It is an axiom of business that every venture or transaction will either sink or swim. The absolute truth expressed in this saying is that success or failure are the only two outcomes, and eventually it all ends in one place or the other. Naturally, real estate investors aim for success, and doggedly overcome obstacles in order to achieve it. Fortunately for them, there is a network of hard money lenders built to help them achieve their goals by providing financing for real estate projects that would otherwise sink into failure.
Hard Money Lenders Make Loan Decisions Quickly
Hard money lenders are private lenders who have little if any bureaucratic structure. The application, review and decision process is expedited. Hard money lenders are experienced in lending and are able to make credit decisions quickly. It is possible to obtain financing for a real estate investment in only a few days. In some situations it is possible to get a next day or same day decision. This lightning response has obvious benefits for the real estate investor.
Those benefits include the ability to close on a property quickly. Many sellers can be motivated by the possibility of closing a transaction quickly, and may even be willing to accept a lower price in exchange. Hard money lenders make this a real possibility. Experienced real estate professional knows how to supercharge the acquisition process by turning to hard money lenders.
Short Term Hard Money Loans
Hard money loans are typically very short term. They rarely extend more than a few years, and may be as short as a few months. This makes them absolutely ideal for fix-and-flip transactions or any other real estate investment that looks to realize an increase in value quickly. Of course, selling the financed property is not a requirement of paying off a hard money loan. Conventional bank financing can also be used to replace a hard money loan.
Hard money loans are typically interest only. This also greatly benefits the short term real estate investor since it reduces the monthly payment on the loan. A balloon payment at the end of the loan term may loom large and intimidate a novice real estate investor accustomed to amortizing a mortgage balance over a term of 1 or 30 years. On the other hand, experienced professionals understand that interest-only loans are an excellent application of leverage.
Real Estate Investors Need Strong Collateral For Hard Money Lenders
Not every real estate investor has the strong credit rating conventional lenders want to see on a loan application. In some transactions the best feature is the value of the collateral security. Many hard money lenders look at this as the primary consideration because strong collateral means that they are in a secure lending position. Low loan-to-value ratios make for a good hard money application.
This feature can work in combination with the ability to obtain a quick credit decision. Real estate investors are often on the prowl for properties with good potential. Finding the rare diamond in the rough with a highly motivated seller often means acting before someone else can put their hands on it. Hard money lenders focus on the value of the real estate will lend on these transactions. Conventional banks will spend weeks evaluating the market value.
Hard money is one of the most versatile tools available to the seasoned real estate investor. The ability to obtain a quick credit decision that extends for only a short term based on the market value of the property almost perfectly describes the financing needs of a fix-and-flip investor, but thinking of hard money in these terms is far too limited. Hard money can be an excellent option anytime any of these three features are a primary characteristic of a real estate loan.
Real estate title issues and property liens are some of the biggest hurdles to closing real estate deals. If you are planning to invest in real estate, make sure you understand property titles and liens. Here are some common title issues.
Common Title Issues That Can Affect a Real Estate Investment
- Recording errors – Clerical errors, or filing errors at your county’s records office, could delay a pending real estate transaction if not resolved quickly.
- Heirship – There are times when a property owner dies and living family members can’t be found. These heirs often show up after the property has been sold, presenting an ownership difficulty for the property’s buyer. At other times, a missing will may materialize after the property has been purchased. If that happens, a living heir could challenge ownership.
- Forged deeds – A forged property deed could challenge your right to ownership.
- Illegally filed deeds – If a minor, an undocumented immigrant, or a misnamed person files a deed, that could affect the legality the current or previous titles.
- Boundary disputes – Differing surveys may conflict causing a neighbor to challenge your right to some of your property.
Other title issues, such as a lien, could also affect an investment. A lien is a claim against property for unpaid debt. Liens on real estate are often placed by financing companies and other debtors because the property was used as collateral for an unpaid loan.
