5 Real Estate Investing Tips for Entrepreneurs
As an entrepreneur you are no stranger to hard work and big paychecks, however investing those returns can make life easier and ensure your future success. Here are 5 real estate investing tips for entrepreneurs.
- Define your financial goals: before you write a check for an investment, take some time to carefully plan your financial goals. What do you want to accomplish by investing in real estate? What type of real estate do you want to invest in? What do you expect your investment to do? How much do you want to spend? If you are unsure, consult with a professional financial advisor.
- Know the difference between investing in real estate and the real estate business: investing in real estate should be used to support your current business, not necessarily replace it – unless you are planning to jump into the real estate world as your business. Keep the two separate and be clear about your intentions and goals with your investment.
- Look at plenty of properties: give yourself a variety of options when it comes to investing in real estate. Don’t necessarily grab the first deal you find, and keep in mind you won’t be living in this property, so your personal needs or tastes should not be factored into whether you purchase the investment, or not. Create a list of criteria for your investment and stick to it when shopping around.
- Do a thorough financial analysis: identifying a property is only one part of the investing equation. A thorough financial analysis helps to determine in the investment makes sense. Be aware of sellers who try to over-sell you on the value if they do not have the data to back up their claims. You need to study real numbers, including items like property taxes, past utility bills, maintenance records to name a few. The most important numbers to study include: net income, cash flow, return on investment, cap rate, cash-on-cash returns and the over all ROI of the property. Don’t forget to factor in any mortgage debts or liens on the property!
- Don’t wait for the “unicorn” deal: just like unicorns, the perfect deal rarely exists – if ever. Don’t get caught up with the mindset that a better deal might be around the corner and risk the good one that is in front of you. If you have done your homework you should feel confident when it comes time to ink the contract.
For more than forty years, the Knipp name has been helping landlords and investors with their real estate development needs. We invite you to visit us online at www.KnippContracting.com or www.KnippCommerical.com and view our online portfolio.
Whether you are looking to renovate your existing commercial building, or break ground on a new commercial real estate project, our team of experienced experts are ready to help you with all your construction and real estate development needs. We look forward to hearing from you soon!