When it comes to investing in MN rental properties, it’s always a good idea to have an exit strategy. In fact, one of the most popular exit strategies investors rely on is the lease option. After all, if you’re having trouble selling a property, you can always try to find a tenant willing to lease it with the option to buy.

But what about using this strategy from the get go on a property you’d like to flip?

You may not realize this, but flipping houses using lease options is a viable option for generating a profit.  

If you’re a beginner investor that’s interested in flipping properties for a profit or have flipped properties before but do not have experience with using lease options, keep reading.

What Is the Lease Option?

A lease option is an agreement made between you and a tenant. In short, it states that your tenant has the option to buy your property at the end of their lease agreement. This is also known as a lease with the option to buy.

When you and your tenant sign a lease option, you aren’t allowed to offer your property for sale to anyone else. In other words, your tenants are the only ones that have the option to buy your property. Then, at the end of the lease term, your tenants have the option to either buy the property or move on. In fact, following through with a lease option is not required.

Why People Consider Lease Options

You might be asking yourself why your tenant would agree to rent your property first and then buy. After all, if someone wants to buy a home, why wouldn’t they just do it now?

There are many benefits to using the lease option as a tenant, including:

• Time to think through the purchase without feeling the competition from other buyers
• The ability to improve credit ratings, gather a larger down payment, and get finances in order
• Securing a sale price now that will still be good in the future, despite how the property appreciates over time
• Taking time to test the environment and make sure the location is a right fit for them

Lastly, it helps tenants trying to sell a home they own time to finalize that sale before jumping into a new home purchase right away.

That said, the lease option is also a great option for investors too. For example, if you own a rental property and want to sell it now, but find yourself in a stagnant market, the lease option helps you find a tenant that will pay rent until they buy or move on. Whether your tenant decides to buy or not, you’ve collected rent on a property that may have otherwise been vacant while on the market.

In addition, agreeing to a lease option with your tenant means that during the lease term, chances are more likely your tenants will care for the property. With the prospect of possibly owning that property when their lease ends, your tenants will care for your property as though it’s already theirs. And if at the end of the term they decide to forfeit the option to buy, your property will be in tip top shape.

But what about investors that are in the business of flipping houses?

Why Flip a House Using Lease Options

If you’re a new investor with big dreams to flip properties and generate a profit, you’ll find that it’s not always as easy as experts make it sound. In fact, you may find yourself with a beautifully renovated home on your hands that just won’t sell.

If this is the case, you stand to lose a lot of money. After all, unless you paid cash for your property, you’re going to have to continue to pay the mortgage until you sell it. Not to mention, it’s likely you put thousands of dollars into upgrading the property so it would sell for a profit. Combine these two things, and you stand to fail as an investor before you’ve even started.

One of the best solutions to a property that won’t sell is the lease option. To start, it allows you to collect monthly rent from tenants, which can help cover the mortgage each month.

It also allows you to collect a non-refundable option fee from your tenants. This fee serves as a guarantee that you will not offer the property for sale to anyone else. And if your tenants decide not to buy at the end of their lease, you get to keep the money.

How to Flip Houses Using Lease Options

If you find yourself needing to implement the lease to buy option on a property you had hoped to flip, the process is simple:

• Purchase a property, renovate it, and try to flip it for a profit
• Once you realize the property won’t sell, find a tenant willing to sign a lease option
• Collect the option fee from your tenant so they can exercise their right to buy at the end of the lease term
• Sign the paperwork
• Lease your property to the tenant for the agreed upon lease term
• Once the lease is up, determine whether your tenant wants to buy or not

If your tenant decides to forfeit the option, that’s okay too. You still have the option fee to supplement your finances until you can either sell the home the traditional way or find another tenant willing to sign a lease option.

Alternative to Flipping Houses Using Lease Options: The Sandwich Lease Option

Of course, the above-mentioned scenario is only one way to flip a house using a lease option. In fact, investors oftentimes flip a house using lease options by playing the middleman between a seller and a tenant willing to buy later.

This is called the sandwich lease option and is more advanced than a traditional lease option.

Here’s how it works:

• Find a Motivated Seller: The first thing you’ll need to do is find a motivated seller that is having trouble selling their home. You can use newspaper listings, websites, Craigslist, and even the MLS to find ‘tired sellers.’
• Sign the Papers: The next step is to sign the Option to Purchase paperwork with the seller. This will allow you to purchase and transfer your interest to a third party when the time comes. You will pay the seller a certain amount of money each month and have to pay an option fee, just like your tenants would have to on a basic lease option. Make sure you consult with an experienced real estate attorney before signing anything.
• Find a Tenant That Wants a Lease Option: Now it’s time to find a tenant that will agree to a lease option. Make sure the tenant you place in the property has enough money to cover the option fee and will be in good standing come the time to buy. You might even consider using a leasing agent to help you find a qualified tenant. It’s also important to set the fees – option fee, monthly rent, or purchase price – above what you are already paying the seller, so you make a profit.
• Close with the Tenant: Have your tenant sign a lease agreement and a separate Option to Purchase. Don’t forget to collect the entire option fee, first month’s rent, and a security deposit. You never know if the tenant will turn out to be a problem halfway through the lease.
• Assign Documents to the Seller: Once you and your tenants have an agreement in place, return to the original owner of the property and assign the documents to them. Usually, the seller keeps the first month’s rent and you keep the option fee. If you use a leasing agent, you’ll owe them a commission as well.

And there you have it! The best ways to flip a house using lease options.

If you’re new to real estate investing and want to get into flipping houses for a profit, with or without lease options, you’re going to need some help. Luckily, with our specialized online training, you can achieve your dreams of becoming a successful real estate investor in no time.

With the  “My First Deal Done in 60 Days” course, you’ll learn everything there is to know about investing in real estate. From finding great deals to negotiating sales prices, developing a growth mindset to closing on deals fast, we’ve got you covered. So, take control of your life and your finances today by taking our course, closing your first deal, and making a profit as a new investor.

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While the top three side hustle jobs don’t include those that want to invest in real estate, it still earned a leading spot. And that’s because investing in real estate has the potential to generously supplement your income.

Not to mention it can give you the freedom to quit your 9-5 job and become a full-time investor.

The problem is that starting a side hustle, like investing in real estate, can be challenging. There’s a lot that goes into investing and it can be tough to balance with your full-time life. Plus, there are many things holding people back from investing in real estate such as fear and lack of experience.

But don’t worry. If you don’t have the time to commit to being a full-time real estate investor, you can still invest in real estate part-time. You just have to know the best ways to approach it.

Here’s a roundup of some actionable tips for making part-time real estate investing simple and easy.

How to Invest in Real Estate Part-Time

1. Find the Right Funding

If you want to start a side hustle like investing in real estate, even if just as a part-time gig, you’re going to need lots of money. After all, you’ll need to buy a property. Plus, you’ll have to make renovations and repairs, market it as available, and continue paying the mortgage until you place a tenant in it.

Funding your first piece of property can be difficult if you don’t have the finances. However, there are some creative ways to fund your first rental property, including:

• Seller Financing: when the seller of a property acts as the bank lender. You would likely pay a down payment and create a payment plan, like a traditional mortgage. However, you’d be paying the seller directly instead of the bank.
• Sheriff Sales: when a property goes to auction due to foreclosure. This process involves the lender, sheriff of the county, and the courts. They are conducted locally and don’t sell for as much as a traditional foreclosure auction, which means there are lots of deals for you to find.
• Retirement Accounts: if you have a 401(k), you can borrow up to 50% of the balance (up to $50,000) to buy a piece of property. The loan against your retirement account must be paid back within 5 years. You’ll also likely have to pay fees and interest on the loan. But it can be done.