Types of Property Liens That Could Affect a Real Estate Investment
When a property owner borrows money to purchase real estate, he enters into a voluntary lien called a mortgage. The lending institution has first rights to that property if the borrower defaults on the loan.
Another type of property lien is an involuntary lien. If you purchase real estate with an involuntary lien placed on it, you could run into legal difficulties. Here are some common types of involuntary property liens:
- Contractor liens – A contractor, such as a construction company, who worked on a piece of property but wasn’t paid may place a lien on the property itself demanding payment for services rendered.
- Tax liens – Unpaid property taxes can result in a big headache for a property owner. If there are unpaid property taxes on real estate you have purchased, you could be liable for those taxes. The IRS may also place a lien on real estate to recover unpaid taxes owed to the Federal government. Typically, the IRS will seek to garnish a taxpayer’s wage income. If the taxpayer has an unstable work history and this is not possible, the IRS may go after the taxpayer’s property.
- Judgments – A judgment is a court-mandated action that requires a property owner to make a payment to an individual or institution before selling a property. These could result from unpaid alimony or child support, a lawsuit decided in favor of a debtor, or any situation where a presiding judge felt justice would best be served by placing such a lien on the property.
Resolving Title Issues and Property Liens
Sometimes, property liens are passed onto the buyer of the property. At other times, a lien may delay or halt the sale of the real estate until the money owed to the lienholder is paid. In some cases, the buyer and seller agree to pay the lienholder from the proceeds of the transaction. In this case the title company will ensure all parties receive the appropriate monetary compensation. Often, however, title issues and property liens take a long time to resolve eating away at potential returns on investment. For these reasons, real estate investors should perform a thorough title research before committing to any investment. In the case of equity crowdfunding, you should ensure that the investment underwriter conduct a thorough title research on your behalf.
A real estate investment sometimes succeeds or fails because of the margins. Sometimes the rate of interest charged on the loan to purchase a real estate property can make all the difference. It can be the difference between a profitable transaction and a losing deal. Certainly occupancy rates make all the difference in apartment complexes. Sometimes just one more vacancy can push cash flow into the red. Given these realities, it is sometimes tempting to eliminate a real estate agent from the transaction.
After all, real estate agents get a slice of the pie. They work on commissions based on the sale price of a real estate property, so cutting them out of a deal could potentially mean buying the property at a lower price. Although the commissions are not large enough to make or break any deal, every successful real estate investor knows not to waste money. So, it is reasonable to ask if there are good reasons to work through a real estate agent when buying or selling property. It turns out the answer is “yes”.
Real Estate Agents Can Network With Other Professionals
Real estate agents are in the real estate business, but they are not alone. The real estate industry includes appraisers, lenders, inspectors and regulators, in addition to a variety of other occupations. A real estate agent is involved with all these other occupations on a regular basis. Agents can make effective recommendations or introductions if necessary. They may have also encountered service providers who are not good at their jobs and should be avoided.
The real value of this knowledge is that real estate agents all work in a given locality. This means the other professionals they know all work in that same place. This means that the real estate investor can tap into a wealth of local knowledge for a real estate project. Many times it’s more helpful and faster than searching the Internet or other resources. After all, like politics all real estate is local.
In addition, a real estate agent will want to keep good relations even after a sale has closed. Calling a real estate agent for a referral on a handyman long after the transaction has closed will probably be a welcomed call. Real estate agents understand that real estate investors will be involved in more transactions and so offer the potential for greater income. As a result they will be willing to spend more time and energy on the relationship.
Real Estate Agents Are Determined to Make the Sale
As was mentioned, real estate agents are paid commissions based on the sale of the property. This means that if the property does not sell, they do not get paid. As a result, real estate agents are often highly motivated to help overcome last minute problems that might otherwise prevent a deal from closing. Again, as part of an established network they are sometimes able to bring the right people to the situation to make it happen.
