Have you finally had enough of watching everyone else “make it” in real estate? Are you ready to see how far you can go and how much you can make through real estate investing? If all you need is a push in the right direction, a path to go down, then you’re in the right place. Here’s the beginner’s guide to investing in real estate.
Real Estate Investing For Beginners
Before you dive into the investing world, you’ve got to know a few terms.
- ROI= Return On Investment. It is the Net amount of value you receive from an investment.
- Cash-on-cash return= Gross amount of money (before taxes) divided by the amount of money you invest.
- Commercial Real Estate = Real estate property used for commercial purposes. This includes stores, factories, and apartment buildings with more than four units.
- Residential Real Estate = Properties zoned for people to live in, up to four units.
- 1031 Exchange = A method of exchanging the money from the sale of one property for up to three other properties without paying Capital Gains Tax. More on that here.
This isn’t your typical guide. It won’t teach you exactly how to find your first rental property or how much money you need to have for a down payment. Those things are important, but the internet is full of that information. This guide is here to teach you what it takes to be a real estate investor. Until you are able to get into the mind of a real estate investor, you’ll never be one.
Step 1: Use Fear As Fuel
If you listen to the stories of people who made themselves into million and billionaires, they usually have one thing in common: they came from humble beginnings. Starting out of a garage and having little-to-no money to feed their families, they had every excuse to not do the thing that made them money. They were worried about where their future was headed and how they were ever going to provide for themselves, let alone achieve their dreams.
They failed multiple times and they were scared. They were so scared that all they were ever going to do was fail. But they didn’t know how to stay down, so they used that fear as fuel. They kicked everything into high gear and let that fear drive them all the way to the top.
Here’s the secret: You never stop feeling fear. It’s always on the edge right before big changes happen in your life. The secret is to use the fear instead of letting the fear use you. Face the fear head on, never letting go of your belief in good things to come.
Step 2: Find a way to get the education you need
Since we were young, we’ve heard the question “what do you want to be when you grow up?” Some of us said taxi drivers, others said doctors, and a great many of us said dinosaurs. Society teaches us that we need to go to college to get a good job. Society then lays out good jobs based on 401k plans and vacation pay. While college is a great catalyst for learning it isn’t the only way to receive a great education.
You need to chase after knowledge about real estate investing! Find mentors and pester them with questions until you have no more. Read every guide, watch every movie, and read every book. One of the great teachers in real estate investing is just to get started. You don’t have to know everything before you start, but be ready to soak in the learning you will receive or you will fail. Network like your life depends on it and get with the people who know the industry, and you’ll get the education you need.
Step 3: Research, Research, Research!
Whether you’re looking for a house to flip or a house to rent out, research first!
Search county records and income reports. Learn all you can about the properties and areas you are about to buy in before putting any money down. This research can take time, so be patient! Finding the right investment isn’t as easy as rolling a dice, you’ve got to keep track of the numbers.
Research not only the property but the team you use to help you purchase the property. Find a real estate agent who knows the area and has worked with investors before. Make sure you are also getting the best deal out of your real estate agent by asking if they offer a commission rebate. You want to make sure to get the best value everywhere you can.
Step 4: Get Creative
Down payments are expensive! Repairs can be tough! You need to have creativity if you are going to succeed in this business. Be willing to take calculated risks and see them through to the end. If getting a down payment comes from leveraging debt, be prepared for the consequences and jump in! Unexpected things are going to happen, it’s part of the territory. What divides the real estate investors who make it vs. the ones who don’t is how you react to those unexpected things.
Step 5: The Key
The key to real estate investing isn’t what you think.
While education, mentors, and money are all important, the key is something that you can’t obtain through books or networking. It comes from within.
The key is motivation.
You have to be so motivated to make it in this industry that you get up every time you get knocked down. You don’t take failure personally, rather, you look at it as market research. You could have all the money in the world and all the best mentors. But unless you have the motivation to get back up when you fail– because you will– you will stay down.
Start your adventure in real estate investing today with a top real estate agent. They know all the tricks to get you off on the right foot, and you could even get a commission rebate. How’s that for Clever? Call us today at 1-833-2-CLEVER or fill out our online form to get started.