Congratulations! You’ve decided you will be starting a real estate investment business. Learning how to start a real estate investment business is similar to learning any new business. It starts with a business plan and the establishment of your company. The good news is that there are many resources at your disposal – including Mashvisor – that will help you develop sound real estate investment strategies.
Here are the five most important steps to take.
How to Start a Real Estate Investment Business
Step 1- Create Your Business Plan
When you are working to establish your business plan, consider the type of rental property business you plan to start. You will be buying multiple rental properties. Will they be primarily multi-family rental properties you own outright? Or will you buy condos to rent as apartments? Perhaps you may also add single-family homes. Are you planning a long-term lease model, an Airbnb, or a combination of the two? Once you know what type of successful real estate investment business you plan to start, seek professional legal help and incorporate your new business.
A lawyer will help you decide on which formal model you establish. Many rental property companies are limited liability companies or LLCs. A rental property business can also consist of many individual LLCs. Speak to your corporate lawyer. Let him/her know that you have a plan forming for how to start a real estate investment business. Ask your lawyer for help deciding which company type best fits your model and why.
Once you have your plan on how to start a real estate investment business in place, look very carefully at your capital. You will need purchasing power. In the beginning, you will want to leverage what buying power you have so that you can get the most rental properties possible. Speak to your lender about the rules they use to establish credit for real estate investors and plan ahead. Many lenders will want to see a rent roll before providing you with a loan.
Related: How Does One Start a Real Estate Business With Very Little Capital?
Step 2 – Create a Toolbox for Starting a Real Estate Business
Once you have a business plan and have established your new business formally, step back and assemble a toolbox. Every project requires the right tools. The same is, of course, true when planning how to start a real estate investment business. Here Mashvisor can be a big help. Mashvisor offers a wealth of real estate investment tools you can use for your rental property business.
Related: How to Make the Most From the Best Real Estate Websites
Step 3 – Create a Real Estate Network
Going it alone can make running your rental property business very challenging. By creating a real estate network, you can free up much of your time to work in your business. For example, you will eventually have a real estate investment portfolio, not just one or two individual rental units. As your real estate business plan matures and you find yourself buying multiple rental properties, you will need the help of a realtor to find the best properties available. Although you may be handy with a hammer, you will also need a vendor list to help you manage maintenance and repairs. Add in your lawyer and accountant and it is easy to see how you can create a real estate network of individuals you don’t directly employ. As time passes and you grow your real estate investment business, you may find it is better to employ some of these individuals directly. That will take time.
Step 4 – Buy Your First Property
Learning how to start a real estate investment business starts with buying your first property. Mashvisor can help you with novel ideas to help you get into your first rental property. For example, did you know that there are even ways that you can buy your first rental property with no money? One great method is to purchase a multi-family home in which you will reside. Owner-occupied rental properties are a very popular first step in becoming a real estate investor. This allows you to take out a personal loan with a very small down payment. You may also find that this first rental property will have an attractively low interest rate depending on your particular state. After you have your first rental property established you can later transfer ownership to your LLC and buy a new property. You may be able to reside in the next one as well. Work with your lawyer and lender to ensure you know the rules.
Related: Real Estate Investing 101: How to Buy Your First Rental Property
The Last Step- Grow Your Real Estate Investment Business
Once you have learned how to start a successful real estate investment business, you will want to grow your business. While a larger business certainly adds more rent, there are many other advantages to having a real estate investment portfolio. One is cash flow. Rental units will always have tenants moving in and out. A rental property business with multiple properties will allow you to spread out the turnover times and keep your cash flow steady. A 100% occupancy rate is not always possible. Therefore, having more rental properties will enable you to maximize your rental occupancy rate. You may require financing for more than just buying multiple rental properties and as you grow your business, you establish more credit. You can use that credit to acquire loans for rental property maintenance and upgrades.
Learning how to start a real estate investment business is not something one needs to do in a vacuum. Mashvisor has the background information and tools to help you.