Being paid when a deal closes also makes them interested in moving the transaction forward. Real estate is a long list of details, any one of which can derail a sale. Real estate agents act as effective managers, following up on appraisals and other details. Although they might be technically working for the seller, a real estate investor buying a property they represent may find the real estate agent to be acting as their personal assistant. This can leverage the real estate investor’s time.
Perhaps the simplest way to illustrate the reason many real estate investors want to work with real estate agents is the difference between price and value. Although real estate agents add to the price of a transaction, they add more to the value of the relationship. And a real estate investor who does not appreciate someone who can add value is probably in the wrong business.
Financing real estate investments is a key step toward achieving the maximum return on investment (ROI) on any project. Borrowing allows the investor to control a larger asset with a smaller amount of capital. Increases in the value of the total asset are larger when expressed as a percentage of the capital actually invested. Leverage is such a critical element in successful real estate investing. A sensible business strategy is to evaluate any potential real estate property from the underwriting standpoint of a lender.
This is not putting the cart before the horse. Underwriting is simply one of the filters that experienced real estate investors use to evaluate projects before signing on. In this sense it is no different from considering the market for a fix and flip residence. Nor is it different from considering the increase in rents that can be achieved by upgrading appliances in an apartment. Furthermore, looking at any property from the underwriting point-of-view of a lender is straightforward and easy to include in a systematic approach to real estate investing.
Concerns of a Real Estate Lender When Underwriting a Loan
One of the most basic underwriting concerns a lender has is the ability and willingness of the borrower to make the payments on time. The second concern is addressed by the history of the borrower. This is why a good credit score is an important asset for a real estate investor. A strong track record with similar types of real estate investments also demonstrates the ability to properly manage a project, including handling the monthly interest payments.
The first point, the ability to properly service the debt, is a function of cash flow. Real estate investors are somewhat notorious for being optimistic on this point. They differ from lenders on this approach. Lenders want to be comfortable if something goes wrong. Basing the ability to pay on a 100% occupancy rate while remodeling the building might not pass the lender’s test. Showing the ability to pay based on income from other properties or employment is a much stronger case.
Real Estate Lenders Set Realistic Standards For a Loan
Lenders, like the rest of humanity, want to sleep well at night, and the best sleep comes from knowing that a loan has adequate collateral. After all, collateral is the last resort the lender has against taking a loss on a loan. Adequate collateral can be defined in a practical sense as a loan-to-value ratio of 70%. In other words, a lender is unlikely to lend more than $70 for every $100 of real estate value. This ratio gives them some cushion against optimistic appraisals or a poor buying decision on the part of the borrower.
Real estate investors are always looking for under priced properties, and so may see a greater value than what the market is currently supporting. Lenders are not so optimistic or forward looking. They tend to believe that the market price is the actual value of a property. This means that evaluating the ability to make a sizable down payment needs to be part of the investors’ calculation when considering a real estate investment.
There are other considerations that come into play when financing real estate, but the ability to pay, the willingness to pay and the value of the collateral are three main considerations. Certainly, a loan application with these three elements in place will pass an initial underwriting review. Loans that do not meet at least these basic criteria face potentially insurmountable difficulties.
Developing the ability to evaluate a real estate project from the perspective of a loan underwriter can be a valuable skill for the investor. Optimism is a powerful motivator, and sometimes taking a more cautious point-of-view brings a valuable pause to a transaction. “Fools rush in where angels fear to tread”, as the saying goes, might be recast in with lenders playing the role of the wise and cautious.
Real estate investing is about leverage. Getting the highest return on investment often means putting the least amount of capital into the project. This means that the real estate investor must be comfortable with borrowing money in order to finance a project. This means that the investor has to be aware of sources of capital when looking for real estate loans.
