Real estate investing is a lucrative career. A popular way to generate steady income, create a passive income stream and avoid inflation rate. There are two myths about investing in real estate. The first one is that you need to be rich to start investing in real estate. The second one is that if you have money, you can begin investing, knowledge is secondary.
Both are not true. We can say that from experience. In this article, we’ll highlight the critical points that you should know if you want to have a career in real estate investing.
Debt never leads towards richness. Before you plan about investing in RE, you need to get rid of your debts. Personal debt restricts your ability to make decisions. Banks will refuse to lend money for investment purposes. Furthermore, it is not right to risk investing in real estate when your finances are not in the right order.
On that same point, I must say, don’t buy educational courses by taking up new debt. Some companies will try to sell you coaching by asking you to open new credit cards. Let’s say your monthly income is $6,000, and all of your expenses make up $4,000. In that case, you have $2,000 extra each month. You can borrow money because free cash is available, and you can afford monthly installments. However, if you don’t have enough savings or your income doesn’t allow that, don’t go with an educational course or coaching. You can try it at a later stage, but for the time being, you need to work on your personal finance.
Experienced investors will agree. Your most valuable asset is your ability to find profitable opportunities. You can get financing from others if the deal is excellent. Otherwise, it’s not even wise to invest your funds.
Create an LLC to limit your liabilities. You can get private money for your investment ventures. However, you need to find the best opportunities.
Reading a few blogs or watching reality TV doesn’t make you an expert. Many people who start rehabbing houses have no idea what they are doing. You can learn from trial and error. It will take time, and you’ll surely make lots of mistakes. The second option is to invest in your education. Learn from the best in the industry. You’ll learn your craft in a few years and there will be fewer chances of making a mistake.
There are a few ways to make money in the real estate industry. You can purchase shares in investment trusts; you can buy commercial/residential property and rent it out. There are wholesaling companies, construction firms, and rehabbers.
As a beginner, it would be best to start the journey with a rental unit. If you want to go into the fix & flip business, get started with wholesaling. You can get started without money or experience. However, you’ll learn to sign the contract. You’ll realize how can you find the most profitable deals in the market. That knowledge will be the most useful resource when you get into the industry as a rehabber.
As an assignment for today, find your role model in the industry. Make a list of 5-10 people you would like to meet. Contact them!
Maybe send them an email or invite them for a cup of coffee. You’ll be surprised. People are willing to share their story and they’ll help you too.