We know you know this, but just to drive the point home: it’s likely you won’t always be successful in the real estate market. Because it’s easy to make mistakes and slip up as a new investor, it’s important that you learn from veterans who will readily tell you that you need an exit strategy in case a real estate deal or purchase doesn’t go like you wanted.
- Do Some Research
It’s hard to say what specific research you’ll need to do because each state and region is different. As a general rule of thumb, always do general and hyperlocal research on your specific area’s real estate market, laws, and patterns. There are millions of online articles and free web seminars to look into as a starting place.
- Get a Plan Together
A common mistake that many new investors make is not having a specific plan for their purchase nailed down. Fully understand what kind of property you want, how much money you can and want to make off of it, and what kind of locale you’re looking for. Have a written
- Look Out for Overpaying
This one is easy. When it comes to bidding on property, don’t overpay more than you can handle. In general when it comes to your finances and real estate, don’t bite off more than your wallet can chew or you’ll have no ability to create an exit strategy.
- Get a Network Going
If you’re looking into a very local real estate market to get started in, understand that most towns and cities have a very communal network of real estate brokers and agents. In order to be as successful as possible, you’re going to have to play nice and be neighborly with other investors and related people in your area.
- Know Your Limits
Real estate is something of a humble business. If you fly too close to the sun then you’ll end up burnt. In simple terms, greed isn’t your friend when it comes to real estate. When you make good investments, don’t keep placing bets to make your winning streak longer. The market is like a game of poker. Know when to hold and know when to fold, or else you’re going to hit a really bad investment before long.
- Don’t Forget a Buffer
You should never be scraping by as a real estate investor. Always have a cash cushion at your disposal. This may seem like common sense, but thousands of investors have crashed and burned because they poured every dime into a property and didn’t leave any money for an exit strategy.
- Be Pessimistic
Real estate has earned a reputation recently for being a safe way to invest your money, but that’s hardly the case. Like with most investments, there’s definitely a risk vs. reward dichotomy to consider. Go into every scenario with the worst in mind so you’ll know that you’re covered in the worst possible situation.
- The Art of the Deal
Exit strategies may not seem concrete, or even existent at all, until the last possible minute. In order to be flexible and make room for every possible outcome, always look for deals to make in order to come out of your loss as clean as possible.