Getting Started in Real Estate
Getting started in real estate is probably one of the best and smartest financial decisions that you can make in this day and age. To be able to reach your financial goals, you have to have your money working for you and not just sitting idle in a bank account. Real Estate is one of those smart decisions that will allow you to have your money work for you and generate a nice, steady stream of passive income each month.
The financial barrier to entry when getting started with real estate is much higher than your standard investment. Let’s say for example in the stock market. But even though the investment is larger with real estate, it provides a level of security and stability that other investments simply cannot offer. When it comes to investing in anything you want to make sure that you are not putting all your eggs in one basket and you also want to make sure that you are reducing the risk to the best of your ability. Real estate investing helps you achieve both of those things.
In this article we want to discuss some of the things that you need to know and take into consideration when getting started in real estate. When you get started in the real estate industry, it will not be the easiest industry to get a foothold into and there are a few things you need to know, so continue reading and we will do our best to provide you with all the essential information that you need with regards to getting started in real estate.
Have Clear and Defined Goals
Before you get started in real estate, you should set some realistic and achievable goals for yourself. Really sit down and think about this because without clear goals that you have written down and that you can read on a daily basis, you won’t be able to track your progress with your real estate portfolio. So take maybe 1-2 hours and write down in as much detail as you possibly can, all the goals that you want to achieve when it comes to your real estate investments. Here are some of the things that you could write down as goals for your investments.
I want to purchase 1 real estate property per year in different parts of the state and I want these properties to bring me in a steady passive income of $XXXX.XX per month and I also want my property portfolio to be managed by a team of real estate managers so that I have more time and energy to focus on other aspects of my business and reduce the time commitment and stress that managing a portfolio of properties brings.
This is just an example of a clear written goal that you could set out for yourself. When it comes to the goal setting portion of this article, we want to stress that you absolutely do not want to skip over this step as that will just slow down your progress in the long term.
Know Everything About The Financial Requirements
Like we mentioned in the beginning of this article, getting started in real estate, while it does have some of the highest potential financial benefits, it does come at a significant cost and there is also an element of risk that you are taking when you decide to get started investing in real estate
That is why it is very important to know everything in regards to all your financial requirements. You will want to gather as much information as possible when it comes to the financial aspects of your investment so that you can develop a crystal clear road map on how you are going to meet all your financial requirements.
Not everyone is fortunate enough to invest in real estate without the help of a lender. The majority of real estate investors will seek out the help of a lender to help them in getting started in real estate and secure their first or first couple of property units. You will want to interview as many lenders as possible to understand all the procedures for lending money to you and you really want to take your time in interviewing quite a few and then cherry pick the best lender that fits all your needs or most of your financial needs.
Acquiring A Partner
Keep in mind that this step is completely optional and going along on your real estate journey as a solo investor is definitely an option. But with that being said, having a partner could really help you out both financially and with any of the decisions that need to be made with regards to the property investments.
Like they say, “two heads are always better than one” and when you have a partner then you can discuss ideas and bounce different topics off of each other which will make buying decisions in your business that much easier. Having a business partner can also at times provide that feeling of security, knowing that you were able to get a second opinion, if for example you are looking at a particular property or handful of properties for your next investment.
With all these pros of having a business partner, it also comes with some cons that we think you should be knowledgeable of before you decide to seek out the help of a partner. When there are two people in the business that also does leave room for ideas and opinions to not be agreed with by both partners. This could lead to unnecessary arguments and frustrations and could cost you a real estate deal or a couple of deals for that matter. In that regard, having a real estate business partner could be a nightmare situation if you don’t have the right type of partner. But you really have to weigh up all the pros and all of the cons of having a partner to decide if it would be a wise business decision on your part.
Begin The Process of Searching For A Property
So you have researched everything that is required of you in getting started with real estate like finances for example. Now you need to actually begin the process of searching for a property that you could potentially invest in. You want to make sure that you do a thorough search to give you the best options available when it comes to your real estate investment.
You will have a few options when it comes to starting your search for a property. You can go on various websites that will list property for sale, you can look on your favorite social media, take a look at the newspaper or seek out the assistance of your friends and family.
One of the best ways, in our opinion, is to have a look on various websites and real estate property listing sites. This way you can get a good look at a handful of properties without the need to leave your house to go and have a look at each property individually. This is why it is one of our favorite options when you are on your search for a property.
On these property listing websites they will also have a lot of pictures of the home that you can look at and they will even sometimes have a video tour so that you can really get a feel for the house and the atmosphere that it provides to the owner. On top of all that they will also sometimes have comments, depending on which listing you are taking a look at.
These comments help to provide insights into the home that you otherwise would not normally find listed on the website, so it is well worth your time to sift through all the relevant comments to get a good understanding of what people think of the property.
Another good way to search for a property is to seek the help of a real estate agent. While this option costs money it might be well worth your money to invest in a real estate agent to help you on your search. When you hire a real estate agent then you are provided with years and years of experience in the real estate space and they will be able to provide you with solid insights into what properties might be best suited for your needs.
You will want to work closely with your real estate agent as the more they know about what you potentially want, the better they are able to help you. Meet with them often and go and look at properties with them. They will then be able to give you their professional opinion on the property in real time as you are looking at it which will help you make a better buying decision. Word of mouth can be a very effective way to find a real estate agent but a simple Google search for a real estate agent in your area will get the job done.
Location Is Everything When Getting Started In Real Estate
In order to have the most success in real estate, a lot of factors will come into play, but one of the most important factors will be the location of your property/properties. You can have the best property in the world, but if it is not in a good location then tenants are not going to want to stay there and you will be faced with tenants ending their lease/rental agreements early or have your property vacant and on the real estate market for an extended period of time before you are actually able to fill the home with a tenant.
When doing your research when it comes to the location of your property, you will want to look out for the following things:
- Taxes — Property taxes differ, sometimes even within the same county. Research this before you invest.
- School districts — It’s always best to be in a good school district. And most families with kids prefer single-family houses.
- Demographic trends — Demographic trends are probably the single most important factor when looking at the appreciation of real estate. Think about the population growth of Austin, TX, versus Detroit, MI.
- Rent rates — Check Craigslist for similar properties, and talk with at least two property management companies about rent rates. You can also check out this post for researching rental comps.
- Public transportation — This is very important if you plan on investing in the city. Tenants in the city want access to public transportation.
- Internet options — Know who provides the internet to a property before you complete a contract.
If you take all of these things into consideration then you will be able to make a better buying decision and the better you get at asking the right questions and looking out for all the important aspects of real estate investing the better you will do in this industry.
So as you can see, getting started in real estate is one of the best ways to make a good passive income and if you had to ask our honest opinion, it is a super fun business to get into. We covered a lot of important topics in this article so feel free to read through it again and take some notes on all the most important topics so that you are best prepared for your future real estate property investments.
We hope we covered all your questions and concerns with this short read, however if you still have questions then you can get in contact with us and we will do our best to get back to you as soon as possible. With many years of experience in the real estate field we are more than capable of helping you out and answering all your questions. If you would like to dive deeper into other real estate topics then you can browse the rest of our website where we cover a wide variety of topics.