Of course, if your finances are stable, you can buy a piece of real estate for cash or use a bank lender instead. The point is to make sure you have cash on hand before jumping into real estate investing.

2. Partner Up

Sometimes even the most creative way to fund your real estate purchase isn’t enough. Or, the thought of investing in real estate on your own, especially part-time, is not appealing.

If this is the case, you might want to consider getting a partner to go in on the investment with you. This will not only help you fund your purchase, it’ll help take some of the load off. Not to mention, if you choose a partner that’s experienced in investing in real estate, you’ll be ahead of the game from the start.

Nothing beats knowledge and experience in the real estate industry. If you can get someone who knows what they’re doing on your side, you’ll find that it’s easy to invest in real estate part-time.

3. Use a Trustworthy Contractor for Repairs

Before you invest in a piece of real estate, you should research local contractors. Even if your future purchase doesn’t need any renovations or repairs, it will at some point. This is especially true once you place tenants in your property.

And it’s worth mentioning that poor communication and shoddy maintenance work are some of tenants’ biggest complaints.

So, save yourself the trouble and start building a Rolodex before you even get started. This way, when the time comes to make a repair on your investment property, you know whom to call right away. Plus, your tenants will be satisfied with your proactive approach to maintenance and repairs, which might mean a lease renewal at the end of the tenancy.

4. Automate Everything You Can

Any time you commit to a new business venture, even one that’s part-time, you’re going to find yourself with more things on your to-do list than you ever imagined. Remember, balancing your full-time job, personal life, and a rental property is a lot of work.

To combat your feelings of being overwhelmed, aim to automate anything related to your real estate investment and save yourself time and trouble. After all, just because you can do something doesn’t mean you should.

Here are some of the best things you can automate to make your life easier as a part-time real estate investor:

• Call forwarding, automated voice mails
• Outsourced company blog posts to keep readers updated
• Autoresponder email responses and other drip campaigns
• Text messaging marketing to reach a wider tenant pool
• Social media marketing that automatically posts for you
• Live chat software for your website (or chatbots to direct people to answers or a contact form)
• Bookkeeping or accounting software that calculates and generate reports for you

When you invest in real estate part-time, you have to be efficient. And the best way to be as productive as possible is to automate routine processes.

 5. Find Your 80/20

80% of your life’s accomplishments in your life come from 20% of the effort you put in. While this can be kind of defeating at first glance, it’s actually helpful for part-time real estate investors.

Why, you ask?

Because as a part-time real estate investor without a lot of time on your hands, you know that more hours are not what’s needed to succeed.

If you want 20% effort to produce 80% of your results, you’re going to need to pinpoint exactly what is driving your results. For example, how are you finding real estate deals, handling record-keeping, and ensuring tenant satisfaction while working your full-time job and managing a personal life.

Once you know the answers to these questions, you can capitalize on the 80/20 rule.

6. Educate Yourself

For those looking to invest in real estate part-time, education is the key. You’re going to need to know a lot before you get started. And if you want to succeed and grow your portfolio, you’ll need to know what it takes to find and close great deals.

Luckily, with My First Deal Done in 60 Days training course, you can start your part-time real estate investing business with confidence.

Here’s a quick glimpse into what you’ll learn:

• How to develop and maintain a growth mindset, even in the face of adversity
• The best ways to find and close amazing deals using a variety of financing methods
• What’s needed during a property inspection
• How to close a deal that’s going to provide a high ROI

Investing in real estate is a big deal. You can generate a lot of money from a good piece of property, even if you’re only doing it part-time. That said, you have to approach real estate investing in a certain way if you want to succeed.

With our specialized online training, aimed at helping people achieve their dreams of becoming real estate investors, nothing is impossible. No matter how much time you have on your hands, you can find amazing properties, structure rock-solid deals, and generate a ton of money. So, sign up for the “My First Deal Done in 60 Days” course and take control of your life starting now.

The post 6 Simple Tips to Help You Start Investing in Real Estate Part-Time appeared first on Andrey Sokurec.

Of course, just like most things in life, there are pros and cons to investing in a rental property.

That said, we bet it’ll be a while before you find someone that believes that investing in real estate is a bad idea. In fact, 38% of Americans surveyed in April of 2019 claim that real estate is the best long-term investment.

Now, we’re not saying that investing in real estate is easy per se.

Because it’s not.

But if buying a rental property and generating income from it for years to come is a good idea, why aren’t more people doing it?

Today we’re going to take a look at the most common reasons why people aren’t investing in real estate these days, so that those on the fence about it will realize what they’re missing out on.

Top Reasons People Aren’t Investing in Real Estate

1. Fear

Fear of the unknown is a natural feeling. However, not everyone can overcome their fears and lead the successful lives they want for themselves.

Many people stunt their ability to grow wealth because they are afraid to get started. And while investing in real estate can be kind of scary at first, that fear shouldn’t hold you back from achieving your dreams.

And yet it does for many people.

2. Lack of Experience and/or Knowledge

We’ve all seen it on TV a million times. To earn a profit with real estate, all you have to do is buy a property that needs some TLC, renovate it a bit, and flip it for a profit – right?

Wrong.

A lot of people lack the knowledge needed to get into real estate investing. In fact, some people that think they want to invest in a property still don’t because they just don’t know how to get started. Or, they get started because it looks easy on TV, realize how much work it is to be an investor and give up.

The learning curve for real estate investors can be tough for anyone that doesn’t have the right resources on hand. This is ever truer for those that don’t have a mentor they can consult with either. After all, when it comes to investing in a rental property, there’s a lot to learn.

That’s not to say it can’t be done though. You can take it upon yourself to learn the industry, study what others before you have done, and practice. But for people that don’t know how to learn about real estate investing, sometimes the best option is to just move on and do something else.

3. Financial Trouble

It’s true there are plenty of creative ways to fund your first piece of real estate if you don’t have a lot of money. But the truth is, not having enough money for even a down payment is sometimes enough to stop people in their tracks, even if they really want to get into real estate investing.

Other financial troubles that may prevent people from moving forward on an investment property include:

• Poor credit scores
• Too much debt
• Lack of capital
• Not enough emergency savings

Of course, once you establish yourself and start building your portfolio, things tend to get easier. Not to mention, the experience under your belt helps you prevent costly mistakes. But getting there can be daunting for those that can’t get their finances under control, so much so that they give up entirely instead of just putting their plans on hold for a little bit.

4. Not Enough Time

When you decide to become a real estate investor, you might not realize how much time you’ll need to put into your property, at least at first.

For instance, the amount of time you spend just trying to find your first investment property can take what seems like forever. And hunting for a rental property isn’t generating you any money. When it comes down to it, many people prefer to spend their free time doing other things, rather than driving around looking for a rental property to buy.

In addition, there’s loads of work to be done after you buy an investment property too:

• Repairs and renovations
• Vacancy advertising and tenant placement
• Lease agreement drafting
• Property inspections
• Maintenance and emergency repairs
• Rent collection
• Bookkeeping
• And so much more

Although the option to hire a property management company to help is there, many first-time landlords feel as though they don’t want to spend any more money than they have to. This leads to horror stories about being overwhelmed and can steer those that haven’t invested yet the other way.

