Real estate investing is a great way to make money, invest in the long term, and start a successful business venture. It can even be fun and rewarding! But just like any big venture where you’re spending lots of time and money, you need to be prepared before you start.
When you first venture into real estate investing, you’re actually setting the foundation for a long-term business plan. It’s crucial to think about the big picture while also spending the time on the initial details. Starting out takes time, patience, and focus. Here are a few tricks of the trade to get you started.
1. Learn from the experts.
It’s extremely important that you take your time learning everything you can about the trade before diving in. There are plenty of informative, helpful resources online.
- The Real Estate Investment Association (REIA) is an extremely helpful tool, with up to date discussions and tools. Even if you can’t make it to the events, they have resources online.
- YouTube has countless videos of experts walking you through steps of setting up just about everything involved in a real estate deal. A simple search will bring you approximately 1,200,000 videos about real estate investing! Find professionals you trust, and follow them. Even once you are started and investing, it’s important to stay up to date on the market. These experts can help with that.
- Real Estate Investor Forum (this site) consists of countless professionals sharing unbiased, honest, and thorough information regarding everything real estate. This is the most helpful tool for getting started, and for continuously growing within your real estate plans.
2. Start small.
Getting started in real estate takes time, experience, and a starting point. Getting started can be overwhelming. So, the best way to get started? Small. Take your time with small investments, small deals, and small risks. Experience can come in all shapes and sizes. Smaller deals are going to lower your risk, while still giving you experience to apply to later, bigger deals. Plus, small deals still mean cash flow, and cash flow still means successful business. Lay the foundation, and you can always scale up to larger investments in the future when you have more experience.
3. Invest in single family home rentals.
There are many perks to investing in rentals, especially single family rentals. Single family home rentals tend to be just as successful as multi-family home rentals in most areas. They are also a great starting place for you to work with real estate purchasing, financing, and renting. Here are a few benefits:
- Getting to know what works for you and renters on a smaller scale is going to help you in the future with multi-family home rentals.
- Working with renters builds your confidence that can be applied to other real estate deals. Rentals can require more on-going communication than a traditional sale. So, getting know how to work with tenants will be beneficial when working with buyers.
- Investing in rental properties now will almost guarantee cash flow to invest in real estate properties later. Getting monthly rental income will add to your cash flow, allowing you to further your options for buying and selling real estate in the future.
4. Remember that cash flow is extremely valuable.
Always remember that cash flow is king when it comes to real estate. Always remember that every party involved in a real estate deal benefits from cash. With cash, deals can be made quicker, you can easily outbid competition, and you can invest in more properties. Don’t let all your money get tied up, and resist long-term mortgages… you will get much better deals on properties if you’re able to pay for them upfront!
5. Assess your options based on the property types and cash flow.
Single-family homes may have lower monthly rent coming in, but they also involve less work and initial investment. The return on investment will be just what you, and your bank account, needs. Make sure you set up the financing side of your investments with extra attention to the available cash. Again, with cash flow you’re able to quickly purchase, invest, and grow.
6. Know your target buyers and sellers, and the demographics of your location.
- As of 2016, the demand for single family homes is steadily increasing. There are many reasons for this of course, and it is subjective to where you are investing. The predominant reason for the trend is due to Millennials and single parents. Single parents are looking for smaller homes, but are outgrowing apartments. This is similar with Millennials, who are entering the job force and moving to the suburbs or quieter neighborhoods. Millennials are drastically different than the previous generation: marrying later in life, not having as many children, and entering newly created career paths.
- Find your main location you want to focus on, and get to know it. Determine the current demographics, and start looking for your target buyers and sellers. The more you can initially analyze these factors, the sooner you’ll know what will work for them. Knowing what works for them, works in your favor. This is also helpful when it comes to marketing your locations.
- Know the market, know the demands, and start supplying the needed real estate. Single family homes can be a forever home for some, or a stepping block for others. Either way, start doing the research to know where this type of real estate is most needed, but maybe not technically supplied. Research is a powerful tool no matter what phase of real estate you are in.
Don’t be afraid to get started in real estate investing. Start gaining experience, investing, and determining what works for you. Experienced investors will tell you that it can be a very rewarding process, in more ways than one. So get researching, and then go out there and put that knowledge to good use!