Guide to Real Estate Investing
Guide to real estate investing. If you are a complete beginner, this article contains everything you wanted to know about the basics of real estate investing (REI) but were too afraid to ask. This guide to real estate investing has been carefully researched to help you in your business.
Let’s begin with a simple question.
Why Might Real Estate Investment Be The Right Move For You?
Real estate investment is desirable because it is simple, straightforward and involves a fair exchange between a property owner (the landlord) and the property user (the renter).
As long as the hot water keeps flowing and the rent arrives on time, everyone is happy and benefits.
What Are The Main Types of REI?
There are several different types of real estate investment including residential, commercial, and industrial, as well as real estate that trades on stock exchanges, called REITs.
Now for the million dollar question…
How Can You Make Money as a Real Estate Investor?
Here are four of the main ways you can make money as a real estate investor:
Real Estate Appreciation
This is when the property that you have invested in increases in value due to a change in the real estate market. For example, the land around your property becomes scarcer or there is an increase in traffic.
This might happen when a major shopping center is built next door. And when you make upgrades to the property to make it more attractive to potential buyers or renters.
Cash Flow Income
This type of real estate investment is when you buy a real estate property, such as an apartment building, and manage it.
You collect an ongoing stream of cash from rent, which the tenant pays to use your property for the contracted rental period.
Real Estate Related Income
This is income generated by “specialists” in the real estate industry such as real estate brokers. They make money through commissions from buying and selling a property.
There are also real estate management companies. They get to keep a percentage of rents in exchange for handling the day-to-day operations of a property.
Ancillary Real Estate Investment Income
In certain properties, this can be a huge and unexpected source of profit.
Ancillary real estate investment income may include things like vending machines in office buildings or laundry facilities in low-rent apartments.
What steps should you take to get started?
Below are 9 steps that show you how to get started with real estate investing.
1: Identify Your Financial Stage (How Much Money You Will Invest)
2: Choose a Specific Real Estate Investing Strategy
3: Pick a Target Market
4: Decide Your Investment Property Criteria
5: Build Your Team
6: Line up your Financing
7: Raise Cash for Down Payments & Reserves
8: Create a Plan to Find Deals
9: Schedule Your Time & Prioritize Next Actions
Can You Invest in Real Estate if You Have No Money?
The simple answer is: yes, it is possible to invest in real estate if you don’t have any money at all.
Of course there is money involved in every real estate transaction.
So to be accurate the issue is not about investing with no money but instead whether you’re investing with none of your own money.
Let’s look at some ways to do real estate deals without investing your own money.
Use Private Money
Cash is king and having private money backing can allow you to do deals without any of your own money.
Partner
If you have a strong business plan with solid exit strategies and a successful track record there will be a ton of money out there to fund 100% of your deals.
Incredible Numbers
It’s all about the numbers. If you have a knack for finding incredible deals people will fight over funding your deals.
Wholesale, Bird Dog
There is no risk, money or credit needed in getting a deal under contract or locating deals for investors.
Subject To, Seller Financing, Lease Options
Taking title to a property subject to the seller’s existing mortgage, getting the seller to carry financing or lease optioning a property are ways to do no money, no credit deals.
Characteristics of a Successful Real Estate Investor
For long-term success as a real estate investor, you need to possess or cultivate certain behavioral traits. These 5 traits will be your keys to success:-
1. PASSION
Successful real estate investors are passionate about everything they’re doing.
They read books and take courses to gain new knowledge.
They may at some point pursue a real estate license.
They network with others who have knowledge that will help them with their projects.
They wake up early, eager to scout out new properties on the market or get to work on one they’re renovating.
They love what they do, even though at times it’s easy to become frustrated when things aren’t going well or there are numerous delays on a project.
2. PERSEVERANCE
You won’t see a successful investor giving up or quitting.
It’s just not in their nature.
If they’re short on funds, they’ll find a way to get a loan, even if they get turned down three or four times.
If they’re renovating a home and the old flooring is stubbornly difficult to remove, they will think out of the box to find a solution, or rent the right tool to get the job done more efficiently.
Great investors take it in stride, knowing that there will always be speed bumps along the long road to success.
3. SELF-DISCIPLINE
A successful real estate investor has to have the self-discipline at times to say “No” to a deal, or even to the general market as a whole.
Not every deal is a good deal.
4. IMAGINATION
Having a good imagination is crucial for successful real estate investing. When you see a rundown, distressed property for the first time, you must have the ability to see the potential in the property.
Turning that “ugly duckling” into a “beautiful swan” can make you tens of thousands of dollars. But if you don’t see the potential, you can’t make that happen.
5. BOLDNESS
Great investors buy when others are most fearful, and sell when others are greedy. You can’t let the media, politicians, or even friends and family frighten you into letting opportunities slip away by doing nothing.
Remember, boldness is not the same as foolishness. A great investor acts in bold ways only at specific times, when great opportunities and limited risk are at hand.
So if you feel that the fast paced world of real estate investment is for you, your hard work may well bring you rich rewards.
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