Sometimes real estate investing for beginners can seem a bit intimidating and it’s easy to get lost in the lights and sounds of all the blogs, books, and television gurus with their slick hair. To help cut through the crap that’s out there I wanted to create a short list of tips you can use as you embark on your journey to find financial freedom through real estate.
No, this isn’t going to teach you everything you need to know. However, I hope this list will help point you in the right direction. It’s not exhaustive by any means, just a brief list of lessons I’ve learned along the way and hope will help propel you toward success. If you are reading this and have a little bit of experience in real estate investing – I’d love for you to share some of your favorite tips in the comments below; but first – here are a few tips for beginner real estate investors.
1) Be Resolved.
Real estate is not something to do on a whim. Investing in real estate is a life long pursuit to take control of your financial future not a get-rich-quick scheme. As an investor, you will struggle. You will make mistakes. You will fail. The successful investors are the ones who can take those experiences and turn them into lessons to improve their skills.
2) You Don’t Need to Be an Expert in Real Estate Investing.
Too many individuals talk about investing in real estate but instead just get bogged down with the vast amount of information out there. I once wrote an article for BiggerPockets titled “The Top 100 Ways to Make Money in Real Estate” that chronicled multiple niches, careers, and methods that investors use today to build wealth. Want to know a secret? I am only good at a small handful. People often email me and ask me for advice on areas of real estate I know very little about. I try to help as much as possible or at least point them in the right direction, but the simple fact is no one knows it all. You don’t need to be total expert in all the things of real estate.
3) You Do Need to Do Your Homework.
On the opposite end of the spectrum are investors who heard about real estate being a great investment and jump in with both feet unsure of where they are going to land. Sometimes these investors get lucky and make it big (and usually go on to be the next big guru) but the majority of the time these investors fall and fall hard. Don’t be like them. Do your homework. Study the niche you want to invest in and learn everything you can about that subject.
4) As a Beginner, Connect with Local Investors.
This doesn’t mean to spam them with requests, but simply reach out. Begin hanging out where they hang out. Ask them to show you some of their properties. Most investors love to show off their accomplishments, so allow them to pick up on every tidbit of information they can give you. Local investors will have a much better grasp at what works in your community than I or any other online investor will know.
5) Learn the Lingo.
If you don’t know the lingo, you are going to look like a fool. Plain and simple. Don’t start talking to an investor about how you think his cap rates are the wrong color. You’ll just look stupid and display your ignorance. Be honest if you don’t know something and don’t try to be something you are not.
6) Learn to Sacrifice.
How bad do you want financial freedom? If you want to use real estate to start living the life you’ve always dreamed you are going to have to sacrifice. You may need to forgo a vacation and use the money toward a down payment instead. You may need to move several times in order to build up enough capital to begin investing. You may need to learn how to use a paint brush and do your own work. Investing in real estate is the most rewarding thing I’ve ever done, but it’s not always been easy. There were years of sacrificing (time, money, and opportunities) to get financially free. If you are looking for a get-rich-quick scheme then look elsewhere.
7) It’s Okay to Start Small.
You don’t need to buy a 24 unit apartment complex right out the gate. Perhaps your first investment will be your first home. Perhaps you’ll start with just a 50/50 partnership on a small flip. This is okay. It’s easy to get over impressed by the big deals that the internet gurus talk about but even they had to start somewhere.
8) Treat Your Business as a Business.
Real estate is a business, so treat it that way. Keep it organized, build systems to manage your life, and seek to improve your efficiency. The reason so many landlords get burned out and hate the role is because they treat it as either a hobby or a job. It’s neither. You are a business owner and as such it is your job to manage the business to the standard which suits you the best.