Investing in Real Estate | Without a Celebrity Scam
There really are two ways to invest in real estate.
The first way is to fall for a “free” course with a celebrity trainer. First, the celebrity is very rarely there, and secondly, the “free” course is usually just a way to get you to pay for a weekend course. Of course, that weekend course is then a way to get you to pay for “personal” training. We have had many clients here who have paid as much as $30,000 for training, before they purchased a house over the market rate!
We think that is crazy.
The other way is to research and learn on your own. You can do this by reading books, reading blogs, talking with local Realtors, and connecting with a local property management company.
I am hoping to do this series with the ultimate goal of saving you money.
Part 1 is RESEARCH.
So, where can you find the proper research? Hopefully, I can help with that using this blog, but there are many good books on the market that discuss real estate investments and how to be a landlord. One of the best resources to get these books is through the Institute of Real Estate Management. They have books such as Brick and Mortar Piggy Banks: Your Guide to Creating Life Changing Wealth Through Real Estate Investment. You can also get a great book from Nolo called Every Landlord’s Guide to Managing Properties.
Even if you plan on using a property manager, which, of course, we highly recommend, knowing the basics of what it means to be a landlord is very important.
The “free” classes don’t mention everything that can come up with your investment and not knowing you are buying more than a house, you are buying a business, can be devastating.
There are other parts of your research that are crucial. For one, you need to know the local laws for the area you want to buy a property in. For legal in Michigan, we rely on the laws set forth in the Tenant & Landlord Law booklet put out by the Michigan Legislature.
So, once you do some light reading and have narrowed down the area where you are interested in purchasing investment homes, it is time to take a quick trip there. A trip? Why? You need to know what the neighborhood looks like, you need to get a feeling of the area around the home and what path the neighborhood seems to be taking. You also need to meet with a local property management company and talk to them about the local market. Property management is ultimately about relationships and it is better to start that relationship face-to-face. You can also have a chance to go over their services and contract without having to figure it out completely on your own.
The “free” class providers would tell you that you don’t need to go there, that they will provide you with pictures of the home that will tell the story. The problem with that story is that it might show a great house, with vacant houses all around it. They don’t show you those pictures. They just remind you that a local property manager is already in place.
We were once that local property manager. Until we started telling investors the truth about their investment properties, then the “free” class provider started their own property management company.
Hopefully, that property manager is also a licensed Realtor in the area and can get you a list of available homes in the areas you want to see them. They can also set up visits to those houses and help you with the purchase itself. They get paid by the seller, and you save a ton on fees.
There are resources available to research a particular house or area. It is actually available through our website, though we don’t run the site. If you go to http://cherryhillre.com/rentfax, you can get a RISC™ score, which is a report that helps predict and compare how demographics, economics, schools, crime and other location-based factors affect the income stability of any rental property.
Once you have found the perfect house, it might need work and just about every property management company should have an in-house maintenance team or a stable of qualified and licensed contractors to help you get the home prepped for a tenant.
They can then work with the property manager to make sure your home passes its inspections by most cities for things like a certificate-of-occupancy and a rental license.
Questions about those? That is a topic for later.
Until then, happy investing…..
If you want to discuss it directly, give us a call at (248) 651-2700 or through our website.
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