Investments: How to Begin Real Estate Investing

With the money you have saved, investing should be your next step. So which would it be? Where should you begin your investment journey? If you plan to invest your money in something that generates a lot of income, real estate investing could be a great place to start. This is a veritably simple, safe way to earn money and with which you’ll see a considerable profit margin.

Investing in real estate can be quite simple if you understand how to buy properties without going bankrupt, earn money through these properties and have some to re-invest. Keep in mind that drastic mistakes can result in drastic consequences for you as an investor.

Real Estate Investing

TYPES OF REAL ESTATE INVESTMENT

  • Residential Properties

It is the most classic way of investing in the real estate market which involves buying places to live, whether houses or apartments.

One of the advantages of this type of investment is that the demand for residential properties in a stable economic situation at the national level will increase since the population continues to grow.

  • Commercial Properties

The acquisition of commercial premises and offices is one of the most dynamic segments. It can give good profits in the short term, generate higher cash flow production compared to other real estate investments.

Commercial property investors must have the appropriate strategies, for example,  good networking, timely advice and an economic expectation. In addition, resources are needed to invest in commercial properties.

  • Industrial Properties

One of the positive things about this investment is that it can be used for various functions,, either as a warehouse, as an office, to produce goods or services. It can also be segmented and the subspaces can be leased.

Follow this 11-step strategy for investing in real estate as a beginner.

Real Estate Investing

Step 1: Build Up Your Credit Score

You need a good credit score to enable you to secure lenders who will be willing to lend you the money to begin investing in real estate and to determine what sort of loan they are going to give you. The higher your credit score, the lower the interest rate you pay and with that, the more money you get into your pocket every month. Learn how to build up your credit score and begin doing that.

Money to Purchase Real Estate

Step 2: Save Money Or Increase Your Income

As tough as that sounds, you cannot really begin investing in real estate, without putting down a lump sum of money, you would be unable to lease or purchase a property. Read our opening statement again (With the money you have saved…). Increase your income as much as you can. Without credit, no savings or a job, real estate investment is near impossible. So save money, make a 5-20% down payment, increase your income, and keep your credit score up.

Step 3: Show Your Income on a Tax Return

Lenders (Private Companies or a Bank) want to see a consistent and stable source of income before they make a decision to give you a loan. This is to avoid high-risk borrowers that will be unable to keep up with paying the loan back after the first few months. In order to do this, you will need to show the past 1 – 2 years of your bank statement depending on whether you are a salaried employer or self employed.

Step 4: Get Pre Qualified with many lenders

The advantage of having multiple banks approve you for a loan is to have many options in case the lender drops off from your lending you the money. This also allows you to take up the lender with the lowest interest rates. Talk about not keeping your eggs in one basket.

Properties for Real Estate

Step 5: Do Your Research

Do proper research and see everything that you could possibly buy. If there are areas that are highly priced in the market, you can purchase properties within a distance of a 5-15 minutes drive from those priced up areas. In order to find out these promising areas, you have to be really good and observant of the vicinity. Look at areas where new establishments are springing up, it could be a hospital, a mall, or complexes, just some activity to show that the area will be bubbling soon. This is to prove that prices are increasing. Then you can buy properties within that vicinity if it fits your budget. The more houses you look at, the more properties you have to compare with another. This will also help you to decide on a good deal when you find it. Without doing this research, you won’t know when you’ll see the exact properties that you would love to buy.

Step 6: Make Offers on Places you think are a great deal

Make offers on places you like that fit your budget. Make as many offers as you would like. Make low offers on some of the properties, you never know the ones that would stick. Do not get caught up in the emotional roller coaster of competing for multiple offers to the point where you pay for something you don’t like or overpay for a mediocre property. It’s not worth it. However, also balance it by being willing to pay a few more thousand dollars for a property you know will appreciate greatly in a couple of years. Don’t be penny wise and pound foolish and miss out on a great property because of a few thousand dollars.

Step 7: Do an Inspection of the property

Once you make an offer on a property and it is accepted, carry out inspections on the property. Get a professional to evaluate how much it would cost to carry out repairs on the property and elevate the property to modern standards. Getting this valuation done, would also help you get a bargain on the price of the property.

Research your real estate before paying

Step 8: Carry out background checks on the property

If you live in Africa or in countries where communal lands are a thing, you may want to visit the Lands and Properties Registry or its equivalent in your State to make sure that the land titles are genuine, and that you are not purchasing a property that is a subject of dispute in court. This is a very important factor because you do not want to be caught up in years of court battles, trust me.

Buying Real Estate

Step 9: Close the Deal on the Property

The last step is to actually close the deal on the property you have purchased. In the process of buying the property, be sure to supply your lenders or the bank with whatever documents they want to see from you.

Step 10: Begin Renovations

Start Renovations on the property you have purchased. Ask around from friends and family for contractors who have done some good work on their properties. You can also look on Yelp or Upwork for contractors or workmen who can carry out the renovations.

Step 11: Find a Tenant

Once the renovations are done, find a tenant to occupy the property. You can use word of mouth to find a tenant. Another way is to also put up an advert on craigslist. Once this is done, congratulations!! You are now a real estate in investor and you are also on your way to making bank in a couple of years. Haha!!

Real Estate Investing

Conclusion

You’ve read it all. The best time to start is now.

Read More: These Habits Are Destroying Your Productivity. Check Them Out!

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