Are You Ready to Overcome the Obstacles?

Admitting that you’re scared, don’t know where to start, or don’t have the money to invest in real estate right this minute is okay. But what’s better is knowing you have some options for overcoming your fears, lack of knowledge, and financial obstacles.

With online courses like My First Deal Done in 60 Days training program, you have the perfect opportunity to break free of the thoughts that are holding you back from reaching your goals.

In this course, we’ll teach you how to:

• Develop a growth mindset and start thinking in terms of success, not failure
• Invest in real estate no matter your experience
• Inspect properties you’re interested in buying so you get the best deal possible
• Structure a winning offer to every seller you come across and increase your chances of closing
• Close the deal and even exit if you need to at the last minute

There’s a lot that goes into investing in a rental property, especially if it’s your first one. And while you can wing it and learn along the way, wouldn’t it be better to take it from the experts and have a plan in place before you get started?

Don’t let common excuses for not investing in real estate get in your way. If you set your mind to it, anything is possible. All you have to do is take a proactive approach to your life and conquer any excuse that tries to get in the way of your financial freedom.

The post The Top 4 Things Holding People Back from Investing in Real Estate appeared first on Andrey Sokurec.

But have you ever heard of cash-on-cash return?

To calculate your investment property’s return on investment (ROI) you have to know a few things. First, you must know how much money you initially invested in the property. Next, you need to know the total amount of money you’ve made off that property.

That said, it’s impossible to calculate the ROI on an investment property until after it’s been sold. Only then will you know the exact amount of money you made off that property and be able to calculate the true ROI.

Because of this, many seasoned real estate investors instead focus on cash-on-cash return, which can be calculated without selling the property.

To get a better idea about how profitable your investment property is (or will be), even if it’s your first one, you should learn about cash-on-cash return. And if you don’t know where to start, start here. We’re going to explain what cash-on-cash return means and why it matters.

What is Cash-on-Cash Return?

Cash-on-cash return (CoC) is one of the easiest to understand real estate metrics. This makes it especially helpful for those who are preparing to buy their first investment property.

In simple terms, cash-on-cash return is the money you’ve earned on the cash you’ve invested in an investment property. But there’s more to it than that. Cash-on-cash return is the money made on an investment property in relation to the amount of mortgage (and other expenses) paid during the year.

In other words, CoC return is a way to measure how hard your cash is working for you. It’s also a way to gauge how successful your investment is and will be in the future.

Calculating cash-on-cash return is pretty easy:

Cash-on-Cash Return = Net Operating Income/Total Cash Investment

The net operating income is the annual pre-tax income you collect on the property, minus operating expenses. Operating expenses include maintenance and repairs, property taxes, HOA fees, and insurance premiums.

The total cash investment is the amount of cash you placed into the investment initially. For example, the amount of cash you paid, loan fees, closing costs, and initial rehab costs.

To makes things clearer, we’ll show you two cash-on-cash return calculations.

CoC Return Example: No Loan, All Cash Payment

The first CoC return example we’ll share is one in which you buy a rental property in MN for all cash.

• Property Price: $250,000
• Closing and Rehab Costs: $12,500
• Monthly Rent: $2,100 ($25,200 annually)
• Annual Operating Costs: $16,800 (two thirds of the annual rental income)

Using these numbers, we find that the net operating income is $16,800. The total cash investment is $250,000 + $12,500, or $262,500.

The cash-on-cash return is thus 6.4%.

CoC Return Example: With a Loan

The next CoC return example we’ll share is one in which you buy a rental property in MN with the help of a loan.

• Property Price: $250,000
• Down Payment: 25% ($62,500)
• Debt Service (8%): $15,000 ($187,500 x 8%)
• Closing and Rehab Costs: $12,500
• Monthly Rent: $2,100 ($25,200 annually)
• Annual Operating Costs: $16,800 (two thirds of the annual rental income)

Using these numbers, we find that the net operating income is $16,800 – $15,000, or $1,800. The total cash investment is $62,500 + $12,500, or $75,000.

The cash-on-cash return is thus 2.4%.

For those of you that don’t want to hassle with math, check out this handy cash-on-cash return calculator.

Why CoC Return Matters

Calculating the cash-on-cash return matters for many reasons:

• It measures the amount of cash flow you receive in relation to the amount of cash you invest
• It works for the current period (usually one year), as opposed to the life of the investment
• It’s a dynamic forecasting tool that can be used to project earnings, expenses, and success

Lastly, cash-on-cash return gives beginner real estate investors a great way to compare properties before making a purchasing decision.

What is a Good Cash-on-Cash Return?

There’s a lot of debate surrounding what makes up a “good” cash-on-cash return. That said, most investors will agree that a good CoC return lands between 8 and 12 percent.

But remember, cash-on-cash return isn’t the end all real estate investment metric. It’s only one of many that help you determine whether a property is worth investing in.

Adding to that, it is not recommended you rely on your cash-on-cash return calculations past the first 12 months of owning an investment property. As you pay down the loan and your expenses fluctuate, you’ll find your CoC return isn’t as accurate.

That’s why, no matter what you decide is a good cash-on-cash return value, you should only use it to:

• Decide whether an investment property is worth buying
• See how hard your initial cash investment is working for you the first year

Not happy with the CoC return you calculated for your first investment property? Use it as a guide for the next property you buy so you can grow your portfolio with profitable properties that will generate the income you want.

How to Improve the Cash-on-Cash Return

Here are some ways to improve the CoC return of any rental property you buy:

• Low Interest Rate: if you are financing an investment property, make sure to secure the lowest interest rate possible. This will save you money in the long run and help improve the CoC return.
• Reduced Down Payment: sometimes when you’re just starting out, it’s hard to come up with a large down payment. If you can convince the lender to let you lower the down payment, your CoC return will increase. Doing this will also lower your annual earnings, but it also means your cash is working harder for you. For those that don’t have a lot of cash to spend upfront, sometimes this is the best option. If you find it difficult to get approved by traditional lenders, be sure to check out other financing strategies such as seller financing.
• Eliminate Expenses: by working hard to lower your annual expenses, you can increase the CoC return and turn a higher profit. For example, lower vacancies, avoid problem tenants, and offer amenities (and increase the rent) to lower costs.

Lastly, aim to find low cost deals on investment properties. The less money you spend on a rental property, the more money you stand to make in the end. This is why having the knowledge and experience to find great property deals is so important.

Final Thoughts

Are you ready to buy your first investment property and want a high cash-on-cash return, as well as a strong ROI over the course of owning a rental property? Then check out our My First Deal Done in 60 Days training program.

We can teach you all about things like positive cash flow, return on investment, and cash-on-cash return. But more than that, we can give you the knowledge and tools needed to find great property deals that will ensure your success as a real estate investor no matter how new you may be.

Knowing how to set yourself up for success comes long before you ever buy your first rental property. Let us help you learn the ropes so you go into your first deal with the confidence needed to turn your life around.

The post What is a Cash-on-Cash Return and Why It’s Important for Investors appeared first on Andrey Sokurec.

Buying an investment property is about more than just making money. Sure, generating a profit should be a priority. But some will argue that the location of your investment property is actually one of the most important aspects of investing.

When it comes to buying investment properties in Minnesota, there are plenty of locations to look into, including the suburbs.

But is buying an investment property in the suburbs the right choice for you?

For someone just getting into property investment, this can be a tough question to answer. That’s why today we’re going to outline the pros and cons of buying an investment property in the suburbs. After all, the more information you have about ideal investment locations, the higher the chances you have of becoming successful.

