Real estate expert, Chris Clothier, provides helpful tips for getting started in real estate investing and how to prepare yourself financially and mentally before jumping all in.
Anytime you start something new, especially when money is involved, it can be as daunting as it is exciting. When it comes to real estate investing, getting started can be very overwhelming.
Learning about real estate investing in and of itself is a lot to take on, and in addition to the basics, you have countless laws you need to know, from taxes to residents to properties to insurance. It’s easy to be overwhelmed and terrified of making a mistake, losing money, or failing altogether.
While these fears are natural, instead of worrying about what might go wrong when starting out, try and focus on planning for real estate investment success.
Tips for Succeeding as a New Real Estate Investor:
Go Over Your Finances
First things first, as a new real estate investor, you need to measure your ability to invest. For instance, are you able to take on another mortgage payment? Or maybe you have enough savings to make an all cash offer. Talk to banks and lenders, look into every possible financing option and be realistic about your capacity to invest.
Review the Numbers
Once you’ve organized your personal finances, you should do some projections. Practice calculating positive cash flow potential, including all the possible costs and eventualities that may impact your new income stream. A few examples of these future expenditures might be insurance costs, maintenance, taxes, mortgage, etc. If you’re uncertain where to get started, there are a lot of online calculators and resources that can help. We also have a helpful article that addresses some additional costs to consider when investing in real estate.
Explore Multiple Investments Opportunities
As you familiarize yourself with investing, you may discover that certain types of properties and investments suit you better. Perhaps you prefer commercial real estate over single-family houses. You may want to flip properties and take everything on yourself, or maybe you prefer REITs or partnerships. Or it could be that turnkey real estate investment is more your style, like that offered by Memphis Invest. But be sure to explore your options! There are plenty of options many investors aren’t aware of and the industry is always evolving and emerging. Do your due diligence and look for the industry best no matter what investing format you choose.
Take One Step at a Time
Don’t stress yourself out and think you can’t begin investing unless you have only dream properties in your portfolio. Many times investors have to work up to their ideal investing scenario, which can take lots of time and may never reach ultimate perfection. Start small and don’t take on more than you can handle. Learn to safely invest and choose good partners every step of the way. This will ensure that you’re looking at feasible properties that match your current investing situation. Grow in knowledge and experience little by little. If you use high quality partners and vendors, you may pay a little more for better service, but cutting corners and making mistakes will cost you in the long run!
Build Up Your Network
When you’re a real estate investor, knowing and networking with other investors can be a huge resource. It’s important to construct a network of like-minded professionals. You don’t have to go at it alone, and having a network that understands you and your business is vital to investing. Be sure to also educate yourself as much as possible with blogs, newsletters, books and podcasts. Take time to locate other investors or groups in your area that you can rely on for support. Having a local resource that you can trust to provide guidance, advice and experience in times of uncertainty can really make a difference.
Aside from support, making connections with other investors could possibly provide new investment opportunities for you in the future as well.
Succeeding in real estate investing is an attainable goal, but it’s done best when you prepare yourself financially and mentally before jumping all in. People do it everyday and you can too.
Our portfolio advisors at Memphis Invest are ready to discuss your investing goals, and we’d be happy to see if turnkey real estate is the best path for you.
Chris Clothier manages the development and implementation of sales and marketing for Memphis Invest. He helps potential investors define their purpose for investing in real estate and educates peer companies on best practices in the emerging turnkey real estate industry. He is a contributing columnist for BiggerPockets and an experienced speaker who regularly addresses audiences of real estate investors and business professionals.