How to Get Started In Real Estate Investing

how to get started in real estate investing

The sub-prime crisis of 2008 dealt a fatal blow to many homeowners and institutions but there is a silver lining.

Over-inflated property prices have settled, creating new opportunities for future home buyers. The market is flooded with foreclosed homes, vacant properties, and unfinished projects.

There will always be value in real estate.

In this article you will learn:

  • How to get started in real estate investing
  • Types of properties and their return on investment
  • Ongoing pros and cons of real estate investing

Roll up your sleeves. We’ve got work to do!

The Basics of How to Get Started in Real Estate Investing

Investment properties often outperform stock investments with an average 9.5% return on residential property versus the average 8.6% one may find through trading stocks, bonds, and funds.

You’re welcome to start with a small property to test the waters. Remember it requires research and allocation of resources regardless of what area you’d like to explore with real estate.

  1. Determine your budget
  2. Explore the types of properties (see below)
  3. Research and practice due diligence with offers
  4. Watch trends, read reports, and follow authority figures in the markets
  5. Decide which is the best option and make a move
  6. Prepare for the worst but hope for the best

Properties fall into two categories: commercial or residential. Either choice takes time and resources to find investors or buyers.

how to find motivated sellers
Learn How To Find Motivated Sellers

Your motivation will be one aspect — finding capital can be sourced via:

Once capital is secured, it’s a matter of creating a funnel to drive interested parties and leads to investment properties.

At the heart of this process is developing a great real estate website

Web sites create a variety of benefits:

  • Properties sites can be tweaked and optimized to appear higher in listings
  • A professional presence can attract investors
  • Create an inbound funnel for real estate investors to sell leads

After having bought (or invested) in a property you are at liberty to increase the price of the property to generate a profit. Other alternatives include repairing and flipping or subletting (such as with AirBnB).

Consider stabilizing the rent until the mortgage is paid in full which provides extra, profitable opportunities.

Sound interesting?

Here are the types of properties you should know more about when learning how to get started in real estate investing:

Basic Rentals

Your typical property found on the market. These properties may include apartments, houses, and commercial real estate.

You make a bid, close the deal, and then take on the responsibility for its maintenance and upkeep. You’ll also be responsible for attracting tenants which can be done through Web-based strategies, local listings, advertising, or working with a broker.

Research is key: consider the location of the property, proximity to desired staples of life, amenities, and trends in the market.

Adjust the rent based on a mortgage calculator along with factoring upgrades and repairs along with local job earning averages.

Real Estate Investment Trusts (REITS)

REITS are when investment companies own many pieces of property and offer a part to investors. In a sense — it’s stock investing but with real estate — through mutual or exchange funds.

This type of property investment lowers the financial risk because of the diversification of the portfolio.

Swings in the market may increase profitability but they’re also susceptible to large crashes such as the one experienced in 2008.

Real Estate Investment Groups

This form of real estate investing is like REITS but property ownership is a small group of individuals instead of a large investment company.

The management of the property is done through the group. This reduces the overhead you’d find in a basic rental setup.

The downside is the difficulty in gauging the commitment others may have in these investment properties.

Crowdfunding & Sharing Economy

The explosive growth of the sharing economy has changed real estate investing. The sharing economy for real estate is well-known through services like AirBnB. It gives a home/apartment owner the ability to rent a property on a micro scale without setbacks found with long-term tenants.

Crowdfunding is another opportunity like REITS and investment groups. It uses crowdfunding platforms and a very wide pool of investors to buy, manage, and distribute the wealth of a property.

On Going Demands of Real Estate Investing

It’s common to gloss over the ongoing demands when asking how to get started in real estate investing. Real estate requires upkeep.

There are always problematic issues with real estate:

  • Emergency repairs
  • Maintenance
  • Tenant relationship
  • Legal liabilities

Those jumping into real estate investing for long-term gains are seeking to keep the property as part of their portfolio. Yet, there will be repairs and maintenance which should be factored into the investment.

Another aspect is the tenant relationship. It can be difficult to judge character. Be aware of tenant rights and be cautious of who you do business with. 

Legal liabilities should be an ongoing concern. Failure to do proper maintenance and repairs could harm the tenant which gives them grounds for legal dispute.

Those inexperienced with property management should seek professional guidance and services.

The Reality of Real Estate

Investing in real estate creates a well-rounded, diversified portfolio if it’s paired with investments in stocks, bonds, and funds.

The investment opportunities are lucrative though a drawback could be the time and resources needed to start.

Despite this — the returns are well worth the time and resources.

Now you know the basics of how to get started in real estate investing.

Get started now

Register and explore our free training to help build a hungry list of potential buyers before you make the first investment. Go in knowing you’re already on track for a large return on your investment.

