Achieve your real estate investor goals this year. Fortunately, these days you don’t need millions in the bank to be a real estate investor goals. As the cost of housing goes down, and new low developments crop up everywhere, it is becoming a little easier to own real estate. It might seem impossible at first if you’re looking at the end result, but start out with small steps and making progress towards your first move. Really, It all starts with a solid financial plan.
Let’s discuss how you can get started in real estate investing without breaking the bank, even if you don’t have millions stashed.
Get Educated
It is important to understand exactly what you are getting yourself into, what is required, what it is you are doing and why. The most successful real estate investors are always learning and so should you.
The first thing you should do is learn all that you can with all the free resources available for your immediate consumption. Further, ensure you grasp all the basic concepts and familiarize yourself with the industry.
Important things to consider and understand:
- Market. Understand the market including fair property values, trends and market rents.
- Risk. Real estate investing carries various types of risks: market risk, asset risk, leverage risk and more. The greater the risk, the greater the reward.
- Types of Properties. Vacant land, single-family homes, multifamily properties, commercial real estate and more. Each type of property has its own nuances that you should understand before you invest.
- Methods of Investing.
- Tax implications. Beware of the tax implications of owning real estate. As a potential investor, you should take them to understand how various types of real estate are treated. Get a clear picture of tax application under real estate activities. Learning this in advance is important as it could save you a large chunk of your returns.
- Law. With time, dive deeper into the law. When owning real estate, the odds are that you will sooner or later be faced with a legal situation. To avoid any potential problems and litigation, understand the law that governs real estate. Issued relating to evictions, security deposit and prepayments, and insurance coverage.
A good place to start is with real estate books, podcasts, and free online resources. You can also speak with other real estate investors, but learn first to ask the right questions to get the most out of those interactions.
Learn more: Reasons To Be Your Own Financial Expert
Develop A Plan
After you’ve done your homework and are comfortable to proceed, develop a goal. Write it down. Then reverse-engineer and determine what steps you need to take in order to achieve the goal.
But, before that, have a conversation with your self. Know how much risk you are able to take and how much work you want to put in. At this point, determine your investment strategy.
Real estate investing can be done in two main ways:
- Active entails a hands-on approach that includes fixing up properties, wholesaling to investors, finding and managing real estate properties yourself.
- Passive entails investing for recurring cash flow streams and long-term property appreciation and includes partnering with other investors, purchasing turnkey properties and having your properties professionally managed.
Learn more: How to Accelerate Your Personal Financial Growth
Raise Capital
To fund your real estate investing dreams, you’ll need to put away some disposable income for your initial investment and/or down payment for the mortgage. If you find coming up with the initial capital too difficult for you, don’t let this stop you – there are many ways to raise capital.
Here are a few financing options:
- Owner financing. If you find an owner with a property they want to sell, and is willing to provide the financing, you can skip all the expensive bank fees and make the payment directly to the owner. You might have to pay a higher interest rate, by the deal can be faster and simpler than any other option here.
- Private loan. A loan from someone close to you, like family or friend. In this type of loan, it is easier to negotiate the terms such as interest, duration and more.
- Hard money loan. A loan lent out to you by a private investor or business rather than a bank for a short-term investment purpose. This type of loan can be quite risky but allows you to turn a quick profit when you are flipping properties.
- Life insurance loan. If you have an existing policy, you can take out a loan that uses your cash value as collateral.
- Bank financing. Banks can provide 100% of total value financing on the real estate you are trying to secure.
Learn more: How to Build a Passive Income Strategy
Explore Your Options
When you are now ready to invest, explore and understand all your options. Explore all your options and understand the risks and investment requirements.
Here are some of the options to real estate investing:
- Traditional real estate investing. Entails buying a rental property (commerical or residential) and renting it out to tenants.
- Crowdfunded real estate. Be a part of a group of people who pool their money with other investors, and invest that money with an experienced rental real estate investment property owners.
- Real Estate Investment Trusts (REITs). Purchase shares of REITs though a broker and earn rental income as share dividends.
- Flipping. Hunt down run down properties sold at a seriously discounted price and turn them for resale/rent at a profit.
- House hack or rent out a room. Perhaps this year the airbnb market will return to its former glory, then you can rent out rooms or units which you live in – or not – for renal income.
Learn more: How to Prepare Your Finances for 2021
Let’s Dive In.
This year, lets dive in. Are you ready to become a real estate investor?
Investing in real estate can be quite profitable, provided you do it the right way. Develop expertise, conduct proper planning and leverage todays technologies to find the best deals out there. Also, ensure that you make well informed decisions based on your own unique financial situation to reach maximum returns, and take consistent action.
Happy Building!
Image credits: Top by Nataliya Vaitkevich from Pexels
