Mindy Jensen is co-host of the “BiggerPockets Money” podcast and co-author of “First-Time Home Buyer, The Complete Playbook To Avoiding Rookie Mistakes”. She is also a licensed real estate agent in Colorado and has been buying and selling homes since 1998. She is passionate about helping buyers make smart, informed decisions about their home purchases.
Recognized by GOBankingRates as one of Money’s most influential, here she shares the types of properties real estate investors should avoid, why you shouldn’t fall in love with a potential investment property, and how to get started with real estate investing. if you are weak. on the capital.
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What advice would you give your young self for investing in real estate?
START! Get a license and start working as a real estate agent. Dive deep into your market and learn all you can about it. What are houses in very good condition selling for? Why are they selling in terrible shape? How is the job market? What are rental houses used for?
Once I knew all of this, I would start buying houses – old houses in popular markets to repair and sell, better houses in stable markets to rent to good tenants. I would also tell myself to avoid condos, townhouses, and homes in strict HOA neighborhoods or neighborhoods that have high association fees. I want to be in control of my spending.
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What are the biggest mistakes people make when it comes to investing in real estate?
Don’t count the numbers and make sure there are enough left over for a decent return on your investment.
Falling in love with one property, there will be others that will be just as awesome. If the numbers don’t work, don’t buy the property.
Not having a large reserve fund or being able to cash repairs and mortgage payments. Yes [the COVID-19 pandemic] taught us something, and that is to be well funded.
Robert Kiyosaki, author of “Rich Dad Poor Dad”: You should never say “I can’t afford that”
What are the basic rules you swear by when it comes to choosing investment property?
Have multiple exit strategies. The market can change in a fraction of a second. Your sale may fail at the last minute. Be prepared for anything and be able to pivot with circumstances beyond your control.
If property doesn’t have more than one way to make money, it’s not a good investment.
NEVER buy weird. Weird, unique, unusual are all four letter words in real estate. You want a normal, traditional, interesting, but ordinary house.
What advice would you give to someone who wants to invest in real estate but may not have the capital to make such a large investment?
If you want to start investing without a lot of money, you are starting from a weak position. How will you handle emergency repairs? How are you going to pay the mortgage when your tenant doesn’t pay rent? There are ways to mitigate your exposure, such as “home hacking” – renting out one or more additional rooms in your house – or house flipping, where you actually live in the house while you renovate it. . (Additional tax advantages for living on your own: if you live or own it for two of the last five years, you pay $ 0 in capital gains tax, up to $ 250,000 if you are single and 500 $ 000 if you are married.)
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There are other ways of not having capital, such as partnering with someone who Is have the money. If you go this route, make sure you get everything in writing before entering into the partnership. Everyone is friends before the deal, but not always friends after. Write the “rules” for the investment / partnership while everyone is still friendly.
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Jaime Catmull contributed to the writing of this article.
Last updated: July 13, 2021
This article originally appeared on GOBankingRates.com: Real estate investment guru Mindy Jensen says to avoid these types of properties