3 Steps Everyone Should Take to Get Started in Real Estate

So I’m a new investor, let us just get that out of the way. I’ve been at this for 2 whole months, hustling 6 days a week, getting a part time job to keep food on the table, and I’ve looked at about 3 dozen properties. I’ve made 21 offers to date, usually to be out bid or ignored. But that’s OK! I’m learning the game, getting a feel for housing prices, feeling the market shift on a weekly basis, and just getting out there, doing something.

I set a goal when I first started, that I would have an offer accepted in 60 days. I haven’t met that goal yet, but I’m one step closer with each property I look at. I’ve managed to send out about 90 letters to properties I’ve driven by, and I’ve received 2 whole phone calls, one which has turned into a potential lead.

Progress!

So enough about me, but how do you, the reader, get started on this journey. Let’s break it down to 3 easy sounding steps.

Step 1: Learn the Math

Yep, that’s right! Math! It’s most peoples’ worst school subject. But this math is super easy, and made easier with the Bigger Pockets calculators.

Real Estate math is no different from any other math. Figure out what you’re going to sell something for, subtract your costs, and you’ve got your potential profit! Easy right? Sure is. Just need to figure out all those costs. You’ve got closing costs, contractor costs, holding costs, realtor commissions. Man it sure adds up in a hurry. But that’s ok! We’ve developed some awesome tricks to help get a quick ballpark figure on what those costs end up. We like to use the 70% rule most of the time, or some variation of it. In my market, it’s more like the 65% rule, in others it may be the 80% rule. It’s what your market will support and where the average home sale goes for.

I like easy, I hope you do to. So let’s quickly explain the 70% rule. Take the ARV (After Repair Value), which is what you’ll want to sell the property for. Multiple that value by .7 and you’ve got your all in cost of the property!

There are many variations and lots of ways to gauge how much you’ll spend on a property. But the 70% is pretty tried and true for most situations.

Step 2: Get Networking

Yes, real estate is less of a business about property and more of a business about people. It’s the cliche old saying, “It’s not what you know, it’s who you know.”

In this business, it’s all about finding those who you can provide a service to, typically increasing both of your wealth at the same time. I won’t get into the nitty gritty of finance, deals, or anything like that. Just know that you’ll want to find out your local community of real estate investors. Find those guys and you’ll find your buyers, money people, and future partners.

A good place to start looking is Bigger Pockets, but also check your local Real Estate Investor Clubs. Check recent cash sales with your realtor and track down those folks.

Step 3: Just Do It!

Seriously, this is the hardest step by far. Overcoming that initial fear of getting properties worth thousands of dollars under contract. Viewing properties with your empty pockets. Writing that first offer with your agent, who is probably looking at you, wondering why you’re about to offer 40, 50, or even 60 cents on the dollar for that house. It’s ok! You’re going to learn along the way, but the fastest way to get started is to just take the risk.

You get the deal? Scared outta your gourd? Good! Now talk to those people you networked with in step 2. Present them the deal, show them your numbers, show them your pictures, show them everything. You’ve got the deal, if they’re interested, they’ll let you know!

So really, this is all about getting out of your own way. Making those first few steps, and turning from a tire kicker, to a live, actual real estate investor!

Good luck!