How to become a real estate tycoon?
Buy a house. Sell it for more than you bought it for. Easy, right?
Okay, there’s a little more than that. But if you want to know how to do anything in life, every single step can be simplified into the phrase made popular by Nike – “Just Do It”. In this case, it’s about starting, and where do you start? Good news is that by reading this article, you have already started, so I’ve solved your problem already. You don’t need to worry about starting, you’re already on your way.
Education
The first step (as with any endeavor) is to educate yourself on real estate. What kind of investor do you want to be? Are you looking to be a sole proprietor? Or are you looking to invest as a syndication? Other styles of real estate investing can include simple partnerships between yourself and a few others. There’s also the option of buying stock like shares of property that multiple people can invest into. You could even invest in a real estate NFT with cryptocurrency. (LINK TO NFT ARTICLE) Whatever your plan moving forward is, there’s an option for you.
Just keep in mind that you don’t have to stick to one style of investing. Diversity breeds success. Sometimes, it helps to invest in partnerships or as part of a syndication. These can allow other (hopefully more experienced) people to make decisions while you watch. Yet another chance at education
So, you’ve educated yourself about real estate, learned from the successes and failures of the people before you. Next you have to have some capital.
Save Money
While educating yourself on real estate, you can start stockpiling money. The idea that you need millions or even hundreds of thousands of dollars to get started is completely false. Having a small nest egg is incredibly important, and you want to put money aside for your emergency savings first, but then begin pinching pennies where you can for your down payment.
The average down payment on a piece of property is 20%. A property for $50,000 would only need $10,000 to start. $10,000 in a year is roughly $27 per day. Even saving over two years would give you enough time to properly educate yourself by watching first hand how the market moves from month to month and year to year. You’ll know more, you’ll have funds in the bank and you’ll understand the markets. Now, you choose what housing market you want your investment property to be in.
You will have a new best friend, and your friend’s name is Google. A simple search will provide you with all the information you need, ranging from population and its growth, local job growth/salaries/wages, crime stats, etc.
Finding a Deal
Here it comes, the first truly scary part about real estate investing, making the first decision about a piece of property. You have to actually go through, look at the property and analyze whether or not this deal is the right one for you.
First things first, you have to crunch the numbers. Based on the local information that you have researched, is this the right property for you? Will the numbers add up in your favor? After monthly costs, and average rental prices, will you have money left over? If you want to become an investor, this is the most important part.
If you’re going to rent out the property you also want to look at the expenses that will occur every month, is there any way to improve them? Could you find more efficient bulbs? Better irrigation? Any renovations that could increase property value therefore increase the rental charge?
All of this is moot if there is not a strong rental demand in the area. When doing your research and asking yourself important questions, this one should always remain at the top of the list.
But ultimately, you need to be able to answer one important question, “As an investor, is this a property you want to invest in? You have to feel passionate about your investment before anyone else will.
Creating a Network
When it comes to buying property, there are multiple people involved. This process takes a few people to complete, so it’s smart to create a large network. Get to know people across the industry and make good friends. Some people you may want to find are:
Real Estate Agents
Insurance Agents
Lenders
Property Managers
Real Estate Attorneys
And the list goes on. Most likely, in one deal, you will interact with each of these people directly. These are people that are going to make your job so much easier because taking on multiple jobs in any industry is difficult. Now, coincidentally, because real estate deals with land, and land is….well…everywhere, it is not hard to find a referral. You can start with whoever sold you your house, property, the rental you live in, etc. Whoever is in charge should be able to give you at least one referral to someone in the industry. Start networking now to have a leg up when you buy your first property!
Make an Offer, then Close the Deal!
Once you are prepared, you know the property, you know your financials, you have to take the final step, MAKE THE OFFER! This is where fast decision making backed by all of your research will come in handy because if you take too long to make the offer, someone with slightly more gumption than you could already have found the property you were trying to acquire.
Did you know that it’s free to make an offer on a property? So if it’s free to make an offer, then why not? If they say no, you’re in the same position you were in before. But if they say yes, well then, you are on your way to becoming a real estate investor.
Real Estate Investor Extraordinaire
At this point, you should not rush yourself in moving forward. I know I just said to not hesitate when finding a good deal, but you are going to build an empire and no good empire is built in a day. There is no timeline for greatness, so take your time in educating yourself. Take the time to research the different markets and really create your network. You are building something that will continue to grow (in size and in profits!), and that growth will only be possible with a solid foundation, and that foundation is YOU.