Investing in real estate is one of the greatest methods today for generating wealth. It’s a practice where persistence is key. And anyone can do it with even a limited amount of money.
The real challenge is getting started. But don’t worry, we’re here to help.
Continue reading and we’ll walk you through everything you need to know about how to get started in real estate investing.
Know Your Financial Stage
The point of investing in real estate is to improve your finances. So it’s important that you first figure out what your overall financial stage is.
By investing in real estate, you can become financially independent and live off of the passive income you get from your properties.
Before actually investing, you need to consider how close you are to that financial independence so you can better hone your investing strategies.
Pick a Real Estate Investing Strategy
Depending on where you are financially and what your other life commitments are, you are going to have to pick which strategy will work best for you.
Someone who has a lot of debt to work off and kids and a job to worry about can’t just drop everything and be a full-time investor.
So let’s look at some helpful strategies that can apply to different life scenarios.
Stability & Survival Strategy
With this strategy, you keep your day job and work even hard to get a raise. You then master lease a residence that you live in and rent out the other rooms to reduce your payments.
You can also become a scout for other real estate investors or brokers and learn more about acquisitions that way. It’s important to know the details about these kinds of partnerships beforehand.
Distressed Properties and Sellers Strategy
A distressed property is a home or lot that appears to be in poor condition. Many of these homes are in the process of foreclosure.
With these homes, you can offer to buy the property from the homeowner. They are usually desperate to sell their homes and will do so at prices way below market value.
After purchasing the property, you can then either sell it to other real estate investors for a profit, known as wholesaling, or you can fix it up and then rent it out.
Growth Strategy
With this strategy, you should already be close to financial independence. Here, you would pay for all of your investments with cash.
Or another method would be to purchase three rental properties, hold them, and then sell two and use those profits to pay off your debt on the third.
Choose a Target Market
Many novice investors have trouble deciding if they should invest in properties near where they live or further away.
Ideally, if the prices are right, you should invest close to home since you’ll know the area better and have easier access to it.
If the prices are too high where you live then you should instead drive to neighboring communities. Finding a niche market is also a good idea.
Niche markets such as mobile homes, condos, note investing, bank-owned homes, and tax liens can many times be profitable endeavors.
Build Your Team
Although you could do all of the jobs in real estate yourself, it’s easier when you do it as part of a team. It’s helpful to have an inner circle of people who you trust and can bounce ideas off of.
These people include mentors and advisors, business partners, and your spouse.
Your support circle would include a qualified Certified Public Accountant, an attorney who specializes in real estate, and a property manager.
And then your service circle would include people who are going to be involved with the physical aspects of the home. These people can include a closing agent, electrician, HVAC technician, general contractor, plumber, and handyman.
Line Up Financing
The type of financing that you get is going to depend upon what your financial situation is as well as your strategy and personal preference.
Your lending team members and mentors are going to be the best resources for helping you line up the funds.
Raise Cash for Your Down Payment
Let’s go over some of the best ways to raise cash.
First, there is saving money. You might have to work for extra income or cut back on your expenditures in order to save more money.
You can also sell possessions like your car or other valuables. Do you have a big home with a lot of equity that you’d be willing to let go of? This could help you raise a significant amount of cash.
Borrowing is an effective method but also something that you need to be careful with. Credit cards, personal loans, or lines of credit can be dangerous if things don’t go as planned.
If you borrow money for a down payment, you have to make sure you’ll have enough to pay back that original amount as well as the interest on that loan. Otherwise, you’re going to have to pay it back out of pocket.
Buy Your First Property
Once you find a property that you like, it’s time to make a deal. If things go well, you’ll now be an owner of real estate.
You should already have worked out your plan for you what you want to do with the property and how you can use it to help make you money.
The Importance of Knowing How to Get Started in Real Estate Investing
By knowing how to get started in real estate investing, you can jumpstart your financial life and become an owner of real, physical assets as well. It’s a great way for anyone who wants to make money to do so.
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