Getting started in real estate investing can be daunting. Acquiring properties can require a lot of money, so ensuring you are making a good investment is critical. Here are 4 practical tips if you are new to real estate investing and want to make wise investment decisions.
1. Network in Your Local Community and Find a Mentor
Surrounding yourself with people who are already successful at what you want to do is crucial. When I first started real estate investing, I tried to do it on my own by simply reading information online and watching YouTube videos. Since then, I have actively pursued relationships with other local investors and have learned way more in a shorter amount of time by simply talking with and being around like-minded investors. Find someone who can teach you while you help them grow their business as well.
2. Know How to Run Numbers on Properties
A property can seem like a great investment until you sit down and estimate the revenue and expenses. It is best to have a set strategy in mind when analyzing properties, such as a minimum amount of cash flow per unit or a minimum cash-on-cash return. It is best to stick to your guidelines and not get emotionally attached to any property. Learn how to use a rental property calculator to analyze the potential return, and if you need help, hopefully you already have a local network of investors from tip 1 who would be willing to assist.
3. Find a Real Estate Investing Realtor
Assuming you will most likely be working with a real estate agent to purchase the property, it is best to work with an agent that is experienced in real estate investing in your area. Not all agents own investment property nor have worked with investors before to buy property. A skilled Realtor, however, can provide tremendous guidance and will help negotiate an offer that keeps you on track to achieve your set strategy from tip 2.
4. Asses Your Risk Tolerance
When you are first getting started in real estate investing, it is crucial to understand the risk involved and to determine how much risk you can afford. A single 25-year-old and a 38-year-old with a wife, three kids, and a home will likely have very different risk tolerances as they approach their investment. Real estate debt is a powerful tool that can generate a lot of wealth, but all debt has risk, and every property you invest in can see ups and down like other markets. Have a plan and never bite off more than you can chew.
Investing in real estate can seem complicated, but having a plan and tools and networking with other investors will drive your success. Now that you have some tips to get started in real estate investing, which step are you going to take today to get closer to owning your first cash-flowing property?
Written by Mason Kiffmeyer, Realtor in Lynchburg, VA
Mason was featured as one of the top 15 Real Estate Agents in Lynchburg in 2022 and 2023 by Expertise.com
From the author:
“Real Estate is what I love to do, and I am thankful for the opportunity to have a career in something I enjoy. I am passionate about people and relationships, and I am honored to assist individuals and families during an important stage of life.”