Real Estate Investing - Minnesota

Before you go out and start buying up properties that you think are a good deal, sit down and analyze your situation.

Take a sheet of paper and write down your goals, reasons, and resources for becoming a successful real estate investor. Be sure to answer at least these 10 questions:

1. What is my motivation for investing in Real Estate?
2. What is my current financial situation?
3. How much money do I have to invest?
4. How much time do I have to invest?
5. Where would I like to be financially in 5 years?
6. Who is on my Team? (Realtor, Mortgage Officer, Attorney, Property Manager, Appraiser, Handyman, Landscaper, Accountant, etc.)
7. What obstacles do I need to overcome? (Spouse, knowledge base, money, time, fear)
8. What am I giving up to invest in Real Estate? (time, money, other opportunities)
9. Do I need a lump sum or a regular cash flow?
10. What is my risk level?

After you have answered these questions and thought them through, it is time to start putting together a business plan. Investing in Real Estate is very similar to starting up your own business. There are tax considerations, legal issues, incorporation issues, and investment – the investment comes in the form of either time, money or both. When writing out your business plan be sure to consider the following:
1. Where do I want to invest (geographically)? Near home, work, colleges, etc
2. What is my approach? Rental, rehab…
If rental –
a. What does my cash flow need to be per month?
b. What are the tax implications?
c. What are the current vacancy rates that I should plan for?
d. How much work am I willing to do to make the property livable?
e. Is the property Section 8 Approved?
f. Who will I be renting to?
g. How many units per building can I manage?
h. How many bedrooms per unit should there be?
i. Are there current leases in place?
j. What is the demand for rentals in the particular area?

If rehab –
a. What do I need to net?
b. How much needs to be done to make the property sellable?
c. How long will it take to fix up?
d. How long will it be on market?
e. How will I sell it? Realtor, FSBO
f. What is the commission rate for the Realtor?
g. How much time/money do I have to put into the project?
h. What is the list price?
i. What can I buy it for?
j. What is the ARV (After Repaired Value)?

By answering these questions, and sticking to your answers, you should be able to determine if a deal is truly a good deal or not and if it is a good deal, does it fit with your plan.