Seeking Funds From Family and Friends
A significant percentage of entrepreneurs and real estate investors got their first seed capital from this source. While the downsides are obvious, the potential to share wealth in the form of investment return is also part of the equation. Keep in mind that when borrowing from family members the IRS establishes a minimum interest rate that must be charged to avoid imputed gifts. The Applicable Federal Rate depends on the term of the loan and can be either accumulated or paid monthly.
Loaning Money From Banks
Banks are in the business of lending money, and a good banking relationship can be a real asset to the real estate investor. Traditional Banks tend to be on the conservative end of the lending spectrum. Banks may not be as sanguine about a project as the real estate investor. Providing sufficient documentation on the ability to repay a loan may be difficult for a larger project. It may also be difficult if the real estate investor is still working a full time job.
Hard Money Loans to Fund Real Estate
Hard money refers to lending done by private investors to others. Loans are secured by the real estate collateral and are typically shorter in duration than bank financing. The interest rate is also typically higher than that charged by a bank. However, hard money lenders are able to make credit decisions more quickly and with less paperwork than a bank.
Real Estate Crowdfunding For Your Loans
Crowdfunding is a method of financing real estate by allowing multiple lenders contribute portions of the total loan amount necessary for the project. It requires an online lending platform, such as Sharestates, to act as the intermediary between the borrower and the multiple lenders. It is an innovative method of financing real estate transactions that can have a higher interest rate than hard money lenders. But on the flipside, crowdfunding can also lend on more innovative projects.
Where to Go For The Best Loans?
The most obvious answer is that the best place has the lowest rate. This is because the cost of borrowing is a direct deduction from the return produced by the real estate investment. A lower rate means a higher return for the real estate investor. Terms of the loan, including personal guarantees can influence this decision. In general the lower the rate the more attractive the financing package.
One important caveat is that borrowing from the same source for a second project is easier, assuming a successful completion of the first deal. This was alluded to when discussing the value of a good banking relationship. So, the type of real estate projects the investor is contemplating in the future may influence where they turn for borrowing. Investors who plan on growing in the business might be well advised to choose a lender that is a better fit for tomorrow, over a lower interest rate today.
Fixing and flipping residential real estate as an investment strategy can be a fraught proposition even for someone who has done their homework. Among the most unpleasant surprises is to learn that an investment property being renovated has been burglarized. The financial setback can be significant and can include lost tools, materials and time. In addition, vacant homes are subject to vandalism which can add to the cost and time of prepping the home for resale.
Although insurance may cover some or all of the cost, it cannot cover the time lost to the burglary or vandalism. This is one of the situations where an ounce of prevention is worth more than a pound of cure. The problem is that the risk of burglary and vandalism for an investment property being renovated is greater than it is for owner-occupied homes. Just an ounce of prevention may not be enough. In addition, the owner is often not there when workmen are showing up.
Protect the Investment Property With Wireless Systems
Fortunately, technology has provided the solution to these problems. Internet based systems such as Blink allow multiple cameras with motion sensors to be installed throughout the house. These systems also can support temperature sensors. This may be an important feature for northern climates where freezing temperatures can cause as much damage as vandals. Alerts from any of these sensors can be sent to smart phones.
However, these systems are connected through the internet, and not every house undergoing remodeling is equipped with internet access. In addition, security experts warn that it may be possible to disconnect wired internet connections from outside the house, effectively disabling the entire system and leaving the house unprotected.
Cellular based systems overcome this potential security breach. Systems such as Simplisafe have the same functionality regarding the different types of sensors. These systems send the same alerts to smartphones, but communicate over cellular phone networks rather than over the internet. In addition some of these cellular platforms are available on a monthly basis. This allows the fix and flip remodeler to disconnect the security as soon as the job is finished.
Both types of systems offer a convenient wireless connection between a central unit and the remote cameras and sensors. Many are battery operated. This means that they are easy to install and easy to move to the next job. This portability can be an important feature during a job since it allows cameras to be repositioned easily. This can be important when different areas of the house are under construction.
