Everything You Need To Get Started In Real Estate
One of the most popular questions in the real estate community is “how do I get started as an investor?” There are thousands of would be investors all across the country who want to dive right into the business but aren’t exactly sure where to start. They may have read a few books, watched a few shows or heard tales from a friend or family member but don’t know exactly where to begin. What makes real estate investing so great is that anyone can do it at any time. You can get started while you are still in college or on a part time basis as the president of a local company. What is fairly universal is that without a plan you will find yourself in trouble. Here are four important items that you need as you begin your career as a real estate investor.
- Education. There are dozens of ways to invest in real estate. Before you get too far you need to have a good idea of what you can and cannot do. One of the things that will help decide the best path to take is education. If you are interested in real estate you probably have a favorite house flipping show or two you watch on a weekly basis. In most shows there is usually a point where the deal looks like it will turn South but the investor ends up saving the day and walking away with a profit. What these shows don’t show you is that sometimes you may not be able to rectify a bad situation. As the saying goes you can and sometimes do lose money investing. Education is usually what can help you get out of or avoid a negative situation. It is the basis for almost every decision you will make moving forward. Education will help steer your business and give you the confidence moving forward.
- Goals. What you want out of the business may be completely different than someone else. As you think about how you want to invest you need to consider your goals. Your goals will lead you to specific property types, markets and price points. A short term rehab property may not make the best purchase if you want to get into buy and hold rentals. Different goals will lead to different properties. With your goals you need to consider your timeframe, available capital, how much time you can commit to the business and long term desires. There are many investors who only want to be involved with one deal a year while others are looking to make real estate a career change. Either option can work in the right situation. Without goals in place you will bounce around from deal to deal without getting exactly what you want. As you build your education and learn the business you need to think about your investing goals.
- Financing. If you are serious about getting started you need to have financing in place. Without financing your real estate business won’t get too far off the ground. With financing you have a few different options. The first is with traditional lender financing. It wasn’t that long ago that lender financing was the used to fund roughly 95% of all investment transactions. Changes in loan programs and guidelines have certainly changed things but they can still be a viable option. Lender financing is best used for long term rental properties where you have a good idea you will hold the property for the foreseeable future. The other main option is hard money lending. Hard money lending acts as a bank but without the traditional lender red tape. They lend to their own set of guidelines and criteria. They are usually much more flexible and for that have a higher set of interest rates and fees. In the past hard money lenders were seen as a last resort but today can be a great short term option for flips and rehabs. Either way you go you need to seek out as many financing options as possible.
- Contractor/Realtor. The next step to getting started is putting a good team in place. The two most important team members when you are just starting out are your contractor and realtor. Your real estate agent will be able to give you a good idea of what is available in the market and if your goals are in line with reality. You may want to invest in short sales and foreclosures but if they don’t work with your market you may need to shift strategies. They will also help walk you through the buying process and work to get you the best possible deals. Your contract will help turn your vision into reality. Regardless if you are looking to do quick flips or add to your portfolio you need a reliable contractor you can trust. They will not only do the work you are looking for but help in budgeting and running the numbers. Any offers you make are largely reliant on the advice you receive from your contractor and real estate agent.
If you are serious about the real estate investing business the next step is to take action. There will never be a truly perfect deal or scenario. You will learn more from doing than by anything you will read or watch on TV. As long as you are comfortable in these four areas you should have enough confidence to move forward.