Real estate investing can be a lucrative and exciting way to build long-term wealth. However, for those who are new to the world of real estate, it can be overwhelming to know where to start. In this article, I will discuss some practical tips for getting started with real estate investing.
Educate yourself
The first step to getting started with real estate investing is to educate yourself. I spent $100 on BiggerPockets books understanding the investing basics before spending $30k on my first multifamily property. In some cities, you can find real estate investing groups with likeminded investors who will help you crunch the numbers for your deal. These resources can provide valuable networking opportunities and help you gain insights from seasoned investors.
Determine your investment strategy
There are several different investment strategies in real estate, including buy and hold, fix and flip, and rental properties. It's important to determine which strategy aligns with your financial goals and risk tolerance. If you're interested in a long-term investment, buy and hold or rental properties may be the way to go. I chose the buy and hold strategy because it is more forgiving if my numbers were off since my holding costs would be lower. If you're looking for a quicker return on investment, fix and flip may be more appealing.
Build a network
Real estate investing is a team sport. You will need to work with a variety of professionals, including real estate agents, contractors, and property managers. Building a network of professionals who can help you with each step of the investing process is critical. I always think about my network’s incentives. Help them reach their goals (financial or otherwise) while I reach my goals.
Get financing in place
Unless you have a substantial amount of cash on hand, you will likely need to obtain financing for your real estate investment. For my first property I contacted a dozen lenders to compare rates and terms. Additionally, be prepared to provide documentation, such as tax returns and bank statements, to support your loan application.
Start small
As with any new endeavor, it's important to start small. I invested in a duplex as my first investment. This will allow you to gain experience and build your confidence before moving on to larger investments. Smaller investments also limit the potential for losing money.
Real estate investing can be a great way to build long-term wealth. By educating yourself, determining your investment strategy, building a network, getting financing in place, and starting small, you can set yourself up for success as a real estate investor.
Comments