When investing in real estate, the goal is to build passive income, which is income that comes with little effort to earn and maintain. The profit you make on your investments should be enough to cover the risk, any associated taxes, and the costs that come with owning real estate. Like the game Monopoly, beginners should understand the primary factors of investment, risk, and economics. Investors buy property, avoid bankruptcy, and generate passive rental income to buy more investment properties. Keep reading to learn top-5 real estate investing tips for beginners.
Easy Tips For Real Estate Investing That Will Help You Get Started
With the right plan in place, the knowledge to back you up, and a couple of significant transactions, real estate investing can be a rewarding and successful way to earn income. Let’s discuss a few tips we’ve found to help you get started as a beginner:
You Need A Plan
It can do you a world of good to treat your investments like a business. You need a winning plan and execute it while ensuring proper management.
A reliable and comprehensive plan will keep you on task and prevent any unnecessary distractions from becoming a hurdle to your goal.
Your plan can include:
- How many units to own;
- Cash inflows and outflows from rentals;
- Refurbishment plans for old units;
- Any other impacts on your investment.
Knowledge is Power
As we said earlier, being a real estate investor is a science. You need complete knowledge and know-how of the industry to be successful. Besides taking high-quality real estate courses, you need to use every method possible to learn as much as you can about the market you’re working in.
Look at the trends in your geographical region. Know all the differences between commercial and residential properties. Gather intelligence about consumer spending habits, local unemployment rates, mortgage trends, and other key influencing factors.
There are loads of real estate investing books out there, and we even have some real estate investing courses at RealEstateU to get you on the right track.
Building Networks is Key
A professional network is essential for everyone in the corporate world, but it’s even more so for real estate investors. One of our top tips for investing in real estate is to make sure you don't forget about real estate networking and connect with everyone in the industry.
From other agents to business partners, clients, and government officials, you should look to build relationships with everyone. Building these kinds of connections helps you make sure you always have leads and opportunities to expand your skill-set and income.
Diversify Your Risk
Not only do you increase your risk by just investing in a small geographic area, but you also limit the amount of profit you can make. It would help if you always explored possibilities and investments in other cities and states to have a better range of choices and opportunities. Like we mentioned above, maybe you partner with other investors in neighboring towns to help you start building a network filled with possibilities.
However, this doesn't mean that you go in blind. You should always do your research and gather knowledge before expanding your area of work.
Find Your Niche
It can be helpful to be a jack-of-all-trades at the start of your career. It helps you expand your skillset and learn faster. However, most seasoned professionals will tell you that it’s almost always better to start developing a niche as you move forward. Maybe you’d like to become an expert in low-income multi-unit housing, or perhaps your calling is rural farmhouse rehabs.
It’ll give you more focus and allow you to become an expert on that niche by knowing everything there is to know about it. This niche-finding strategy is a great way to avoid feeling overwhelmed about everything available in the investing industry. You can always move on to other niches once you capture one.
Start By Getting Your License With REU
When we said not everyone could be a real estate investor, we weren't joking. You need a wealth of knowledge and training to start off on the right track in the industry. You also need a valid license.
RealEstateU is an online real estate school providing courses in real estate licensing, real estate investing, and continuing education since 2013. When you enroll in our online real estate licensing courses, you will get expert tips for real estate investing and comprehensive guidance from our experienced instructors. The more you learn about the industry in your state, the more equipped you will be when you’re ready to start making deals.