Real Estate Investment: Where to Start

One of the most common things you’ll hear when it comes to investing is, “Investing in real estate.”  They all make it sound easy and fun but they don’t tell you how to go about it. They make it sound as if it’s as easy to just buy a house and resell it.  There’s a lot of things to consider if you plan on investing in real estate.

 

Financial Stage

The first step when you are considering investing in real estate is to know where you stand financially.  Knowing how much financial flexibility you have is key to knowing what opportunities and investment options are available to you for you to be able to invest at a comfortable rate without having to go too far into debt.

 

Investing Strategies

There are plenty of options to consider when going into real estate investment.  And as much as you’d like to diversify and fill your portfolio with multiple goals, plans, and strategies, you have to start somewhere.  Will you take an active role or not? Are you investing alone, with a partner or more in say a peer-to-peer method? This type of method allows more diversifying and less money, perfect entry into real estate, but may not give you that full control feel.  There are many options out there, and you can always adjust as your income changes over time.

 

Activeness

When deciding your investing strategies, you’ll also want to decide if you’ll become an active investor or passive investor.  Your investments may not only be limited to your financial ceilings, but you may dedicate your time into being more active in your investments and in doing so, can safeguard yourself a bit better as you will know where the details of where your money is being put to use.

 

Know Your Market

The market you choose can make a huge difference in the results towards your success.  You want to have as much knowledge about the market you’re investing in. A good starting point is your immediate area for that very reason.  You’ll be able to really sell the location with talking points with specific knowledge of the area you are comfortable with. If prices start to look too high in your vicinity, leaving the area a couple hours away may give you better, more affordable and profitable prospects.  Looking at smaller niche markets can also be profitable if you remain in cities with high market prices.

When analyzing the market of your choice, there will be key factors to look out for that you’ll want to have a good knowledge of the following.

  • Jobs in the area
  • Population size and demographics
  • Rent and price of other local listings
  • Education
  • Crime and safety
  • Convenience and distance of necessary needs like grocery stores and clinics
  • Public transport
  • Neighborhood aesthetics

 

Investment Targets

Once you know the area and niche you’d like to invest in, you can set a more specific target of the type of investment you’re looking for.  This would involve things like the type of property you’ll be looking into (house, condo, apartment, how many rooms, surrounding neighborhoods, amenities, size, etc.) as well as the price range of the place you are looking to invest.

 

Build Your Team

You’re going to need a team of people when looking into real estate investments.  This can and will range in terms of size and what each team member’s role is, but all will play an important part.  The people you will have within your circle will be partners, mentors, advisors, lawyers, accountants, home contractors, etc.  Make sure you have built, and continue to build, a team that you can rely on and trust.

 

Financing and Payments

You’ll need to learn what the best method of financing will be for you as you continue real estate investing.  There are many options from bank loans to private lenders, so you may have to adjust how you finance as you move from project to project, as different factors may influence which method works best.  And as much as you are getting on your loans , you’ll need to be prepared to put some money down in case anything were to happen. In such a scenario, you have to be prepared through your savings, ready to liquidate assets to cover costs, or communicate with business partners and investors from your circle.

 

Due Diligence

Once you are prepared financially, and have your targets, you can start treasure hunting for your big real estate investment.  Opportunity doesn’t always knock, you have to be the one out there going door-to-door, and you might just have to do that literally.  Make use of that circle you’ve built, don’t be afraid to use every resource you have. The best deals to be had are the ones not everyone is willing to work for.  

As you move through your real estate investing career, have patience and structure.  Stay organized as there will be a lot to handle, but remember to be patient.  It takes time to build a home, it takes just as much time to buy and sell it too.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.