You Can be a Local Real Estate Expert [CHECKLIST]
One of the things we like best about a self-directed IRA or Solo 401(k) is the ability to invest locally. You can leverage your knowledge of neighborhoods and network of associates to identify opportunity. So how can you expand on this potential and become a fully-fledged local real estate expert? In this blog, we will discuss everything you need to know to get started.
The success of your efforts will depend largely upon your understanding of the local market. The internet is a great resource when it comes to beginning to learn about real estate, but don’t get distracted by what is happening in other markets. Instead, focus your primary attention on what is working in your area, where the market conditions will directly affect your investments. Start with a small area, become an expert in it, and then gradually expand your efforts.
Don’t be a Scaredy-Cat About being a Copycat
Studying what is working for successful investors in your area and copying their strategies is not only okay, it’s one of the most important steps toward becoming a successful investor in your own right. Dig up every bit of information you can find on their investments, study their strategies, and try to learn what makes their projects pay off. When you know what really works, you can start developing your own strategies and making your own investments.
Learn from Their Mistakes
There is a learning curve to every pursuit, and you will likely make some mistakes as you are starting out. If you are making sure to study experienced investors, however, you can use their experiences to inform your decisions and avoid many of the potential pitfalls that could be detrimental to your early efforts.
Don’t Miss Out on the MLS
If you want to know what the successful investors in your area are doing, you need to get data on their investments. The Multiple Listing Service is the most reliable source of this information, but you have to be a licensed realtor and a dues-paying member of the MLS to access it. This obstacle is easy to overcome, though, since you can just ask your real estate agent to get the data you need. The MLS will have a lot of vital information you can’t get elsewhere such as: where your target investors bought properties in the past and where they are buying now, where they are selling properties, the difference between sales and purchase prices (which can tell you if they were able to get the price lowered and if so, how).
The Bottom Line
While it won’t exactly be easy, the path to becoming a local expert isn’t as daunting as it may seem at first. You’ll have to put in the legwork, do a lot of research, and hit the pavement to look at homes and talk to people, but your efforts will pay off tangibly. When you know the value of homes, market rents, and market conditions in your area, you will be able to quickly spot the best opportunities for investing your retirement capital and develop reliable strategies for maximizing your returns.
Photo by Mark Moz via CC license
Download our checklist for more information about becoming a local real estate expert.
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