Investing in real estate is a great way to grow your financial portfolio and nest egg for retirement. Not only will you have more assets to your name, but you'll also have a steady cash flow that can serve as additional income if you have a regular day job. To begin your real estate ventures in this lucrative market, you need to start studying. From market trends to housing prices, there's a lot to learn. Here's a roadmap on how you can get started.
Join an Investing Club
Jumping into a new industry can be daunting. You probably have so many questions, such as how to finance a real estate property, what the tax laws are, and how to screen tenants should you choose to rent out your property. That's why you should join a like-minded group of people who share a common interest and can provide real advice. Many cities and states have local real estate investing clubs that you can join and network in.
These clubs can serve as a catalyst for your real estate business. At these networking events, you'll be able to learn from every type of professional in the field, such as brokers, attorneys, landlords, and contractors. If you find there are no investment clubs near you, you can use social trading apps to form a network of people near you!
Determine Your Financial Situation
Once you have a firm understanding of the ins and outs of real estate investing, it's time to look at your financial situation. The first step you should take is paying off any debt you have, whether it's student loans, your own mortgage, or credit card debt. When you apply for financing options for a rental property, banks and financial institutions will look at your credit score to determine whether you're eligible for a loan. So, as long as you maintain a high credit score and having minimal financial blemishes, you'll show banks you're trustworthy.
However, applying for a mortgage requires a lot of paperwork and your financial history will be thoroughly scrutinized. Real estate investors with less than ideal financial histories often turn to hard money loans to finance a rental property. Hard money loans give people with poor financial histories an opportunity to invest in real estate and climb out of debt.
Take Texas, for example. Suppose a man named Joe got a credit card in college and began charging all of his expenses on that credit card without making enough money to pay it off. Joe climbed further and further into debt, and it's been 10 years and he finally wants to buy a home. However, that debt he accrued during college is still looming over him and no bank will issue him a mortgage.
However, Joe just ran into an old friend who had the same problem and said he was able to buy his first house after seeing hard money lenders in Fort Worth. These hard money lenders disregarded his financial history and took his rental property's equity into account instead. So, Joe drove on over to Fort Worth and the hard money lenders issued him funds within 7-10 days after being approved and used his property as collateral!
Find a Market You're Willing to Invest In
Now that you've settled your financial situation, it's time to look into the various markets for your new real estate business to invest in. Many people believe real estate is simply owning or building a second home and renting it out to other people. But, there's so much more to this rewarding market. Not only are there residential real estate options, there's commercial real estate as well. The important thing to remember is to always do your research when looking for the right market to dive into.
To start, consider downloading a real estate investment app that will give you a list of potential residential or commercial properties you can purchase. Then, conduct market research by looking into housing prices of homes in the same neighborhood. If you're close enough, take a look yourself to get a feel of the area surrounding a potential home. You'll be surprised how different one street could look from the next. Also, lean towards properties that are safe and well kept in order to attract responsible tenants.
Form a Team
Going into this industry alone can be extremely difficult. This is why forming a team of professionals will help boost your business in real estate. Start by comparing real estate agents in your area that have similar goals, values, and interests as you. This will make hard decision-making moments easier and less stressful. Along with a real estate agent, you're going to want to find a reliable contractor that will work with you. Many homes you invest in may need repairs. Look for contractors in your local investment group or try searching on a freelancing app to find a professional near you!
Make Your First Purchase
The time has finally come! Once you feel confident you and your team have everything together, it's time to make an offer. With every offer there will be some risk, but that's part of the business, so don't lose hope or confidence. It may require putting offers on multiple properties, but once you make your first deal, you'll realize all of your hard work was worth it.
The Bottom Line
Investing in real estate can be a tricky business. If you're not well informed on every aspect of the real estate market, you could find yourself drowning in financial burden. Start by reading up on everything there is to know about real estate-from legal issues to financing, and to maintaining a rental property as well! Once you have everything in line, you'll grow a successful real estate business you can be proud of.
