Become a real estate millionaire in five easy steps - part 2
Do not get ahead of your emotions. Watching those house-flipping shows, hearing the real estate guru’s tell you about how many millions they make and counting the success stories of other investors is far from reality in the real estate investment world.
In part one of this series, we discussed how not to get caught in the real estate guru trap, which is step one. There are many excellent real estate seminars available you just need to take time and research the company before you reserve your space--even if it is free.
You may want to grab one of the books or podcasts I suggested as your first step in your new venture. After that, you can go to step two:
Step 2 - Do your research
Just like educating yourself, performing research is an ongoing, never-ending process. The research you will be conducting will be on the economy, job market, demographic trends, growth patterns all from the national as well as local market level. However, your focus will be on the local market where you intend to acquire an investment property.
Other local research to get familiar with is major private and public projects underway and on the horizon, as well as in changes in local ordinances or laws. For example, in Napa years ago the river flood control project was completed, which removed most of the risk of Downtown Napa having a catastrophic flood like in the past. This has significantly increased property values and development in the area.
You should keep abreast of what is on the market and what has sold or leased by keeping this information in a database or spreadsheet.
Real estate is local--it is nice to have the big picture of the demographic trends, for example, of our nation, but it is vital to know the trends in the city you intend to make your focus.
Familiarizing yourself with the local market, taxes, and laws are easier when you have a team of professionals available. Your team should at least include a real estate broker, accountant, and attorney.
Step 3 - Focus on what you know
I have had clients who were in business for themselves leasing space to run their business which later purchased the building they leased.
For example, Christy, a dentist, leased her office in a large medical office building. I represented the owner of the building listing if for sale and suggested to Christy she should consider purchasing. She knew the dental business, knew the building well and knew what medical practitioners value in office space.
With this information, she was able to anticipate what other medical practitioners looked for in an office. After her first purchase, she ended up buying a couple more medical office buildings as investments.
By focusing on the type of real estate she was comfortable with because she used these kinds of spaces in her own business gave her an advantage other investors may not have.
This leads us to step four--finding the right property and step 5--don’t get cocky both in part three of the series.
Burt M. Polson, CCIM, is a local real estate broker specializing in commercial, luxury estates and wineries. Reach him at 707-254-8000, or firstname.lastname@example.org. Sign up for his email newsletter at BurtPolson.com.