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5 Tips from the Best Property Investors in the Business

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Looking to get started with property investing?

When it comes to real estate, it's clear that real estate is the investment of choice for many people.

What's less clear, though -is how to get the ball rolling.

When it comes to real estate investments, where do you start? How can you be sure that an investment is a good move, and what can you do to increase your chances of success?

If you're thinking of buying your first rental property, or are looking to learn about investments in general; there's really no better way to start than by looking for advice from others who have been there and done that. Sure, you could learn everything yourself; making mistakes along the way -but by learning as much as possible from others who have had experience in these areas, you can save yourself a lot of headaches, and a world of problems.

While there are plenty of people out there who claim to have advice, experienced professionals who have walked the walk and own property themselves are the ones that you'll want to pay attention to. With this in mind, let's take a look at some of the best investors in the business, and see what they have to say about property investing.

1. Treat Your Business Like a Business

Brandon Turner is perhaps one of the best known real estate investors. Brandon is an investor himself, so you know that you're getting first-hand information from him. He's also happy to share his experience and advice with readers on popular website, Bigger Pockets. Brandon's also authored a number of books including The Book on Rental Property Investing.

One key piece of advice that Brandon offers is something that is often neglected by those who are first starting out: the importance of treating your rental investments like a business -not a hobby.

"Create systems, processes, and rules that govern how you do things," Brandon explains on his website. "Pretend that you will be handing your business off to someone else very soon - so you need to have a carefully defined process for doing things. This process will change - and that's okay."

The key is to make sure your real estate venture, no matter how small, is something that is able to be outsourced if necessary. This will save you from creating a company that's dependent upon you always being there in order to function; and will allow you to scale your company more easily, since you'll already have clearly established processes in place.

2. Consider Enlisting a Property Manager

You might think you can do it all, and you probably can -especially if you just have one or two rentals and a decent amount of free time on your hands. But if you're hoping to scale your property empire, or looking to invest in properties that are out of state, then hiring a property manager may be one of the best things that you can do.

Dave Van Horn has been in the Real Estate business for over 25 years, so it's safe to say that he knows a thing or two about investing. In his article, When To Hire a Property Manager, Van Horn outlines some benefits that can come when you're outsourcing rent collection and leaky pipes, these include better screening and quality of tenants, less turnover, better repairs and maintenance systems, as well as better handling of legal issues.

"Looking back today hiring a property manager was one of the wisest things I've ever done," Van Horn writes. "It enabled me the free time to start a new and even more successful business than I had ever had before."

If you're still on the fence, here are a few more reasons to hire a property manager.

3. Educate Yourself

Leonard Baron, MBA, CPA is a San Diego State University Lecturer, a Zillow Blogger, and author of several books including Real Estate Ownership, Investment and Due Diligence 101. One of his key pieces of advice? To educate yourself.

"Fully educate yourself for 3-6 months," writes Professor Baron. "Talk to other people who own properties, read books, go to the local real estate investment clubs, etc. The better you educate yourself, the higher the chances you will take the proper steps to reduce your risks and make smart and safe decisions."

4. Carefully Estimate Your Expenses

While it's true that real estate investing can be an excellent opportunity to grow your wealth, it's important to ensure that you begin your foray into investing fully prepared -and with a realistic view of your expenses.

JD Esajian, star of Flip this House and President of CT Homes LLC, a multi-million dollar real estate investing company, outlines the importance of accurately calculating expenses when assessing the viability of a potential rental investment.

"Aside from initial costs, a rental property investment will encompass a range of expenses," says Esajian. Esajian breaks these up into five different categories: property taxes, maintenance, utilities, property management, and homeowners insurance, which he explores in his article: Estimating Expenses For Your Rental Property Investment

5. Find Your ROI

Once you've compiled a list of your projected expenses, you can then calculate your return on investment, or ROI -which will tell you whether you're going to be making a profit on a property. This is important because a high rental income doesn't automatically mean higher profits -remember, your expense could be higher as well.

"One of the most important concepts for new real estate investors to understand is return on investment (ROI) and the math involved in determining it," says Ethan Roberts, real estate writer, editor and investor. "ROI measures the efficiency of an investment and indicates how lucrative it will be," Ethan explains. "It's always expressed as a percentage or a ratio, so to calculate it, you divide the dollar amount of the return by the total dollar amount you paid out of pocket for the investment. Maximize your ROI on every rental property you purchase, and you're well on your way to building great wealth as a real estate investor."

When conducting research on your income and expenses, have a look at websites like Zillow and Trulia to see what other similar properties in the area are renting for, and take a look at developments that could impact that local economy, such as new jobs. Talk to local real estate agents or property managers to see what their thoughts are on the viability of a potential investment. When it comes to investments, it's important to ensure that you make informed decisions; so take the time to gather all of the facts.

Finally, let's round out this list with one final quote from Bigger Pockets founder and real estate investor Brandon Turner. Remember, "Real estate investing is not a competitive sport. Ask for help from others. Build relationships. Learn from those with more experience than you."

When you're first starting out, and even as you continue to expand your portfolio and branch out into different investments, you're going to want to keep on learning.

"As the famous quote says, 'You are the average of the five people you associate with most,'" Turner says, "Go associate."

Are you ready to start your own Rent Estate (tm) property empire? Take a look at 30 Tips for Financing Your First Investment Property to see how you can get started.

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