On May 12, 7:09=A0am, "brazilrealesta...@[EMAIL PROTECTED]
"
<JazMar...@[EMAIL PROTECTED]
> wrote:
> On May 11, 8:54=A0pm, Socrates <SocraticMeth...@[EMAIL PROTECTED]
> wrote:
>
> > I am looking (after graduation) to consider a career in real estate.
> > Any advice would be helpful.
> > I am also considering (secondary interest) purchasing and renovating
> > properties as well.
>
> look at Brazil
AA says that one drink is too many and a thousand isn't enough. Real
estate education is the same. One great idea could make your career
and one thousand pieces of information might not be enough.
Risk Management is your most important goal at the beginning. You
need to make at least 100 mistakes before you become experienced.
People will lie, cheat and steal from you and you claim YOU are the
liar, cheater and thief. So start out with low dollar/low risk deals.
You are trying to eliminate downside, not hit homeruns. As you become
more experienced you can do larger dollar deals and take more risk for
more reward.
Almost everything will be a learning experience at first. Actually
read all the documents and keep copies in labeled folders. Note every
dirty trick done to you. Soon YOU will be supplying the contracts and
be in control of the negotiations. It really is true, every problem
is an opportunity THE NEXT TIME. If your figured out how to solve the
problem that is an opportunity to help someone else out (for a fee).
CAP rate is the single most important metric. Learn to calculate it
(Net Operating Income/Price).
There are two kinds of income: One Time and Recurring. Learn to do
both. When you get stuck with a dog that is bleeding you dry knowing
how to generate recurring income to pay the debt service is very
important.
The most common One Time income is appreciation. Flippers do this as
fast as possible. Buy and Hold owners do this as an exit strategy.
Think hard about your exit strategy before you buy. Appreciation can
be because you bought cheap, normal increases in price (inflation
related) or forced appreciation such as adding a parking lot or view
deck.
Recurring income is Rent. If your CAP rate is higher than your cost
to borrow you have the basis of a profit. If it is lower you are
going to need big down payments to avoid negative cash flow. CAP rate
divides by price, ROI divides by down payment and infers leverage and
risk. You can get eye popping ROI with modest CAP rates. Be very
careful believing ROI numbers and promises. O down payment with one
penny of profit is infinite return on nothing, (which may only be a
penny).
Stages of Buy and Hold:
Analyzing the deal: 1 hour
Property Management 10 years (learn to do this so you can fix problems
created by "professional" property managers.)
Exit Strategy (sale) (3 months)
Good Luck! and don't drink the hemlock.
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