Real estate investing for beginners can be a bit confusing. If you are a first-time real estate investor, you may be wondering how to invest in real estate. The truth is, there is no single answer. Part of the process involves determining what type of investment company you want to have and what your goals and timelines are.
Mashvisor can help provide support to real estate beginners. However, we need to choose a starting point when explaining real estate investing for beginners. In this article, we will assume that you have already found a source of real estate investment financing. If you need to start a bit further back in your quest to understand real estate investing for beginners, we suggest that you start with a bit of research on ways to finance your first rental property.
What follows is real estate investing 101 for beginners by the folks at Mashvisor. Your author invests in real estate. The real estate investing strategies for beginners offered below are the ones your author followed and recommends.
Step One: Analyze the Real Estate Market
Real estate investing for beginners must start with learning how to find an investment property. Every property purchase is a serious endeavor, but the first one is always special. It can also be stressful. However, by following the steps Mashvisor can lay out, the process can be less scary.
Begin with a real estate market analysis. Before you start screening individual investment properties, you must first analyze the local market you intend to invest in. The process begins at 30,000 feet. One looks at the housing market overall. Is it a buyers’ or sellers’ market? If it is a buyers’ market, max out your capital and get the most property possible right now. If it is a sellers’ market, start small and be patient. Look for real estate deals. Look at distressed properties. Consider an owner-occupied property.
Step Two: Find an Investment Property
Next, you must learn to do an investment property analysis. Here, you have narrowed your search by researching the overall market. You have also looked carefully at the individual neighborhoods available to you. Once the right location has been determined, you start to look at individual investment properties.
Real estate investing for beginners gets fun when one starts learning how to buy an investment property. You have done all of the hard work already. But which specific first property will you opt for? You will have choices. The answer can be found by using an investment property calculator.
An investment property calculator, like that found on Mashvisor, is a vital tool. An investment property calculator allows real estate investors to determine their rate of return on investment. By using the same calculator to compare various properties, the best return on one’s investment can be determined. This helps remove any subjective and emotional factors when one compares options.
Step Three: Take the Plunge
Once you are ready, real estate investing for beginners means buying a property. You will need your friends. A network of business associates really. Buying a first real estate involves a surprising number of individuals. You will likely work with a realtor. Since you are buying, the services come free to you. The seller pays the commission in almost all regions. Be sure to read up on how to find a great realtor.
You will also need a home inspector. Don’t rely on the seller’s list of needed updates. Find a professional, licensed home inspector. Many home inspectors don’t dive deeply into things like HVAC systems, septic systems, lead paint, and chimneys. You may want to augment the services of the home inspector with specialist inspectors if anything is in doubt.
Once the reports are complete, take careful note of the value of the real estate investment property after the report is done. It is likely to go down and you need to negotiate accordingly with the seller.
Next up, you may want to have a lawyer on your side at the closing. Although not always required, a lawyer who handles property closings can be a good resource. You may feel short of funds, but this is not a place to skimp.
Step Four: Identify Resources for Real Estate Beginners
Real estate investing for beginners is really about developing a toolbox and business methodology. The good news is that you don’t have to invent the wheel. Many successful real estate investors have come before you. They have created a roadmap you can follow.
One good idea is to bookmark and use the best investment sites for beginners. We may be biased, but we think Mashvisor is a great site to start with. However, we are not alone! In fact, we will even tell you that there are other folks that have great websites out there. Learn what each site can offer you and use these tools. They cost very little (and in some cases are free) and have a high relative value.
Step Five: Keep Learning
Like in sports, nobody tries harder than a rookie. Smart beginner real estate investors have energy, curiosity, and are open to learning. This is critical. Have you ever noticed in sports or in movies the staring roles and starting players are often veterans? This is because they have wisdom and the ability to work efficiently. They have been there and done that.
In real estate investing, it is important to maintain your energy but learn to work smarter, not harder. Leverage your real estate network. Learn from them, but also, keep them working for you and with you. Learn to make the most of your time and put a high value on it. You won’t be a beginner real estate investor long. You will soon be a savvy investor who has learned valuable lessons. Keep learning by checking back with Mashvisor for updates and new techniques.