Investing, in any form involves risk. There is always a chance that your best laid plans will turn out differently than you anticipated. Natural disasters happen, political turmoil unsettle nations, and companies go under unexpectedly.
But the risk that things will not go according to plan should not be the reason you fail to seize the investment opportunities life throws at you. That’s because along with the risk of failure there is also a possibility of success in every worthy investment opportunity.
What you should want to know is that there is a greater chance of success with an investment than there is a risk of failure. Once you are certain of making money on an investment, the only thing left is to improve your chances of success by boosting your competence.
How do you do that?
You become a better investor by learning from the experiences of successful investors. Secondly, surround yourself with professionals who can serve as guiding lights on your investment journey.
Regardless of what kind of investor you are, these two steps will help you get more success. If you are a property investor looking for ways to enhance your decision-making abilities and improve the performance of your assets, this post is actually for you.
Below we highlight ten financial tips from seasoned financial advisors that can help you become the kind of property investor you have always dreamed of being.
The Top 10 Financial Tips Every Property Investor Needs to Know
- Put Your Financial House in Order – Your personal finances will always cast a shadow on your hopes of real estate investment success. Some of the important financial steps property investors need to take include consolidating personal debts to reduce interest payments, reducing card limits, and canceling unused credit cards. An experienced financial adviser can help you lay the foundation for future property investing success by collaborating with you to create a plan of action for gaining control of your personal finances.
- Build a Team – Beginner investors often think they need to wait until they have started their investment journey before they recruit a financial advisor, mortgage broker (who specializes in investment properties), realtor, lawyer, or accountant, and possibly property manager. But these professionals should be by your side from the get-go. They help you avoid unnecessary and costly mistakes.
- Create a Business Plan – Why do you need a written plan? A business plan creates coherence between your stated objectives and your actions. Objectives not only become clearer when they are written down, but the business plan gives you a reference point for making tough decisions. The plan helps you keep all aspects of your investment goals in view and also do a proper assessment of where you are versus where you want to be.
- Define your Strategy and Niche – Real estate investing is vast; there are several distinct types of investment properties. Also, there is a range of ways to invest in real estate. Based on your goals, capital, location, and experience, which type of investment property offers you the most opportunities for success? How do you want to invest in those properties? When deciding on the best investment strategy to use, you need a financial advisor to help you understand the potential financial impacts of each option.
- Understand the Power of Location – The neighborhood is more important than the building. This is a fact that new property investors often overlook. Location is the most influential factor in the potential success of a property. To succeed as a property investor, you must know how to evaluate locations. You must be able to (or have someone who can) analyze available data to know when a location is changing for the worse or the better.
- Know How to Read the Markets – Understanding market trends is another reason you need a team of seasoned professionals beside you. These people have access to market information you may not even know exists. They will educate you on how to use the available tools and insights to get the most out of any market. Additionally, your team can help you make connections between events in other markets or industries that will affect your investments.
- Understand the Relevant Laws – Maintaining accurate financial records and understanding how to use relevant tax laws to boost profits; these are two areas where a seasoned financial advisor makes all the difference. Taxes can hurt or boost your profits, depending on how you approach them. In addition to tax laws, you also need to understand landlord-tenant laws in your location, if you want to avoid lawsuits and any form of liability.
- Use More Than One Lender – Laziness and loyalty are the two reasons property investors stick with a single lender. When you use a single lender, one failed investment can drag down your entire portfolio down with it. With multiple lenders, however, you limit the performance of a specific asset to that particular investment. Another problem here is banks, brokerage firms and insurance companies may not always give you the best financial advice because they want to sell you a product. This is why it is important to maintain links with an independent financial advisor who is not connected in any way to the product.
- Have the Correct Loan Structures – The decisions you make at the start of the mortgage process – such as how you structure the loan – will continue to matter throughout the lifetime of the loan. Most real estate investors don’t understand that real estate investing is more about finance than it is about properties. Fortunately, you do not need to be a financial wizard to avoid this mistake; you just need a good financial advisor.
- Review Your Security Regularly – You can give a lender too much security; lenders will never tell you this. But if you know how to review your properties annually (or know someone who can do it for you), you will be able to reconcile their value with the security you are giving the bank. This is just one more benefit of having an experienced financial advisor on your side.Finally, when making a list of the professionals you need in your real estate investment team, do you include a financial advisor along with the realtor, accountant, and attorney? Failing to do this is one of the main reasons many property investors don’t make the transition from good to great.You will go further faster if you have a financial advisor walking beside you on your real estate investment journey. Talk to one today! If you need help finding a financial advisor, visit FinancialAdvisors.com.