Five Steps to Becoming a Real Estate Investor
By Space Coast Daily // January 28, 2019
Becoming a real estate investor has a lot of perks for individuals who want to start their business and be their own boss.
You can earn from joint ventures, wholesaling, and property management, among many others. Like all professions, though, there are skills that you need to acquire and lessons that you must learn to become successful in this field.
These are the steps you can take to become a real estate investor:
1. Study the Industry
Before starting your career, you must do your research on the industry and determine your target market. Real estate is an intensely competitive field. Getting a clear idea of what’s ahead and identifying your purpose as well as strategy will keep you focused on your goals when minor setbacks come along.
A crucial part of studying the industry involves a market analysis. It provides data on your industry, the market, and your competitors.
You can conduct a feasibility study to assess the practicality of your venture. Plus, doing your research on sites such as bestrealestatedirectory.com can help you learn more about the trade.
Here’s how you can conduct a feasibility study:
- Perform a Preliminary Analysis – This allows you to filter through ideas before you have invested a significant amount of time, effort, and money.
- Create Income Projection Statement – Factors such as service fees and revenue adjustments are necessary to estimate how much you’ll be earning over a specified period.
- Plan a Market Survey – A market survey is used to come up with a realistic projection of revenues by defining the market, reviewing trends and purchasing power, analyzing competing services, and determining total volume in the market area.
- Review Data – Go back to the data you’ve collected during the study. Analyze the pros and cons of your business idea. This allows you to make informed decisions about your venture.
2. Know Your Options
Understanding the different types of real investment is crucial in succeeding in this career. You ought to identify which one works best for you and your budget. Contrary to popular belief, you don’t need millions to become an investor. You just have to find the right setup that fits your needs.
You have two primary options which are:
- Traditional Real Estate Investing – This one involves purchasing properties and renting them out to tenants. One significant factor you must consider is that this option requires you to sift through listings and visit them before you can settle for the right place. It will take considerable time and energy on your part without guaranteeing a property’s saleability.
- Crowdfunded Real Estate Investing – On the other hand, crowdfunded investing means that you join a group of other investors to pool your resources together and lend it to veteran real estate property owners. It lessens the pressure to find the perfect rental space without compromising profitability. A disadvantage is a risk of running into scammers, but you just have to read up on reviews about the organization and talk to fellow investors who placed their money there.
3. Craft an Excellent Deal
Creating outstanding deals that favor homebuyers without decreasing your profit margin will entice them to choose your properties. Aside from the price of a place, you should look for the ideal location with a structure that’s in remarkable condition when selecting a property investment. Overpricing is a big home-selling mistake.
4. Build Your Reputation
A few agents destroyed the public image of real estate investors by being all about the money and sales without considering whether the property is the best fit for the needs of their clients. However, the most successful people in the industry uphold high ethical standards. You should build your reputation, identity, and credibility by treating your customers with utmost respect and honesty.
5. Start with What You Can Afford
Most people hesitate to become real estate investors because of the price of properties. Plus, you need to pay a hefty down payment up front, which is discouraging. However, you don’t have to buy an extravagant house or building for your first rental. You can find establishments for sale that come with a price tag of 100,000 USD or less. Learn about various financing methods as well when deciding to acquire your first income property.
Becoming an investor requires guts. It’s definitely not for the faint-hearted since there’s always some form of risk involved. The return on investment is substantial, though, since real estate never depreciates. Most of all, even if your rental venture doesn’t work out, you can always sell that particular property and find another one.
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