When you decide to invest in real estate, the first question you have is “How to get started in real estate investing?” So here is the answer for you.
The main goal of real estate investing is simply to put your money to work today in order to have more money in the future. Basically, what you earn from your investment should be enough to offset the risk you take, the taxes, and the cost of running your investment property. This includes routine maintenance and repairs, services, insurance, and utilities. Keep in mind that there’s no magical simple recipe that works for everyone to start in real estate investments. But this guide can help you figure out or even answer some questions as you start your journey in real estate investments. Be aware that “simple” doesn’t mean “easy “, because if you trip, the after-effect can vary from minor obstacles to bankruptcy and major problems.
With that being said, here is your guide on how to get started in real estate investing:
How to get started in real estate investing: Get educated on real estate investments:
This, of course, does not mean that you have to go to college to obtain a degree in economics. This simply means that you should get your basic knowledge of real estate. It is like building a house, and you have to start with building the foundation.
There are many real estate investing sources out there from which you can learn. Books, for instance, are your ultimate friend, and as the saying goes, “Those who lead, read”. This method is the most common one among investors. Most libraries contain a special section dedicated to real estate investments. Another way to learn is reading blogs. There are many great articles across the web that can be a fantastic source to get your knowledge from, especially when it comes to investment. Mashvisor is an excellent example. Blogs are usually written by people who are in the middle of their journey in real estate investment world. Finally, you can get yourself a mentor. It is true you can find an adviser who can charge tons of money for a piece of advice. However, you can also find experienced local real estate investors who can help you over a cup of coffee.
Related: Here Are the Best Real Estate Tools Without Which No Real Estate Investor Could Make It
How to get started in real estate investing: Set your goals and pick your strategies:
What is it that you really want to invest in? Is it residential properties? Apartments? Or is it commercial real estate? This is a key element because once you know what you want, you will narrow down your choices and get focused. There are tons of ways to make a profit in real estate, but you don’t really need all of them. You should only pick the real estate investment strategy that suits your aims and then proceed with it.
Related: How do I know if real estate is the best investment strategy?
How to get started in real estate investing: Set your business plan:
Create a solid ground for your investments to stand on, and a map for your journey. It is called a business plan. It should include details on your investment including the following:
- What are you doing?
- Why are you doing it?
- What are your goals and strategies?
- What kind of real estate property do you wish to invest in?
- How long do you need to achieve your goals (timeline)?
- Where do you want to establish your real estate investment business (location)?
- Do you need a team? Do you need to hire any professional property management companies or can you handle it by yourself?
- How much would this investment cost you? And how do you plan to fund it: cash or mortgage?
- Finally, the most important thing: What is your backup plan in case anything does not work the way you planned it?
These are only a few things that you should state in detail in order for you to get a successful start.
How to get started in real estate investing: The property:
We talked about getting prepared before. Now is the time for the real deal. Where you invest your money depends on your goal and how you put your strategy to work. Always remember to buy smart! As a beginner investor you have a lot to lose, so keep it real and purchase your first investment property wisely. This means you have to take into consideration the location of the property, the cap rate, the facilities, the amenities, and the crime rate, for instance. These are, of course, among many other factors that determine whether the property is worth purchasing or not.
How to get started in real estate investing: Cash flow
How are you going to pay for your investment? What method are you going to depend on? Are you going to pay in cash? Or are you going to take a mortgage? This is an important aspect that can determine whether you’re going to make it or not. Thus, you should conduct careful investment property analysis first to determine the rental income you can expect from this investment property and see whether your cash flow will be positive or negative after the mortgage payments.
Related: Why Positive Cash Flow Properties Are So Important for Investors?
How to get started in real estate investing: It’s all about marketing
No matter what kind of real estate property you are investing in, you certainly need a strong marketing tact to succeed. As a new investor, you are basically building a brand and a name for yourself in the housing market. Know what works best for you and be creative with it. Whether you are trying to invest in a rental property, or buy a real estate property in order to sell it for more than what you have paid for it, for you, it is all about attracting tenants or buyers.
How to get started in real estate investing: Always be prepared for the worst
Just like you set your business plan to enter, you also need to set your exit plan. Have a lucid understanding of the options you have in hand, and what you can do in case it does not go the way you planned. It definitely doesn’t mean that you should give up if such a situation appears. It only means that you need to examine a few options, just in case.
Finally, this is where your journey begins. Now that you have done all the previous steps, put everything you have learned on how to get started in real estate investing to practice. Do not forget to enjoy your journey!