Real Estate Investing Guru Mindy Jensen Says To Avoid These Types of Properties
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Mindy Jensen is co-moderator of the podcast “BiggerPockets Money” and co-author of “First-Time Home Buyer, The Complete Game Book to Avoid Beginner’s Mistakes”. She is also a licensed Colorado real estate agent 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 the most influential properties in the world, here she shares the types of properties property investors should avoid, why you shouldn’t fall in love with a potential investment property, and how to start real estate investing when you are low on capital.
What advice would you give your younger you about real estate investing?
BEGIN! Get a license and start working as a real estate agent. Dive deep into your market and find out everything there is to know about it. What are houses in very good condition selling for? What are they selling for in terrible condition? How is the job market? What do houses rent for?
Once I knew all of this, I started buying houses – old houses in valued markets to repair and sell, nicer houses in stable markets to rent out to great tenants. I would also tell myself to avoid condos, townhouses, and houses in strict HOA neighborhoods or neighborhoods with high club fees. I want to be in control of my expenses.
What are the biggest mistakes people make when investing in real estate?
Don’t run the numbers and make sure there is enough left to get a decent return on your investment.
Falling in love with a property – there will be others who are just as great. If the numbers don’t work, don’t buy the property.
They don’t have a large reserve fund and cannot do cash flow repairs and mortgage payments. If [the COVID-19 pandemic] taught us everything, it’s good to be financed.
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What rules of thumb do you swear by when selecting an investment property?
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Have multiple exit strategies. The market can change in a split second. Your sale can fail at the last minute. Be prepared for anything and be able to deal with circumstances that are beyond your control.
If the property offers nothing more than one way to make money, this is not a good investment.
NEVER buy weird. Strange, unique, unusual are all four-letter words in real estate. You want normal, traditional, interesting, but ordinary when you buy a home.
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 spending a lot of money, start from a weak position. How do you deal with emergency repairs? How do you pay the mortgage if your tenant is not paying rent? There are ways to reduce your exposure, such as: B. “House hacking” – renting an extra room (s) in your house – or turning the pages in residential buildings where you actually live in the house during the renovation. (Bonus tax perks for living in your Flip: If you’ve lived / owned in it for two years in the past five years, you’ll pay $ 0 withholding tax, up to $ 250,000 if you’re single and $ 500,000 if you’re married.)
Read: Finance Professional Rachel Cruze Shares Biggest Money Mistake You’re Likely to Make
There are other ways not to have the capital than working with someone who has the money. If you go down this route, make sure you get everything in writing before entering into the partnership. Everyone is friends before the deal, but not always afterwards. While everyone is still friendly, write down the “rules” of the investment / partnership.
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Jaime Catmull contributed to the coverage of this article.
Last updated: April 20, 2021
This article originally appeared on GOBankingRates.com: Real Estate Investment Guru Mindy Jensen Says Avoid This Type Of Real Estate