We have all thought about getting started in real estate investing.
Admit it; you’ve rented an apartment from a landlord who owns the property practically as a hobby, or you’ve seen those TV shows where they flip properties and turn a profit and thought, “I could do that.”
Well, you can get started in real estate investing.
Investing in real estate can be scary—you’re putting your own money on the line every day—but it’s a smart way to earn money and work for yourself, outside the confines of the traditional 9-to-5 job. As long as you’re smart about investing and soak up knowledge like a sponge, you can push past the fear and make money.
The market is still ripe for savvy real estate investors. There are still millions of amazing purchase opportunities through foreclosures and short sales and big, institutional investors have stopped buying them, leaving room for individual investors to step in and sweep up these deals.
If you’ve ever considered investing in real estate, here are the first four steps you should take to get started investing in real estate.
1. Understand what kind of real estate investor you will be
Don’t invest willy-nilly in whatever is thrown at you.
You need to make intentional decisions to discover what kind of real estate investor you’re going to be. Will you buy residential or commercials? Will you buy and rent or will you fix and flip? Will you buy in your own name? Will you be a passive investor or active investor? These are the kinds of things you need to know going in.
You also need to be an expert on all parts of your businesses. You need to learn about the market, not just the headline-stealing national real estate market numbers, but the market where you want to buy. Who lives there? Who works there? Where are the hot neighborhoods? Do the neighbors take care of their properties? What are the local zoning laws and building codes? You need to be a dedicated and thorough researcher.
2. Make a money plan
Once you have an idea of your investing style and location, craft an investment budget and stick to it. Don’t forget to factor in cash for repairs and taxes. They’re always more than you think, especially if you are buying a short sale or foreclosure where repairs and upgrades are likely to cost more. Figure out how much cash you have on hand—you may have to put down 25 to 50 percent on a home, so prepare for that. And if you need a mortgage, make sure you have great credit before you even knock on a lender’s door.
3. Identify amazing opportunities
Great deals come in three flavors these days: Foreclosures, short sales and auctions. Even as the market has picked up, these properties are still out there. In fact, now that inventory is so tight, there’s actually a better chance of you turning a bigger profit on some of these purchases. You can find some of these properties through a real estate agent, directly from a lender or by going to sites such as HUDhomestore.com, which lists FHA foreclosures and auctions; Foreclosures.com, which sells listings for a small fee; or Auction.com for home auctions.
If you want the best profit potential on any of these opportunities, look for homes in the best school districts in the area.
4. Assemble your dream team
You can’t do this alone. You’ll need a real estate team to help guide you through your most profitable purchases. You need a real estate agent or broker who knows the area well where you want to buy and can help flesh out your market knowledge. You’ll also need a great mortgage lender who is familiar with real estate investors. A good home inspector is also key, because you want to know all the issues of a home upfront so you can figure out if it’s a good purchase and get an idea of how much repairs will cost you. Finally, get a good real estate attorney who will help you avoid all the crazy hidden issues that could come up, especially with foreclosures and short sales.
These steps are just the beginning of a career investing in real estate. For more information, check out my 9-part video and ebook “Intentional Investor” series, which will cover everything you need to know about making money in real estate. For a limited time, you can use the code BUYNOW to get the series for just $75.
To learn more about real estate investing, click the audio link below to listen to the full Ilyce Glink Show on WSB Radio, or go to iTunes and download the show to your handheld device.
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Thanks for listening.
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