Jeff Kreutz, Co-Owner, KH Properties, LLC
(816) 682-4268
1) Get some amount of real world experience before going into a new field of investing in income property. The learning curve can be steep, so build a good foundation. Spend time working with someone you know who is already in real estate or has experience with renting, owning and running a business, finance, remodeling, rehab or construction, real estate acquisitions, etc.
2) Prepare yourself financially (obtain good credit, save enough principle to invest, learn to understand P&L’s and other financial statements, know your operating and carrying costs, etc.) There are a lot of things that can come up which can change the course you have set for your properties. Being financially prepared can make riding out those storms much easier. I would also advise starting a relationship with your banker or loan officer ahead of time. Stop in and discuss your business plan ahead of time; meet with them and get an idea of what his lending institution will be looking for when the time comes to borrow. Putting a face with a name will make getting a loan down the road much easier. It is beneficial if you have someone who can vouch for you on a personal level when the loan goes up for committee approval.
3) Be realistic about the time commitment you will need to put forth. Starting a new business is often done on the side while you transition from one career to another. This means a lot of nights and weekends will be consumed and sacrifices will need to be made. Consider when and how you will be able to get your new business off the ground. Real estate often runs on its own schedule and you need to be flexible with its demands.
4) Find a mentor/advisor in the industry. It always helps to have someone or a group of individuals who are further along in the business to give you advice and help guide you down a path when you’re not sure which way to go. Other real estate developers/managers, lenders, and contractors are all good sources. I am constantly looking to learn more and find out about new areas of opportunity and it is always best to learn from someone who has been there before.
5) Develop a broad skill set (you should know a little about every aspect of your business). Being a “jack of all trades” can be an incredible asset. Not only do you not have to rely on others as much, it really puts you in control when negotiations and decision making come into play. Knowledge relating to finance and loans, rental and management practices, legal and company structures, leases and contracts, construction and remodeling, purchase and sales procedures, tax codes and tax planning are all great areas to be continually learning about.
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