It is true, anyone CAN invest in Real Estate but not everyone will be great at it. I will show you how anyone can become a real estate investor but again not everyone should do it.
Real estate investing is a career choice and just like every other career out there some people will be good, others will be great, but some will just be terrible at it. Some of the key traits of a great real estate investor are Budgeting, Organization and Scheduling. Even if you are not great at these yet, as long as you want to be good at them and put the effort in then you will be fine.
How Is It Possible That ANYONE Can Be A Real Estate Investor?
Simply because no matter how much money you currently have, or how much experience you have in real estate you can still get started. You don’t have to be an expert or rich to get started.
While it may be easier for you if you are sitting on $100,000 and years of experience but the truth is that most real estate investors start off with no experience and very little money.
How to Get Started with Little or NO Experience
The First Step:
Honestly you are already doing the right thing, researching and educating yourself.
Looking up and reading books and articles written by experienced real estate investors is the best way to get started. It will get you familiar with ideas and terms involved. I have plenty of articles about Investing that will help you learn more.
Have you heard the term “Education is the key to success”? This is true in real estate investing as well as many other things in life. The more you know when starting out the more successful you will be in your investing career.
One advantage of reading articles from other investors is that you get the benefit of learning from their mistakes without having to lose any of your own money. The best part about making a mistake is that it shows you one way to not do something. The best part about learning from someone else’s mistakes is that you lost nothing while learning a lesson.
This brings us to…
The Second Step:
Learn from someone who has been investing in real estate for five plus years.
You need to create a foundation of real estate investing knowledge by doing your own research and educating yourself. Once you have created this foundation you need to find a way to build on it. You can either start on your own and hope for the best or you can find someone with real life experience that you can learn from.
I went with the first option, I learned a little and then started out on my own. I could have had more help if I would have asked for it. I knew a couple real estate investors, but I didn’t want to bother them. I figured I would be fine, and I would learn as I go. I did learn from all the mistakes I made, and I did ok, but it could have been much better.
If you know someone that is a real estate investor I suggest that you sit down with them and start asking questions. I am sure they will be willing to at least do that. If you are lucky they may be willing to take you under their wing and show you the ropes. That would be the best-case scenario.
If you don’t know any investors or you can’t get any one to sit and talk with you the next best thing would be to find one online and talk with them. Obviously, you need to check out the possible consultant to make sure they are ligament. Check their current employment situation to make sure they are still active in the real estate investment market. You should also check how long the they have been in successfully investing in real estate. I suggest an approximant time of five years.
I offer a consulting program. If you are interested check out my Resources page. I have programs that will fit all your needs no matter where you are in your investing career. I have Email Correspondence or Phone Consulting programs. Check it out, I would be happy to work with you.
How to Get Started with Little or NO Money
The financial side of investing is going to be different for everyone. Not everyone has the same financial situation. There are different methods for financing investment properties. I will go over a few options available.
Cash is King! If you have enough cash to purchase investment properties without borrowing, then you are in great shape! Don’t worry if you don’t have the cash I will go over other options that involve non-cash purchases.
If you have $50,000 or more in cash, then you should start out with cash purchases. You will at some point run out of cash and need to take out loans, but you could buy one or two properties with out borrowing money and therefore you won’t pay interest.
This is how I started. I have less then $1,000 cash in the bank when I bought my first investment property, so if you have little or no money saved you can still become a real estate investor.
You can take out an equity loan on your home, assuming you own it and have equity build up. You won’t need as much as you think to get started. I have helped investors start out with only a $20,000 equity loan and no cash.
You can take out an equity loan on your home and purchase a rental property. In one year, you can take out an equity loan on the rental property and purchase another rental property. This way you can buy one new rental property every year.
If you have some cash saved up, you can use an equity loan to supplement your cash to help you purchase more properties faster.
You can use conventional loans to purchase investment properties. I know some investors that only purchase this way. They can buy a property and get $700 per month in rent and only have a $300 mortgage on it (PITI).
You can spread your cash or equity loan out by using conventional loans to purchase investment properties. You will need to use your cash or equity loans to pay for down payment and closing costs of each purchase, but with using conventional loans your wan buy more properties before running out of cash.
One downside to using conventional loans to purchase investment properties is that the lender will have minimum requirement for the property you are purchasing. These include value and condition.
In the current hot market, you will not need to worry about the value being much of an issue. Concerning the condition of the property the appraiser will play a key role in this process. Whatever he sees during the appraisal will be written into the report. I have had appraisers write every little thing down and I have had appraisers write very little down.
The lender will not be too strict with a conventional loan purchase. Its not like an FHA or VA loan that has higher standards concerning condition of the property. The lender will mainly be concerned with functional issue like Windows being broken, Foundation issues and such.
Hard Cash Loan
This includes personal loans and private lenders.
Very rarely would I ever consider using this type of financing for an investment property especially if it’s a long-term investment. I have seen this type of financing used on short term Fix and Flip investments and it has worked out ok, but I have also seen where it turns into a disaster.
The reason I don’t like this option is because of the extremely high interest rate which makes it impossible to make and profit on long term investments and it also very quickly eats away of the profits of a short-term investment. If you have any issues or delays on the sale of the short-term investment you will quickly see your profits disappearing.
The main obstacle in the way of anyone interested in starting to invest in real estate is their own determination. If you are determined to make it happen and you keep working at it you can make it happen.
I have people all the time tell me they want to get into real estate investing, but they never put any time or effort into making it happen. I can tell them everything I know and set them up for success but if they don’t make it happen it never will.
For more information about getting into real estate investing I suggest you read my article “How to Start Investing in Real Estate”.
Stay determined and make it happen!