Investing in real estate can be an effective way to diversify one’s portfolio. It offers a lower correlation to other major asset classes and can provide stable cash flow.
However, before you start looking for properties, it’s important to be honest with yourself about your financial capabilities. This means setting SMART goals.
Know Your Goals
Regardless of what real estate investing strategy an investor chooses, they must have clear goals in place to ensure they are progressing toward the desired financial outcomes. For beginners, these should include learning as much as possible and establishing a portfolio of properties over time.
It’s also important to think about why an investor wants to get involved with real estate. This can help them to identify the stepping stones needed to reach their goal, whether that’s raking in a certain amount of cash flow or having a specific net worth by a particular age.
For beginners, these goals should also take into account their ability to manage the property’s expenses, such as mortgage interest, repairs, and marketing costs. Having these numbers in mind can help investors avoid going over budget and stay on track. It’s also important to note that real estate is a people business, so it can be beneficial for beginners to network and build connections.
Create a Business Plan
Once you’ve determined your goals, it’s important to construct a business plan for your real estate investing company. This step will help you boost legitimacy, secure a loan and ensure that all the relevant details are documented.
A good business plan will have two distinct sections, the operations and the long-term goals. The operations section should document the everyday short-term processes you will use to meet your business goals, such as finding properties to buy, marketing completed renovations and managing ongoing maintenance.
The long-term goals will provide the benchmarks you need to measure your success. They may include a date when you hope to flip your 25th property or when you expect to reach a certain revenue milestone. It’s also a good idea to outline the vendors you will rely on in this section, including real estate attorneys and agents as well as contractors, plumbers and property managers. This will save you time and money in the long run.
Find a Mentor
The right mentor can elevate your real estate investing to a whole new level. But finding a good one can be tough.
The key to finding a mentor in any field is to be proactive. Start by identifying your core investment goals and find someone who has successfully accomplished those goals. Make sure their level of success matches yours, and that you’re comfortable with the risk they have taken to achieve it.
There are a number of ways to find a mentor in real estate, including networking events and online. You can also join a real estate investor mastermind group, or attend free workshops. Announcing your intentions on social media and forums (like BiggerPockets) can also help you connect with potential mentors. The best way to find a real estate investing mentor may be to approach them directly, but you must have something valuable to offer in return. They’re busy people with thriving real estate investing businesses; you must give them a reason to take time out of their day to help you.
Attend Networking Events
Real estate investing is a business of people, and it is important to attend networking events and meet local investors. Networking events allow you to make connections with fellow investors, find a mentor, and learn about new strategies.
It is also a great opportunity to get the word out about your business. When you attend a networking event, be sure to bring plenty of business cards so that you can exchange them with other attendees. Make it a point to write something on each card so that you will remember who they are.
You can also join local networking clubs that offer a variety of benefits for members, including access to property owners and contractors. Additionally, Asset Based Lending hosts several Flips and Funding networking events throughout the year where you can meet with hard money lenders and other professionals in the industry.
