The idea of investing in real estate might sound frightening for a while, as it is easy to fall between the cracks of all the pieces of information that everybody tells you all the time. Continue reading for some pointers on where to start in real estate investing.
Here is the thing: No, you do not have to be an expert and you do not have to own a fortune in order to start investing in real estate. As a matter of fact, all major successful real estate investors started small and some of them with no cash at all.
But to get started, you have to know that decisions must be made, regarding what you really want from your real estate career. Therefore, being clear about your investment goals according to your financial situation is a key element to kick start in real estate investments. Furthermore, real estate careers require patience and pre-planning, while the results you want can’t be instant.
Related: What Is the Best Type of Investment Property in the Real Estate Market?
Moreover, there is no ultimate guide for instant success. But if you are wondering where to start in real estate investing, here are some tips to set your feet in the right direction:
Where to start in real estate investing: Is it right for you?
Deciding whether something is the right thing for you is the first step to anything at all. So, take a minute, evaluate your situation and goals, and then decide whether real estate investing is really what you want to do. Only then you start actually thinking of where to start in real estate investing.
Where to start in real estate investing: Real estate education
Where to start?
Hang out with real estate experts: The smartest thing to do in order to obtain real estate education is to hang out with real estate experts. By experts, we mean experienced real estate investors as they are the direct source from which you can learn live. Spend time with them and watch them do their work. Take notice of what experienced real estate investors do in order to be successful in real estate investing.
Read real estate investing books: If you go to any public library, you can find plenty of books dedicated to real estate investing. They are written by real estate experts for people like you, beginner real estate investors.
Join real estate courses: Look up courses in the real estate investing business. If it is hard for you to commit to a classroom course, then search for online courses. There are plenty of real estate gurus who are willing to share their knowledge with you.
Go online: With the internet nowadays, there is no excuse for anyone to not be learning. Look up real estate investing, and you will get hundreds of thousands of blogs and articles dedicated to real estate. Plus, it is free most of the time, so why not taking advantage of that! A great example are Mashvisor’s blogs.
Most important aspects of real estate education:
Real estate market analysis: Real estate market analysis is simply a comparison between the market value of a certain investment property and other similar properties that are for sale or have been recently sold within the same location. Learning to perform real estate market analysis is important in determining the rental income and the true value of your investment property.
Real estate metrics: Another important aspect of real estate education is real estate metrics which are tools that help you determine whether a certain property is worth investing in. These tools include cap rate, cash on cash return, return on investment, etc.
Related: The Top 15 Cities for Short-term Rentals for Cap Rate
Where to start in real estate investing: Analyze your financing options
Cash: Of course, with cash on hand, you can get anywhere as well as invest in anything. So, why not invest it in real estate?
Borrowing money: There are always family members or friends who are willing to lend you the money if you ask. So, do not be embarrassed to ask. All you have to do is provide proper guarantees for repayment, and they won’t say no.
Loans: A mortgage is a good financing method to go with. After all, there are many loan programs that are available for beginner real estate investors.
Real estate partnerships: A partnership in real estate investing will save you a lot of time trying to get a loan. If you have the knowledge, experience and a solid investment plan, then partner up. Find someone who is willing to invest in what you have to offer.
Where to start in real estate investing: Choose the right investment strategy
Long-term investment strategies:
Buy and holds: This strategy is plain and simple; it benefits from price movement. You basically buy your investment property and keep it for a period of time until its worth goes up. This investment strategy is especially beneficial with the growing demand for houses.
Traditional rentals: Traditional rentals are still considered a good and secure way to guarantee a monthly income. This is especially true for beginner real estate investors. You rent your rental property under a legal contract to a tenant who is committed to paying monthly rent for using your property.
Short-term investment strategies:
Airbnb rentals: This is one of the modern investment strategies, which connects people looking for accommodations and housing, especially while traveling to different cities for short-term stays. In Airbnb rentals, your guests are usually vacationers, travelers, and businessmen looking for a place to stay for cheap.
Fix and flips: This requires a little extra work and money on hand. You buy a property for a good price and then put it back on the market for a higher price after applying some improvements and maintenance. Keep in mind that this investment strategy, though lucrative, is very risky. Therefore, we do not recommend it for beginner real estate investors.
Related: 8 Tips to Mitigate the Common Risks of Becoming a Real Estate Investor
Where to start in real estate investing: Buying your first investment property
When it comes to buying your first investment property, there are a few things to consider. Consider the location, your budget, and other factors such as your time and the effort you are willing to put into it. Another thing to consider is the investment strategy you want to go with. We at Mashvisor strongly suggest that you go with rentals for they are the safest investment strategies to go with, especially, if you are just starting in real estate investing. Therefore, if you are considering buying your first rental property, then read the following blogs to help you out:
- Buying a Rental Property? Consider These Factors
- What to Consider Before Buying a Rental Property?
- Buying a Rental Property: Is It a Seller’s or a Buyer’s Market?
Tip: Hire and a real estate agent
Real estate agents are real estate experts. In other words, they know what to look for when buying an investment property. So, make sure to hire one before buying your first rental property as you are going to need a lot of expert advice on that.
Where to start in real estate investing: Build connections along the way
As we all know, you can’t go far without connections. Make a contacts list and start filling it with contact information of people you meet along the way. You must have other real estate investors, agents, appraisers and lenders amongst your contacts.
The real estate investing journey is not necessarily an easy one but definitely an exciting one. Our tips on where to start in real estate investing should help you join this business field.