The journey of a thousand miles begins with one STEP!
Welcome to the real estate investing world. I hate to be the one to break it to you but it’s not going to be a smooth sailing ride. What I do know is that once you’ve learned how to walk in real estate, you’re going to be running towards a secure future and becoming a real estate investor. Your journey through real estate and becoming a real estate investor begins by taking it step by step and that’s why I’m here to guide you along the way. So if you’re up for the challenge, stay put and let’s begin.
Related: How to Become a Real Estate Investor in 4 Easy Steps
Step 1: Educate yourself
You can’t jump in the ocean before you learn how to swim, and real estate is no different. You can’t start investing in real estate before gaining knowledge about becoming a real estate investor. You don’t need to go to college and graduate with a degree to educate yourself about real estate. With the developed, technological world we live in, you can get everything you need to know with a click of a button. So before buying your first rental property sit down, bring a hot cup of coffee and explore the real estate world from the screen of your laptop. Read about the different types of investment properties. Read about the different investment strategies to identify which one will best suit you. Read about the various financing methods and the aspects of each one. Read about the best locations, about return on investments, about previous experiences from past investors. Just read, read and read about becoming a real estate investor.
Step 2: Create a plan
Probably the most crucial step in becoming a real estate investor is creating a coherent business plan to follow. Having a well-organized plan will save a lot of time and effort when having to make decisions. Include in your plan your investment strategies, your financing strategy and constantly keep track of your budget. The purpose of writing out a plan is to understand your responsibilities.
After you have completed your research, identify exactly what type of property you are looking to invest in and if it’s convenient for you and your budget. Choose the type of income goals you expect from your rental property and identify your ability to maintain the property. Part of your business plan should include deciding how you will be managing the property. Are you going to self-manage the property or will you hire a professional? Owning a rental property and becoming a real estate investor is a big responsibility, and depending on the type of property you choose, you may need to spend a lot of time acting as a manager. So always have your strategic plan ready!
Step 3: Choose the right location
Real estate investing all boils down to one key factor which is: LOCATION! The location of your investment property will either make you or break you. Therefore, think wisely of the location to ensure that becoming a real estate investor there will be a successful venture.
When searching for the right location, you want to take into consideration whether or not it will attract tenants. Ask yourself does the property provide all the public amenities that tenants are searching for? How is the neighborhood? Does it have a low crime rate and high employment rate? There are many details to focus on in terms of location.
Related: How to Choose the Right Location for Rental Properties
Step 4: Pick an investment strategy and property type
Investing in real estate takes many forms from very passive involvement to very hands on. There are two main investment strategies to choose from: either Airbnb rentals or traditional rentals. Airbnb is a type of investment that is “short-term” because you are renting out your property to tenants who only want a property to stay in for a short period of time. Traditional rentals, on the other hand, are long-term.
Not only do you have to choose a strategy but also the type of property you want to invest in. Do you want condos, single-family, multi-family, or apartments? Before becoming a real estate investor you need to decide on which strategy and property type suit your plan best and make sure they also fit your budget as well. Check out Mashvisor for the latest blogs about the different types of properties and read about each one.
Step 5: Real estate market analysis
Becoming a real estate investor can be easy and simple by using real estate market analysis. This allows you to determine the best properties to invest in and predict the profitability and value of each real estate investment before you invest in it. The real estate market analysis allows you to compare multiple similar properties based on information about each property to determine what price is most suitable for your investment.
Related: The Real Estate Market Analysis Tools That Every Investor Needs
Step 6: Choose a good price for rent
Since the goal of every real estate investor is to make money, charging the right price for rent is important. Too much will drive tenants away while too little will have you lose money like crazy. When setting up the rent, beginner investors should take into consideration the property type, the features of the property, the location, and the average rental rate in the area.
Step 7: Select the best tenants
Once you are on your way to becoming a real estate investor, finding good tenants is important to succeed in the real estate business. Perfect tenants are able and willing to pay rent in full and on time each month, keep the rental property in a good condition, and follow the policies of the rental agreement. Real estate investors should create certain criteria to follow by when choosing tenants. Also, it is advised to do a background check and credit check and have an interview with potential tenants to make sure they don’t destroy your rental property. It’s better to be on the safe side than have a tenant who will generate negative cash flow for your rental property.
Step 8: Use Mashvisor
Mashvisor is an online platform which allows both beginner and experienced real estate investors to carry out their real estate investments more professionally. Mashvisor contains a blog section which offers thousands of blogs that cover all topics and aspects of real estate investing. From city-specific guides, through beginner guides, to expert tips, Mashvisor has it all!
To learn more about how we will help you make faster and smarter real estate investment decisions, click here.