Real estate investing can seem daunting initially. The number of properties worth hundreds of thousands of dollars can make the process of getting into real estate as an investing tool seem nearly impossible. Yet there is a way in. Building a real estate investing business is possible, for anyone. Even if you have never done investing before, never mind real estate investing, being curious about investing in real estate is a good first step. We are going to help you understand the process of real estate investing. By breaking down the process into several quick, actionable steps to begin your real estate investing journey, you can have an understandable means to begin building wealth.
1. Real Estate is for Everyone
So you don’t have a history of investing in real estate. That’s okay. No one knows everything from the very beginning of their journey. Great guitar players were not born being able to play guitar. The same is true for investing. No one is born understanding how to make their money work for them through real estate investing, But given appropriate tutelage, effective investment in real estate can be learned. So, where to begin?
2. You Don’t Have to Know Anything About Investing in Property
When debating how to learn about real estate investing, the first step is to familiarize yourself with what you are already good at. Do you love checking out real estate? Do you love working with your hands and understand how building things works? Have you grown up helping your parents to balance their checkbook? Each of these aspects of your own skill set will help you understand where to best start in your real estate investment venture.
3. Use What You Already Have
If you are good with your hands and like to build things, you might start out looking at fixer-upper houses or apartments. If you love real estate and checking out listings, then you are probably fairly familiar with prices of properties in your area. This can be a benefit if you find something that you know right away is a good price for a particular neighborhood. If you have always been good with numbers, then you will be able to make your money work for you by understanding how much you can spare to purchase your first piece of property. Each of these skills can be a benefit when it comes to real estate investing. The rest you can learn as you go.
4. You Know More Than You Think You Do
If you start with one thing that you already know and are comfortable with, then learning the rest will be less daunting to pursue. Real estate is no different from anything else. You never know anything about anything until you start to learn about it. This is the same with real estate investing – you begin to learn one thing, and the rest will slowly come together and fall into place. If you love what you are learning, if you are excited about having a financial future to be proud of, then you will find that you learn quickly all about real estate.
5. It Is Easy to Start
It is generally advisable to begin investing in real estate in the area in which you currently reside. This is so if any work needs to be done on the property, you can do it yourself. This helps to keep costs down so you can build up equity in the property you have invested in. This equity allows you to purchase additional properties.
Of course, you do not have to do work on a property yourself. You can hire someone to complete the work on your behalf. And in that case, you probably have more room as to the location in which an initial investment property can be purchased. After all, you won’t have to fly to a new county or state to get any required work completed.
Purchasing your initial property in your current residential area also means you can check out prospective tenants or even get your friends into your first investment property.
6. You Can Afford a Down Payment
Without a doubt, the cash down payment is one of the most confronting parts of purchasing property, for investment purposes or residential ones. Some banks will allow very low down payments – some as low as 5% down – which means you can afford a property with far less cash out of pocket.
7. Friends Can Help You Out
Alternatively, down payments can also be compiled between friends. Think about it – you may not have $100,000 in cash sitting around, but what if 100 of your friends each put $1,000 into the down payment pot? Then you would have a $100,000 down payment, and you would have 100 friends to help pay down that mortgage.
Granted, this would be hard to maneuver when it came to selling the house or splitting up rental profits, but the concept is clear. Getting two or three trusted friends together to pool their money and you have a much easier foray into property ownership than trying to go it alone.
8. Property Can Be a Family Affair
Some banks will allow guarantors for property purchase. This means someone else – a parent or legal guardian generally – puts their own home or property down as collateral to promise the bank that they trust you will make your payments as required. This means, if you default on your mortgage at any point, the bank will take that property as well as your property. Therefore, this works best for individuals who do have the financial means to carry a mortgage; they just do not have the cash upfront for a down payment.
9. Flipping Is Possible
If you are someone who is good at building things, then real estate investing can take more of a flipping tone. You can purchase run-down fixer-upper houses or apartments, and flip them for a profit because you can do the work required to make them much nicer than they were when you purchased.
However, if you do not have the knowledge of how to do repairs and updates, then you may end up paying a lot of money out to tradespeople who have the expertise you lack. So be very sure of your abilities to do high-quality work on your own before you embark on a flipping adventure.
10. Slow and Steady Wins the Race
For most real estate investors, time is the name of the game. Getting a renter into an investment property is the fastest way to begin making money on a property, but this is only the case if the rent being paid covers the mortgage being charged by the bank. For many people on the road to real estate investing, rental properties are a safe bet.