Are you looking for an exciting way to make extra money for you and your family? Are you thinking about the best investment options around the US? Well, the answer to all your questions is just one: Investing in real estate. There is a reason behind the strong growth of the real estate investing business over the past couple of decades, and the reason is that this is one of the safest and most profitable investment strategies in the entire US market. So, the next logical question comes: How to start a real estate business?
Related: 7 Reasons Why Real Estate Is the Best Investment Strategy
To help you out in starting your new endeavor as a real estate investor, here are some tips about how to start a real estate business:
1. Think whether you have what it takes to be a real estate investor
True, real estate investing is a very attractive option, but to be honest, it is not something that everyone can deal with. To become a successful real estate investor, you have to be ready to devote a lot of time, energy, efforts, enthusiasm, and some money. In addition, you need certain traits such as being good with numbers, being hard working, being detail oriented, and being patient. While real estate investments promise great returns on investment in the middle and long term, profits rarely come right away. So, before you start thinking about how to start a real estate business, you should first decide whether such a business is the right thing for you at all.
2. Start doing your homework
If you have the right qualities, you can become a successful real estate investor in no time even with no previous knowledge of the real estate market and experience in the real estate investing business. All you will need to do is do A LOT of learning. But if you are looking for how to start a real estate business, it means you are ready to devote time and effort to this investment opportunity. You will need excellent research skills as a large proportion of your job as a real estate investor will be researching investment strategies, real estate markets, investment properties, real estate professionals, and many others.
3. Check your financial situation
If you want to know how to start a real estate business, you should check out your financial situation immediately. Regardless of how much enthusiasm you have as a novice, you will need some initial capital to start investing in real estate. No worries, you don’t need a ton of money as there are plenty of ways to make money in real estate with the money you already have, but you still need some. First of all, budget your income, expenses, and savings. Visit the bank even before you start thinking about the best real estate market or best investment property to check your credit history and make sure you are eligible to take a mortgage loan. At the end, you should have a pretty good idea of whether you can afford starting a real estate business and how big your first real estate investment can be.
Related: Financing a Rental Property: What’s the Best Way?
4. Start making use of real estate investing resources
For your research, you will need a lot of real estate investing resources. You are quite lucky in this regard because the market is full of such resources – online and offline – to help you learn how to start a real estate business. They offer all sorts of real estate knowledge – from identifying the most profitable real estate markets at the moment, through choosing the right investment strategy, to tips on financing the purchase of your rental property. One very important resource is real estate classes which you can choose to take online or in a classroom. Both options have their advantages and disadvantages, so consider carefully which option is the better one for you.
5. Start analyzing real estate markets nationwide
Real estate investing does not need to be limited to your own location only. Out of state real estate investing is becoming more and more profitably with the advance of new technologies and cheaper transportation options. In many cases, out of state real estate investing offers significantly higher profitability in terms of rental income, cash flow, CoC return, and cap rate, so many real estate investors opt for this strategy. To know how to start a real estate business, you have to familiarize yourself well with the concept of real estate market analysis (comparative market analysis) and investment property analysis. You will need to perform these a lot to choose the best investment property always.
6. Get yourself a rental property calculator
In the 21st century the life of a real estate investor is indispensable without a rental property calculator, which can do the above-mentioned real estate market analysis and investment property analysis instead of you. This will save you a lot of time and energy which you can devote to other tasks in learning how to start a real estate business. If you are looking for the best rental property calculator available on the market, check out Mashvisor’s. It’s highly interactive and will give you many options which other investment property calculators lack.
Related: Is Life Even Possible Without a Rental Property Calculator?
7. Start building real estate investment networks
One of the key determinants of how successful a real estate investor you will eventually become is the size, composition, and quality of your real estate investment network. You need all sorts of professionals in it including other real estate investors, real estate agents, real estate brokers, real estate lawyers, insurance agents, buyers, sellers, professional property managers, accountants, etc. It is important to start building your own network way before you are ready for buying your first income property as the people in it will help you with a lot of the decisions you need to make. This should be one of the things you do in the process of learning how to start a real estate business. In addition, some of its members might end up being the people with whom you form your real estate partnerships. Partnerships in the real estate business offer many important benefits, especially for first-time investors.
8. Start as a part-time real estate investor
Regardless of how confident and prepared you get to feel after learning how to start a real estate business, don’t make the common mistake of leaving your permanent job and jumping into real estate investing full-time. For the time being, it is better to have a secure job and secure source of income, while you see how much rental income and cash flow you can actually get to make from real estate investments. Once you have gained some experience in the world of real estate investing, you can decide whether it’s something that you can and want to do full-time.
9. Start small
Although you might be tempted to buy a large, luxurious, and thus expensive real estate property as your first rental property, don’t. There is time to grow in the real estate business. It is always better to smart small to learn the ins and outs of the business. Be sure about that – it is much better to learn how to start a real estate business with a small, simple property than with an expensive one which will require a lot of one-time and recurrent expenses in addition to a lot of work from you.
If you want to know how to start a real estate business, above are the steps which you need to follow in this process. Before you go ahead though, make sure that you have what it takes to be a successful real estate investor in terms of qualities and determination.