Real Estate Investing is about more than buying your next house or rental property. There is a lot of knowledge and wisdom (including both mental and emotional conditioning) that must go into investing, especially if you hope to make a profit from your investments. With the frothy housing market, it’s no surprise that many are hesitant to enter into the world of real estate investing.
But if real estate investing is something that interests you, there are a few tips that can prove to be quite helpful in the beginning stages. So, to help you along this difficult but rewarding process, below are some dos and don’ts when it comes to beginner real estate investing.
Gain as much knowledge about real estate investing as possible. This sounds obvious, but far too many people neglect the important homework that needs to be done to enter the market successfully (for any investor, I would make reading “Antifragile” a necessity as part of this homework). However, this doesn’t have to be the case, as there are many great resources on investing in the real estate market that you can glean wisdom from without leaving the comfort of your home. If possible, I also highly recommend finding a mentor that can help you along the process.
But don’t just find a random person on the street to ask about investing. Finding someone who currently owns real estate assets and has proven their approach by growing their wealth through the ups and downs of different market cycles is key. The benefit of meeting with someone in your city, who has both skin in the game and real results to show for it, can be immeasurable for your confidence level. Plus, you will also hear about the exact investment strategies they used for the property types they acquired.
You’re also going to need to take calculated risks if you expect to succeed in real estate investing. Now, I’m certainly not suggesting you to throw your money into the first property that may produce a large payout, but if you wish to succeed in the industry, learning how to deal with uncertainty is crucial.
Expenses can pop up quick in real estate, so you don’t want to forget to set a budget. For instance, before you buy a rental property, it’s important to sit down and set a budget that has you acquiring a nice return on investment. Determining a budget and sticking to it is one of the key determiners for success when it comes to real estate investing. If you haven’t found forecasting to be your strongest skill-set, don’t worry, there are a lot of online resources that can help you with budgeting. One area that is usually forgotten when it comes to looking at expenses are an investor’s personal management costs. This includes things like travel costs, airfare, and gas.
The ins and outs of real estate investing take time to learn, so don’t expect you will know it all right out of the gate. Also, don’t let the fact that you won’t know it all immediately hold you back from entering into the real estate market. Yes, it takes time. But devoting yourself to the craft and maintaining the desire and humility to learn are two character traits that can take you far in real estate investing.
Real estate investing can be an excellent and fulfilling endeavor. It’s an industry that takes passion, perseverance, and wisdom, but applying the principles laid out above, you’re already on the track to successful real estate investing.