It might seem tricky for some people to start investing in real estate. So, if you want to learn how to invest in real estate, keep reading.
We are here to tell you that investing in real estate is actually easier than you mght think it is. Here are four simple steps on how to invest in real estate:
How to invest in real estate: Real estate education
The first step to learn how to invest in real estate is getting proper education. Real estate education does not necessarily mean that you have to get a degree in real estate. It simply means that you should educate yourself on real estate, especially, terminology. There are plenty of sources from which you can learn. You can read real estate books and blogs or enroll in real estate courses and so on. There are also many real estate investing gurus that offer real estate education courses either in class or online.
Moreover, for you, as a beginner real estate investor, there are aspects of real estate education that you should focus on. As we mentioned before, the terminology is a big part of the real estate investing business. You should know terms like cash flow, cash on cash return, cap rate, real estate appreciation, net operating income, and so on. You must also learn how to do real estate market analysis as well as using the investment property calculator. These will serve you when buying an investment property, especially, for the first time.
When you learn how to invest in real estate, you should also educate yourself on investment property financing in addition to how to buy an investment property. The only thing you cannot do in real estate is getting into it with zero knowledge. Of course, there are things that you will learn along the way, but you must know the basics beforehand.
Related: How Much and What Real Estate Education Do You Need to Become an Investor?
How to invest in real estate: Financing
Now after you have acquired the real estate education needed for you to begin, you must think of financing as the next step in learning how to invest in real estate. Analyze your financial situation. Go over what you can afford and what you can’t afford as a beginner real estate investor. For instance, if you decide to take a loan, see if you can afford to pay a 20% down payment. If not, then you should go with another financing method.
There are many financing methods that you can go with other than bank loans. There are private lenders as well as online lenders. You can also apply for owner financing in which you pay the seller each month instead of paying for a bank or a lender.
How to invest in real estate: Choose your real estate investment strategy
Well, this is actually the real deal. Knowing the different investment strategies that are available for you in the real estate investment business is important when you learn how to invest in real estate. In order for you to be able to start investing in properties, you must decide what real estate investment strategy you want to go with. Therefore, here are some of the best real estate investment strategies for beginner real estate investors:
Investing in rentals:
The real estate investing business is so diverse. Therefore, it offers many real estate investment strategies that you can go with. Investing in rentals is one strategy. There is also a variety of rental strategies that you can choose from. You can invest in apartment rentals, residential rentals, or even commercial real estate properties. You can also choose whether to invest in traditional rentals or short-term Airbnb rentals. Of course, it all depends on your financial situation.
Investing in rental properties is beneficial in terms of cash flow. They generate a steady monthly rental income with which you can repay the mortgage. Investing in rental properties is also great in terms of growing your business fast and building your real estate investment portfolio.
So, if you are wondering how to buy a rental property, here are some tips:
- Find the right location.
- Make sure it has all the required amenities and facilities available.
- Settle your finances and get the down payment if you are considering a loan.
- Hire a real estate agent who has experience in investment properties.
- Do the legal paperwork.
- Start investing.
Related: The Best Rental Real Estate Strategies for Beginners
Wholesaling real estate:
Wholesaling real estate is one of the best real estate investment strategies in the market. It is especially great if you are a beginner investor and considering to invest in real estate with no money.
The way it works is: you find a property that is selling for less than it’s worth and assign it to a contract. The contract gives you a period of time during which you should find a property buyer. You sell the property to the property buyer for less than it’s worth but more than what you agreed for with the property seller. Therefore, the extra money that is left is your commission on the deal.
Creative real estate investing:
The good thing about the real estate investing business is that it offers creative investment strategies besides the traditional ones. Therefore, why not start with a live and rent strategy? Consider purchasing a multi-family investment property. You live in one unit and rent out the rest.
The live and rent strategy is one of the easiest strategies to invest in real estate. It saves you the pain of owning multiple properties at different locations. It also saves you money in professional property management. With the live and rent investment strategy, you can grow your real estate investment portfolio faster as well as achieve better rental income.
Related: Is Creative Real Estate Investing Really a Thing?
How to invest in real estate: Planning
At this point, you have already gotten done with the education, financing, and choosing your strategy as the first steps in learning how to invest in real estate. Now comes the time to put it all together in one plan. Consider your investment goals. What do you want to achieve from this business and write in detail how you are going to achieve it. But the most important thing is sticking to this plan. Therefore, make sure it is realistic and actually serves your goals.
Bottom line
Now that you have learned how to invest in real estate, it is all a matter of action. Start small, and work your way up. It is important that you know the basics first and find the right financing strategy, and then you learn the rest along the way. Not having an experience in real estate investing does not mean that you are not going to succeed as a real estate investor. Make sure you plan well and stick to your plan. You can find more details and information on buying an investment property and becoming a real estate investor on Mashvisor. You can also consult with our professionals by signing up.