5 Tips To Begin Investing In Real Estate
Updated: Feb 26, 2019
Are you a beginner looking to get involved in Real Estate? Have you heard about all of the millionaires & billionaires who have made their riches using this investment vehicle? Good, because sometimes it is more important to be working in the right medium than being the most educated or hardworking.
Developing a business around real estate investing can be very lucrative indeed, however with any business a certain exposure or risk is also associated. Any business endeavor that you take on to achieve your goals, will require one common denominator and they is HARD WORK! Some people look at real estate as a safe vehicle to place and protect there money, while there are others who treat this as a business and try to maximize our results.
Real estate is very interesting in that you can make money in so many different ways with so many different asset classes. This can be a benefit to the business or a negative because it can take your focus off of your primary niche before you set up the necessary processes and systems to streamline your revenue for that specific delivery method or asset class.
This business is all about building a solid foundation through solid principles that will propel you to close and profit on your first deal and allow you to gain experience to successfully complete several deals down the road.
We want the beginner real estate investor to understand that this process is no get rich quick operation. It will take a lot of time, hard work, knowledge and networking to put yourself in the position that you dream of.
This is why we are here, we have put together 5 simple tips to allow you to begin investing in real estate and help build a solid foundation to reach your goals.
5 Essential Tips To Begin Investing in Real Estate
1) Educate Yourself With Credible Sources
The internet is a great resource tool for education. There is so much information and tools available to us at our fingertips. While having this abundance of information is great, we have to be careful where we are getting our information from. As we stated before, we are trying to build a solid foundation based on solid principles and we can't do that with false information. In the current world that we live in, there are several real estate guru's out there who relay false information in order to have you sign up for their education services. These are the characters that we want you to pay close attention to. While we are not saying all of these professionals are built this way, we are saying do your due diligence if you decide to hire one of these folks to mentor you.
We recommend that you begin educating yourself through books, blogs, podcasts and less expensive tools that we have available to us today. With sites like www.biggerpockets.com & several informative blogs built around specific niches from true real estate professionals who have had success. We feel there is no better cost effective approach to build your foundation then through these avenues. So, if you really want to be successful in this business, you are going to have to put in the time and dedication to begin learning about this specific field.
2) Choose 1 Specific Niche For Your Market
This could possibly be the first step to begin investing in real estate because we want you to begin educating yourself around your specific niche. With the abundance of information that we have available to us, it is easy to become a jack of all trades and a master of none. However to truly gain momentum and earn revenue and begin having some success, we believe that it is vital for the beginning real estate investor to choose 1 specific niche, educate yourself on the niche, develop specific systems for that niche and then once this aspect of your real estate investment business can operate without you, then move on to a different niche. We feel that this is the best formula to actually begin seeing success, gain momentum and confidence to propel yourself to the next level.
The market that you choose to invest in (will discuss next) will determine which niche will be the most profitable to approach first. Whether you decide to flip houses, buy and hold, BRRRR, invest in land, crowdfund, wholesale, purchase commercial, become a turnkey investor or just invest in REIT's. Choose 1, stick to it until you have found success, then move onto the 2nd most profitable niche in your market.
3) Focus On Your Market
Choosing a farm area to invest in, is no simple task. This will require a lot of research and networking with local professionals to really come up with a plan to reach your full potential. Not all real estate market's are built a like and you won't know this unless you do your research and determine if your market is profitable for your chosen niche. In some markets in America you will see great appreciation, allowing you to forecast higher profits on a flip, purchase low cash flow properties due to the bonus on the back end while other markets you will see very little appreciation, you will have to master purchasing properties at a discount and focus on cash flow when you invest for the long term.
This is a good opportunity for you to get out and begin networking with real estate professionals in your area. Good agents and brokers will have this information at their disposable. They will be able to point you in the right direction and be able to tell you what local cities, neighborhoods and counties you should begin marketing towards.
4) Surround Yourself With The Right People
In life, in general they say that you are the average of the 5 people you hang around most. I believe this to be true and this is no difference in business. If you do not currently know anybody who is involved in the real estate industry, has found success or maybe just other successful people, we suggest scheduling meet ups and lunches with local professionals in your community. Try and schedule at least a 2-3 lunches or meet ups every week. This will allow you to conversate with people who have the same interests and mindset as you. This will only help you grow in the long run, help you build your knowledge and always have friends you can fall back on when you may have a question that you aren't completely sure of.
5) Understand The Numbers & Take Action
So at this point, you should have chosen your specific niches, the area you are going to invest in and have developed relationships with local professionals. One of the most important aspects with any investment is your ability to understand the numbers with every deal you look at. This will allow you to mitigate your risk and create successful opportunities for yourself and your investors. Each niche has a different due diligence and evaluation process to find out if this specific investment is worth your time, energy and money. We suggest that you create specific systems (spreadsheets, tools) to help steam line your property evaluation process, so that you can analyze and act on more deals.
"You will never find success if you do not take action"
Your ability to process information and turn that information into action will determine your success in this business. There are several ways to cut down on the learning curve (education, mentors, relationships) but the biggest contributor will be the amount of action that you take. We did not talk about putting together a plan, that is for another post but being able to put together a plan, implement that plan and take as much action as necessary to find success (or failure) will determine how quick you find success.
We see it all the time. People who begin investing in real estate get so caught up in the education process, reading and trying to learn they fail to take action. YOU DO NOT NEED TO KNOW EVERY LITTLE THING ABOUT YOUR NICHE TO TAKE ACTION. Do not fall victim to this. Take action sooner than you think. You will learn more being involved in the game then you will ever learn from a book or education source.
If you think this is going to be easy, you are wrong. It is going to take a lot of hard work, dedication and planning to truly see the results that I am sure you intend. Don't give up, work hard, plan and iterate when the time come.
We hope that this post gave you some insight into what it is going to take to achieve your goals and how we feel the best way to build your foundation is.
In the comment section below, let us know of any other tips you feel should have made this list.
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