What is a Suburb?

Before we discuss the pros and cons of investing in the suburbs, it’s a good idea to talk about what the suburbs even are.

In fact, let’s take a look at the three most common ways to describe the area you might invest in.

• Urban: a highly-populated area that serves as both a place to live and work. Urban areas have political autonomy thanks to their size.  They also tend to have a central place for resources. Residences are typically close together. Multi-unit residences, such as apartments, are normal.
• Suburban: an area where there is a medium-sized population when compared to urban and rural areas. The residences often surround the larger city and are usually single-family homes. The resources available are limited and there is very little political autonomy or representation. There are, however, medical services and small shopping areas.
• Rural: open, spread out areas of the country where the population numbers are small. Many times the people living in rural areas survive off the natural resources of the land and farm. Or, they have to travel far distances for things like medical care and food. Common jobs in rural areas include working in coal, copper, and oil. 

Now, let’s take a look at the pros and cons of buying an investment property in the suburbs in Minnesota.

The Pros of Buying an Investment Property in the Suburbs

There are many reasons why a beginner investor might want to invest in a property that’s located in the suburbs of MN.

1. Lower Cost of Living

Living outside of the city means a lower cost of living. And while you won’t be living in the investment property you buy in the suburbs, you will be buying it. You can expect more square footage and yard space than ever when you purchase a rental in the suburbs when compared to the city.

In addition, a large home with plenty of yard space, at a great rental rate, is very appealing to high-quality tenants or home buyers looking for a long-term place to live.

2. Great Public Schools

When people think about settling down and raising a family, and thus providing a top-notch education to their growing children, many think about the suburbs. After all, suburbs generally have fantastic schools. And who doesn’t want that?

The reason this works for investors is that people looking to settle down, but continue to rent, don’t want to move a lot. This is disruptive to the family and often results in their children having to change schools. To avoid this, you’ll find more long-term tenants that want to sign lease renewals.

3. Less Turnover

One of the easiest ways to generate a profit as an investor is to purchase a property in the suburbs. That’s because people think of the suburbs as a more permanent place to live. This means less turnover for you.

Not sure what’s involved when your rental goes vacant? These are the things you’ll have to do to place a new tenant in your property every time it goes vacant:

• Clean, repair, and possibly upgrade the property
• Advertise the property as available
• Show the property to those interested
• Collect applications and run background checks
• Draft new lease agreements

If you don’t have an experienced property management company helping you out, this process can become very time-consuming. This is especially true if you have to do it each year. The goal you should have as an investor is to find a great property in a great location with great tenants that want to stay.

4. Less Wear and Tear

As we mentioned above, every time your MN property is vacant, you have to start the tenant placement process all over again. This means finding new tenants to move in your rental. And while most of your tenants are likely to be great if you perform thorough tenant screening, the truth is, having multiple families living in your property over the years is going to wear it down.

5. Close Proximity to the City

One of the most appealing parts of living in the suburbs is that you get the best of both worlds. Your property is in a quiet, family-friendly area that is safe and you are very close to the city whenever you want to go to dinner or see a show. Being able to enjoy the hustle and bustle of the city, and then go home to a quiet neighborhood and enjoy life is something many tenants and home buyers look for.

Cons of Buying an Investment Property in the Suburbs

Of course, just because there are lots of great reasons to invest in the suburbs of MN, doesn’t mean you should ignore the disadvantages and jump right into buying a property. Here are some of the things to be careful of when considering a suburb rental property as an investment.

1. Smaller Tenant or Buyer Pool

Because the suburbs have the long-term appeal, you may find that most people living in the suburbs are already homeowners. This means it may take longer for you to find tenants or buyers. Even worse, those looking for jobs are more likely to head to the city where the chances of being hired are higher.

2. Longer Commute

Sure, some people love the thought of working in the city and living in the suburbs. But depending on how far out from the city you are, you may run into two problems:

1. Tenants or buyers who work in the city don’t want to commute that far to work every day, decreasing your tenant and buyer pools further
2. If you live in the city and don’t have a property manager handling your rental you may not want to commute that far every time your tenants need something

The gas, stress, and wear and tear on your vehicle may not be worth it. And you can trust your potential tenants are thinking the same thing.

2. Lack of Property Diversity

Most of the properties you’ll find in the suburbs are single-family homes. And while this may be perfect for you as an investor, there’s always a chance you’ll want to diversify your real estate properties. This means you’ll have to invest in other types of property in the city, which could end up being far away. This will only make your life more difficult as a rental property owner.

3. Lack of Public Transportation

Tenants or homeowners who don’t drive or don’t have a car will not like the suburbs as much as the city. Access to public transportation is a feature many prospective tenants and home buyers look for. Unfortunately, that’s not always something you can highlight when you invest in the suburbs.

More so, those with cars may not like the fact that the main highway is so far away. This will turn some of your potential tenants or buyers away.

Final Thoughts

In the end, there’s always going to be pros and cons to any investment decision you make. The key is to do your research and really think about what you want, both short-term and long-term, when it comes to investing in a rental property in MN.

If you’ve just begun your journey as an investor, and need some guidance when it comes to making plans, finding the right property, and closing a deal that will make you money, check out our My First Deal Done in 60 Days training program. This online program will take you through every step you need to become a successful investor. Find out how to finance properties, what to look for during an inspection, and how to close deals fast so you can start off on the right foot whether you choose to buy an investment property in the suburbs or not.

The post A Quick Guide to Buying an Investment Property in the Suburbs appeared first on Andrey Sokurec.

When it comes to financing MN real estate, most people follow a traditional path.  They save up a large down payment, have steady employment and good credit, and hope a lender will finance the deal.

But what happens when you don’t want to — or worse yet can’t — follow the traditional path?

If you think that having no down payment, poor credit, a past foreclosure, or a shaky employment history means giving up your dream of building wealth through real estate, we have good news for you!

There is a creative way of financing real estate that may be just what you need to buy your first property: seller financing.

Seller financing has become less popular in recent years.  But this unique way of financing real estate offers beginner real estate investors a good chance of succeeding.  That’s why today we’re going to discuss some proven seller financing strategies that you can use to buy an investment property.

What is Seller Financing? (Pros and Cons)

Seller financing in a non-traditional way of financing a property without using a bank.  Instead, the seller of a property acts as the “bank” and extends credit to the buyer.  The buyer usually makes a down payment and then continues to pay for the property over time.

In other words, the seller and buyer agree to a down payment amount and a payment plan for the remaining balance of the purchase price.

Pros of Seller Financing

There are many reasons why both sellers and buyers might like seller financing:

• The terms, such as the down payment, interest rate, and payment amounts are negotiable
• The seller receives monthly payments until the property is paid for, which means a steady income
• Buyers can secure real estate with less than stellar credentials
• The entire process is quick, easy, and inexpensive
• Sellers can get rid of a property they don’t want anymore, without defaulting on the mortgage

Seller financing is a win-win situation for both seller and buyer looking to unload/buy a piece of real estate.

Cons of Seller Financing

There’s a reason why seller financing isn’t always a popular solution among investors:

• Sellers don’t get all their money at the time of the sale
• If the buyer stops paying on the property, the seller becomes responsible for the mortgage again
• Buyers cannot flip these properties until the property is paid for

Top Seller Financing Strategies

1. Focus on the Seller

One of the biggest advantages to seller financing is the fact that investors can sometimes buy a property well below asking price.

