Real Estate Investing: 7 Steps To Get Started
Real estate investing doesn’t have to be complicated. Like any other worthy investments in life, it needs your knowledge, time, and patience. There is a common myth about the risk factor, but the reality is it has more benefits than detractors so you must get started at some point in life. So then, why not start now?
In this post, we will cover the necessary steps to help you begin with your first real estate investment.
We know you are busy and would love to hear the ideas summarized. So here is the secret sauce to becoming a successful real estate investor.
1. Do Your Real Estate Research First (Consult with an expert for better understanding)
2. Pay With the Lowest Down Payment (Keep your cash for improvements and unforeseen events)
3. Start With Renovations (Move in and get busy)
4. Actively Invest In Real Estate (Strike the deal and run the process)
5. Become An Expert Yourself (To achieve your real estate goals)
6. Invest In Larger Properties ( Make more investments)
7. Know The Risks (Of not doing the necessary things)
Now, let’s dive into each of the seven sections and understand in detail and how to implement each
Do Your Real Estate Research First
Before you start investing, do a thorough study to understand the market. You may take advantage of Google or consult a Realtor expert to discuss, regardless of your portfolio’s size. Select your locality of choice and then look at homes in that area until you find an under-priced property compared to others in that area, as it is rundown or outdated and will require investment.
Pay With Lowest Down Payment
Once you have found a home matching your requirements, which has the potential to be fixed up, buy the property with the lowest possible cash down payment. Often a seller allows you to buy without any money down if he or she is in a hurry to move out, or wants to get out of their mortgage payments.
No matter what, you have to plan your down payment and be ready with a strategy that suits you best.
Start With Renovations
Whether you buy for yourself or have plans to resell, after taking possession of the unit, start working on renovating and decorating, doing most of the work yourself. You can take up courses in home construction or carpentry. You can learn online or with YouTube. Then you buy tools and materials to make the changes. Seek advice from experts if you aren’t sure where to start. The repair and decorations will add value to your property no matter when you plan to sell it or put it up for rent.
If you want to become an active real estate investor, you have to be focused on your success as a continuous process.
Actively Invest In Real Estate
After you are done with the renovation and have transformed your home and yard’s look, you can plan further.
Firstly you can sell at a price higher than you paid, including what was spent in refurbishing. You can use the profit to buy another property, renovate and sell, and continue repeating the process.
Secondly, you can re-appraise your house for a lower monthly payment to cover your mortgage and get some extra money out of your investment.
Thirdly, you can rent out the unit. You can revisit your loan with the bank to refinance, often for as much as you invested depending on the new value of the property when rented out. With higher rent being paid, your property potential gets appraised higher.
Become An Expert Yourself
To repeat the process or make better investments:
- Learn tips, and enhance your knowledge.
- Educate yourself as much as possible.
- Connect with other investors, frequent online forums, learn, and network
Invest In Larger Properties
After your first successful investment, when you acquire adequate knowledge about this real estate sector and have good cash flow, you can next invest in larger properties. Repeat the process with duplexes, fourplexes, and eventually graduate to apartment buildings.
Many estate owners in America began with individual purchases and went to fix it personally, then sold the house, bought another, and kept repeating the process.
Know The Risks
Like the stock market, the real estate market is similar. But unlike the stock market, real estate transactions have higher cost, and selling is not immediate; it’s a process that takes time. Because of this, real estate is considered a low liquidity asset. As expected, the biggest gains are realized when you buy low, hold, and sell high. Typically property needs to appreciate at least 5% to break even when you consider the transaction costs.
Real estate investment is undoubtedly a long-term process, and risk comes when you buy the wrong property or pay too much for it. Also, you must know the legal aspects when you sell or rent out your property.
Real Estate Investment is Hard Work
Real estate investment can be profitable; but first you must have the right knowledge. Remember it’s a journey, and requires ongoing effort to be successful.
Choose your strategy, and partner with a trusted real estate agent to get the help needed at any point in the buying and selling life cycle.
Whether you want a starter investment or a forever home, contact Bluefin Realty today for help with your real estate goals.