According to modern investors, real estate is one of the best ways to diversify your portfolio. It can also be a great side income. If you really enjoy real estate, you can even make it a full-time business.
But don’t expect success to come without significant effort on your part. There are a few things that every new investor needs to succeed.
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There are many complexities of real estate investing, but finding funding is the first step. The amount and type you need largely depend on the investments you want to make. Contrary to popular belief, you don’t need hundreds of thousands of dollars in savings yet, investing in real estate with little money to your name isn’t easy either.
It’s possible to make your first real estate investment with less than $5,000 in savings. If you’re good at networking or know other investors, you can form partnerships or solicit angel investors. Hard money lending, home equity loans, government grants, seller financing, and trades are more options for investing with little to your name.
If you choose to take this route, donâ’t expect everything to be handed to you. You’ll be required to put in ample sweat equity. You may be doing all the work for a small profit. Just remember that it’s all progress, moving you in the right direction for future investments.
More investors get started with a business loan. They approach a lender with a good prospective property and money saved for a down payment and use traditional funding to start. Ideally, you’ll be able to pay off the property within 5-10 years rather than 30, like you would a typical mortgage.
It’s simplest to make a real estate transaction through hard-earned savings. Spend a few years banking money for investment so that you can buy a small, all-cash property and work your way up from there. Be very careful of the risks associated with the property you buy-this is your hard-earned money, and you don’t want to lose it all on a bad bet!
Being a Landlord
Define your role as a landlord. Are you planning on being a hands-on landlord or a behind-the-scenes investor? Will you be doing some of the property maintenance yourself or outsourcing it to a property manager?
There are many options here, and many landlords try several methods of maintaining the property before settling on a customized option. Most choose to hire a property manager, as it removes much of the stress and liability from their hands for a small monthly fee.
No matter how you decide to perform your landlord duties, it’s essential that you have an iron-clad lease agreement. A good landlord will consider all the options and create a customized lease structure, not one downloaded for free off the internet.
Remember that a residential lease might be structured differently than a commercial one. For example, you might choose to use a modified gross lease for commercial properties, which may not be suitable for your residential properties. (Read this great article about modified gross leases to learn more.)
It doesn’t matter what type of landlord you are if you have a good lease agreement and keep your end of the bargain. If you’re willing to do that, you’ll succeed in any real estate endeavor!
You don’t have to be a realtor or have a formal certificate to show that you know the business. However, you should possess a working knowledge of today’s real estate economy and the markets in which you’ll be working.
Start by investing in a single market. Understand the ebb and flow of buying and selling, rentals, and business sectors to determine which type of investment will serve you best. Study supply and demand, trends, desirable locations, comparable prices, and more. (Check out this awesome resource from RealEstateExpress.com on studying your local real estate market to help you master this concept.)
When you’ve mastered one market, you’ll be ready to move on to another. Pretty soon, you could have real estate investments in every city in the county!
The Right Mindset
I bet you often find yourself thinking about how to become a millionaire through real estate investing?
With funding in hand, you’ll need perseverance, optimism, business-savvy, and a handful of other strong personality traits to lead you to the right investments. Investors who have made their fortune in real estate have not done so through submissive, quiet moves. They’re passionate, imaginative, bold, self-disciplined, educated, and transparent.
These personality traits will carry you further than the average investor. When one opportunity slams a door in your face, you’ll have the perseverance to carry on. When you lose money on a risky venture, you won’t throw in the towel. Instead, you’ll move on to the next prospect.
Many investors can say they made money from real estate, but few can say they’re the best in the business unless they put their best traits forward and push through to make their fortunes!
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