Getting Started in Real Estate Investing
Getting started with real estate investing isn't much different than getting started with anything else. The secret is to determine what you want to accomplish and develop a game plan to help you achieve your goals.
Once you've decided that you want to get involved in real estate investing, you should follow the steps below
1. Ensure Your Personal Finances Are In Order: The first thing you want to do is get an updated copy of your credit report. Make sure there are no errors on it. Once you have your credit report (and its accurate) you will want to figure out how you will finance properties. If you have sufficient capital ($10k to $20k minimum) you could probably use that as a down payment and get financing through traditional banks.
2. Find a Mentor: One of the best things you can do to help you is to find a mentor. Find a successful real estate investor in your community and seek their "knowledge." If possible, find a way to take them to lunch and pick their brain. Ask them questions. Try to learn from their mistakes. If you cannot find someone locally, attend seminars and read books about real estate investing.
3. Form a LLC or Corporation to Limit Your Personal Liability: Now that you have your finances in order and a mentor to teach you, you should create a LLC or Corporation for your real estate investing. You want to separate your personal liability from the properties you invest in. This way, you can protect your assets from possible lawsuits or bankruptcies.
4. Determine Your "Investing" Strategy: Your next goal is to determine your strategy. Will you focus on commercial or residential real estate? Single Family Homes or Town Homes? Or do you want to focus on foreclosures, bankruptcies or tax liens? The secret is to pick one and become a master of that category.
5. Stay Local at First: Once you have a game plan, your next objective is to start searching for properties. It makes sense to begin in your local area and stay within a 50-mile radius. The reason I say this is two fold. (1) You know your local area very well and (2) it's easier to maintain and fix problems locally. For instance, if you purchased property out of state it would be much more difficult to resolve tenant issues, compared to a local property.
6. Start Small: Rome wasn't built in a day. Don't feel like you have to purchase 100 properties in your first 12 months. The secret is to have a strategy and stay disciplined. You might have to look at 100 properties to find the "diamond in the rough." That's okay. Your goal is to find properties with equity and positive cash flow.
7. Purchase Your First Property: Let's face it. Purchasing your first property is always the hardest. But once you make your first deal, you will feel invigorated. Heck, you might make a mistake or two. That's normal. But you can learn from it and be that much more knowledgeable your second time around.
8. Repeat: Start looking for your next property!
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