Keys to Successful Real Estate Investing: What Every Investor Should Know

With the right strategy and partners, anyone can turn a single property into a portfolio that generates lasting wealth. But first, you must know the keys to successful real estate investing.

At ABL, our goal is to be your go-to investing partner. Whether you’re a total beginner or a seasoned pro, we provide fast, flexible property financing and expert advice along the way.

What Is Real Estate Investing?

Real estate investing is buying, owning, managing, renting, or selling real estate for a profit. It’s been around forever. But many don’t realize all the benefits of real estate investing. For example, it can generate value from regular cash flow, property appreciation, and tax breaks.

Types of Real Estate Investing

Here are some of the most popular ways to invest in real estate:

Fix-and-Flips

A fix-and-flip is when you buy a distressed or undervalued property, renovate it, and then resell. As long as you sell for more than your acquisition, rehab, and holding costs, you’ll make a profit.

ABL can help you execute flips by providing tailored financing. Our fix-and-flip loans can fund up to 92.5% of the project cost (property and rehab) and up to 70% of the after-repair value (ARV). Plus, you can pay as few as 0 points, and there’s no prepayment penalty if you finish early.

New Construction

New construction is when you build a property from the ground up to resell or keep as a rental. These projects typically require more experience and involve more risk. However, they also offer higher potential returns, especially if you develop a profitable multifamily property.

Fortunately, you don’t have to go it alone. ABL offers tailored new construction loans for experienced investors. We’ll finance up to 70% of the ARV, 70% of the land purchase, and 100% of the construction costs. We’ll do it for single-family, multifamily, and condo properties.

Long-term Rentals

Long-term rentals are residential properties you lease to tenants for months or years at a time. Think single-family rentals or multifamily units. As the owner, you can collect regular rental income to cover property expenses and then keep the rest as profit. Meanwhile, you can build equity and deduct property expenses, mortgage interest, and depreciation from your taxable income.

To seize your next long-term rental opportunity quickly, secure funding with ABL. Our DSCR rental loans require minimal paperwork and focus on the property’s ability to cover monthly loan payments with its cash flow. Our average minimum DSCR requirement is 1.2.

Short-Term Rentals

Short-term rentals (STRs) are properties you rent to tenants for days at a time. For example, many are listed on platforms like Airbnb and VRBO to attract guests and streamline bookings. As an owner, you can collect high rents, but you also handle more tenant turnover and cleaning.

Getting financing for an STR can be tricky since rental income is highly variable and seasonal. However, ABL offers DSCR loans for STRs based on the average annual rent. Otherwise, the loan terms and qualification criteria are similar to those for our long-term rentals.

6 Keys to Success in Real Estate

Now that you know the main types of real estate investing, here are six tips to succeed:

Know Your Market

The best real estate investors have a deep understanding of their local market. Carefully study supply and demand, home values, average rents, and other housing trends. By keeping up with the latest, you’ll be more capable of spotting investment opportunities.

Build a Strong Team

You won’t get far in real estate without a strong team. This can include agents, real estate attorneys, contractors, property managers, other investors, and lenders like ABL. Partner with us for fast, flexible property financing you can rely on.

Use Debt to Your Advantage

Debt is a powerful tool in real estate. For one, properties are expensive, and paying for them without a loan can be challenging, if not impossible. Plus, even if you can pay with cash, debt can boost your returns by lowering the amount of upfront capital you must invest.

 

ABL offers responsible loan programs for investors just like you. With each loan, our underwriters ensure you can afford the payments so that the loan makes sense for us and you.

Do the Math

To be a successful investor, you must pursue or reject deals based on the numbers. Carefully calculate metrics like ROI, cash flow, and ARV to ensure the potential return is worth the risk, and use our hard money loan calculator to see how debt financing can boost your returns.

Always Have a Plan B

Unexpected costs and delays are common in real estate. Instead of letting them ruin your investment, give your project some financial cushion by budgeting for contingencies and planning in extra time. You’ll be glad you did later.

Start Small and Scale

Dream big but start small. It takes a lot of time and effort to get your first real estate investment off the ground, but over time, you’ll learn the tricks of the trade and find ways to improve your strategy and process.

Common Mistakes to Avoid

Before you dive into real estate, avoid these common pitfalls:

• Overpaying for properties. It’s often said that you make your money in real estate when you buy. The flip side is that if you overpay for a property, it’s hard to avoid taking a loss. So always run comps and be careful not to overvalue.
• Underestimating rehab costs. Get quotes from contractors, utility companies, and lenders to ensure you’re working with accurate numbers before underwriting a deal.
• Over-leveraging yourself. While debt can be a powerful investing tool, it can also expose you to outsized risk if you take on too much of it. Consult a loan professional to ensure you’re borrowing responsibly.

At ABL, we’re more than just a lender—we’re your real estate investing partner. Our local teams are here to help you at every step. To get started, pre-qualify for a loan today!