If there is a type of investment opportunity worth getting into, it is real estate investing. There is always a demand for better housing which means as long as you have residential or commercial rental properties you have the guarantee of getting uninterrupted income. Besides, real estate investing can be an excellent source of passive income into your retirement. But just how does one get into the Real Estate business?
To a first-timer the real estate business might sound like a complicated concept. In truth, however, it is doable; you only need to have the right goals, aspiration, information, and strategy. Here are a few steps to get you started.
7 Ways to Get Started Investing in Real Estate
Set S.M.A.R.T Goals
The first step you should take is to set clear goals that explain why you want to invest in the real estate business. Naturally, everyone will jest ‘to make money’. That, however, is a very vague and meaningless objective. You need to have specific, measurable, achievable, realistic, and time-bound goals. For instance, you could say I want to get into the real estate business so as to make a monthly income of $250 per door, per month, and grow the business so that after one year I will have at least ten units that give me a total of $2500 per month.
Select the Type of Property You Wish to Invest In
When you decide to get into real estate investing, you will realize that there are a plethora of property types from which to choose. These range from residential to commercial units. The households can further be a single family or multifamily units. Each of these property types come with their sets of pros and cons.
For instance, while Single family units will give you lower rental income, they have a fewer maintenance cost, lower turnover rates, and you are more likely to get quality tenants. Whereas multifamily units will get you higher rental income but you must be ready to spend a significant amount of it on repairs and maintenance. Thus, you need to research different property types to determine the one that appeals to you the most and is likely to help you to reach your investment goals.
Find Out About Financing
A raging debate among real estate investors is about which should come first between looking for property to purchase and the funding. Experts advise that it is best to first secure the funding before searching for a deal. You need to ascertain how much the going price is, as well as, how much the financial lenders are willing to offer for such an asset. It is equally important for you to identify a credible lender. All this information you can get by interviewing different bankers.
Consider Getting a Partner
If you do not feel confident enough going it alone, or if you cannot raise the funds you need for such rental property, it is prudent to partner with someone credible, like reputable real estate investors. Through such partnerships, you will get to co-own the property you wanted and learn the ropes of successfully running a real estate investment, without taking on debt. The downside, however, is that you will not make as much money as you would have if the property were entirely yours.
Identify a Suitable Location
In real estate, the site of the asset has a significant influence on the quality of renters and amount of rent you get. For instance, high-end, luxurious residential areas tend to attract high-quality, premium paying tenants and vice versa. You, therefore, need to determine which area is suitable for you to put your investment. Take the time to research every area that you wish to invest in and compare the following variables. The type and amount of taxes, the school districts around, the demographic trends, the prevailing rental rates as well as the social amenities like public transportation and internet options. Careful consideration and comparison of these factors will help you buy a good deal.
Search for a Suitable Property
Once you have clarified your goals, the type of structure you wish to purchase, and its location and price, you need to start searching for good deals or offers. Reliable sources of such information include real estate agents, popular online listing platforms like Craigslist, real estate publications, and newspaper classifieds. You could also drive around in search of deals. Lastly, you could inquire from friends, colleagues, and family for leads and referrals.
If during your search for deals you come across an asset that interests you, do not hesitate to make your offer. Do not fall into the ‘analysis paralysis’ state that ensnares many first-time real estate investors. Just go ahead and place your proposal irrespective of how moderate you think it might be. The worst that can happen is that the owner will reject your offer. On the flipside, if he or she accepts your proposition, you might just be on your way to fulfilling your dream of being a real estate investor.
Getting started in real estate investing is not as daunting as most people think. You only need to have a clear roadmap and the right information to get there. The above steps are an excellent guide to getting you started.