If you’re thinking of becoming a real estate investor but you’re not sure from where to start, then this guide is made just for you! In fact, you’re already taking the first step to getting started in real estate investing by doing research to gain the necessary knowledge. Real estate investing is not as simple as buying a rental property and waiting for it to start making money. It takes time and effort to become a successful real estate investor, and the first thing beginner property investors need to do is surround themselves with knowledge regarding all aspects of real estate investing.
Buying any type of investment with a blind eye means you’re throwing your money away. Because we know you’re not into that, we’re here to provide you with the ins and outs of getting started in real estate investing. So, without further ado, let’s dive right in!
Getting Started in Real Estate Investing – Choose the Right Location
Location is the most important aspect of the real estate business. Every beginner real estate investor must keep location in mind before getting started in real estate investing. The location of your income property determines the supply and demand, appreciation, operation costs and expenses, how much can you charge for rent, cash flow, and other factors that determine how profitable the investment property will be.
Therefore, before getting started in real estate investing and buying your first income property, don’t make the mistake of buying the cheapest income property thinking it’s a bargain. The investment property will not be profitable if it’s not in the right location! The best locations are those with a continuous construction of investment properties, healthy economy, growing population, and job opportunities.
Wondering how to start your search for the right location? We’re here to help! Mashvisor provides income property investors with the best tools to find the best locations across the US to buy investment properties.
Getting Started in Real Estate Investing – Pick the Type of Investment Property
The world of real estate investing offers numerous types of investment properties ranging from single-family homes, multi-family homes (duplexes, triplexes, and apartment buildings), townhouses, condos, etc. Thus, before getting started in real estate investing, income property investors should understand these types and what investing in each type requires in order to decide which the best type to invest in is. Naturally, the best type of income property would be whichever brings the highest return on investment.
This might leave a beginner real estate investor feeling overwhelmed. However, Mashvisor’s investment property calculator makes this a piece of cake! This tool computes cash on cash return, cap rate, and potential rental income of different investment properties. This allows income property investors to compare between and easily find the best one before getting started in real estate investing. To start analyzing the best investment properties in the city and neighborhood of your choice, click here.
Getting Started in Real Estate Investing – Pick the Investment Strategy
After finding the best type of rental property to invest in, the next step for getting started in real estate investing is determining the investment strategy. There are mainly two investment strategies, the first being long-term investment strategy. Following this investment strategy means property investors buy the investment properties and rent them out for long time periods. This is the traditional and most popular way of real estate investing.
The second investment strategy for getting started in real estate investing is the short-term investment strategy. This investment strategy basically means that property investors rent out investment properties for a short time period. These are also called Airbnb rental properties.
Before getting started in real estate investing, you have to figure out which investment strategy to follow. The best strategy depends on your goals as a real estate investor, location, and the type of income property.
Getting Started in Real Estate Investing – Financing the Investment Property
Financing investment properties is a huge concern for a beginner real estate investor. However, don’t let this discourage you from getting started in real estate investing. Once you know where to find financing for the first time, you’ll realize it’s not as hard as it seems. Moreover, property investors can even buy a rental property with little or no money at all!
There are many options available for financing investment properties. A real estate investor could buy a rental property all in cash, or take out a loan. Real estate loans range from mortgage loans (the most popular type), private money loans, hard money loans, and owner-occupied loans. Before getting started in real estate investing, educate yourself on what is required to obtain loans.
In addition, other financial aspects of real estate investing to be familiar with include rental property taxes, payment plans, and mortgage calculation. Thus, before getting started in real estate investing, always identify your current financial situation, your personal financial goals, the maximum amount of loan for which you are eligible, and set a budget before buying a rental property.
Getting Started in Real Estate Investing – Real Estate Market Analysis
One mistake that beginner property investors make when getting started in real estate investing is not performing a real estate market analysis! A real estate market analysis is the process of evaluating investment properties to explore expected profit and risks. This will determine whether or not getting started in real estate investing is a good decision.
Real estate market analysis (also called comparative market analysis) provides property investors with a comprehensive picture of the investment property, its location, and allows them to predict its profitability and future value before making the decision of investing in real estate. Furthermore, real estate market analysis makes it easier to compare similar properties based on information about each rental property.
In short, performing a real estate market analysis before getting started in real estate investing will help a beginner real estate investor with all the previously mentioned points – finding the right location, the best type of investment property, the optimal investment strategy to follow, and the best financing method!
Tips on Getting Started in Real Estate Investing
Work with a Real Estate Agent
Real estate agents are professionals who have been in the investing business for a long time. They know how to find the best deals and how to negotiate the purchase price of the investment property. Agents will also perform a real estate market analysis for you! A beginner real estate investor will learn a lot from an agent about getting started in real estate investing.
Select Good Tenants
Finding good tenants is important for successful real estate investing. The best tenants pay rent on time, keep the rental property in good condition, and follow the lease policies. Before getting started in real estate investing, it’s smart to first determine who your target tenants are and go through a tenant screening process to ensure you don’t end up with a bad tenant.
Set Appropriate Rent
Making money is the main goal of every real estate investor. Thus, the price you charge for rent is an important factor to think about when you’re getting started in real estate investing because it affects your return on investment. Charging too much will leave you with an empty income property, while charging too little means you won’t generate enough cash flow to cover the operation costs, meaning you’ll be losing instead of making money from your rental property. Again, a real estate agent and a real estate market analysis will help you determine the appropriate rent.
Start Using Mashvisor
Mashvisor is an online platform available to both experienced and beginner property investors. It offers data analysis to empower them to make smart real estate investment decisions. Mashvisor also offers a number of real estate investing tools for getting started in real estate investing, including the investment property calculator, property finder, the Mashmeter, and the Heatmap. In addition, Mashvisor’s Knowledge Center includes thousands of blogs and guides that cover all aspects of real estate investing in the US housing market. To learn more about our product, click here.
Final Thoughts on Getting Started in Real Estate Investing
Now that you’ve completed this guide, you’re already on your way to becoming a real estate investor. Getting started in real estate investing is made easier with Mashvisor! Make sure to continue reading our blog to learn more about all aspects of real estate investing.
To start your 14-day free trial with Mashvisor and subscribe to our services with a 20% discount after, click here.