A website with thousands of real estate investor subscribers commissioned me to write some basic real estate investing articles. I wrote a short series, and an excerpt from a credit article follows:
Credit History and the Successful Real Estate Investor
Real estate investing is a business. No matter what your goals, property types, or investing strategies, investing in real estate is a game of numbers. It’s return on investment, and your profitability in the business will involve one or more of these factors:
- buying right;
- efficient and cost effective renovation and improvements;
- effective management;
- proven marketing and rental techniques; and/or
- selling right.
We didn’t start with “buying right” without good reason. All of the rest of the items on the list can enhance your return on investment, but they’ll be playing catch-up if you didn’t make the best deal on the front end.
Too many new real estate investors place all their efforts into finding and negotiating the best price. Buying below market is quite important, but a real estate investor can give back much of the price advantage in the financing. Unless flipping a property very quickly, the financing costs of holding properties are eating away at total return from the day the deal closes.