More Options to Secure the Investment Property
Of course, security firms such as Protect America and ADT which provide residential security systems are also an option for an investment property undergoing remodeling. Some of these systems require more extensive installation, but can be left behind and become a feature of the remodeled house. If a fix and flip remodeler is concerned about burglary, it is at least possible that a potential buyer could feel the same way.
Motion detectors that turn on outside lights are a very simple and low cost solution. They act as a deterrent and can be particularly effective when paired with a fake camera. The concept is to make the house a less attractive target and encourage thieves to choose the next target. The downside of this faux approach is that because they do not send alerts it is impossible to tell if they are effective.
The downside of any high tech security system is that they tend to be viewed as infallible. The fact is that no system is infallible. Sometimes the old ways are the best. Establishing good relations with neighbors can sometimes provide the best possible security.
Like beauty, value is in the eye of the beholder. However, for better or for worse, most banks and lenders involved in real estate lending do not see it that way. They require a systematic evaluation of the market value of a piece of property before they will agree to lend against that value. The document that provides them this evaluation is called an appraisal. An appraisal can make or break estimation for any type of real estate deal.
There are different appraisal methodologies for different types of real estate. Investment real estate is often valued under the Income Approach. This is a formulaic appraisal method that divides the anticipated income from the property by the capitalization rate. Difficulties come from determining the correct value for each part of the formula. For residential real estate, however, the Sales Comparison Approach (SCA) is the most commonly applied method.
Elements of the Sales Comparison Approach
As the name implies, this approach compares the value of a property to other properties that have sold recently. Only actual sales that have closed can be considered. There is typically a geographic and time limit on “comps”, as they are called. If a property exactly like the appraised property has sold recently, the job of the appraiser is straightforward. However, this is rarely the case. Skill is required to adjust the sales price of the comps. Appraisers have to account for features either in or missing from the appraised property.
For example, an appraiser would deduct if the comp has an attached two car garage and the appraised property has a detached one car garage. Naturally, there is some estimation involved in determining the value of a garage being attached to the house. Similarly, if the appraised property has a finished basement while the comp does not, an estimated value will be added to the appraised property.
Residential real estate appraisals typically include three comps if at all possible. Each will require adjusting the value of the appraised property for some features. This process results in a range of estimated market values for the appraised property. The appraiser then applies some professional judgment and arrives at a market value. A lender relies on this valuation to decide if there is sufficient collateral to make a loan.
Shortcomings of the Real Estate Appraisal
Until there is a willing buyer with the financial resources to close the sale, there is no way to tell how much a particular piece of residential real estate is worth. A single family home located across the street from a highly regarded elementary school is worth more to a family with children than a retired couple. It may be worth even more to a teacher who has just been hired to teach at the school. An appraisal cannot possibly reflect this type of variable.
In addition, prior to the collapse of the real estate market in 2008 many appraisers colluded with the buyers and even lenders. Appraisers documented market values specified by the buyer or lender. This was clearly unprofessional and unethical. However, because lenders rely so heavily on appraisals in making loan decisions there is still pressure on appraisers to deliver the “right” valuation. Professional standards and comparable sales similar to the appraised property are the best safeguards to a good appraisal.
According to MarketWatch, real estate is the fastest growing segment in crowdfunding. In fact, it is expected that real estate crowdfunding (RECF) will create $500 billion or more in funding and generate $3.2 trillion in value each year by 2020. Furthermore, RECF will create more than 2 million new jobs by 2020. From 2009 to 2014, the industry grew by 1,000 percent.
3 Reasons the Real Estate Crowdfunding Ecosystem is Getting Bigger and Better
There are several reasons why this growth is happening. I believe it will lead to real estate crowdfunding becoming the norm in real estate investing within the next 10 years.
1. First, technology makes delivery of services more cost-effective and efficient, and it makes those services more affordable for the consumer. Before RECF, developers and borrowers had fewer choices in where to go for a loan or to obtain real estate funding. Thanks to the JOBS Act of 2013, the economics of funding real estate has changed. Technology itself is making real estate transactions easier to conduct, more transparent, and less costly.
