Before getting into any business, education is a must. In fact, education is the first step to everything. That is true in regards to real estate investing too. Therefore, continue reading this article to find out about the most important aspects of real estate education you should know.
Real estate education is the first step to your success in real estate investing. You can’t just start with your investment business without knowing the basics. These are some of the most important aspects you should know:
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Real estate education: Learn about the different real estate investment strategies
Learning about the different real estate investment strategies is an important aspect of real estate education. You must have enough real estate knowledge in that field. Otherwise, you might end up with the wrong strategy that does not complement your investment goals; therefore, the outcome will be disastrous for you. Understand that there are long-term real estate investments as well as short-term real estate investments. What would be a better strategy to with in case of your objectives?
Here are a few of the most popular investment strategies in the real estate investing business:
Fix and flips:
Fix and flips is a great investment strategy with lucrative prospects. However, it needs some cash on hand to start with. Basically what you do is find a good deal on an investment property, apply some improvements, and then sell it for a higher price using forced appreciation. This strategy, though lucrative, is a bit risky, especially for a beginner real estate investor. Therefore, you might want to stay away from it until you are more confident.
Real estate development:
As rewarding as it is, it is still a bit too risky for a beginner real estate investor as well. In real estate development, you buy land and construct properties from the ground up and then sell them. This strategy requires a lot of time, energy, and finances.
Real estate wholesaling:
House wholesaling is a little more reasonable for a beginner investor in real estate. It does not even require much money. Once you have found a property that is selling for a cheap price, you assign it to a contract and proceed with contacting potential property buyers. When you have your buyer ready to pay a little more but still less than the property market value, then you close your deal with a good commission on it.
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Real estate rentals:
Real estate rentals is a huge subject. They include short-term rentals (Airbnb rentals) and long-term rentals (traditional rentals). Investment rentals are a great investment strategy for beginner real estate investors. Not only do they provide a stable rental income, but they are also the safest investment strategy there is. So, if you are considering investment rentals, then all you have to do is decide on which rental strategy (Airbnb rentals vs. traditional rentals) you want to invest in and then proceed with buying your first rental property.
Real estate education: Define your financing sources
Learning about the financing methods available for real estate investors is crucial. This is especially true in case you do not have the cash to pay for your first investment property. You should check banks, private lenders, and mortgage brokerages to see what they have to offer. Learn how the whole concept of borrowing the money works and what the requirements are for each financing option.
An important thing to know about some loan programs is the down payment. Some lenders require at least 20%, but others might require more or even less depending on the financing program.
You should never underestimate the importance of real estate education in terms of financing. Many other aspects of real estate investing will depend on this one in the future.
Real estate education: Real estate market analysis
The real estate market analysis process is a must in real estate investing. As a real estate investor, you must know how to perform it. Basically, it means that you perform a comparison between the market value of a certain investment property and other similar properties within the same location. However, you should do this comparison between your investment property and other similar properties that are for sale or have been sold recently. The result you get is the price range of your own property.
Now, you should keep in mind that investment property analysis is the first step in this process. So, make sure you analyze your investment property properly in terms of amenities, size, bedrooms, and other aspects.
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Real estate education: Real estate investment management
When it comes to investing in real estate, an investment management plan is essential. Whether you do it yourself or hire professional property managers, this is a very important aspect of real estate education. However, if you are new to real estate investing, we suggest that you go with an investment management firm. It is better to have professionals taking care of your property, especially if you are a part-time real estate investor. Moreover, you should know that there are two types of investment management: property management and asset management.
A property management firm will take care of the daily operations of your investment property. These tasks include dealing with tenants, collecting monthly rent, and dealing with rental arrears as well as maintenance. If you think that you can’t or do not want to deal with such tasks, then you should definitely hire property management professionals.
Meanwhile, an asset management firm will take care of the financial aspect of your investment property. Its sole purpose is to minimize the investment property’s expenses and maximize the profits. You should consider hiring a firm if you are not confident in managing your business’s finances. In fact, it would be a safer option for you to avoid any financial mistakes.
Final thoughts
Of course, these are only some of the most important aspects of real estate education that every beginner real estate investor should know. But if you want to learn more about investing in real estate, you must check out our blogs. You will find all the information you need on all matters related to real estate. We offer a wide variety of blogs that are dedicated especially to beginner real estate investors. So, do not hesitate and join us!