In the real estate investment world, no one begins as a giant. Your goal might differ from the reality of things in the real estate market. You might say “I want to own multiple income-generating assets.” The most important question is how to start investing to reach multiple income-generating assets. Moreover, you find many excited entrepreneurs wanting to jump on the bandwagon with other real estate investors, but they find it difficult to make that first move with buying the first real estate property.
What are the steps every beginner real estate investor should take to buy the first real estate property?
Think thoroughly about what type of property to go for
You must assess your needs as a novice real estate investor and calculate what fits within your current career and lifestyle. There are plenty of options to go for with your first real estate property. You can go for multi-family properties, Single family properties, condos, townhomes, or even apartment buildings.
What most successful real estate investors advise is to start small. The best beginner real estate property is probably a single-family property or condo. This will give you a hint of what it’s like to be a property owner without an abundance of responsibility thrown at you.
Decide on how much money you wish to invest in the property
Finding creative ways to invest in a property is essential. Keep in mind that when investing your own cash, you are taking more risk. Of course, there are plenty of financing options available to real estate investors. You can use your residence’s home equity to put a down payment on your first real estate property. On the other hand, many real estate investors consider it smarter to invest with little or no money at all.
Make sure to be aware of all the financing methods. Successful investors figure out the financing of a real estate property before anything as it can make or break success. For more information about property financing methods, read this blog post: Investment Property Financing: Your Options as a Beginner Real Estate Investor.
Build your real estate investment network
Whether you thrive in teamwork or consider yourself most productive as a lone wolf, you need a team in real estate investing. There are many steps involved in buying a real estate property as an investment, so you will need many real estate professionals to help guide you to the most cost-effective solutions. A real estate investment network often includes a real estate agent, mortgage broker, and property manager.
While it may seem a bit early in your real estate investing career to start looking for a property management company, it makes perfect sense to figure it out prior to actually investing. Many real estate investors go for managing their own properties to make sure that they are utilizing the rental income as it should be. There is nothing set in stone, you can find what works for you and implement it.
Don’t underestimate the value of a rental property calculator
With every buy-and-hold investment property that you buy, you’re going to look into using it as a rental property simply because rental properties have a magical dust that is called rental income. Now, what a rental property calculator can do is give you the current market value of the property. This happens simultaneously while factoring in the property’s ability to generate a substantial rental income. Moreover, a rental property calculator can give you the real estate comps of the property. Meaning, you can compare the property’s price, square footage, and many other specifications. To make use of Mashvisor’s rental property calculator, click here and enjoy the 14-day free trial.
Find a Coach and mentor
If you’ve read about real estate investing, then this is not the first time you hear this! A real estate expert can help you make the right decisions with every real estate property you buy. He/she might bring things to your attention that you haven’t even thought of.
If you’re wondering where to find a real estate mentor to help you, read this blog post: How to Find the Best Real Estate Investment Mentor.
Finding the right real estate property
After setting your goals and filtering out your financing options comes finding the property that will meet your investment needs. Of course, in order for a real estate investor to find a property, he/she will need to widen the search. The methods can range from sending mail and emails to hiring a real estate agent to find you the exact type you’re looking for. Moreover, real estate investors usually look for positive cash flow income properties and properties with a high cap rate (usually somewhere between 4-5%).
Just make sure to explain to your real estate agent what you’re looking for in an investment property.
Closing on the property
This marks the first step in becoming a real estate investor! Of course, closing on the property has many expenses, many of which you will have to take on. In many cases, the seller takes some of the costs as well. While closing on the property may be the end of your journey with your first real estate property, it is merely the beginning of your journey alongside it.
Lastly, for the many wanna-be real estate investors, the real estate investment world is open to anyone who is willing to take a risk! Start taking the first real estate investing step in today’s real estate market. This will help you get to where you wish to be in tomorrow’s market!
If you have any more insights on the topic, please share them with us in the comments section.