Interested in real estate investing? Well, if you’ve no idea where to get started, then you’ve come to the right place. In this post, we offer easy steps for investing in real estate that include beginner-friendly strategies, advice, and tips. Remember, real estate investment is all about location and access to capital.
Whether you’re new to real estate or experienced, research is a must. Learning how to research real estate markets makes investing in real estate much easier. Why you may ask. This is because the bulk of your work lies in planning and research.
So, what information should you be looking for? First, you need to find out if it‘s a buyer’s or seller’s market. Second, study the economy of the city, demographics, and job market. A city with a high-demand job market and strong economy increases the demand for real estate property. Lastly, run the numbers such as occupancy rate, rental income, median listing price, and more.
#2. Choose Your Investment Strategy
There are numerous real estate investment strategies. One of the strategies is fix and flip. This strategy requires you to find undervalued properties, fix them up then sell them for profit.
Another strategy is short-term buy and hold. Basically, you find undervalued properties, fix them up and rent them out. Lastly, we have the Buy, Renovate, Rent, Refinance and Repeat method or BRRR. This method allows you to build up a portfolio by leveraging your real estate investments.
#3. Draft a Real Estate Business Plan
As a beginner in real estate investing, draft a business plan. First, a business plan will enable you to identify the reasons for investing. Second, it will help you outline your goals - short and long-term. Basically, a business plan will enable you to visualize a roadmap by helping you outline your goals, strategize your steps, and much more.
#4. Pick Your Target Market
Should you invest close to home or select a new market? If you’re a beginner, we recommend that you invest close to home. Start with suburbs in major urban areas as they’re affordable and reasonable investments.
Before choosing your target market, consider the job market, rent/price ratio, school districts, safety, and crime rates. You should also take into account neighborhood covenants, public transport, and walkability.
#5. Know the Risks in Real Estate Investing
Like stock trading, real estate markets fluctuate. As you already know, the biggest gains are usually realized when you buy low and sell high just like in stock trading. But unlike the stock market, real estate costs are very high.
The biggest risk in real estate investing is buying the wrong property and paying too much for it. Another risk is choosing the wrong location. Since you can’t move a house or building to a desirable location, it‘s important to make location your primary consideration.
#6. Choose the Type of Financing
When it comes to real estate investing, a bridge loan will enable you to promptly execute a sale on a home you can fix and sell quickly. With a bridge loan, you can complete more fix and flips, scale your business and build your portfolio fast.
To qualify for a bridge loan, you’ll need at least 20% equity in your home. The lender will also require you to have good to excellent credit.
#7. Find Good Real Estate Deals
The first rule of real estate investing is never buy what you cannot afford. This is because expensive properties have high operating expenses. What you need to do is buy real estate property below market value. This will provide you with a higher ROI.
The best way to find good real estate deals is by using a property deal finder such as MLS.com. This tool will enable you to search for the best-performing investment property in your market of choice.
#8. Build Your Team
To succeed in real estate investing, you need a team of experts. These experts can be your advisors. Therefore, when building your team, include your spouse, mentors, business partners, attorney, and others.
You should also include electricians, painters, plumbers, home inspectors, handymen, and other specialists. To find members of your team, we recommend networking with like-minded real estate investors.
#9. Networking Is Key
Attend as many networking events as you can. By networking with like-minded real estate investors, you can learn how to land great deals, how to overcome challenges, and much more. Also, networking allows you to learn and build a contact list.
These connections will enable you to uncover real estate market trends and even find a mentor. With a mentor, you can take learning real estate investing to the next level.
#10. Learn Real Estate Investing
While mentors can advise and teach you a lot about real estate investing, it‘s wise to expand your sources. This is where real estate investing books, magazines, and blogs come in handy. Just spending 15 to 30 minutes a day learning will set you up for success in real estate investing.
Here are three books on real estate investing to get you started:
• The Millionaire Real Estate Investor, By Gary Keller
• Insider Secrets To Financing Your Real Estate Investments, By Frank Gallinelli
• The E-Myth Real Estate Investor, By Michael Gerber, Than Merrill, and Paul Esajian
Remember, having a continual education mindset will serve you in your career as a real estate investor.