Are you planning on getting started in real estate investing? If so, you’re making a smart choice! Real estate investing is still one of the very best ways to build wealth in the United States today but there are “lessons” that most investors wish they knew before they got started with investing in real estate.
In this article, we will cover the lessons that most investors wish they knew when they were getting started with investing in real estate. These lessons will ultimately help you to beat the learning curve and become a successful real estate investor from the very beginning of your career.
#1 – Learn How To Forecast Cash Flow Correctly
Forecasting cash flow, or planning for unexpected expenditures, is the first lesson that you must master when getting started with real estate investing.
Even though you may have a good period of nine months or longer where there’s a wide margin between your mortgage and rent, the reality is that unexpected expenses will occur.
As an Austin Texas real estate investor and landlord, you can expect a wide variety of expenses to come up at any time like needing a new water heater, roof, or other appliances in your investment property.
When these situations occur you don’t want to be left scrambling in search of money to fix problems at your rental property, that’s why it’s best to budget for these expenses from the very beginning. You will specifically need to budget for things like maintenance, repairs, CapEx, property management fees, property taxes, and other administrative costs.
The key to success with investing in real estate investing is choosing an Austin investment property that will cash flow well because once you find the right property and forecast your cash flow, making money in real estate investing will be easier than you imagined.
#2 – Consider “House Hacking” When You’re Just Getting Started With Real Estate Investing
House hacking is one of the oldest practices in the world because it involves buying a rental property with more than enough bedrooms that you can rent out to cover all of your housing expenses.
For example, you could buy a 4-bedroom single family home in Austin, and if you’re single, rent out 3 of the bedrooms while keeping one for yourself or you could buy a duplex and live in one half of the duplex while renting out the other half.
The good thing about house hacking is that this method enables you to eliminate all of your housing expenses since they will be covered by your renters or tenants. Once your housing expenses are nonexistent on a monthly basis you could then devote your income to savings or investment.
Most people never get the chance to do this and they spend up to 30% of their income on rent or their mortgage. If you can eliminate your housing expenses by “hacking” your house in the very beginning, you can invest in your future while accomplishing your financial goals faster than you imagined.
Don’t think that Austin Texas house hacking is something that you should only consider if you’re in your twenties because in today’s world every real estate investor (regardless of their age) is considering this method of housing.
Housing is expensive for just about everybody across the board these days and it makes sense for most investors to consider bringing aboard one or more renters to live in their property especially if they are starting out in life or are quickly approaching retirement and thinking about how they will be able to subsidize their retirement years.
#3 – Don’t Look for A Perfect Deal, Look for A Good Deal
Like most real estate investors in Austin, or elsewhere in the United States, you may be looking for the “perfect deal” when you invest in real estate but the reality is that those deals rarely exist.
Instead of looking for the perfect deal, you should be looking for a “good deal” or a property that’s in a great location, will cash flow well, and produce excellent ROI. Once you commit yourself to find good properties don’t be afraid to negotiate hard to meet your standards because these properties are out there, and you will ultimately find them if you keep searching for them.
Thankfully, in 2019 there are lots of great deals out there, especially in the Austin real estate market because, in Austin, the average home price is still low when compared with the rest of the United States and the cash-on-cash return is high.
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