That said, if your seller feels uneasy about your proposal, you may not be able to secure the deal.

Many people have never heard the term “seller financing” before.  Throwing that idea to sellers you want to buy from may scare them into thinking you’re trying to scam them.

The key to starting seller financing negotiations is to:

• Make your main goal to help the seller and convey this to them during all conversations
• Build trust with sellers by explaining what seller financing is
• Disclose the pros and cons of seller financing, emphasizing the benefits
• Have different kinds of offers available, one of which is seller financing
• Have specific terms ready to present if a seller wants to know more about seller financing

By focusing on the seller and earning their trust, you’ll have more leverage when it comes to negotiations.

2. Understand the Seller Types

Not everyone looking to sell is going to want to get involved with a buyer looking for creative financing.  However, there are certain types of sellers that are more likely to consider seller financing.

Here’s a rundown of the most common seller types you should familiarize yourself with:

• Distant Investors. Sometimes investors move away from their investments and don’t want them anymore.  If money isn’t a problem, collecting a steady stream of income from a seller financing deal is a good option.
• Inherited Homes. Someone that has inherited a home and doesn’t want to deal with it might consider a seller financing deal.  Again, the steady income they can collect from you while you pay off the property might be enticing.  This is especially true if the property needs some TLC.
• Failed Landlords. People invest in rental properties with high hopes of earning passive income.  When this doesn’t work, they look for fast ways to get rid of their failed investments.  This offers you the perfect chance to get a great deal on a property.
• Retiring Investors. Investing in real estate can fund your retirement if you do things right.  But investors that have been generating revenue for a long time don’t always want to give up that passive income when they retire.  Negotiating a seller financing deal helps keep the passive income coming in, without having to maintain the property.

There are many opportunities to close a seller financing deal.  You just have to know who is motivated and zero in on them.  After all, people that are looking for a quick way out are more likely to see the benefits of seller financing.

3. Be Transparent

If you’re looking to propose seller financing to a seller, it’s important you be transparent about why you don’t qualify for traditional financing.

Of course, some of the reasons will become clear when a seller you’re working with runs a background check.  For example, a seller will find out about your employment status, assets, credit worthiness, and even past references.

But what a seller might not understand is why someone with decent credit, a good job, and money in the bank doesn’t qualify for a traditional mortgage.  This is where a little explanation can help.

For instance, maybe you recently bought a primary residence and the banks won’t approve a loan for a rental.  Or, maybe you just started your own business and there’s no way for you to show potential income to the lender yet.

There are many reasons why you might want to use seller financing to buy a property.  Being upfront with your seller from the start can help move negotiations forward.

4. Do Your Research

Did you know that a seller that still owes a mortgage on a property makes seller financing harder? Or that if the seller you’re trying to buy from has a tax lien on their property, the sale might not go through like you hope?

These situations don’t make it impossible to finalize a seller financing deal.  But they do make things more complicated.  As a beginner investor, you might not want to deal with these types of situations.

According to Jason Burkholder, a real estate agent with Weichert, Realtors, “most mortgages have a ‘due on sale’ clause that prohibits the seller from selling the home without paying off the mortgage. So if a seller does [seller] financing and the mortgage company finds out, it will consider the home ‘sold’ and demand immediate payment of the debt in full, which allows the lender to foreclose.”

This means if the lender carries out their right to require the seller to satisfy the mortgage in full immediately, your monthly payments will do the seller no good.

If this happens, and the money can’t be handed over to the lender in full, the property will be foreclosed on. This leaves both buyer and seller out of luck.

5. Look for Seller Financing Deals

It can be easy to find owners that are willing to negotiate a seller financing deal.  You just have to know where to look:

• Ask around, whether on your own or using your real estate agent
• Scan online sites like the MLS or Craigslist looking for keywords like “flexible terms,” “seller financing,” or “motivated”
• Buy lists of homeowners in an area, check their property’s equity, and mail a request to negotiate a sale

Of course, these are just some of the ways to find sellers ready to sell using seller financing.

If you’re ready to learn how to become a successful real estate investor, sign up for our My First Deal Done in 60 Days training program.  

To start, you’ll learn the basics of real estate investing, including 11 surefire ways to find great deals.  You’ll also get details about how to start the process of seller financing and buy your first investment property.

In addition, you’ll learn what to look for when inspecting properties and how to structure and present offers to sellers.  But best of all, you’ll find out how to close deals as quickly as possible.  

Taking charge of your life, achieving financial freedom, and realizing your dreams is something we don’t take lightly.  We’re here to help you every step of the way so you can begin your own personal journey as a real estate investor.

The post Top 5 Seller Financing Strategies for Beginner Real Estate Investors appeared first on Andrey Sokurec.

And if you invest in other in ways, such as stocks and bonds, owning real estate is a great way to diversify your holdings.

Individual investors own 47% of all rentals, so there must be something good about investing in real estate. But the truth is, it’s not always going to be easy.

Sure, the popular TV shows make it seem like buying, flipping and/or leasing real estate is simple and lucrative. And while it can be, it’s a good idea as a beginner investor to look at the pros and cons of investing before making a decision.

Today we’re going to take a look at the pros and cons of investing in rental property, so you can make an informed decision about whether to take the leap as an investor or not.

The Cons of Investing in MN Real Estate

While investing in MN real estate can pave the way to financial freedom, there are some hurdles you’ll have to overcome. This is especially true for new investors.

1. It Can Be Time-Consuming

It takes a lot of effort to invest in rental property. For example, budgeting, making offers, getting appraisals, scheduling inspections, and financing all take time.

And that’s just to buy the property.

This doesn’t include things like:

• Researching rent rates and marketing your property
• Screening tenants
• Emergency maintenance and repairs
• Seasonal inspections
• Collecting rent
• Handling bad tenants and vacancies

If you’re just starting out, you may be thinking that investing in a piece of real estate is a quick way to generate a steady income. And you may not realize the time commitment it takes to manage a rental.

But the reality is, real estate investing is not a get rich quick scheme that just anyone can get into. There are many risks and a lot of money at stake. And the time it takes to manage a rental can be overwhelming.

2. Not Liquid

Once you decide to invest in rental property, it’s tough to get out if you change your mind.

Real estate is not usually a liquid asset. In other words, you can’t convert real estate into cash and hope for it to retain its original value.

For a property to be considered a liquid asset, it must be a seller’s market. There will also have to be many interested buyers, and the transfer of the asset has to happen fast.

And even if you decide to sell your MN property as-is for an all-cash offer (which can happen fast), you’re might still lose money.

3. Getting a Good Deal is Hard

Many real estate investors find perfect properties and generate money immediately. But usually for beginner investors, that’s not the case.

There are circumstances that make finding a good deal difficult, especially in a competitive market.

Here are some of the ways you can make finding your first property easier:

• Become a real estate agent so you can access great deals before the general public
• If you aren’t a real estate agent, find a high-quality one before you start looking
• Research property prices, locations, and rent rates so you know what a good deal looks like
• Don’t rely too much on your real estate agent; they aren’t investors and approach real estate differently
• Join a real estate investing club to network with others
• Know which type of real estate investment property you want to invest in

Even if you do all these things, there’s a chance that finding the right property for you, at a price that works for your budget is going to be challenging.

Luckily, we offer an exceptional online program that makes finding a good deal easier and faster. With the My First Deal Done in 60 Days Training Program, you will learn everything you need to know about investing in your first rental property.

