How to Get Into Real Estate Investment as an Entrepreneur
Investing in real estate is one of the best ways that entrepreneurs can increase their financial success. Though the business is risky, the returns on real estate investments have the potential to passively generate wealth. Here are a few tips for getting started.
Establish Real Estate Connections
First off, reach out to people who can help steer you in the right direction. Instead of shucking out hundreds of dollars on seminars, web courses, and personal coaches that guarantee success, talk to experts in your area- in person. Seek out experienced and highly-recommended realtors, financiers, contractors, and any other real estate specialists whose advice may be beneficial, then work on developing connections with them. Having positive relationships with seasoned, knowledgeable professionals can significantly improve the outcome of your real estate investments in the long run.
Start in an Area You Know
When you are just starting out, it is advisable to begin in an area that is familiar to you, such as the city in which you grew up or went to college. You likely have at least a general idea of the market there. You probably know the common age bracket, job market, and average income and level of debt (for instance, a place filled with younger adults working high-paying, degree-requiring jobs may have a lot of student loan debt). You can use this knowledge to your advantage. Knowing your market is key to being successful in any business venture, and real estate investments are no different.
Examine City Growth
When making a decision about where to purchase your first investment property, it is also vitally important to look at how a prospect city has changed over time, as well as how it is projected to grow- or decline- in the future. An expanding city with a thriving economy ensures that your property will turn a profit down the road. Some things to note and consider include nearby comps, the average length of time properties remain vacant, and the amount of new construction in the area.
Be Realistic About Cost
The best way to profit substantially on real estate investments involves adding value to a property. Though it can be especially risky, flipping properties is an excellent way to do this. Start out by examining wholesale properties that won’t require much money upfront, but keep in mind that repairs and renovations will get expensive quickly. Shop around for the best construction rates, and, if you’re crafty, do what you can yourself.