According to the author of Rich Dad Poor Dad(Robert Kiyosaki), the renowned investor and financial education expert, here is what you must know about real estate investing:
- Education: The most important thing when you start investing in anything is education. You will make a lot of mistakes at first, however, you need to learn from them, keep growing and keep learning. Another way to put this is that, If at all you want to succeed in this industry you can’t do without learning.
- Liquidity: Real estate is not a liquid asset. It’s not like Bitcoin, gold, or stocks that you can go into(buy) or get out(sell) anyhow and anytime. That is, it’s not that liquid. Hence, you must take your time to do your research before putting money into any property otherwise, your money might be tied into the deal for so long if you don’t get anybody to rent or buy it. 2 to 3 years is not too long to do research. Take your time and do your due diligence.
As a matter of fact, Robert Kiyosaki suggests that when you’re just starting in real estate, you should find 100 properties within 3 months, write a report on each of them, and then choose one. I think it’s very good advice.
- Location, location, location: In this business, location is very important whether you want to sell the land or use it for rent. If you get a good location at an exorbitant price, you’ll be able to break even in the long run. But that doesn’t mean you should overpay for your property deals. Always do your research and buy at a fair price. The location affects the:
- Number of available customers or people interested in the deal
- The price of the property
- The amount the property would be rented out
- How long it will take to sell or rent it out
- Management: You don’t just buy a property and leave it. You need to do regular maintenance to ensure the house remains in good condition and continues to appreciate in value. You can decide to do this maintenance yourself or give it out to a facility management company. It all depends on your preference.
- Financing: How you finance a house is very important. Depending on how large the deal is, you can decide to finance it with your capital or raise money from banks/individuals.
Note that because real estate is not that liquid, you should not always tie down your cash, especially if you need the cash to run other business activities. Also, you will need to gain some experience before you can start raising money from banks or other investors. You need a track record showing that you can successfully turn a property into a profit before people will give you their hard-earned money. You must earn their trust.
That’s all I have for you today. I know there’re many other expert tips out there, so feel free to add them in the comments below.
Thank you and God Bless!