Discover the ways to invest in rental property, find and nurture good leads, inspect properties before you buy, and replace your “I can’t” attitude with an “I can” attitude.

The Pros of Investing in MN Real Estate

Don’t give up on your dreams to be a real estate investor just yet. Despite the few drawbacks, there are many positives to investing in real estate.

1. Easy Use of Other People’s Money (OPM)

Sure, investing in real estate can be expensive, especially if it’s your first property. But where else can you get away with a 10%-30% down payment on such a large purchase?

When you finance real estate, you’re leveraging other people’s money to make your financial dreams come true. And with careful planning, all it’s going to take to get you started is a relatively small down payment.

2. Generous Income

If you’re patient and find a MN property in a good location with high rent rates, you have the potential to generate a lot of steady income.

But more than that, you can use it to leverage your next investment and grow your portfolio.

Investing in real estate is more stable than investing in the sometimes volatile stock market. Though some people make a lot of money in stocks and bonds, others lose a lot.

With real estate, things are a little more predictable and lot easier to weather when times are bad. And with average returns on single-family homes coming in at 9% over the course of nearly 30 years, it’s safe to say real estate is lucrative.

3. Appreciation

Though no seasoned investor will tell you to bank everything on appreciation, the truth is, good pieces of real estate will increase in value over time.

In addition to the cash flow you create from collecting rent each month from tenants, real estate gives you a chance to generate another form of revenue in the form of appreciation.

It can take a while for your real estate to appreciate. And you most likely won’t be ready to sell for a long time, if ever.

But if you do things right, you could sell your property in the future for a nice profit.

4. It Can Be Passive

If you decide to hire a property management company to handle the day-to-day tasks associated with your rental, you can collect passive income each month.

And while there will still be financial obligations such as marketing vacancies, making upgrades to increase value, and paying your property manager, most of the hard work will be done for you.

5. More Control

Setting yourself up for future financial success can be done with real estate or the stock market. But when you invest in rental property, you have more control.

Here are some of the ways investing in real estate offers you more control:

• Property appreciation usually happens faster than stock market growth
• You can cash out on your property (by selling) whereas stocks and bonds have to stay
• Improvements and upgrades can be made to increase the value (and rent) of your investment
• Manage your property yourself if you want so things are always done your way

Just because you have more control over a real estate investment than stocks and bonds doesn’t mean it’s easy. You just have more opportunities for change when needed.

Should You Invest in Rental Property?

So, now that you know the pros and cons of investing in real estate, let’s take a look at some final things to consider before making a decision:

• What do your finances look like? To invest in rental property, you’ll want a high credit score and a low debt to income ratio. Ideally, aim for a credit score of 620 or higher and debt payments equaling less than 43% of your gross income.
• Do you have enough in savings? Understand that lenders usually require 20% or more down on investment properties. You’ll also need some leftover money to handle things like closing costs, maintenance, repairs, cleaning, the mortgage, and other fees until you place a tenant.
• Will you self-manage? Think about how much time you have on your hands and whether you can manage the investment yourself. If not, calculate the costs of hiring a property manager. In addition, consider your personality. You might want to self-manage but not have the patience to deal with tenants.

In the end, the pros of investing in MN real estate far outweigh the costs. However, knowing what you’re getting into, so you aren’t surprised is always best.

If you’re ready to invest in rental property and aren’t sure how to get started, remember to look into the My First Deal Done in 60 Days online training program. We’ll take the time to teach you the basics of real estate investing and help you overcome any obstacles standing in your way.

And if you have any questions about investing in your first piece of MN real estate, contact us today and we’ll be in touch with you as soon as possible.

The post What You Need to Know About Investing in MN Rental Property appeared first on Andrey Sokurec.

Sure, you know that being an investor is a great way to earn passive income and achieve financial freedom.

But if you don’t know the types of properties available to invest in, how can you ever reach your potential?

By learning about the various types of real estate properties, you can take advantage of the ones that will generate you the most money.  You can also find the properties that work best for your lifestyle, time limits, and budget.

Since each type of investment property has its own unique set of features, we’ve created this simple guide, so you can make the most informed decision as you start your career as a real estate investor.

Ways to Invest in Real Estate In MN

Before learning about real estate properties you can buy, let’s first take a look at the most common ways to invest:

• Flip Property Investing. This method is for people that want to buy, renovate, and sell a house as quickly as possible for a profit. In other words, they are fixing and flipping real estate.  They look for properties that are in need of renovations and buy them at low prices.  They then invest money into fixing it up and selling it for much more than they paid.
• Buy and Hold Property Investing. This is the most common type of real estate investing. It involves investors that buy one or more properties and hold onto them as rentals.  As the properties appreciate, and tenants pay their rent, the investor generates income.
• Commercial Property Investing. This type of investing involves property for commercial, rather than residential, purposes. In other words, the property you buy will be used for conducting business.  Investors buy them and lease them to companies.
• Vacation Rental Property Investing. Some people invest in vacation properties to use as their own and rent when they’re not using them. Others invest in vacation rentals and lease them year-round because they generate a lot of money.

As you can see, the way you approach investing will have an impact on the types of real estate investment properties you buy.

Now we’ll take a look at the different types of properties you might want to invest in as you get started in real estate.

Top 3 Types of Real Estate Investment Properties in MN

1. Residential Real Estate

When you think about investing in real estate, the first thing that probably comes to mind is a single-family home.  And while this is the most common type of residential real estate property, there are others.

Residential real estate includes properties that people live in.  When you invest in a residential property, you become the landlord.  You then place tenants in the property.  These tenants pay rent, that should exceed the mortgage and other expenses, and you make money.

Here are the different types of residential real estate properties:

• Single Family Homes. One family resides in the property without sharing the space with anyone else.
• Apartment Buildings. You own the entire building and lease individual units to different families. The land the building rests on is a common area for all residents to share.
• You own individual units (as opposed to the entire building) and lease those units to tenants. You do not own the land; rather it is a common area for all residences to share.
• A large house divided into two apartments so two separate families can lease from you. Each apartment is on the same lot of land and the families share this common area.  There are also triplexes and quadruplexes that hold many families.
• Like a duplex, a town home is a large house split into two apartments. The difference is each apartment has their own lot of land despite the shared wall.

New investors buy single-family homes because they are less expensive than large buildings.  That said, if you’re looking for long-term success (and you can afford it), investing in a multi-family residence usually yields a higher ROI.

2. Commercial Real Estate

Any type of property used for commerce is considered commercial real estate.  Investors lease them to companies so they can conduct business. Commercial property leases usually last many years.

The most common types of commercial property include offices, retail shops, multi-family properties (with 5 or more units), industrial property, and hotels.

When leasing your commercial real estate, there are many levels of responsibility you can place on your tenants:

• Single-net leases require tenants to pay rent and property taxes
• Double-net leases require tenants to pay rent, property taxes, and insurance
• Triple-net leases require tenants to pay rent, property taxes, insurance, and handle maintenance
• Gross leases require tenants to pay only rent; you are responsible for property taxes, insurance, and maintenance costs

Note: there is some crossover when it comes to the different types of real estate investment properties. For example, apartments can be called residential real estate and commercial real estate.  In addition, industrial buildings can be considered commercial real estate, or as you’ll see next, industrial real estate.  It’s important not to get too caught up in the classifications and just understand what each type is best used for.