2. Another reason RECF is replacing traditional real estate is lack of trust for the status quo. Millennials are now the largest living generation, and they don’t do things quite like their parents and grandparents did. Millennials are less trustful of banks than older generations, and fewer of them carry credit cards. In a word, Millennial attitudes toward finances in general are giving birth to entirely new ways of paying for services. This attitude is affecting just about every aspect of modern life from obtaining a student loan to buying a home.
3. The above two phenomena are leading to a proliferation of RECF platforms. In 2015, there are 140 RECF platforms in the U.S. and thousands around the globe. This increase has led to specialization among companies entering the space ranging from commercial leasing to 1031 exchanges. Both equity-based and debt-based crowdfunding are entering new and uncharted territories every day. Not only are opportunities for accredited investors getting better, but new opportunities are arising for non-accredited investors with the promise of many more to come.
What This Means for Real Estate Developers and Investors
As technology gets cheaper, easier to implement, and more ubiquitous, industries that rely on that technology will become more efficient and profitable. On the forefront of this revolution is real estate crowdfunding.
The generation that is most familiar with the technology that makes real estate crowdfunding possible are Millennials. The Millennial generation, will soon be the most economically powerful generation alive as the largest transfer of wealth in history takes place before our very eyes.
Real estate developers looking for investors can be confident that someone interested in their project is just around the corner—or one Google search away. Likewise, real estate investors looking for a project to capitalize on can find one right at their fingertips. Docusign and other document transfer technologies are remaking real estate transactions to be more efficient and transparent. Emerging technologies like the blockchain are promising to improve upon that with smart contracts and heightened transactional security. To be sure, technology is making real estate investing more accessible to more people at a better price.
I envision a time when all the documentation necessary to conduct a real estate transaction can be handled instantaneously without travel. Conducting real estate transactions through digital channels is here to stay. Thanks to real estate crowdfunding pioneers like Sharestates, it’s only going to improve until no one is doing it any other way.
Success in real estate investing comes like success in many other fields; through hard work and continual effort. Every real estate investor can tell of a fortunate break here and there, and most are reluctant to take credit for success, but all can attest to the fact that perseverance was a necessary component. Given that, here are 5 ways to persevere and triumph in real estate today.
Recognize Changes in the Real Estate Market
Strategies that have worked in the past may not work today. Mortgage rates have been and continue to be very low. In addition, there is a lack of starter homes on the market. Successful strategies in real estate investing will be based on these and other current market conditions for a particular area. Flip strategies, for example, might focus on cleaning up starter homes rather than upgrades to move homes into higher priced market segments.
Online tools are also playing a greater role in the real estate investment business. Learning to access resources through the internet is a change for many investors. Using video made by drones to market properties was unheard of only a year or so ago, but is now almost a requirement for high-end properties. Finding drone operators is easier on the internet than anywhere else.
Diversify Real Estate Investments
Continuing to do the same size and type of real estate transaction is a comfortable approach, but it can also be very limiting. The type of property for that transaction may not always be available. It is important to stretch investments to a different scale or market segment. This brings diversity to the portfolio as well as economies of scale.
However, it is important not to over leverage properties or invest in unfamiliar strategies. There is a balance in this area that should not be ignored. Starting small is wisdom, staying small is safe, but growing too fast is dangerous. Success means taking measured chances to grow.
Conduct Due Diligence on Real Estate Transactions
Overcoming difficulties in real estate investing can be a double-edged sword. While it leads to success, it can also breed complacency. Experience is a great teacher, and one of the lessons it teaches should be the need to do fundamental research on each and every real estate transaction.
There will always be unexpected developments, but the more groundwork the real estate investor commits to a project the more likely a favorable outcome becomes. Uncovering problems early leaves more time to develop solutions, or can even create the possibility of walking away from a bad investment.
