Real estate investing offers numerous ways for people to make money, and can be a great way to achieve financial goals. However, breaking into the industry can be intimidating for new investors.
Fortunately, there are beginner-friendly strategies that can provide an entry point into the industry. One such strategy is wholesaling, which involves identifying and acquiring properties below market value before assigning contracts to end buyers.
1. Know Your Goals
Whether you’re new to real estate or have experience in the industry, it’s important that you set realistic goals for yourself. This will help you avoid impulsive investments and pitfalls like confirmation bias, which is when you focus on information that supports your existing beliefs.
Having clear goals can help you stay accountable to your investing strategy, so be sure to write them down and keep track of your progress. For example, some investors aim to save a specific lump sum by a certain date. However, it’s more effective to break this goal down into smaller, weekly savings amounts.
Additionally, be sure to consider any expenses associated with a property before making a decision. For example, it’s important to understand the maintenance costs of a property, including things like a fresh coat of paint between tenants and vacancy rates. This will help you determine if the property is worth your time and money. You can also use real estate investment platforms like Arrived to crowdfund properties that are vetted and potentially profitable for your portfolio.
2. Know Your Niche
Real estate investments can diversify your portfolio. They also tend to have lower correlations to the stock market, helping you minimize risk when markets are down. Additionally, you can often purchase properties with far less money than other investments.
To determine the right niche for you, consider your local market conditions and what types of properties are in high demand. You should also think about average sales prices and turnover rates. For example, if the average property in your niche sells for low prices and has a slow turnover rate, it may not be a good fit.
Some real estate investment niches focus on specific property types, like single-family homes or commercial spaces. These niches allow you to become an expert on the structure, details, and values of these properties. This knowledge will make you a valuable resource for buyers and sellers. Other real estate investing niches are location-based, focusing on property and clients within a particular neighborhood, city, or ZIP code.
3. Find a Mentor
A real estate investing mentor can make all the difference for new investors. They can provide guidance, expertise, and advice to help you achieve your goals. Ultimately, you need to find the right mentor for you and ensure that their goals align with yours.
Ideally, a mentor should be able to adapt their strategies to market fluctuations and understand how to leverage their resources to maximize the impact of each deal. They should also be able to identify your strengths and weaknesses, and offer support during challenging times.
Fortunately, finding a mentor is easier than you might think. You can start by seeking out a real estate coach online and reading reviews. Additionally, you can attend paid events to meet mentors and potential students. Attendees at these events have a high chance of meeting a mentor who can guide them through the process of starting out as an investor. This can be one of the most important decisions you make as a beginner, so research thoroughly and ask for testimonials from previous students.
4. Network
Real estate investing can be a lucrative way to make money. Whether you use it as a side hustle or it becomes your full-time job, there are many different strategies to start making money in the industry. However, breaking into the real estate market as a beginner can be challenging.
Fortunately, there are numerous networking opportunities that can connect you with other professionals in the industry. Visiting local business networking groups, attending expos and conferences, joining a real estate investment club and subscribing to industry publications can be beneficial to your career.
It’s also important to remember that not all real estate investments involve buying and selling physical property. There are other ways to get involved with the industry, including REITs and online real estate platforms. Investing in these types of assets can offer the same benefits as owning physical property, but with less risk and a lower time commitment. This makes them an ideal option for beginners who want to add real estate to their investment portfolios.