While, technically, anyone can become a real estate investor these days, what does it really take to become a real success and what are the steps to get there?
Before you get started, there are a few things to keep in mind that will help you determine what kind of real estate investment you want to be a part of. The first of which is figuring out what kind of real estate strategy you want to be a part of. The spectrum of which ranges between being an active investor and a passive investor. An active investor will typically involve themselves in fix and flip strategies, wholesaling properties to investors, finding and managing a rental property themselves, or working as a licensed real estate agent in their area in order to build commissions for other future investments. An active investor is likely working non-stop, on multiple projects at once, and is always in need of funding. On the other hand, a passive investor can engage with real estate investing through buying shares of a property portfolio, partnering with other investors, or just generally investing in other real estate investment schemes. The choice between being an active or passive investor is really up to the individual and how much they want to be part of the day-to-day operations and rewards of a property. Aside from some monetary constraints or a license to become a real estate agent, there are no barriers to entry to become a real estate investor as anyone can participate, they must first figure out what kind of investment strategy they wish to become a part of first.
Once you have committed to and figured out an investment strategy, you can then move on to learning about the properties themselves. This next step will require a lot of research information as your end goal is to become a realistic competitive expert in the real estate market. Some of the key subjects to know are what kinds of properties are there and which ones to focus on, and what is the property’s situation in terms of structural support, renovation, location, community, real estate laws, and taxes. It is important to note that many properties are very different from each other. For example, what might the investment differences be between a multi-family rental property in rural New York compared to urban New York? Or how about a single-family property? Or a commercial property? Or the difference between the exact same property in the mountains compared to the beach? The point is you must be able to distinguish between all the different categories of real estate on top of all the different legal, geographical, and cultural factors that may arise in order to become an adequate expert in your field. To start off, you might want to focus your skills and knowledge on a particular specialized segment of real estate investment to give yourself a potentially unique advantage. Overall, unlike many other career paths, earning a degree is not required to become a real estate investor; but if you want to become successful at it, you will have to teach yourself and it will take a lot of time and patience.
Once you have mastered the realm of real estate in relation to your investment strategy, you can move on to mastering the market itself. The market is not too difficult to observe itself as it simply is determined by the nature of buying and selling property. However, the difficulty arises in figuring out the right properties and the right prices. As you probably understand, the market is not perfect. There are some properties that are overvalued and some that are undervalued. Hence the practice of real estate investment. However, understanding the market will require one to observe these properties for what they are actually worth and determine whether the process of fixing-and-flipping, or whatever investment strategy you are using, is actually worth it. And that itself is the challenge as you not only have to take into account the property itself, but you also have to account for the market as a whole and where you think it is heading, which may not always be the case.
After you have mastered the real estate market, you can move on to acquire financing, again, depending on your investment strategy of choice. Here is where your research can finally start to gain ground in implementing your project. As one begins to enter the industry, it will be more challenging to find other investors or people who will give you loans as you have not built the relationships yet or had the experience to prove your success. But you have done enough research to register a plan to showcase to investors to get them hooked on your idea. It is important to know that most investment projects require a lot of capital on your end so you will want to get as much cash on hand as possible. That is where other investors and private money lenders can come in as they can give you enough money to fund your project so that you can live out your real estate investment dream. Just make sure your strategy is sound and well-presented when trying to acquire more funds. Over time, this process will get easier as you have a longer history, reputation, and credibility within the real estate investment world.
Lastly, just before you go out and purchase your first property, you should read up on the local and state laws so that you are prepared for any legal situation that could stand in your way. No matter how experienced one is, there are always going to be challenges you did not foresee, but the better informed and knowledgeable one is about the property, investment strategy, and local customs and legalities, the better your chances are of overcoming the adversities present towards you.
Okay! You should now know all that there is to get started as a real estate investor. That being said, these are summarized guidelines that merely point out the general steps it should take to get started and become a successful investor. There is a lot to learn and a lot to keep in mind when practicing real estate investing. Just know that more likely than not, it is probably not going to go the way you expect. It could be that managing a rental building is much more costly and demanding than you expect. But, don’t fear. The smarter the strategy, the better the plan, and the more aware you are of the real estate market, the better your chances of success are. Good luck!
If you’re looking for financing on your next real estate investment, Stratton Equities is the leader in Nationwide Direct Hard Money and NON-QM Lending in the real estate market. Reach out to a member of our team today by applying now at www.strattonequities.com
Michael Mikhail is an accredited leader in the mortgage world and a seasoned real estate investor with over 20 years of experience in the industry. He currently serves as the founder and CEO of Stratton Equities, the leading Nationwide Direct Hard Money & NON-QM Lender for real estate investors. An innovator in the private lending space, Michael has built Stratton Equities into a resource for borrowers, brokers, and loan officers. His passion for helping others succeed in their investment goals inspired him to create a company with the most extensive library of private money loan programs under one roof. Additionally, he has developed a unique hands-on training program and educational platform to provide loan officers with a clear pathway to success.
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