Consider Taxes on Investments
As has been said, “It’s not what you make, it’s what you keep that counts.” Income taxes can become a significant drain on the return earned on investment real estate and have to be included in any calculation. Unfortunately, tax laws are complicated and confusing.
However, they also include some significant benefits for real estate investors. Understanding how to structure transactions to maximize these benefits can improve the after-tax return. Learning to keep an eye on income tax considerations is a must for a successful real estate investor.
Set Aside Time as a Real Estate Investor
Anyone starting to invest in real estate begins with enthusiasm and dedication. However, this can wane over time as the demands of life, and probably a full-time job, begin to take a toll. Often the number of hours spent on evaluating opportunities or developing properties also begins to dwindle.
Success in real estate investing requires dedicating blocks of time to do the necessary research, paperwork and legwork. This can mean pushing other things aside to protect those blocks of time. Discipline in time management is an absolutely critical skill that has been mastered by every successful real estate investor.
This list is not exhaustive. Activities such as always exploring new ideas and developing new networking contacts could have been added. However, the 5 ideas listed here are great ways to grow as a real estate investor. They cover the basics and pave the way for greater success in the future.
“It’s not what you know, it’s who you know.”
While this old saw is not entirely true, it’s not completely wrong either. After all, business is done between people who work for companies, not between companies by themselves. Inter-personal relationships are and always will be an important aspect of any business, especially real estate. Effective networking, getting to know people, is as important in real estate as understanding the local market.
Naturally, a new real estate investor will look to benefit from the knowledge offered by other, more experienced real estate investors. However, there is actually a wide range of professionals that can add value to a real estate portfolio and increase the investment rate of return. This list includes real estate agents, contractors, appraisers, inspectors, mortgage brokers and real estate attorneys, just to name a few.
Meeting Real Estate Professionals Online
Meeting this wide range of real estate professionals is very straightforward on the internet. There is a wide range of discussion forums available that focus on specific areas of real estate investing, real estate lending and real estate management. Of course, like online dating online networking brings the risk that what is being presented is not real. Always be careful when sharing personal information.
Another fantastic place to network is the discussion forum of your favorite real estate podcast. They often offer a menu of forum topics, such as this list of over a dozen specialties from BiggerPockets.com, a popular podcast. They offer forums from General Information and Investor Basics to such specialty topics as Financial, Tax and Legal and Real Estate Technology and the Internet.
Locally Building a Real Estate Network
Like politics, all real estate is local, and at some point in the real estate investment process the best way to build a network is to work locally. There are a wide variety of real estate investment clubs, and like the online forums they often have a specific focus. Attending a special focus club is a good way to learn more about that area of real estate investing.
Another way to build a local network is to attend real estate auctions. These are typically attended by real estate investors and professionals. In particular, look to build relationships with those who won the auction. There are several ways to learn where and when auctions will be held. There are subscription services for auctions, and notices are printed in local papers and online.
Networking Tips for Real Estate Investors
Keep in mind that networking is an important part of real estate investing. It is an investment of time that contributes to success as a real estate investor. Although any individual networking event may not produce immediate results, over time networking is worthwhile. Keep this in mind if attending local events seems unproductive and fruitless at the beginning.
The other important aspect of networking to remember is that it is a two-way street. It is as important to contribute as it is to receive. In discussions, offer only helpful comments. Offer to help put chairs away or straighten up the room after a networking event. Remember that networking is about building professional relationships, so behaving professionally is important.
One aspect of networking that might not be worth the time is attending real estate seminars, particularly seminars that charge for attending. The ready availability of information on the internet and through discussion forums means that more quality information is available for free than ever before. In addition, seminar selling is still as prevalent as ever.
Like other aspects of the real estate investment business, successful networking takes time and effort. It may come easier for some people than for others, but everyone can build a robust network. The time spent in creating a network will result in a more profitable career as a real estate investor.