Though most people invest in traditional commercial real estate, there are some unique types that may interest you:

• 52% of producers still feel that farmland is a good or “extremely” good investment.
• According to the IRS, billboards are real property. They can be very lucrative, and you don’t have to worry about tenants.
• Data Centers. As technology advances, the need for more data centers and investors to take interest in them follows suit.
• Student Housing. Gone are the days when a simple dorm room was enough for the average college student. Millennials expect resort-style pools, 24-hour gyms, and smart washers and dryers.  And they’re willing to pay to have these things.
• Medical Buildings. Popularity for small, outpatient facilities is on the rise as health care costs in the country continue to explode.  Because of this, it may be a good time to invest in a small medical building.

As you can see, there is no shortage of traditional or unique commercial real estate to pick from.  And the great thing is, they all offer you the chance to establish yourself as a successful investor.

3. Industrial Real Estate

Industrial real estate is for warehousing, manufacturing, research and development, and distribution.  Also, some industrial real estate has built-in office space for conducting business.

Take a look at the top types of industrial real estate you can buy, even as a new investor:

• Warehouses/Distribution Centers. These buildings are huge and are used for warehousing and distributing inventory. They have large parking lots and accommodate the increasing demand for eCommerce products.
• These buildings house specialized equipment for producing materials or goods.
• Cold Storage/Refrigeration Buildings. With cold storage and freezer space, these buildings are great for food distribution.
• Showroom buildings combine large retail spaces, office space, and onsite storage space.

Though they require larger investments up front, there are benefits to investing in industrial real estate:

• Command high rents and generate tons of annual revenue
• Include fixed annual price increases in the lease agreement
• Draft long-term leases for the highest ROI and financial security
• Use triple-net leases so tenants are responsible for most of the expenses
• Save on maintenance costs because businesses have reputations to uphold

The more lucrative the industry, the more you have to gain from investing in industrial real estate.  That said, you should always do your research first. While industrial real estate is a staple in the investing world, you risk losing big if you’re not careful.

Final Thoughts

As a new investor it can be tough to know what type of real estate investment property to buy.  Not to mention the challenge of knowing how to begin the process of investing.

If you’re thinking about becoming a real estate investor, check out our “My First Deal Done in 60 Days” Training Program.  Sometimes getting that first property is all you need to spark a successful real estate career.

With this online program, you’ll learn everything there is to know about the different types of real estate investment properties.  We’ll help you understand the basics behind investing and discover what it takes to nurture leads and close deals – all within 60 days.

Investing in real estate is an investment in yourself and the life you’ve always dreamed of living.  So get out there and take control as a new real estate investor.  With our online course and your desire to achieve financial freedom, anything is possible.

The post The Most Common Types of Real Estate Investment Properties in MN appeared first on Andrey Sokurec.

But that’s not to say that it can’t be done.

In fact, if you take advantage of the resources available to you, you can become a highly successful real estate investor in a short amount of time.

The key is to start by educating yourself.

To help you get started, we’re going to share with you what to look for in a real estate investing course, so you can reach your goals as a real estate investor.

But first, let’s check out why investing in your education first is a good idea.

Why Take a Real Estate Investing Course?

You might be asking yourself why you need to take a real estate investing course to succeed.  Especially in Minnesota, where the demand for rental housing is high.

Not to mention, there are plenty of people out there with zero experience that don’t take classes and find success on their own.

Well the truth is, educating yourself puts you ahead of the competition before you’ve even started.

Here’s a quick look at some of the benefits of taking a real estate investing course:

• Understand why investing in real estate is a good financial move
• Learn the skills needed to start investing right away
• Identify mistakes (that others before you have committed) before they happen to you
• Find out the different ways you can invest in real estate, with or without a lot of money
• Develop an individual plan of action that will help you reach your goals
• Gain access to helpful tools that make being an investor easier
• Find out what to look for when investing in property so you get the best deal for your money
• Learn the different ways to approach sellers so you can close more deals and make more money
• Find out what to do after you’ve closed a deal, so you can become a successful landlord

As you can see, there’s a lot that goes into being a successful real estate investor.  And while you can learn on the job from your own mistakes, it’s best not to.

If you’re ready to start your journey as a real estate investor, read on to find out what to look for in a real estate investing course.

What to Look for in a Real Estate Investing Course

There’s no shortage of real estate investing courses available in the market.  Some are free, and some are thousands of dollars.

Finding the right course can be overwhelming since there are so many to pick from.

Luckily, we have some of the key concepts you should look for in any real estate investing course, regardless of how much you pay for it.

1. Having the Right Mindset

“Whether you think you can, or you think you can’t – you’re right.”

No one knew better than Henry Ford the impact your attitude can have on your overall success.

And what he says is one hundred percent true.  If you let people tell you that you’ll never make it in the real estate industry, you’ll prove them right.

Sure, having money, other properties, and great credit might help you break into the real estate industry quicker than others.  But that certainly doesn’t guarantee your success.

It’s important when educating yourself about how to be a successful real estate investor that you also learn about having the right mindset.

And it just so happens that our “My First Deal Done in 60 Days” Training Program focuses on how to develop a success mindset from the beginning:

• Learn how to take responsibility for your own life, no matter what other people say
• Create short and long-term goals that you’d like to achieve
• Discover what’s holding you back and how to overcome it
• Find out how to deal with both positive and negative people in all areas of your life

Creating a plan that will lead you to success is the first step in becoming a good real estate investor.

2. Real Estate Investing Basics

If you Google “real estate investing basics” you’ll find millions of search results.  But that’s not going to do you much good if you want to become a real estate investor anytime this century.

No one has time to read everything about becoming a successful real estate investor.

Plus, if you’re new to real estate investing, how are you to know which sources are credible and which aren’t?

To make things easier on you, and ensure you learn the basics of investing in property, find a course that covers the following:

• Learn what the income outlook is for you in when investing in MN real estate. Also, learn the different ways you can finance your first property.  This is especially important if you don’t have a lot of cash on hand or your credit is less than stellar.
• The real estate industry is like its own little world with its own unique language. If you’re going to make it, you’re going to need to know all the terminology so you don’t make a big mistake.
• Property Types. You can invest in a whole host of different property types as a real estate investor. For example, you can buy single-family homes, multi-family homes, condos, apartments, and even commercial properties.  Find out which type of investment property best suits your goals before you start looking.
• How to Spot Deals (and Close Them). One reason some real estate investors are so successful is they know how to spot a good deal and convince the seller they want to sell to them. Find a course that discusses finding available properties, estimating repair costs, and knowing how to gauge potential rent rates.  Knowing how to do this prevents you from investing in a bad deal.

Of course, there’s more to the basics than this.  And your real estate investing course should cover those basics.  This just gives you a good idea of what to look for.

3. Lead Generation

You may not realize this, but as a real estate investor you need to know how to source leads if you want to find the best deals.

And unfortunately, a lot of real estate investing courses fail to teach their students this vital skill.  Then, when it comes time for you to seek out potential investment deals, you have no idea what to do.

There are several ways to generate leads on a property beyond direct mail, following “For Sale” signs, and checking out newspaper ads.

Your real estate investing course should go into detail about sourcing leads from places such as:

• Current industry professionals
• Magnetic and bandit signs
• Multiple Listing Service (MLS)
• The internet (and how to market yourself)
• Meetup groups, conferences, and conventions
• Mass media
• And more

The course you take should tell you how you nurture any leads that come your way. Plus, it should explain how to approach investment, partnership, or mentoring opportunities.

