Investing in Maine real estate is much like investing in real estate anywhere else: successful investors are the ones who make the best decisions. While experience and intelligence are important, ultimately anyone can make a great decision about real estate that turns out to be a great investment.
At Integrity Mortgage, we love working with wise property investors who continue to increase their real estate holdings over time. This is why we’ve put together some tips for new investors and strategies that will help you to become a better, more successful property investor.
1. Think Strategically
Always have a plan and a strategy in place. While reality TV shows might show off property moguls who follow their gut and everything just works out, that’s not how reality works. In the real world, successful investments are a planned process. Conducting market research, developing relationships with reliable contractors, building credit and raising funds, and preparing for the unexpected are all important to your success as a real estate investor.
“Measure twice, cut once” is a piece of wisdom that all the best real estate investors live by, whether they’re flipping houses or purchasing them as rental properties. Perhaps the most important aspect of strategic thinking is to consider everything with your objective in mind. The right decision for your current investment might not be the right decision for your next investment, so make sure you’re taking the time to consider it before making a big decision.
2. Don’t Get Too Attached To Your Properties
While you should always consider how you feel about and like a property when making a buying decision, you need to remember that unlike when you’re buying your own home, you will not be living in your investment property. Rather, you will be flipping or renting out the property. With this in mind, it’s very important to remain as objective as you can when considering a purchase. While your tastes might inform you, the practical reality is that you need to be aiming for the desires of the market you’re in.
If you hate in-ground pools for example (perhaps because they’re hard to maintain) you may be disinclined to consider a property with an in-ground pool, However, if they’re in high demand in the market you’re investing in, then that would be a mistake. This principle of not getting too attached, or thinking too personally about your investment properties is really an extension of strategic thinking, but it’s a common trap investors fall into.
3. Try These Types Of Investing First
There are two great ways to enter the world of real estate investment: flipping a house or purchasing rental property. These two approaches to investment require significantly different mindsets, though in many cases your success will rely on the same skills and relationships. Flipping a house requires thinking of inexpensive ways of driving up the price you can get for it. There are a lot of common practices in this vein.
On the other hand, if you’re buying a house as a rental property, you will have a long term relationship with the property and may want to focus more on ways to maximize longevity and minimize costly maintenance for your property as well as affordable upgrades that can get you a good price. With the rise of industrial aesthetics in real estate, there is a lot of potential to make spaces you own low-maintenance, beautiful, and trendy all at once. The big thing to keep in mind is that you should plan for the total cost of ownership when finding a property and setting terms for rent.
Again, on reality TV a lone person, or a team of two appear to magically renovate a home and then flip it for a huge profit. The reality is that you probably don’t know how to do everything from plumbing and wiring to mudding, tiling, insulating, and painting perfectly. Especially for your first project, it’s wise to hire professionals for anything outside your wheelhouse, even if you’re very handy. You will no doubt learn to do more (or develop more relationships with more contractors who can do more) over time, but your first project is typically your riskiest since you have no prior experience or track record.
4. Manage Your Risks – Get the Right Insurance
Regular homeowner’s insurance won’t cover a vacant property. This is especially important to keep in mind if you’re flipping houses or your’e between tenants. There’s separate specialty insurance that can cover losses due to natural disasters, fire, burglary, or other damages to your investment property, though. This kind of coverage is especially important to learn about when you’re getting started, because it can save you tens of thousands of dollars in the long run to be covered by the right insurance.
5. Get To Know the Local Market
Do your research. Check out what houses are going for in your area, what kinds of amenities, architectural styles, square footage, number of bedrooms and bathrooms, and what neighborhoods are hot if you’re flipping houses. One common strategy for flipping houses is to buy the good houses that aren’t currently in demand, improving their value on the market with inexpensive renovations, and sell with a strong value proposition. Other investors hold onto houses that the market isn’t right for as rental properties and renovate and flip them later when the market is stronger or demanding the right things.
If you’re planning to rent the property out, consider checking the local Facebook community pages. There are always people expressing what kinds of house or apartment they’re trying to rent. Figure out what kind of property would be affordable to purchase, but commands a high rental price in your local market. This is the key to making a good profit after the cost of mortgage and any needed repairs.
6. Create a Support Team
Whether it takes months or years, if you continue to invest and grow your holdings and ambition, you will need a dedicated team. This often happens organically, as you become the main client for your favorite contractors, or you find a mentor who understands your vision and wants to help. Similarly, your real estate agent and your mortgage provider will become close allies in your property investment business. Choosing the right people to work with is at least as important as finding the right properties to purchase.
If you’re ready to start investing in real estate, consider getting your mortgage with Integrity Mortgage. We have experience helping new investors get started and we want to see you succeed. Contact us today to learn more about how we can help.