Unlock the secrets to successful real estate investing with our comprehensive guide! In this video, we delve into the essential aspects you need to master before diving into the property market. Whether you’re a beginner or looking to sharpen your skills, this tutorial has something for everyone.
What You’ll Learn:
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- Zoning Analysis: Understand the importance of zoning laws and how they can impact your investment strategy. Learn how to navigate these regulations to find the best opportunities.
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- Legal Analysis: Get to grips with the legalities of real estate to ensure your investments are secure and compliant with all necessary regulations.
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- Business Analysis: Explore how to assess the financial viability of properties and identify the most lucrative investment opportunities.
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- Negotiation Strategies: Gain valuable insights into negotiation tactics that can help you close deals more effectively and maximize your investment returns.
Whether you’re planning your first investment or looking to expand your portfolio, this video will equip you with the knowledge to make informed decisions and thrive in the real estate market. Don’t miss out on these expert tips and strategies from a specialist real estate accountant that could transform your approach to property investment!
Transcript of Video:
Welcome everybody. So today we’re going to do a little presentation on what it takes to invest in a piece of real estate. I get this question a lot from clients. Hey, how do I buy? What are the steps involved? What do I need to look out for when it comes to my first real estate acquisition? And I figure you know what rather than repeating myself 200 times over, I’m gonna create this little video for you, which will give you an overview and at some point down the road I’ll expand on these individual topics to talk about all the little individual steps and what to look out for there. So with that in mind, let’s just go ahead and go straight into an overview of what it takes to buy a piece of property and what to look out for. The very first thing is selecting a market. When we’re talking about market, I’m going to think about two particular areas. First is the product type and the second is where geographically it’s going to be located. You can be as specific as I want to have only retail spaces in West Los Angeles between X Block and Y Block. That is very very specific. That’s a very clear niche that you’re looking for and maybe you have a strategy around that type of real estate investment which will support your investment thesis. Alternatively, you can be as general as I’m looking for apartments within Las Vegas area, Clark County, or maybe you’re looking at the Western United States and I’m only looking to buy hotels over there. It doesn’t really matter what the asset class or the market is. The most important thing is that it supports a certain investment decision, a certain investment proposal that you’re considering to walk down the line towards and this is kind of the path that you want to specialize in. So with that in mind, I would say that if you don’t know, you should probably do a bit of research first and feel what type of asset class and what type of market you feel comfortable with. The most obvious one, especially if you’re starting out, apartments because apartments are very easy to understand. You at some point probably have lived in an apartment. You understand what it takes to do a residential lease. You understand kind of generally speaking what the rights and responsibilities are of a landlord and most likely the area that you’re going to want to do it is somewhere in your backyard. You can drive to it within an hour distance of wherever you currently live. That way you can physically see it and know it. On top of that, if you’re buying something within your geographic area, you know that particular city better than anyone. The number one thing I say to most of my clients is that a good solid real estate investment is one where you have a story behind it. If you can tell a good story about why this particular investment or why this particular purchase is the right one, then you’re on the right path. What I mean by story is they’re going to open up a high-end shopping center three blocks away from my apartment. That’s probably going to drive a lot more demand for this area. We’re going to see a light rail line go in there. Another great investment opportunity might juice up your rents quite a bit as well. That’s generally what we’re talking about when we’re thinking about market. Like I said, if you’re going to start off, it’s probably going to be residential with some aspect of it being in your backyard. You can graduate or diversify out into other asset classes and other markets when and if you feel more comfortable. Once you’ve determined that story, then the next question is going to be, does it make financial sense? You can have the greatest story on earth. You’ve got the public transportation. You’ve got the high-end shopping center. You have the value add opportunity. But if the price is wrong, then your returns aren’t going to be there. You might even end up losing money. And of course, the worst real estate investment you can ever make is one where you’re writing a check to cover the property every single month. In our world, we like to see our properties generate cash flow and give us that return, which will make our bank account happy. And it’ll help us delever by bringing down our debt every single month by servicing the mortgage. So with that in mind, I would tell you that the first thing you’ve got to do after you’ve selected this market, put the numbers to paper. Make your rent assumptions. What are they? Comp it to other similar properties in the area. Look at operating expenses. Right. What are they like these days? What’s the current condition? Hey, for example, if you’re in California, guess what’s going up these days? Insurance. So you’ve got to factor in a 25, maybe 30, 40 percent bump over what it has been in previous years because insurance companies are less interested in taking on that risk in this state, for example. So make sure you have your financial assumptions in there. If you’re not so sure, you get the opportunity to go out and speak to all the professionals who work on this type of stuff. Insurance brokers know insurance, for example. Talk to repair maintenance guys for what it costs to repair things these days. And you’re going to look at property taxes, which is fairly straightforward. You can calculate it based off what the county is. Talk to lenders, talk to debt brokers as well to figure out what the cost of financing is when you’re determining your cash flow. But all this stuff has got to go on paper, even if you know with almost absolute certainty that this particular investment you selected is going to be a home run. In addition to that, you’re going to want to look a little bit at the legal considerations surrounding your potential real estate investment, especially in states like, again, we’re very big on California here. Recently, tenant protections have ramped up significantly. And if you’re considering being a landlord, you’ve got to be aware of what your rights and also what your obligations are as a landlord to service your tenants and not get into a situation where you’re losing lots of money and or getting sued, which is an absolute nightmare. On top of that,