Becoming a real estate investor has become increasingly easier in the past few years given the expansion of mobile apps and websites such as Airbnb which allow any person to rent out a piece of real estate and become a property investor in a quick transaction.
It is every real estate investor’s dream to rely wholeheartedly on their investment property for income instead or relying on another full-time job. However, as you will soon learn, making money in real estate may take you a while to reach a level of financial comfort with your real estate investment that will allow you to leave other work opportunities.
When you begin investing, you are likely to start off small depending on your financial situation. Do not worry, however, as Mashvisor is one of the best real estate investing tools which allows new investors to look for rental properties that match their investing budgets while also providing beginner and experienced real estate investors with real estate data analysis to help them choose the right income property for their needs. Moreover, Mashvisor blog provides you with the necessary knowledge and steps to becoming a real estate investor.
Step 1 to Becoming a Real Estate Investor: Check Your Finances
The first thing you need to do before you become a real estate investor is to check your finances. You need to be realistic about your financial status in order to be a successful real estate investor. There’s no room for messiness and miscalculation when you are starting a new business venture, especially one which may sometimes hold a high-risk factor such as property investment.
You need to know how much you spend each month and where the money goes. You also need to make sure you are organized and have a credit score high enough to be approved for a bank loan to buy an investment property if you require one a mortgage. When your loan for buying an investment property is approved, you will be required to make all payments from your pocket until your rental property starts to create rental income. It is best to know your financial limits and abilities before diving into an investment to insure positive results and high return on your investment.
Step 2 to Becoming a Real Estate Investor: Learn More!
After you have figured out your financial state and organized your down payment and other future payment sources, you need to start educating yourself on the state of the real estate market. Read online, ask other property investors, and look at the housing market. You need to learn as much as you can about the real estate market and the best real estate investment strategies. Ask and answer all questions that relate to your business venture including the following:
- Is it a good time to invest in real estate?
- What is the best property type to invest in?
- How should you rent out the property you invest in?
The best way to educate yourself on different types of properties to invest in, the return on investment these properties yield, and how well they match up with your current investment ability is to visit Mashvisor.com.
Step 3 to Becoming a Real Estate Investor: Make a Plan and Stick to It
Write out a business plan and understand your responsibilities! After you have completed your research, identify exactly what type of property you are looking to invest in on your way to becoming a successful real estate investor. You can choose from an apartment, a condo, a single family home, a multi family home, a townhouse, and many others. Decide on 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. Owning a rental property is a big responsibility, and depending on the type of rental (short term or long term rental) you chose to turn your income property into, you may need to spend a lot of time acting as a manager of the rental property.
Calculate the amount of money you will be spending on your income property. Identify all costs before starting your investment project. Think about things such as cost of maintenance, cost of renovations, and even cost of utilities if you will be covering these costs for the tenants of your property. After you have decided how you will be conducting business, make sure you stick to your plan and – by all means – do not go over your budget.
Step 4 to Becoming a Real Estate Investor: What about Taxes?
After you have planned out your goals and costs for the investment property you would like to purchase, you need to start thinking about taxation on the property. Owning a rental property that you do not reside in has some different taxation guidelines than your primary residence. As a real estate investor, you should make it your goal to educate yourself on this subject so that you are able to classify your property correctly and in the most beneficial way for your tax return. Don’t forget to consider applicable tax deductions as well as these will let you save lots of money which you can reinvest in your business endeavor.
After you’ve completed all the required education and planning to start your journey of becoming a successful property investor, you can start utilizing all you have learned in the real world. Start off small with your initial investments and make sure to calculate all risk factors to insure a successful investment career. To further your success in the field of real estate investment, be sure to keep up to date with all the new articles on Mashvisor blog and to use all the tools at hand on Mashvisor.com.
To start out your 14-day free trial with Mashvisor to find the best investment properties in the US real estate market, click here.