Interested in Real Estate Investing? 3 Tips on How to Get Started

Real Estate Investing

The American dream was built upon the hopes of owning land, and that hope was realized by many. Still, to this today, investing in real estate is one of the safest and most lucrative things to do with your money. Homes are a major asset and have been throughout history. This won’t change.

Are you interested in investing in real estate? Read on!

Get Your Finances in Order

Money breeds opportunity. Don’t miss out on an amazing deal just because your finances are tied up in other projects. Real estate experts know that aggressive investment requires liquid capital. Become intimately familiar with the various financing methods that are available to you:

Personal capital

  • This is money you already have in the bank, ready to spend. Unless you’re already wealthy, chances are you don’t have the capital on hand to close a deal.
  • Remember, wealth includes any assets in your name as well as the cash in your account.
  • If you’re willing to part with some collectibles or big-ticket items you’re not using anymore—think old cars, boats, or motorcycles—you may be able to scrounge up enough capital to jumpstart your investing.

Traditional mortgage

  • These are loans backed by banks, credit unions, and financial institutions.
  • If you need help acquiring the capital to fund your dream of becoming a successful real estate investor, a traditional mortgage is the most common way of borrowing money to make that dream a reality.
  • Conventional loans require an extensive amount of paperwork and years’ worth of financial information before an applicant is approved. At that point, it could take weeks or months to receive the money you need to make a move on a property.

Hard money loans

  • Instead of fumbling with the red tape surrounding conventional loan applications, consider lending from a private investor or a group of investors, known as a hard money loan. They’re often location specific: for example, if you live in the Dallas-Fort Worth Metropolitan area, you’d be better off looking for Dallas hard money loans than applying to borrow from a private investor in Houston.
  • This option is feasible if you have questionable credit or a sparse financial history, given that applications for a hard money loan are often asset-based and focus primarily on equity as opposed to the borrower’s financial history.
  • Because there’s less bureaucracy in the lending process, you’ll be notified of your approval and get ahold of your cash much more quickly than a conventional loan.

Read Up on Real Estate

Figure out what type of market you’d like to enter. If you’re a hands-on investor, perhaps taking over as the landlord of a multifamily residential unit would bring you more pleasure than buying a commercial property and renting out units to various stores and restaurants. Other types of real estate you can invest in are:

  • Single-family residential units
  • Mixed-use properties
  • Industrial lots
  • Raw land
  • Real estate investment trusts

Take the time to analyze any unique advantages and risks your chosen market may pose.

Scope Out Your Area

Do your due diligence around your neighborhood. As you’re driving around town, take note of any buildings for sale or homes for rent. After a few trips around your city with a fresh investor’s perspective, you’ll have the knowledge to make a well-informed purchase. Get a feel for the real estate market in your area.

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If you see properties for sale but notice that they stay vacant for more than a month, you can infer that the market is cooling down in your area: look elsewhere for a quick profit. However, you may be able to purchase a home or a multifamily residence on the cheap if you intend to hold it for the long-term, maximizing your profit overall. Vary your investment strategy based on the length of time you plan to own the property.

Opportunity Knocks

Don’t wait to fulfill your dream of investing in real estate. Property is a scarce resource: there will always be a person who needs a place to live, start their business, or store their things. Residential and commercial real estate are industries that boast an unwavering demand. It’s a buyer’s market: organize your finances, do your due diligence, and invest in as many properties as you can.