Investing in real estate can be very rewarding if you have an entrepreneurial spirit and are ready to work hard in order to reap massive rewards. There are a lot of people who would love to do it, but oftentimes, it’s difficult knowing where to start, what all is involved, and even if it is feasible for them. With a little research, you can find an array of information online that will help you get started on your way to investment success if you put some time into it. If you are considering becoming an investor but unsure of where to start, here are some of the most frequently asked questions about real estate investing.
How Do I Get Started Investing In Real Estate?
Before you get started investing in real estate, it’s crucial to determine how you will finance your endeavor. If you have a sufficient amount of money saved up ($30,000 – $50,000), then you can use this help finance your first acquisitions. Some investors prefer to start out by taking out a loan from a banking institution or private lender to help them get on their way. In any case, you need to have a reliable source for your funding before you can do anything else.
Some aspiring investors like to attend seminars to help educate them on what the process is like. This can be helpful but is not necessary. It is a good idea, however, to educate yourself in any way you can whether it be by reading books or doing internet research in order to ensure that you have some basic knowledge about real estate investing while you’re just starting out.
Do I Need A Real Estate License?
There are ups and downs to obtaining a real estate license, but regardless, it is not absolutely necessary to have one. If you opt not to get one, you can work with other agents who may be able to offer some well-needed assistance along the way. It’s a fast track to getting started; however, the downside to this is that you will have to give away a percentage of your profits.
On the other hand, if you do become licensed, you will be able to network and find greater opportunities while also making larger profits. But, acquiring a real estate license takes up a large amount of time and money. In addition, you will have to learn a new skill which will take quite a bit of practice to master.
Which Real Estate Investing Exit Strategy Should I Use?
There are three main strategies that real estate investors use when starting out, and some use a combination of them all. One strategy is to begin by buying wholesale properties. When purchasing a wholesale property, you can close a deal very quickly and make fast cash. But, there is no inspection of the property, so there is a higher risk that there may be major problems lurking.
Another strategy is rehabbing. This often goes hand in hand with the purchase of wholesale properties, because you essentially take a property that needs some work, fix any issues, and then resell the house. You could also simply purchase a run-down property which is not on the wholesale market and do the same thing.
The last real estate investing strategy is renting. You could purchase properties and use them for rental purposes. The advantage of this strategy is that you can accumulate long-term wealth. Rather than making a quick buck, you can retain the rights to the property yourself and gain a steady flow of cash from it over time.
What Are The Risks Involved With A Buy / Fix / Sell?
As with any area of entrepreneurship, there are risks involved. There are numerous ways deals can go wrong, and it’s difficult to prepare for all of them. For example, sometimes the value of a property can decrease due to factors related to its specific location or neighborhood. This can end up meaning a loss on your investment and potentially a major setback. Or, if you hire a contractor to fix the house, they could run away with your money. It’s a good idea to never pay for a job until it’s done and make sure to have a few contractors that you can rely on.
What Are The Risks Involved With A Buy / Fix / Rent?
When deciding to buy and fix a property in order to rent it out, you can easily run into some of the same problems as when you buy a house to sell it. You may sometimes have to deal with bad contractors, and sometimes the price of repairs is underestimated. You would then have to shell out more cash than expected and lose money up front. In addition, different areas have certain safety requirements for landlords that could render your property too dangerous to rent out. You also have to worry about liability in the case that a renter is injured.
Is Real Estate Investment Really For Me?
Unfortunately, this is a question that only you can answer. It’s an extremely profitable investment that will take some time getting used to if you are serious about it. As with most things in life, experience will do wonders for you. Not everyone starts out making the best deals or profits, but with time comes more knowledge about the process and more success. For many who decide to take on real estate investing, it is their full-time job (especially if you decide to get your own license). If you are considering it, you have to realize that it is definitely a big commitment but a worthwhile one.
None of this is meant to scare you away, and hopefully, you have now gained a greater understanding of what real estate investing is all about. If you set your mind to it, you can do it. And remember, there are resources all around you that can set you up for success if you put your heart into learning about the craft and eventually mastering it. In the end, you will thank yourself for it and be able to sit back and enjoy the fruits of your labor.