If you’re like many first-time Real Estate Beginner investors, you’ve probably been browsing forums on Bigger Pockets, reading articles from Landlordology and Listen Money Matters, and spending quality time with Investopedia (we won’t judge). It can feel overwhelming to navigate all the industry jargon, acronyms and numbers. But don’t let the intimidation stop you from pursuing your dream to invest in real estate!
Before you jump into real estate, it’s important to consider your motivation. Real estate investing can be extremely lucrative, but it’s not for everyone. If you’re not fully committed, you’ll find yourself putting in extra work and missing your financial goals. You may even lose money on your investments. To avoid these pitfalls, set clear financial and personal goals before you start.
Next, determine if you’re going to invest in real estate full-time or part-time. Full-time investors tend to make more money than their part-time counterparts, but they also have a lot more expenses and responsibilities. It’s also important to consider your local market and understand what kinds of properties will make sense for you. If you’re not familiar with your area, consider taking a crash course in local property trends. It will help you stay on top of your game and identify new opportunities that you wouldn’t have otherwise known about.
You’ll also need to decide if you want to become a landlord and purchase rental properties or flip them for a higher return. Becoming a landlord will require you to commit to long-term tenants, deal with maintenance and other related issues. If you’re not ready for this responsibility, it might be best to stick with a wholesale strategy or purchase commercial properties.
Once you’ve determined your motivation and chosen a strategy, it’s important to create a business plan for your real estate investment. This will help you map out your goals and develop an actionable plan to achieve them. It’s also a great way to keep you accountable and on track.
Lastly, you’ll need to determine how much capital you’re willing to put into your real estate investments. This will be a major factor in your decision-making process. Depending on your investment strategy, you’ll need to have enough money to cover startup costs, such as licensing classes, exam fees and marketing materials. It’s also a good idea to include a contingency fund for unexpected expenses, such as a broken down AC unit or an unruly tenant.
Finally, you’ll need to develop a network of professionals to assist you with your real estate investment. This could include a real estate attorney, CPA, mortgage brokers and property managers. Having these resources will help you get started quickly and avoid costly mistakes. Moreover, they will give you peace of mind that you’re making the right decisions for your business.