Do you want to know how to get started in real estate investing? Or have you tried investing in a property before, only to find that your real estate investing strategies are not helping you save money or make a profitable income?
In either scenario, you can stand to get advice from experienced real estate investors, so that your property investing experience turns out to be successful always. In this blog post, we provide the 10 basic and essential steps that every aspiring real estate investor needs to do, in order to have a profitable and enjoyable experience investing in real estate. So, let’s get started.
1. Study your country’s real estate investment market growth prospects
Your nation’s real estate investment potential will affect your individual investments as well. That’s why it is important to know what growth you can anticipate in the industry and where. By studying your country’s real estate investment market potential, you will be equipped with the knowledge to make the right investments. You will also limit your risks and stand a higher chance of making a profitable purchase.
2. Choose a category of real estate investment to invest in
Real estate is a massive market. If you want to become a real estate investor, you’ll need to be very specific about the type of properties you want to specialize in. That way, you will be the master of one and not a Jack of all.
First off, select between residential, commercial, and industrial real estate niches. Then, figure out what type of property within that niche, you’d like to invest in. For example, the residential real estate niche includes villas, townhouses, apartment complexes, single family dwellings, condominiums, etc.
Similarly, commercial real estate will include everything from retail spaces to buildings for hospitality/healthcare to office spaces and more. Then there is the industrial real estate niche, which will include a whole different set of properties such as bare land, storage/warehousing facilities, heavy manufacturing centers, industrial showrooms, etc.
When you specialize in one type of real estate investing, you are able to learn about it better and also offer more personalized properties and services which will help you get a steady stream of renters and/or buyers.
3. Narrow down the locations you’d like to purchase property in
Location within your country, state, or city is super important. For one thing, location will affect the price at which you purchase the property. For another, the location can affect the cost of materials and transport, if you choose to do some work on the property, before renting it out or selling it. The location and its accessibility to facilities such as public transport, malls, hospitals, schools, parks, etc. will also affect the rental/sale price later.
4. Do a study about the type of renter you want to attract for your property
When you have narrowed down the real estate niche and location, figure out what type of renter/buyer you’d like to attract. Ideally, you should have clarity about who you want renting your property, their real estate preferences, the purpose of renting/buying the property, the goal they want to achieve through the real estate, and how long they intend to hold this property.
Knowing this can help you create the right kind of marketing, to promote your new real estate investment and attract the right type of buyers/renters.
5. Check about the potential to renovate, remodel or flip the property
The real estate investment you make should ideally have some potential to renovate, remodel or flip the property. This will give you some freedom to improve the property value before taking it out on the market. Additionally, it will allow you to expand your client base, by making available additional amenities that weren’t available in the original property.
6. Take stock of your finances and get financing if needed
Finance is super important when you want to start real estate investing. Your personal finances and ability to get financing if needed should support your investing dreams and goals. If you can’t finance your investments in the long run, you’ll put yourself in a really risky position.
7. Have an exit strategy ready in advance
Because financial risk is super high in real estate investing, and the competition is intense globally, you need to have an exit strategy mapped out. What recourse will you take if your investment starts to perform poorly? How will you dispose off the real estate if you aren’t able to break even beyond the projected timeline? What will you do if your losses and loss-making potential far outweigh your profit-making potential?
This exit plan will also help you attract investors when you do need financing because it shows that you have a smart plan in place to safeguard their money.
8. Hire a qualified team of property managers
Professional property managers are highly experienced in real estate management. They will be able to take care of all of your real estate investments, ensuring they are up to mark and in sync with the client’s expectations. They will reduce your burden of monitoring and managing the property day-to-day, allowing you to focus on your investment portfolio. Your property managers can become the point of contact between you and the client who uses your property, helping manage rent collection, property upkeep, and building compliance.
9. Keep yourself abreast with the latest real estate trends
It’s very important that you keep yourself updated about any real estate investing or general real estate trends, fads, and fashions. That way, you’ll be able to minimize risks and maximize your income earning potential on your existing and future real estate investments.
10. Find a mentor or coach and learn the tricks of the trade
Finally, none of the above steps will help if you don’t have the guidance and expertise of seasoned real estate investors. This is where it helps to have a real estate investing mentor or a real estate investing coach by your side.