Whether you’re new to real estate investing, or an expert with several years of experience, there is one fact about real estate investing that everyone is well aware of: it’s a great way to make money.
So, what makes real estate investing such a top pick for investors worldwide, and how can beginner investors compete in such a crowded market that is full of professionals and experts in the field?
This blog aims to answer these questions, and to provide new real estate investors with information that could help them better prepare themselves for becoming active investors and find success in the field, in addition to introducing a number of real estate investing tools that can be used by beginner investors to enable them to compete with the most experienced real estate investors out there.
What’s Special About Real Estate Investing?
Like any other investment, real estate investing has a number of advantages and disadvantages related to it.
The most prominent advantages of investing in real estate are:
- It is relatively easy to understand, and it requires no official education in the field in order to pull off a successful investment. Most real estate investors are self-taught, and a large portion of your real estate knowledge as an investor will come from experience and by learning from your mistakes.
- It is a hedge against inflation. Home prices are not affected by inflation, and investors who own rental properties can often take advantage of inflation to ask for higher rents, which means that inflation can actually be used to increase your profits.
- Real estate investors have easier access to financing options for their investments through mortgages and loans, which makes this market a better option when it comes to financing and leverage.
- Real estate properties can appreciate. This is one of the biggest advantages, allowing some investment properties to appreciate in value far above their original sale price, turning a mediocre investment property into an excellent profitable property passively over time.
Some of the disadvantages of real estate include:
- It is a low-liquidity market.
- The transaction costs are high.
- Real estate properties require constant maintenance and management.
With these advantages and disadvantages, real estate is still one of the most vital and profitable investments on the national as well as the global level. For this reason, the real estate market has become one of the most competitive markets in the economy, with investors competing for the best investment properties and opportunities out there.
This made real estate investing more intimidating for beginner investors who are looking to get involved in the market and trying to find investment properties that are suitable for them due to a large number of professional and experienced real estate investors who are dominating certain markets.
So, what does a beginner investor need to do in order to find a good investment property and a profitable real estate investment opportunity?
Getting Educated
The first and foremost step that any prospective real estate investor needs to make before they start investing is to get a proper education. We are not talking about a college degree or any sort of official education (although they can be a plus). We are rather talking about reading books, blogs, and guides, watching videos and listening to podcasts, asking friends and acquaintances, or even finding a mentor to teach you.
If you’re serious about your quest of becoming a real estate investor, then you need to take advantage of any source of knowledge that becomes available to you, and any piece of knowledge that you hear or read online. Get yourself affiliated with the terms used in the field, the concepts, the methods of financing that are available to you, and the laws and regulations that apply to the market.
Finding an Investment Property
Finding an investment property might seem like a simple task for most until they actually start searching. Long gone are the days of driving around and looking for a “For Sale” sign on the front lawn of a house (although you can still do that if you enjoy the ride). Nowadays, even looking for listings in printed newspapers and bulletins is a far-fetched method for finding a good investment property.
There are a number of great online sources and websites that real estate investors rely on when trying to find good investment properties, and you will need to get yourself affiliated with those.
You can use Mashvisor, for example, to search for investment properties based on the city of your choice in the US. The platform will give you a list of the investment properties that are available for purchase in the area, and you can further customize your property search based on your budget, method of financing, or even the projected returns that you desire your investment property to have.
Some of the other available sources for property listings include Zillow, Trulia, and Redfin.
Analyzing an Investment Property
Another important aspect of real estate investing includes knowing the numbers and being able to calculate the values in order to determine the quality and viability of an investment property and projecting its returns.
This takes you back to step 1 (education), as you will need to have sufficient knowledge of the key real estate metrics that are used to evaluate an investment property such as cap rate, cash on cash return, and cash flow.
Typically, in order to calculate these values and analyze your investment property, you would need to use a spreadsheet and a regular calculator, and you would have to do the calculations manually, which is a daunting and time-consuming process.
These days, however, there are multiple websites and platforms that allow you to calculate these values with ease and at a faster speed than ever before. These online investment property calculators come in several forms and serve different functions, so make sure to pick the one that is most suitable for your needs.
Mashvisor, for example, in addition to providing you with tools that can help you find investment properties, also provides you with readily available calculations and analytics for the property and the area, allowing you to even compare different properties with ease. Additionally, as mentioned before, Mashvisor allows you to search for investment properties based on your own search criteria, including the projected returns of a property (cap rate, cash on cash return, and cash flow).
You can, for instance, filter out results based on your desired cap rate or cash on cash return, allowing you to only see properties that are relevant to your investment goals and that are as profitable as you would like them to be.
Bottom Line
Real estate investing has a number of great advantages that make it one of the best types of investments out there. After you’ve gained enough knowledge and education on real estate investing, you will find a number of great tools that can help you carry out your real estate investments with ease and at a fast pace, which will allow you to compete with even the most experienced investors in the field.
Are you tired of searching for the perfect investment property only to always get beaten to it by an experienced real estate investor who has readily available analytics and insights? If so, then it’s time for you to start using Mashvisor to level the playfield. With Mashvisor, beginner and experienced real estate investors can all compete on an even ground.