If you think real estate investing is beyond you, think again. While it may be a complicated process at times with a lot of details to keep track of and capital to acquire, so long as you take a studied, thoughtful approach and take advantage of the resources all around you, you’ll be well on your way to turning a tidy profit in the real estate game sooner than you think.
We’ve outlined what you need to know to get started.
While it’s not necessary to have any previous experience with the housing market or with managing a property, it helps a lot and it helps prepare you for when it’s time to dive headlong into real estate investing.
In addition to apparent steps such as reading books or detailed articles on real estate, other actions you can take to see if this is the right path for you would be:
Where do you want to begin developing your real estate investments? Conventional wisdom suggests that you’d want to buy low and sell high, but how low are you willing to go? The truth is some low-cost real estate opportunities are inexpensive for a reason. In addition to any potential physical problems with the property, what other factors separate a poor investment from a wise one?
A lot of it comes down to location. Research the area. Is it an area with substantial economic opportunities and a high employment rate? Other factors to consider include:
Any of these could be a barrier or a boon to the desirability of a city and to what return on your investment you can expect from your property.
There is also the question of how far are you willing to travel either to conduct or supervise renovations or to manage as a rental property.
This is where we get into the nuts and bolts of investing. Decide what sort of properties you’re going to focus on and write out a profile describing your criteria. You’ll need to have a written profile to share with partners, other potential investors, and real estate agents you expect leads from.
When just starting, it’s recommended that you focus on a single niche such as single-family homes within one or two zip codes and a specific price range. Or you could concentrate on rental properties with a certain number of units or even focus solely on features intended for retail space. Whatever your chosen niche will be, write it down in detail and focus your search strictly within that niche.
Other criteria to consider and write down would be your ideal terms—the numbers you expect to work with. For instance, if looking at multi-unit rental properties, how much do you plan to earn beyond expenses from each rented unit? What about single-family house rentals? If looking at retail spaces, how much do you expect to make back each month from each space filled?
These criteria are not set in stone. As you develop and grow in your real estate investment goals, your rules can and should change as well.
You can’t go into this business alone. You’re going to need a range of people to either be working with or to be able to call upon to make your real estate investment dreams come to life. In addition to a spouse and/or business partner, you may want to have a personal advisor or mentor to help support and guide your way through the real estate investment process. You’ll also want to have on hand a lawyer with a specialty in real estate, a certified public accountant to handle your books, and, of course, lenders of some sort to help provide long or short term financing as needed.
As far as managing or developing a property go, you will also want to consider the following as additional team members:
How can you find all of these people to join your team? It’s essential to network with other real estate investors and cultivate contacts within the investment community to obtain the names of people who can help you with your plans. See if there is a Real Estate Investment Association (REIA) in your area or check with the local Chamber of Commerce and other business groups for leads.
It takes money to make money. Fortunately, you have several options when it comes to obtaining financing for your investment plans. Below are some opportunities to research and explore:
Any goal worth pursuing is going to require a fair amount of study, preparation, and work. Becoming successful in real estate investment is no different. The good news is that there is nothing involved with real estate investment that is beyond anyone willing to put in the time and effort.
We’ve covered some of the more critical things to know when starting. The rest will be up to you. Start browsing homes now!