5 Steps to Get Started with Real Estate Investing [for Beginners]
Getting started with real estate investing is easier than you think.
Real estate investing is a proven way to create generational wealth, with consistent cash flows every month. However, most individuals back themselves out of a commitment to any kind of real estate investment because of the same set of challenges that everyone faces. Getting started with real estate is, however, easier than you think; as long as you are willing to get educated, working with the experienced mentors, formulating a roadmap and following through with thorough due diligence, you will reap the benefits of real estate investing in the long run. Even something as straightforward as buying, fixing and reselling a property requires calculated steps.
5 steps to get started with real estate investing
As obvious as they might seem, a lot of investors fail to pay attention to any one or more of the following steps. Even buying a property, fixing it up and reselling it at an appreciated value, requires a systematic approach.
Real estate investing for beginners can be simplified with:
1. Research is the key
It is essential to study the lay of the land before investing in one. Research is critical, as it informs you about the applicable municipal compliance policies and laws, market prices, and demographic trends among other aspects. One should not even decide on a target market or property type without diligently researching in the profitability of the locations.
Find out, which neighbourhoods are have piqued the interest of customers and renters; find out which kind of renovations would pay off buy appreciating the value of your asset. If you are just getting started with real estate then thorough research will even offer key insights about properties that are under-priced in contrast to their location.
2. Negotiate the down payment
If you are buying an old property for a fix and resell, then you have to check its current financial records with the last owner. Most property owners offer assets at an undercut price if there is any mortgage associated with it. Such a situation can be turned in your favour with a little elbow-grease.
One of the essential real estate basics for dummies is that the property can be re-mortgaged by the previous owner. The previous owner can apply for a re-mortgage or a trust deed of a value equivalent to their equity in the property. Striking such a negotiation with the owner cans save you from a hefty investment; especially, if it is your first investment.
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3. Do not dilly-dally
Once you have a resell property in your possession, it is prudent not to delay its renovation. As long as you have done your research thoroughly, you should have masonry and carpenter services on stand-by with your renovation plans.
You can employ freelance handymen services to cut some costs on the renovations, and even roll up your sleeves to take care of refurbishments if you have the trade specialization to your knowledge.
4. Choose the path of maximum profitability
If you have performed your research well and renovated your investment asset as per the market trends, then you should have no trouble deciding whether to rent or resell the property. The decision completely relies on variables such as market demands in the locality. You can either rent the house at a rate that helps you pay off the investment fee, or you can refinance it since the property now earns as a rental asset.
Properties in the CBD would be much more valuable if rented out to commercial clients; same for those in the residential areas. The suburban locations may yield better in terms of resell. Studying the demands of the local property market can offer a lot of insight to those facing this dilemma when getting started with real estate.
5. Repeat the process with better deals
A common mistake for beginners in the domain of real estate investment is that they move laterally across the price bracket. If you intend to continue as a real estate investor, then repeat the whole cycle with higher priced real estate assets. Start off by researching the market trends by the time you are ready to invest again.
If you are considering real estate investments as a means to build capital or even raise a side-income, then you cannot seriously consider venturing ahead without a clear-cut action plan. The above cited steps are the foundation to any kind of real estate investment opportunity.
