Best Practices for Investing in Real Estate
I had a conversation with my cousin this morning who has been extremely successful in the movie industry. He’s tired though and the hours are hard, especially as a husband and father of three kids. He makes great money, but would love to cut back and have MORE time with his family. He’s interested in real estate, but unsure how to get started.
This is a common theme I hear a lot…HOW DO I GET STARTED? There is so much to learn.
Many would-be investors know that real estate is a reliable, relatively low-risk way to build wealth but they aren’t sure what steps to start the process.
Some new investors will often start small and build capital, then they’ll invest in more significant and passive investments down the road.
At Taylored Investments, we know some investors who started real estate by investing in short-term or vacation rental properties (some of our family has gone this route). By starting with a vacation rental or Airbnb in a desirable area, you can enjoy the property with your family or friends while building your capital and gaining valuable real estate experience!
If freedom is a top priority, you may at some point, likely move from active investment projects to more passive investments. For example, vacation rentals often lead to small multifamily properties and ultimately to completely passive commercial real estate syndications.
This is a great strategy, but there are a few things to do before getting started in real estate investing. Keep reading for a quick guide on how to take your first steps toward real estate investing success.
Identify Your Strengths
The first step is to figure out your strengths. It might sound cliche, understanding your strengths and weaknesses is absolutely crucial to your success. I shared this with my cousin today as there are SO many ways to make money in real estate, but not EVERY avenue is for EVERYONE!
Where do you perform well? Where are you average? Where do you really excel?
As you probably know, when you are able to focus our efforts on your strongest areas, you perform better and you are ultimately more fulfilled. This holds true for real estate investing.
Some people are extremely creative and like working with their hands; maybe flipping houses is a good place to start. Others are excellent with people and selling; so maybe being a realtor is a good fit. Maybe you have a great job and you make good money each year, but you want to diversify your investments; passively investing in a syndication might be the best fit for you.
Identifying YOUR OWN STRENGTHS is so important.
Design A Plan
Once you’ve identified your strengths and passions, it’s time to design a plan to bring your real estate investment dreams to reality.
Let’s face it, most of us want to design a life around our personal desires and goals. I think real estate investing is one of the best ways to get there!
When designing a plan, you must first do your due diligence. A real estate investment plan is not to be taken lightly. You have to research what options are available to you, research markets, determine which type of investment best fits your lifestyle and personal investment goals. You can’t rely on others to do this for you!
Here’s a tip, get a feel on what other real estate investors are doing (maybe join a local Real Estate Investor Assocation or attend a conference or join a mastermind). There are so many experienced investors out there that you can learn from! By following other investors, you’ll understand pretty quickly what is working and what’s not. Also, be sure to stay up to speed on the current real estate market.
While your plan may involve some trial and error, you have to establish a viable plan early on before you even need one.
Take Action
Once you’ve put in the work to create a vision for your life and real estate investment journey, it’s time to start taking action.
While this step seems obvious, it can also be the most difficult one to take. It’s not uncommon to get so wrapped up in the research and the due diligence of real estate investing that you can quickly get stuck. You’re doing all the right things but not actually taking any steps forward.
One way to combat this ineffective behavior is to set a timeline. Starting with research, map out each phase along the way that needs to be completed. Once you have every stage mapped out, include specific action steps that need to take place. Then, most importantly, ADD DATES to your action steps. When deciding the time allotment for each task, a good rule of thumb is to create a time frame that’s realistic but also challenges you. Don’t make your action plan so comfortable that it doesn’t get accomplished within a reasonable amount of time.
Action is intended to get you from point A to point B. If you’re at point A now, then point B is the lifestyle you’re dreaming of. But you have to TAKE ACTION in order to start progressing towards your real estate investing goals.
Push Yourself Forward
Investing in real estate can be overwhelming, even intimidating, especially when you’re new. However, please remember that progress doesn’t have to equal perfection.
To move forward, you have to trust your strengths and your instincts. As time goes on, you’ll feel more comfortable in this new role as a real estate investor…but until then, it’s up to YOU to continue every day.
Remember, most people don’t knock it out of the park with their first real estate investment! The first deal we did took a LOT of time, work, and money. We didn’t see immediate results, but I’m so glad we learned what we did and continued forward.
Your first deals will probably be a work in progress. You will quickly figure out what will work and what doesn’t. But as your expertise grows, you’ll know how to adjust your deals and your vision accordingly.
By creating a vision, starting small, and taking action, you can develop investments that you can enjoy, while living a purposeful, intentional life building your wealth. Who doesn’t want that?