Real estate investing has the potential to be a complicating process, but just like any type of investing, there’s a learning curve.  With a little bit of help and research, anyone can be a real estate investing guru. According to the Certified Investor Agent Specialists, there are the five different segments of investors in real estate investing.  See which segment you might be included in, and take note of each tip within the segment to help you with all of your future endeavors.    

First-Time Investor

Being a first time investor can be intimidating due to the complexities of the investing process.  Nevertheless, the vastness of knowledge should not deter anyone away.  Everyone must start somewhere, so taking baby steps is pivotal.  First-Time Investors are starry eyed individuals who have never purchased an investment property in their life.  These investors can easily be overwhelmed with information and unfamiliar with investing terminology and processes.  Here are some tips to help ease the burden: 

  •       Use free online tools, such as investopedia.com, to become familiarize with terminology.
  •       Find a REALTOR® who can provide reassurance and can update you frequently.
  •       Understand that First-Time Investors have the potential to be the most important investment type for real estate firms.  In other words, these investors have leverage. 
  •       Be prepared to have questions ready before meeting with a REALTOR®. 

Move-Up Investor

Move-Up Investors can be the same as First-Time Investors in regards to that they may have never purchased an investment property.  However, these investors already own a home with payments low enough to support it as a rental property.  Over time, a Move-Up Investor can build a portfolio of rental properties that can generate wealth.  Here are some tips to consider: 

  •      Continue to learn terminology and some basic financial formulas.
  •      Incorporate a rental strategy that is long term.  Focus on using cash flow and equity to purchase another rental.
  •      Find a REALTOR® who can provide assurance, give frequent updates, and show the potential of a home in the current rental market. 

Portfolio Investor

Investors who have previously owned property and plan to continue purchasing property every one to three years are called Portfolio Investors.  These investors incorporate these properties in their long-term investment plans.  Most real estate firms strive to acquire a loyal group of Portfolio Investors to give stability and predictability to their databases.  Consider the following guidelines: 

  •    Be comfortable with investment concepts and terms.
  •    Be knowledgeable of the local market.
  •    Find a REALTOR® who maintains constant contact, understands your specific needs, and assists with input on property management strategies.
  •    Be aware of your importance to the real estate firm.  If you’re not treated like a valued customer, find a new firm. 

Performance Investors

Performance Investors are the “Ferraris” of the real estate investors.  These rare investors purchase at least one property to hold each year.  They are usually high net-worth individuals who understand the value of large cash-flow real estate portfolios.  Also, they are highly experience and most likely have refined investment goals.  It is important for Performance Investors to find a REALTOR® the meets their specific needs.  Real estate firms will give up their left leg if that demonstrates value to these customers, so be sure to find a REALTOR® that genuinely cares.  Look for the following characteristics that your REALTOR® should possess: 

  •       Demonstrates value through thorough property evaluations, calculations, and portfolio managers.
  •       Actively and strategically utilizes networking and marketing tools.
  •       Maintains constant contact. 

Rehab and Resell Investors

The Rehabilitation and Resell Investor, also called R&R or “flippers,” purchases property, makes quick improvements, and then resells it.  These investors are not interested in buying and holding property.  They would rather make a sell within six months at the most.  Since R&R Investors are usually highly experienced, it is important for them to find a REALTOR® that: 

  •       Understands the REO, short sale, and probate process.
  •       Understands the specific buying, selling, advertising, and rehabilitation tolerances.
  •       Uses marketing and networking tools in a timely manner.
  •       Networks with contractors and R&R team members. 

One thing you might notice is the importance of a real estate agent in each market.  No matter how experienced you are, a high-quality real estate agent is essential in minimizing the risks in this recovering market.  The McNaughton Real Estate Team takes pride in extraordinary customer service and their persistence in researching real estate. If you want to dabble in the real estate market or need a loyal business consultant to help manage your portfolio, call McNaughton Real Estate today at (479) 442-9099, or visit us at 3422 North College Ave., Fayetteville, AR 72703.  We will be more than happy to help you.