As we head midway into 2019, the country’s housing market is beginning to cool. Yet, despite that, the top US cities are experiencing pricing hikes.
That means that getting started in real estate investing right now requires careful consideration. The right location and the right property is crucial.
Read on to learn how to get started in real estate when you’re new to the game.
Write Down Your Goals
Before you start real estate investing, it’s wise to know what you want to accomplish from it.
Becoming a millionaire isn’t really an actionable goal. It’s better if you decide how much you want in income each month per door after all your expenses.
You may also have a goal to acquire one new property each year, for example. You can also set retirement goals such as how much money you’ll need a month to retire and how many rental properties that will take.
Next, understand that although real estate investing sounds appealing, it’s not the best option for everyone.
Is it a reasonable option for you?
Ask yourself the hard questions: Do I have the skills to be a real estate investor? Can I take on this commitment? Is the housing market right for real estate investing?
If you answered yes to these questions, you can confidently move forward with getting started in real estate.
Even if you don’t know everything you need to know, that’s OK. There are so many resources (most of them free) that you can turn to teach you how to get into real estate investing.
Review Your Finances
Next, you need to evaluate whether you have the ability to invest. While you don’t necessarily need to cover the cost from your own pocket, can you afford another mortgage payment?
Be realistic about what you can and can’t do. Talk to various lenders to explore your options. Read more here.
Pick a Type of Property
Real estate investing is such a broad field. There are so many options from vacant farmland to apartment buildings and Caribbean vacation rentals.
There are pros and cons to each type of real estate property. You need to figure out which one would work best for you.
Your best bet when you start real estate investing is to explore all your options. You may prefer turnkey real estate investments over properties you need to flip. Or vice versa!
Decide Upon a Location
You’ve heard it a million times: location, location, location! One of the best tips, when you are getting started in real estate, is to do extensive research into an area.
Find out the property taxes in the area you’re considering. If you plan to invest in residential properties, look at the schools in the area. This is a big factor for families who may rent your properties.
Figure out the typical rental rates in the area. Schedule a meeting with a few property management companies to discuss rent rates.
Make sure you look at the walkability score of your area. As well as the accessibility to public transportation. Both factors will be important for future tenants.
One of the most important things you can research is the demographics in the area. Demographic trends can help you project the appreciation of your investment.
Population growth and household income are driving forces that can help your property be successful.
You really can’t do too much research! Even looking into the internet options that service the area are important.
Being armed with research helps you make a well-informed decision.
Review the Positive Cash Flow Numbers
Once you’ve lined up financing for your real estate investment, it’s time to do some estimates.
Real estate for beginners requires you to carefully consider the projections of cost and revenue of your investment.
Include all the possible costs such as insurance, taxes, maintenance and so on. There are plenty of free only calculators that can help.
Search for a Property
Now that you’ve done all the grunt work, here comes the fun part! It’s time to start searching for the right property.
There are many ways you can go about this. You can use a real estate agent to find investment properties in the area you want. Many newbie real estate investors go this route.
Of course, you can also look on Craigslist and other online and print community spaces for properties.
You can get your hands on a tax-delinquent list. This will require that you spend time negotiating a short sale with the sellers. But it could be worth your while.
Plus, there’s also the option of just driving around the neighborhood and looking for “for sale by owner” signs.
While you are exploring the area, you may come across the perfect option but there’s no for sale sign. Go ahead and send a letter in the mail explaining that you are interested in buying the property.
The owners may not be interested, but you have nothing to lose! And with off-market options, you aren’t competing against other bidders.
Make an Offer
Once you’ve found a property that meets your needs, go ahead and put in an offer. Many beginner investors get stuck “looking” that they fail to move to the next step.
Go ahead and make an offer. Feel free to put in a low-ball offer. The worst thing that could happen is that the sellers turn your down.
Make sure your offer includes a contingency for a property inspection. That way, if the quality is sub-par, you can back out of the deal.
The Bottom Line on Getting Started in Real Estate Investing
Thanks for reading. We hope this guide on getting started in real estate investing has given you the overview you need to move forward.
Remember, real estate investing can be an excellent source of income, but it comes with some work. Plenty of research and consideration at the beginning will help you decide if it is the right option for you.
Next, check out 3 types of UK property investments you’ll never regret.