Ok, so this idea sounded better in my head than when I actually wrote it down. That being said, while remaking the classic Christmas song to fit real estate investing might not work particularly well (especially given that Christmas already happened), I must note that some of the best pieces of advice I’ve ever gotten are quick tidbits that are easy to remember and therefore easy to recall in the heat of the real-estate-investing moment.
Over the years, I’ve heard quite a few, so I will narrow that list down to the top 12.
On the first day of real estate investment… Ok, you get the gist. We’ll just make a numbered list.
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The 12 Real Estate Investing Tips of Christmas
1. Never (or at least only in exceptional cases) buy something you can’t resell in 45 days and at least break even, but preferably profit on.
2. If you are not embarrassed by your first offer, you have probably offered too much.
3. Live below your means. The difference between the “haves” and the “have-nots” often comes down to who is willing to defer gratification and who is not.
4. Rehabs always take longer and cost more than you originally think they will. So add a contingency to your rehab budget (we add 20 percent).
5. Never meet with tenants at your home, even if that means you have to meet them at a fast food restaurant or coffee shop. Always maintain a professional relationship with your tenants (and vendors, employees, etc.).
6. Treat real estate like a business, not a hobby. That means systematize everything you can.
7. Maintenance is your best form of tenant retention. Don’t skimp on it, and follow up with your tenants to make sure they are satisfied.
8. Be your tenant’s ally, even when they are mad at you. Make the lease, law or company policy the “enemy” and work to find the best possible solution for them given the situation. (Note that the best possible solution for them is not just what they want, but what complies with the lease, policy, law and of course, what you want.)
9. Not every maintenance call is an emergency, even if the tenant makes it sound that way.
10. No employee, vendor or contractor is indispensable. If one of them starts to believe they are and acts that way, that is a really bad sign.
11. Never skimp on tenant screening. If a prospective tenant has an eviction, particularly a recent one, there is a much higher chance that prospect is willing to go through that process (and therefore make you go through that process) again.
12. Never skimp on due diligence and never trust a pro forma. Always verify the rent roll and use real numbers whenever possible (i.e. the operating statement, which you should do your best to verify as well).
So there it is. Hopefully these tidbits will help you as they have helped me. And of course, have a great New Years, and may 2016 be filled with many a profitable deal!
What are some of the most valuable real estate tips you’ve picked up over the years?
Leave a comment, and let us know!