Entering the real estate investing business is not a simple task; you’re not only investing your money, but also your time and efforts. Most people find the idea of starting a career as a real estate investor intimidating due to their lack of knowledge of real estate.
Nonetheless, the question of “How do I become a real estate investor”? is now being asked more than ever before! Thanks to the available real estate investing resources, anyone can jump in the housing market and start a real estate investing career!
So, you’re considering a career as a real estate investor? Well, you’ve come to the right place to start out! Let’s first start with the basic question: “What is real estate investing?”
What Is Real Estate Investing?
Real estate investing is the process of purchasing, owning, managing, renting out, and selling real estate properties for profit. Real estate investments are illiquid assets, capital intensive, and highly dependent on cash flow.
How to Become a Real Estate Investor?
Become a Real Estate Investor: Get the Right Education
The housing market is a vast one, and entering the business comes with a number of new terms that a real estate investor should be familiar with. And although it’s not obligatory to attend real estate classes or major in real estate, no successful property investors made it into the market without sufficient knowledge of the business. Therefore, the first step to start your career as a real estate investor is to support yourself with the necessary knowledge of the different aspects of real estate investing.
Before you go ahead and buy your first investment property, you need to ensure you’ve learned the ins and outs of the real estate business. Moreover, you have to understand the different types of investment properties, investment strategies, the process of investing in real estate, the legal and financial aspects associated with real estate investing, how to acquire financing for your investment properties, etc.
There are many resources from which you can acquire this information such as books and websites (blogs, guides, and tips); you can even go further and find an experienced real estate investor to be your mentor! One of the great things about starting a career as a real estate investor is that you learn by doing.
Become a Real Estate Investor: Have a Business Plan
Real estate investing is just like starting any other career in which you can’t start on a whim without having a specific business plan in mind. A business plan is vital for any real estate investor, and one of the best advice you’ll get in the housing market is to start out small and plan, plan, plan! Successful property investors set their goals and how they plan to reach them and, most importantly, constantly keep track of their budget.
This step is especially important if you’re planning on becoming a real estate investor for the long term. In this case, you want to grow your real estate investment portfolio strategically, ensure you buy the best investment properties, follow the right investment strategy, and reduce the risks that come your way. Property investors can’t guarantee all of this if they don’t have a plan!
Become a Real Estate Investor: Understand the Housing Market
This is one of the most important steps to become a real estate investor. The housing market is the factor that makes you or breaks you! Before you buy your first investment property, you should ask yourself: “Is this a good time to start investing?” “Are the current investing market’s conditions in your favor to be buying or rather selling investment properties?” “What is the right price you should pay for an investment property?” You can only answer these questions when you understand the housing market.
The best way to understand the housing market is by conducting a real estate market analysis. The market analysis allows a real estate investor to determine the right investment properties and forecast the profitability and value of each property before he/she even makes a purchase. In addition, a comparative market analysis (CMA) is another key to a successful career as a real estate investor as it allows you to compare a number of similar investment properties and determine which one is the most profitable.
Tips to Succeed as a Real Estate Investor
Choose the Right Location
As a new real estate investor, one thing you would hear a lot is location, location, location! Location is, in fact, a factor that has a major influence on your investment. It determines supply and demand, rental income, occupancy and vacancy, appreciation, and much more. Thus, when buying your first investment property, make sure you strategically choose the best location instead of focusing only on finding the cheapest investment property.
Click here to start your search for the best investment properties in any location within the US housing market!
Align the Investment Strategy with the Property Type
As previously mentioned, the housing market is vast and filled with different property types and investment strategies. You can invest either for the long term or the short term, invest in traditional or Airbnb properties, and commercial or residential properties (which is further comprised of numerous types like single-family homes, multi-family homes, condos, townhouses, etc.)
To become a successful real estate investor, you need to take into consideration that whichever type of property you invest in has to align with the strategy you follow. For example, single-family homes are more profitable for the long term. Not only that, but the strategy you go for has to also fit with your business plan, investment goals, and budget.
Establish the Appropriate Price for Rent
Making money is the main goal of every real estate investor. Therefore, the price you charge for renting out your investment property is an important factor to think carefully about, as it will affect your return on investment.
On the one hand, charging too much might lead to not finding tenants and facing vacancy. On the other hand, charging too little would make it impossible to generate positive cash flow. To set up the rent, property investors take into account the property type, the features of the property, the location, and the average rent in the area.
Select Good Tenants
Good tenants are those who pay monthly rent on time, keep your rental property in a good condition, and follow the lease policies. The best way to filter out the bad tenants from the good ones is by going through a tenant screening process. The typical tenant screening process includes a background and credit checks, checking references, and conducting interview with potential renters.
Become a Real Estate Investor with Mashvisor
Mashvisor is an online platform that allows both beginner and experienced property investors to carry out their investments more efficiently. Mashvisor’s blogs section offers hundreds of blogs, city guides, step by step guides, and tips that cover all aspects of real estate investing. Not only that, Mashvisor also offers a selection of the best tools that ensure smart investment decisions and a successful career as a real estate investor, including:
- Mashvisor Rental Property Calculator: This is used to measure investment properties’ cash flow, cap rate, and cash on cash return to analyze and find the best properties.
- Mashvisor Investment Property Finder: This allows property investors to search for and find actual investment properties available across the US housing market in a matter of minutes. This further means that you can compare between different properties to find the best one.
- Mashmeter: This is a graphic tool supported by data which not only provides property investors with an understanding of the return on investment they can expect, but also allows them to compare returns on traditional and Airbnb rentals to determine the optimal rental strategy.
Before starting a career as a real estate investor, make sure to do your homework and research to make smart investment decisions. Head over to Mashvisor to read more on the housing market, and sign up to have the best tools at your disposal at all times!