work that way. They are busy making money off of you from selling you the package and really not from real estate. To be a real estate investor, or a flipper, you don't need any of it. It's a waste of your time and money.

Rule #8
Before you consider any investment:

1. Make sure you know which price range you want to be in, and perhaps location as well. The price range of successful real estate investments moves from one price segment to another in different market shifts a different times - the market is dynamic and keeps changing all the time. These all the little gears of real estate -- different sizes that move at different speeds at different times. Why you need an experienced and competent Realtor to keep track of market shifts and specific locations. What was true or that you knew 3 months ago, is unlikely to be correct today as it likely shifted. And will keep shifting again and again.

2. Make that you have a down payment for the purchase, and cash for the renovations, or cash sustainability for a rental property.

3. Make sure that you have secured your investment lender and that you have been qualified. Lenders for real estate investments vary in size, amount of money in play and type. If you would like a recommendation to such a lender, call me or email me and I can have you connected to competent lenders that can help you accomplish your goals.

4. Buy right, then sell right. Choose strategically.

Rule #9
And remember that your competent Realtor is not an investment counselor but rather a specialist in market knowledge and your partner in identifying, negotiations and bringing to a close a successful transaction on both the buy-side and sale-side of the equation.

Rule #10
Don't hedge yourself on one property only. Real estate investing is much like the stock market. Use the 80/20 rule average. You'll make some on some deals, and make less on others, but when you average out, you should or must have a successful profitable formula.

So here you are, you have your 10 Rules To Becoming A Successful Real Estate Investor in Phoenix Scottsdale.

In the meantime, you may want to review my previous posts on:

3 Ways To A Down Payment If You Don't have One...

Investment Property? 6 Ways To Crunch The Numbers For Your Return

Richard Bazinet, Realty ONE Group, Phoenix Scottsdale Real Estate