The Beginner’s Guide to Getting Started in Real Estate
There are so many reasons to get started in real estate, it’s no wonder it’s considered the best investment on the planet. Real estate is one of the best investments you can make, because you can borrow against properties that you owe money on and you can purchase a property with 20% down.
Few assets can compare to a great real estate investment portfolio. They are not making any more land so property prices will always have to increase over time.
Before you get started in real estate you should figure out what it is you want to do. Do you want to be a real estate agent? Register for classes and begin your search for a broker.
Do you want to be an investor? Start learning today and watch your investments multiply.
There are 3 types of real estate deals from a financial point of view. The first type is a typical sale. You find a property you like and you pay for it outright or you borrow a mortgage and make payments on it.
The important thing about this type of strategy is, it is your money. You do not owe anyone else. If the investment goes sour, it is entirely your loss. This is the most common type of real estate deal.
The second most common deal is characterized by using a third party’s funds. These deals are very common when you have someone who “flips” houses. To “flip” a house is to buy it cheap, fix it up, and resell it quickly.
This type of strategy usually incorporates a few components. The first part is the project manager. This person is tasked with finding a good property and examining it. They will then put together a full implementation plan for the flip.
This means they will put dates and prices to the property to give the investor an accurate schedule of their return on investment. This is a very effective way to make quick money in real estate without using your own money. It is worth mentioning that, if you are very good at project management, you will have multiple investors.
The third type of real estate transaction is a “no money” transaction. Lease options are a great way to get properties for no money. This strategy depends on your ability to find motivated sellers. People will often want to get rid of a property to save their credit or cut their debt.
People also inherit properties that can become a burden. It is possible to obtain control without ownership of a property for a significant time, until you have the means or credit to finalize the property’s exchange.
Your financial strategy should also reflect in your location. For instance, if you are in a rural area you can consider building a new development. You can put the plan in writing and begin to shop for investors.
If you are in a suburban location, you may be looking for that easy “flip”. Consider looking at houses that only need minor cosmetic improvements.
If you try to flip a house that needs too much work you are going to frustrate yourself and exhaust your budget. Paint and carpet are easy to fix scenarios that add value to your investment.
You may be in a great location with exceptional property values. If so, you may find someone who is attempting to flip a property and has failed to sell it within the scheduled date. This is the perfect home to lease option because the “flipper” has exhausted their funds to make the house look great.
If you come in and offer to take over payments, that you will make directly to the owner, until the date you officially transfer ownership, you are going to have a good chance of walking away with a remodeled home for little to no money down.
One of the best things about real estate is it does not take money to make money. In fact, the more knowledge and experience you have the less of your actual money will be required.
When choosing a good location for your investment property, you should do your research. You are going to want to know the properties comparable to the one you are considering, that is properties that with similar characteristics that sold recently.
This will give you a solid understanding of the ceiling in your investment area. You never want to try to buy a home that needs work in an area that cannot support the value added to the home.
If you considering a home in a neighborhood where homes cost $120,000, you are not going to want to have an investment that will cost more than the high medium range. It is always better to have the small, nice house on the block vs. the biggest house.
The reason for this is that the smaller home’s value rises because of the value of the bigger home. In a similar fashion, the larger home’s value is lowered by the cost of comparable properties in the neighborhood.
These are some quick tips to help you get started in real estate. Always do your homework and you will prosper. Real estate is a great way to make a living or even some extra money. The best part about a real estate deal is everyone can walk away happy.
