Starting something new, particularly when there is money involved, can be as daunting as it is exciting. For new real estate investors especially, getting going can be overwhelming.
On top of trying to learn about real estate investing itself, there are countless new laws to learn, from insurance and taxes to properties and tenants. You may be afraid of making a mistake, losing money or outright “failure”...and that’s all natural.
Instead of fretting about what could go wrong as a green investor, focus on taking the steps that will set you up for real estate investment success.
Key Steps to Success for New Real Estate Investors
Review Your Finances
Number one, naturally, is to determine your capacity to invest. Are you prepared to take on a second mortgage payment? Do you have the savings to make an all cash offer? Talk to lenders, investigate financing and be honest and realistic about your ability and capacity to invest.
Crunch the Numbers
Once your personal finances are in order, it’s time to do some projections. Practice calculating your positive cash flow potential, keeping in mind all of the costs and eventualities that can make an impact on your new income: insurance costs, maintenance, taxes, mortgage and so forth. If you don’t know where to start, there are tools and calculators out there to give you a hand.
Explore Different Investments
As you start investing, you may find that certain properties and styles suit you more. You may prefer commercial properties to single-family homes. You may discover you like to flip properties, or that turnkey real estate investment is your speed. Investigate! Explore! Look into REITs and partnerships. There are a lot of options out there that many investors simply aren’t aware of all the time. As the industry evolves, new twists (such as Turnkey investing) are emerging. Stick with the industry best and no matter which format you choose to use for investing, you will find success.
One Step at a Time
Don’t stress yourself out by thinking you have to start out with your dream investment properties in your portfolio. Investors often have to work up to their ideal (and even then, ideal is never really ideal). Nothing can sink you quicker than biting off more than you can chew. So start small. Learn how to invest safely and with good partners step-by-step. Go after properties that are feasible for your current situation. Build up your knowledge and experience, little by little. Use high quality partners and vendors and while you may end up paying a little more for services, the price you pay for mistakes is much higher!
Build Up a Network
For real estate investors, others like ourselves are an invaluable resource. Build up a network of like-minded professionals. Follow blogs, sign up for newsletters, locate investors in your area that you can depend on for reliable advice and support during rough patches. Having a network that understands you and your business can be an integral piece of the investment puzzle. You don’t have to do it alone.
Beyond that, making connections can open up new investment opportunities for you in the future.
How did you feel when you were new to real estate investment? In the comments, share the best piece of advice you ever received when you were just starting out.