Top 5 Tips to Get Started in Real Estate Investing | Paper Source Online
Originally published by ThinkRealty | November 3, 2020
Understand the ways to profit from real estate investments.
If you are interested in becoming a real estate investor, before you dive in, there are a few very important details you must know. We’ve broken down the top five tips that experts want you to consider before getting started.
1. Money is Key.
It sounds obvious, right? As the old adage goes, “you need money to make money”. Some advertisements might have you thinking you can get your start in real estate investing by purchasing a property with zero money down. While that might be true in some rare circumstances, it is not commonly that simple. Perhaps the most important advice we can share is that it is imperative to have money in reserve before getting your start. Simply put, if you don’t have money, you shouldn’t be in the real estate game.
Don’t have the money saved up? Commit time and patience to saving it. We’ve successfully mentored numerous eager investors to save money on timelines anywhere from a few months to a few years. You need to have the drive to be successful, and we have the mentorship to make your dreams a reality.
Why do you need money saved up? It’s simple: things always happen. You will need backup reserves to handle those unexpected issues. Let’s say you’re flipping a house and you’ve set a budget for it.
Suddenly an unprecedented rain season means costly roof repairs. Now you’re in need of several thousand dollars on top of what you’ve already accounted for. Where do you get this money if there are none in reserves?
Another common instance: you invested in a rental property and your tenants suddenly need to move out. Unless you have new tenants lined up to move in immediately, you’ll lose that monthly income until you find a new tenant. Without those monthly funds, you need to have reserves to be able to cover unexpected expenses before they bury you.
2. Work Ethic Is Everything.
Most people get into the real estate game as a side hustle, with the hopes of getting into it full time. The plan, goal, and dream is to quit or retire from their job and focus only on real estate. While real estate investing can be very profitable, it is not easy and certainly does not happen overnight. You need the drive and desire to succeed in order to be able to be successful.
The most successful real estate professionals are committed to putting in the hours. We receive calls and texts all hours of the day, all days of the week. You must be willing to be flexible and dedicated to putting in the hours in order to be successful. Remember that without a doubt, there will be bumps and stress along the way. How you handle them will determine how successful you will be in this venture.
That brings us to the next point…
3. Don’t Quit Your Day Job…yet.
So many times people jump into this field and tell us they’ve already quit their job to begin their new career in real estate investing. This is a common and unfortunate mistake.
We understand – you are eager to get your start and you have heard you can make a great deal of money if you make the right moves. Let us circle back to our previous two tips: In order to be successful, you need money (a steady influx of money from your current income) and the capacity to handle hard work and long hours. Success does not come overnight.
Again, the most crucial advice we can give you is do NOT quit your job immediately. Instead, be prepared to have a second full time job. You need proper training and experience before becoming a full time real estate investor. We consistently coach clients on the right timing to leave a job and become a full time real estate investor. Give it time and you will reap the benefits.
4. Establish Partnerships and Relationships.
Having relationships and partners is essential in your success. We pride ourselves with not being a large, nationwide company, because we value working locally with a smaller, more intimate group. Why?
Because through this environment, we are able to foster meaningful relationships with people who can be instrumental in our success.
Who is your local partner? Your local partner is someone who can mentor you and guide you to make sure you’re making sound decisions and progressing your career.
For example, you might foster a relationship that allows you access to deals that might not yet be on the market. Since you’ve built trust and communication in that relationship, you’ll get a first look on the property. You’ll also know the best contractors and lenders to access funds to grow your business. You’re not just making connections, you’re building a foundation for long term success.
5. Don’t Let Your Emotions Make Decisions.
Here’s a tip that we don’t commonly see given to real estate newcomers – make sure your emotions are in check.
Let’s be honest – the market is hot right now. Properties are not staying available for long. This market creates a sense of urgency and a need to snatch up a house quickly before it’s gone.
We see it all too often – a client falls in love with a property for a personal reason. Maybe the neighborhood is perfect, the tree in the front yard reminds them of their childhood home, or the wrap-around porch is number one of the priority list. Since it’s the perfect place, they’re willing to pay more than the property is even worth. Here’s the critical error: Do not let your emotions cause you to overpay.
Instead, we urge you to avoid overpaying for a property on impulse. Take a step back and analyze all of the information available to you before taking the plunge. What are the pros and cons of the area? Is the neighborhood up and coming or are crime rates on the rise? Examine all the factors and keep your emotions in check.