Financing your deals with private money lenders

Financing your deals is the most important thing in developing your real estate investing business, and finding a private money lender and hard money lenders should be something you look for daily.

how to find private money lendersWith traditional financing being very tight for investors it’s time to search out other alternatives. The best alternative is finding a private lender and hard money lenders. Despite the economy there is still a tremendous amount of money out there and because of the economy a lot of this money is sitting on the sidelines. A lot of investors have taken their money out of the stock market and are waiting for things to improve. Investing their money in real estate is a terrific alternative. Most folks want to get involved in real estate investing but don’t have the time or knowledge to get started, this is where the rehabber / real estate investor can step in and help. Real estate investors can provide these private lenders with secure investments by having them fund properties that were secured for 50 to 60 cents on the dollar. This becomes a true win – win situation, real estate investors can fund more deals and a private money lender can earn a nice return on their money. Private money lenders and hard money real estate funding can provide real estate investors more flexibility than banks and other financial institutions.

Anyone that buys house’s repairs them and resells them for a profit can benefit from working with private money lenders.

If this describes you, then you will find this information invaluable and it could help you buy more houses and make more profit. Hard money and private money lender may be a term which you are familiar with, but just in case, let’s first look at what it usually refers to; funding provided by a private individual or group for the purpose of purchasing and repairing a house. This type of lending matches perfectly for all types of real estate investors. Hard money and private money lenders make loans for other purposes, but the majority of the loans that they make today are to people like you and me.

[pullquote align=”normal” cite=”BiggerPockets.com“]Definition: A private money lender is a non-institutional (non-bank) individual or company that loans money, generally secured by a note and deed of trust, for the purpose of funding a real estate transaction. Private money lenders are generally considered more relationship-based than hard money lenders.[/pullquote]

In order to protect as much of your capital as possible and keep your cash flow liquid, you need money for both buying and repairing the home. Since the guidelines that banks follow are different from those of the hard money real estate lender, you can get all of the money that you need from one place and at one time. You may even be able to add in the closing costs.

Private money lenders will want to know that their money is protected.

There are a few things you must do to make a deal to a private lender enticing. You need to buy low, 60-70% of ARV (after repair value), you need to provide them with a promissory note, a mortgage deed of trust, and add them as additionally insured on the insurance policy for the property. Make sure you structure your deals interest only and be sure they get a guaranteed minimum return on their investment. You don’t want to have a lender fund your deal for $100k and then turn around and sell a couple weeks later, this will not be worth the while for the private lender and they may look elsewhere to lend their cold hard cash.

Now your probably curious how to find these private money lenders. The first thing you need to do is make a list of 10 people that you can speak to. These could be friends, family, co-workers, etc. You want to come across confident and present it as an opportunity. Be sure to know what your program and what your willing to pay. And remember you can always say ‘NO’. If a private money lender is looking to take a % of the profit or wants unreasonable terms – move on, their is plenty of other folks out their who will jump at the opportunity. Finally, be prepared – have a private lending packet or something you can give to your prospects that adds credibility.

 Money Talks

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3 things you need to make money investing in real estate

The real estate market is ripe for the picking and its never been easier to make money investing in real estate!

These are the 3 things you need to make money investing in real estate.   I like to call them the low hanging fruit.  I know the best places to get all this ripe and juicy low hanging real estate fruit.  There is no better time than now to make serious money in real estate.   If you ever had any interest in real estate then now is the time to get started.  If you are currently in real estate then now is time to push and push harder then you ever had before.  It’s all their for the taking.

Think about it!  It has never been easier to flip your properties for top dollar and it will continue to get easier as the market improves.  It’s almost the perfect scenario because there are still PLENTY of distressed properties out there.   There are short sales, vacant properties, REO’s, probates and more.  So… are you cashing in yet?

If you are than you know that the 3 things to making money investing in real estate in this market or any real estate market is having lots of…

Why do you need these things to make money investing in real estate?  Because you need properties to deals.  To do deals fast and flip them quickly you need a list of cash buying investors.  If you want to close on properties fast without using any of your own money or credit then you need access to capital and if you want to close on multiple deals a month then you need even more capital.

The bad news is that finding these leads, buyers and lenders can be time consuming and difficult.  The competition can be fierce and you need a proven, simple way to access these leads quickly.   The good news is I got you covered on All Three!

I’m getting you exclusive access to a massive pool of seller leads, cash buyers and private lenders.  Being able to leverage your time is essential in real estate.  You need proven systems to help you business grow.  This ultimate tri-fecta of real estate systems and it’s right here for the taking.   Accessing motivated sellers, private lenders and cash buyers can change your business on a dime.  These tools and systems can get you out of the rat race and put you on a path to success and FREEDOM.

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