Beginner’s Guide to Real Estate Investing: 8 Easy Steps
Purchasing your first real estate investment can be a very daunting task. There is a lot of information to sift through in order to figure out what you really need to know.
In this beginner's guide to real estate investing I break down 8 easy steps, you can follow in order to block out the noise and make it to the promised land.
The first order of business is making sure that you have a proper amount of cash in the bank to fund your first purchase. I know you heard that you can get a 0% down deal through vendor take-back financing (VTB). Well, if the opportunity is there, take it. However, it most likely won't be. Instead of wasting your time trying to find a needle in the haystack, focus on building your cash reserve so you can go out and get your first deal.
A great way to get started is through something called House Hacking. This is where you actually live in one of the units and rent out the others. This is great because it will allow you to purchase your first property for as little as 5% down.
Once you have a sufficient amount of money in the bank it's time to talk to a mortgage broker. They are going to give you something called a pre-approval which means that you're ready to start shopping! The best part about this is that you're going to know exactly how much you can spend on your first real estate investment. This is really going to help narrow down your search and allow you to become an expert on your first deal.
At this point, you now know that you're able to invest in real estate! But do you know what you want? This is a crucial step in the process. With real estate investing being such a broad field you're really going to want to focus on one part of the business. Is it student rental, single-family, multi-family, or pre-construction that you're after? Once you figure it out, put in your 10,000 hours in researching it and become the expert. This is going to help make sure that your first real estate investment is something to be proud of.
Now you know what you want and you know that you can have it. It's time to get to work. The first order of business is to hire the right team members. Your real estate agent is going to be absolutely crucial during this process and it's very important that you choose the right one! If you were going to hire a maid you would interview multiple people right? So why not do the same for your real estate agent. I recommend you choose someone who is also an investor or at the very least specializes in investments.
This agent should be providing you with the rest of your team. Especially if you're investing in a city in which you don't reside. If the agent is actually an investor, you know that this team has been tested and tweaked to perfection and you can rest easy knowing you have the right pieces in place.
It's time to go look at some properties and make some offers. This is a very exciting time and it's important that you don't let your emotions get in the way of your decision making. It's easy to get excited about getting your first real estate investment out of the way but it's important that your first deal is a great one. Chances are it wasn't easy for you to save the initial down payment and the last thing you want to do is lose it by overpaying for a piece of real estate.
Once you officially purchase your first real estate investment and the keys are in your hands it's time to make some repairs. Chances are you bought an older house and there are always things to be fixed. Make sure to go through your home inspection report and try to address as many issues as you can. Even though some issues may not seem urgent, it's best to address them regardless as they could actually save you money in the long run!
Congratulations! You have graduated from the Beginner's Guide to Real Estate Investing in 8 Easy Steps and you have secured your first property.
Now it's time to rinse and repeat!
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