How To Start In Real Estate Investing

You might have seen the late-night television infomercials purporting riches through real estate investing. You might have even bought a course or two. Can you really get rich through real estate investing? Is real estate investing as easy as they make it sound on television?

Like any worthwhile profession, real estate investing requires knowledge, patience, hard work, and a bit of luck. While it is absolutely possible to make a lot of money in a short amount of time, it is very rare. Rarer still is the killing made by the novice investor. If you’re realistic about your expectations as an investor, you might be able to make a good living out of real estate investing. What are some considerations to keep in mind when getting started?

There are many facets of real estate investing that you can pursue. You can invest in apartment complexes, commercial properties, strip malls, mobile homes, and just about anything else that people can safely occupy. For the new investor, single family homes are one of the best ways to get started. Single family homes have two sets of potential buyers; namely, owner-occupants and other investors. An apartment building can’t boast that same benefit.

Once you decide to invest in single family houses, there are different strategies you can pursue. Be careful, however. The new investor often has high hopes and dreams. The promise of big bucks will cloud judgment and cause a novice to take on too much too soon. Trying to do too much at once will yield little to no results, leading to discouragement and eventually quitting the real estate investing game all together.

The first strategy that most new investors will take on is the buy and hold strategy. Using this strategy, you purchase a house with the intention of renting it to a tenant. The key to this strategy is to ensure that your purchase and rental of the home yield a decent profit. For example, if the rental values of houses in your area are about $1000 per month and you pay $900 per month in mortgage fees, the $100 difference per month might not be enough for you to be successful. You would need to multiply this strategy many times over to make a decent profit. The risk of losing money on this tiny margin is too great for the novice investor to take on. If you get a good margin, this is an excellent long-term wealth builder. Keep in mind, however, that you will need to manage and maintain the properties, essentially being the “landlord.”

Another strategy is to buy low and sell high. This is an excellent strategy if you’re the handyman type. With this strategy, you find a property that is below market value and needs fixing up. If the cost of acquiring the property and performing the repairs is a good percentage below the actual value of the home, you can sell it for a handsome profit. Just two or three of these types of deals can make your year a successful one.