Figuring out how to start real estate investing can be a tricky scenario. There are a lot of different people to learn from, several different strategies you can choose, and a host of competing opinions and ideas. With all the different options, it’s very easy to get overwhelmed and have no idea which route to take.
If you’re in this position, don’t worry. Thousands of investors have had the same experiences, and many of them have gone on to achieve their dreams and build sizable portfolios. Many have even become millionaires and created financial freedom for their families.
But when they looked back at the beginning of their journeys, they all realized there were a few key pieces of information they wish they’d have known from the start. Of course, there’s an infinite amount to know about real estate, but if you leverage the following five pieces of advice, real estate investing can be your ticket to a rewarding side hustle or new career.
Mistakes and failures are part of getting started
If you’re wondering how to start real estate investing, then you’re probably looking to avoid common beginner mistakes. However, as counterintuitive as it may seem, common beginner mistakes are essential to your growth as a real estate investor. Without them, you won’t learn the real estate industry’s most important lessons, and you’ll set yourself up for failure later on.
Of course, this doesn’t mean you should make rash decisions. Any time you’re investing time or money, you should think carefully about how you’re doing it. However, you shouldn’t let your fear of making mistakes keep you from taking action. That’s one of the only beginner mistakes that will actually hurt your progress as a real estate professional.
Whether you’re afraid of saying the wrong thing to a motivated seller, overpaying for a deal, or underselling to a cash buyer, you’re almost guaranteed to make all of these mistakes at some point. Instead of desperately trying to avoid them, accept that they’re inevitable and learn the lessons that they can teach you.
Not everyone else is your competition
When you start looking into real estate investing, you may hear people talk about “beating the competition.” While it’s true that you are competing against other investors to land deals, you shouldn’t consider anyone in your market an opponent.
The reason is simple: some of the best deals you’ll ever land will come from joint venturing, which is the process of working with another investor to land and assign a deal to a cash buyer. In other cases, the person you lost a deal to one day may be the person you sell a deal to the next week.
That’s why it’s important to keep positive relationships with everyone in your local real estate market. In the long term, doing so will create meaningful friendships and open up profitable opportunities.
In the same vein, you should network with all of the real estate professionals you can. Working with real estate agents and home services professionals will make lead generation much easier because they can connect you with people who are ready to sell.
Landing deals is easy, but it takes a lot of work
Some things are easy and time intensive; real estate investing is the epitome of that statement. The individual steps are very simple: find motivated sellers, market to them, make offers, negotiate, and then close or assign the contract to a cash buyer. However, when you put each of these steps together, you can expect to do a lot of work before you land a deal.
The main reason is that you’re going to contact a lot of people who aren’t interested in your offer. Even if you generate 1,000 leads, only a few of them will be willing to sell for below-market value.
Of course, there are ways to make the process more efficient. You can narrow your lists down to the most motivated sellers, launch multi-step marketing campaigns, or drive for dollars. But you still need to be prepared to consistently do a lot of work if you want to regularly land quality deals.
Comps are your best friends
If you want to avoid losing money on your investments, comping and calculating property values are two other areas that will demand a lot of your time and effort. Comping is the process of finding recently sold properties that are similar to your deal and then using the sales prices to calculate how much your deal will be worth once you repair it.
Comping is an essential skill set no matter what type of real estate investing you want to pursue. The best thing you can do as a new investor is learn the process and get good at it. Understand what factors influence property values and what makes a relevant comp.
Comping is essential in real estate. Luckily, there are tools that make it easy
You’ll develop these skills as you invest, so don’t let your lack of knowledge keep you from getting started. However, you should be intentional about learning this skill set. Start by investing in tools that make the process easier, like a comping tool backed with data from the multiple listings service (MLS).
Then use it to develop an understanding of property values and the factors that influence them. If you’re serious about developing this skill from the start, you’re going to have a much easier time making money than if you try to learn it later.
Real estate marketing doesn’t have to be expensive
If you want to launch a long career in real estate, you might think that you need to invest thousands of dollars in marketing every month because that’s how professionals operate. However, this isn’t a good idea if you’re just getting started.
Countless investors go broke every year because they try to keep up with the marketing budgets of well-established real estate investment trusts, brokerages, and wholesaling businesses. But just because everyone else seems to be launching large-scale mailing campaigns and hiring full calling teams, that doesn’t mean you have to follow in their footsteps.
If you don’t have a large marketing budget, start by placing bandit signs in high-traffic areas. You can also cold call prospects or drive for dollars and knock on doors. These low-cost options are highly effective and can easily give your real estate business the boost it needs to get off the ground.
Real estate investing can be a complicated career. There are several essential skills you’ll need to master and a lot of information to learn; doing all of it will take time and hard work. There aren’t many shortcuts to long-term success in this industry.
However, the good news is if you’re wondering how to start real estate investing, the first steps are very simple. All you have to do is understand the basic premise that the industry is built upon and then give it a try. Real estate is beginner-friendly, and as long as you’re willing to take calculated risks and make mistakes, it can be a great path to a lucrative career.