Becoming a real estate investor is more than just buying a property and leasing it for money.  You must learn how to network within the industry and find properties that help you reach your goals.

Only then will you become a successful real estate investor.

Final Thoughts

Getting into the real estate industry as an investor is not that hard to do.  The challenge lies in becoming a success and making enough money for it to be worth it.

That said, reaching financial freedom through real estate investing can be done.  All you need to do is educate yourself so you know what you’re doing.

If you’re thinking about breaking into the MN real estate industry and need an affordable, effective, and proven real estate industry course to get you started, check out our “My First Deal Done in 60 Days” Training Program.

With this online program, you’ll learn how to have the right mindset so you go in with a positive attitude and set yourself up for success.  You’ll also learn all the basics behind real estate investing, how to find and nurture leads, and what it takes to finance your first piece of real estate.

So, take control of your life and make a change.  Invest in yourself and your future as a real estate investor. And start aiming for the financial freedom so many people tell you is out of reach.

Because you know what?  It’s not out of reach.

You can have a fulfilling life as a real estate investor.

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And truthfully, flipping a house does have the potential to generate a lot of profit.  But there’s a lot more that goes into being a successful house flipper than most investors know.

Without the knowledge about how to succeed, you stand to lose a lot of money trying to flip a house fast.

That’s why first-time investors looking to flip a house in Minnesota should check out these rookie mistakes other before you have made.  Once you know what not to do, you have the chance of making a lot of money and paving your way to financial freedom.

Mistakes to Avoid When Trying to Flip a House

1. Overpaying

The whole point of flipping a house in MN is to generate a profit.  The last thing you want to do is overpay for a house that won’t sell for more than you paid.

In order to avoid overpaying for a property you intend to flip, follow these best practices:

• Research the overall housing market
• Pay attention to the housing market in the area you’re looking to buy
• Once you find a property you’re interested in, have a contractor or some other third-party provide a second opinion on price
• Learn how to structure a good deal before you try to buy, getting help from a professional if needed

Lastly, don’t let the lack of inventory force you into buying something that’s priced too high.

Remember, you have many factors to consider when it comes to flipping a house.  Most importantly, you have to consider the cost of rehabbing the house for it to sell at a profit.  You don’t want to start out in the red before you’ve even begun working.

2. Flexing the ARV (After Repair Value)

You can’t just pay attention to the property’s purchase price when looking to flip a house.  You’ll also need to calculate what the after repair value (ARV) will be.

This is where an experienced professional comes into play if you’re a new investor.

A reliable real estate professional will be able to closely estimate how much money it will take to rehab a property. In addition, they should be able to help you determine the property’s after repair value.

In other words, you should have a firm grasp on what your flipped property should sell for before you’ve even bought the property.

The key here is to always stick to that after repair value, no matter what.  If you start adding to the value just because, you could find yourself losing money in the end.

Trust the ARV and don’t change it.

3. Not Following the 70% Rule

After you’ve determined the ARV of your property, it’s time to use the 70% Rule.  This rule is used to determine two things:

1. How much you can afford to spend on the rehab of your property
2. The maximum amount you can pay for the property

Following this rule will give you enough wiggle room for unexpected costs during the property’s rehab.  In fact, you should expect to get approximately 20% profit (or more!) of every house you flip.

However, the only way to make a profit is to stick to your calculations closely, monitor your budget, and not overpay for the property.

4. Not Getting a Home Inspection

Unless you plan to tear down the entire property and flip it for a profit, you should always get a home inspection before you buy.

Most of the time when you flip a house, you only make cosmetic changes to increase its value and sell it for more than it was worth originally.

If you fail to get a home inspection, make renovations, and later go to sell, only to find out there is major damage, you’re in a lot of trouble.

If anything, you can use the home inspection to lower the purchase price since you’ll have to fix whatever pops up as damaged anyway.

5. Paying the Help Too Much

It’s not enough to buy a property for a great deal and stick to your ARV and the 70% Rule.  You can lose a lot of money during the flipping process by overpaying contractors for their help.

If you get stuck hiring a contractor that is trying to turn your property into a luxury retreat, chances are you’ll overpay on the rehab and lose profits.

Researching contractors that will work as cheaply as possible without providing shoddy workmanship is not easy.  But if you want to know how to flip a house, that’s how.

Luckily, you don’t have to overpay to renovate your property if you follow these helpful tips:

• Research reviews on well-known home improvement sites such as Angie’s List or HomeAdvisor
• Only work with contractors that are investor-friendly (as opposed to those that only work with retail consumers)
• Ask other investors for recommendations
• Check out other homes that are currently being rehabbed and get the contractor’s information
• Get bids from a few contractors and see which one comes in the lowest

Don’t hurt your chances of making a profit by overpaying to rehab the property you want to flip.  Instead, perform your due diligence; it will make a world of difference.

6. Not Having Enough Time

One of the most important things to know about how to flip a house is that the quicker you do it, the more money you stand to make.

If your goal is to make money flipping houses, you have to allocate enough time to do it right.  This means you can’t just buy a house and hire some help to fix it up.

To start, you’ll need to be actively involved during the entire purchase process.  But things don’t stop there.

You’ll also need to be involved in the rehab of the property, making sure everything stays on budget and your contractors follow the timeline.  Lastly, you’ll need to be actively involved in the sale of the property.

The longer the house you intend to flip is in your possession, the more money you lose paying for the mortgage, contractors, and utilities.  Make sure you have enough time to give your house flip your full attention.

7. Neglecting the Landscaping

Sure, landscaping can add a lot to your expense list, but if you want to flip a house and make money, you can’t leave bad landscaping for the next owners.

That said, a new yard can increase your property’s ARV by as much as 10%, which can do wonders for your profit margins.

If landscaping is not something you can afford, don’t buy a house that needs landscaping.

Another thing to think about when it comes to re-doing your property’s yard is to not overdo it either.  Sure, you‘ll want to increase the curb appeal of your property so it will sell for a profit.  But if you over-improve for the area, buyers aren’t likely to pay what you want when it comes time to sell.

8. Not Having an Exit Plan

You should never venture into any real estate deal, including flipping a house, without at least one exit strategy in case things go sour.

Here are some of the most common exit strategies you can use when trying to flip a house:

• Lease Option. This is when you lease your property to a tenant and include an option to buy the property at a later date in the contract. Sometimes a portion of the rent can go towards the purchase price the tenant will pay when the time to buy comes.
• As one of the most common exit strategies, this is when you wholesale the property to another investor at a very low price. This helps when you get into a deal you want out of fast.
• The last exit strategy, if you can’t sell the flipped house for a profit, is to lease it to a tenant until you’re ready to sell. This offsets the costs of the mortgage and buys you time to make a profit later.

If you don’t have a backup plan in place, you shouldn’t be investing in a house you plan to flip.

Final Thoughts

As a first-time investor, knowing how to flip a house for profit can be difficult.  After all, the television only offers the good aspects of flipping houses, with a few challenges for drama.  That said, learning how to flip houses is possible if you take the time to research best practices and common mistakes to avoid.

Even better, if you’re really looking to learn how to flip a house in Minnesota, sign up for the “My First Deal Done in 60 Days” Training Program.  With this online program, you’ll learn what it takes to find a good property to flip.  You’ll also learn how to find the best deals, how to budget for a rehab project and the kind of timeline needed to flip a house for the money possible.

So, take control of your dream to become an investor that flips houses for a profit and begin your journey to financial freedom today.

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