A first-time real estate investor needs some guidance when starting out. It is easy to make mistakes when you first begin in the business, which is precisely why you should take advantage of other’s experiences.
Mashvisor helps you take advantage of the experience of previous real estate investors, as well as learn to use the best real estate tools in the business. We put together a list of the things you need to know before getting started in real estate.
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A First-Time Real Estate Investor Doesn’t Have to Start Big
A huge misconception that many beginner real estate investors have is thinking they need to invest big from the get-go. You will have beginners trying to save up a huge down payment to get a loan for their first rental property. The truth is, however, it is often smarter to invest small when starting a real estate business. For example, instead of taking out a loan to buy a rental property, try renting out rooms in your own home. You can also try investing in REITs to get a foot in the door. These strategies can help a beginner real estate investor save up for buying his/her first rental property.
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A First-Time Real Estate Investor Needs to Take It Slow
Don’t rush! Starting a real estate business can be very exciting and it is easy to get caught up in the excitement of becoming a real estate investor. Don’t rush into a deal, and don’t rush the business. You don’t want to be the victim of real estate investment scams. It is also okay if you aren’t making as much money as you thought or a sale is taking longer than you expected. Try to understand why something is taking longer than planned and work on fixing it instead of getting frustrated. You won’t become a millionaire from your first investment so take it easy.
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A First-Time Real Estate Investor Should Focus on Margins
Again, it is easy to get emotional when you are just becoming a real estate investor. However, remember that real estate investing is a business which means it should be based on proper calculations and the right use of traditional and Airbnb data. Before you buy a property or rent one out, make sure you use real estate tools to calculate all the necessary margins. Follow real estate market trends as well to find the best time to buy.
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A First-Time Real Estate Investor Needs Proper Management
Owning a rental property requires a lot more than managing loan payments. Becoming a real estate investor often also means managing properties you own. As a property manager, you will need to choose the right tenants, budget for expenses, and maintain the property. This may not be a job you can handle with your first investment property. In this case, you can opt to hire a professional investment property manager to do the job. Of course, whether or not you can afford a property manager should be based upon proper calculations using real estate tools.
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A First-Time Real Estate Investor Should Be Debt Free
It is not a smart move to get into more debt to try to make money. If you already owe money to a bank or a private lender, pay it off first. Real estate investing 101 tells you not to accumulate debt no matter what. Be smart when working to get your first investment property.
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A First-Time Real Estate Investor Should Be Creative
Just because you are new to the business, doesn’t mean you can’t put your personal touch on it. Be creative when you are investing in real estate. This means being creative in using investment strategies, in your investment property financing, as well as the type of property you choose.
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A First-Time Real Estate Investor Should Set a Budget
Setting a budget for a beginner real estate investor is important. However, sticking to the budget is what actually matters. Your budget should be based on proper calculations given your financial status. Sticking to the budget means you are cutting the risk of putting yourself in financial stress due to your investment.
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A First-Time Real Estate Investor Thinks About Renting, Not Selling
Many people assume that real estate investing for beginners is all about buying low and selling high quickly. In reality, however, properties are not sold for much more during a short time frame. What you need to focus on is getting rental income from the investment properties you own. Keeping a property empty until it is resold is a waste of time, money, and valuable resources.
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A First-Time Real Estate Investor Should Know Exactly What He/She Wants
The best way to go about real estate investing is to have a game plan. Know what type of property you want, what financing options you have, and where you want to buy. Having a plan will make the investing process much more organized and less confusing.
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A First-Time Real Estate Investor Should Know to Keep an Open Mind
Since you are just starting in the business, you probably don’t know much about buying or owning a rental property. What you need to do is keep an open mind and talk to more experienced investors. There’s a lot you don’t know about real estate investing so be open to new ideas. Only use these ideas, however, if you do the proper research beforehand.
As a beginner, you should do as much research as you can before you begin investing. Think of the investment as a test and the research as preparation. The more you prepare, the better you will do on the exam. You can find the bulk of information, as well as tools for real estate investing, on Mashvisor.