5 steps for investing in real estate
“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.”
Franklin D. Roosevelt
If you are still confused about whether to invest in real estate or not then let me tell you real estate is still the best investment you can make today.
Investing in real estate is a great investment that generates passive income. Starting a real estate business is not an easy task. Every business needs a proper plan and strong actions to execute that plan. You will find many shortcuts for getting rich by investing in real estate but the irony is there are no shortcuts. If you have done all the hard work to make money and now you want to invest in real estate then you are at right place. You don’t have to be very good at math or calculations to invest in real estate all you need is basic knowledge.
So today we will discuss the 5 steps for investing in real estate. These steps are
- Educate yourself
- Create a plan
- Choose right market
- Build your team and Real estate network
- Buy property and grow
1) Educate yourself
One of biggest the mistake that a beginner real estate investor makes is making an investment with very little knowledge or listening to others suggestions. It is the same as shooting an arrow in a dark because there is very little chance that you will hit the target. Investing in real estate requires knowledge to reduce the risk as possible as you can. There are some basic calculations behind every successful investment decision. We don’t study real estate investment tips and trick in our college or university but it’s very important to know the fundamentals of real estate investment. You should know:
- Different real estate types
- Trends of real estate
- Basic terminology used in real estate
- Analyzing real estate
There is a famous saying “knowledge is power” so the more you expand your knowledge the more successful you will be. You can read books, attend real estate seminars, or enroll in an online course just to get basic knowledge. Reading a book is one of the common habits of millionaires. So, we highly recommend you study The Millionaire Real Estate Investor by Gary Keller the founder of world largest real estate company “Keller Williams”. This book will guide you on how you can become a millionaire real estate investor.
The other book which we recommend to every future businessman is Robert T. Kiyosaki’s Rich Dad Poor Dad it’s a mindset changing book that tells you saving money won’t make you rich and much more.
2) Create a plan
There are so many people that get into real estate investing and they are trying to be an entrepreneur but they don’t have the right business plan. For example, there are tons of different types of rental properties e.g. single-family home, large family home, and commercial property, etc but first you need to identify and pick one type of property to start with.
So first you should:
- Identify your goals
- Make a strategy
- Make a strategy
Every business has long term and short-term goals. You will find many real estate strategies that have their pros and cons, so you should choose such a strategy that is best for you. Moreover, the amount of investment is very important. You should also check different options for investing in a property that gives you the best return.
A great plan will make you prepared to cope with issues or unexpected situations during your investment journey. You can focus on your goals and easily monitor the current progress. For more details read this short article on how to create a real estate investment plan for beginners.
3) Choose right market
You don’t have to execute your real estate business plan in your own backyard. Invest where the demand is higher, you will have to research a lot to find out the gap in the market. You can grow faster when you find that gap and fill it for example if you are looking for rental property but you are living in a White city, Tel Aviv you might consider a market further away. There are some areas that just don’t work as well as others.
Once you have found the market it’s time to dig deeper and understand as much as possible about that market. For example, where do people like to live? Where property prices are higher and where they are lower? What’s the crime rate? What’s an average affordable price of common people etc.
You can talk with local real estate agents, lenders, or local investors. Their help will be valuable to you.
4) Build your team and Real estate network
You will find no example of a business that is run by a single person. Every business needs a team because a solo flight is always dangerous and challenging. So, you need a team of professionals that can help you with your investments. Your knowledge combined with your team experience will deliver the best results.
According to the author of long-distance Real estate Investing there are 4 people whom He called “The core four” that can help you the most
- Agent: helps you find deals and understand the market
- Lender: helps you to get the best financing as possible
- Property manager: advise on rental rates and the property conditions
- Contractor: helps in managing your property to sell/buy or rent
To find these 4 people you can ask real estate investors for recommendations and build relationships to grow your network.
5) Buy property and grow
Once you have surveyed the market and your team is ready its time to buy your first investment property. Before investing in property, you need to do a thorough analysis of investment to find the estimated profit. Invest in a property that gives you the highest profit rate. You will find many online investment calculators that can help you with your calculations.
As your business gets stable you should grow your business by trying new markets and availing different opportunities. It is one of the toughest tasks to grow your business but it is rewarding if done right. The bigger your investment the greater will be cashflow.
Investing in real estate is not that difficult because with the right team, knowledge, and understanding of the market anyone can step in the world of real estate.
Andrew Carnegie said, “90% of millionaires become so through owning real estate” so you can also become a millionaire. Use the above-listed steps to start your real estate journey and achieve your goals.