Real estate is one of the tried-and-true ways to invest your money. Once you put in the hard work, the time, and the money, growing your money becomes simple and achievable when you understand the basics, economics, and risks to real estate investment. However, “simple” doesn’t mean easy. It will take time for you to reap the benefits of investing.
The predictions for real estate come far ahead in the process instead of having assurance early on, which is why many people are still afraid to take the risk of investing in real estate. However, we’re here to discuss some ways how you can start your investment journey today!
Ways to Kickstart Your Real Estate Investment Journey
1. Pre-plan before starting
To get you started, you have to understand that planning is the first and most important step you have to take when preparing for your investment, especially if it’s your first time.
There are different kinds of real estate investments, and if you don’t do the proper preparation, then all of it can seem overwhelming. Here are some ways you can prepare for that big investment.
Learn about the industry
It isn’t easy to dive into real estate investment if you don’t have any background knowledge about the industry. It’s easy to get lost and to feel confused without the proper guidance and expertise.
If you want to start making big decisions, learn about the industry by reading books, attending courses/classes, knowing the laws, and asking professionals. Building your knowledge about the industry before investing is always ideal; don’t go in blind.
Figure out what you are interested in buying
This is an integral part of the pre-planning process because there are many real estate investments to choose from, like single-family homes, multi-family homes, and commercial real estate. Each type offers opportunities for making money, including flipping, house hacking, and more.
Know what your financial situation is
Since each type of real estate has different risks and benefits, it’s essential to know just how far you’re willing to go for your investment. Can you budget for renovations? Can you afford to lose money even after purchasing the property? Figure out your financial situation so that you’re able to buy a better investment.
Real estate investor Sahil Mehta says that to determine the right property to invest in, you must choose a suitable option based on your current financial situation, risk appetite, and experience.
Identify your goal
In real estate investment, finding out your plan is crucial because it would determine the kind of risk you’re willing to take as well as the type of benefit you’re after. With this, you’ll figure out what kind of property suits your risk appetite the most.
2. Calculate the risks and benefits
Not every real estate investment can show a return right off the bat. Therefore, it would be best to learn how to calculate cash flow and the property’s potential. A property’s cash flow is the difference between the income and expenses of the property purchased. Expenses here include the mortgage and the operating expenses, savings for future improvements, remodeling, repairs, and more.
3. Manage your cash flow
When starting with real estate investment, there are four ways you can look into and work on to eventually achieve financial freedom:
Real Estate Appreciation
- This happens when a property’s value rises because of a change in the market. If you bought a property situated in a piece of land that’s becoming busier and more commercial, you might notice an increase in the property’s value.
Selling your property investment at the right time and when demand is high can give you an excellent return.
Cash Flow Income
- This focuses on buying a property like an apartment and turning it into a rental property that you can manage. This can give you a stream of cash from tenant rent. Other properties that can provide you with this type of income include storage units, offices, retail buildings, and the like.
Real Estate-Related Income
- This type of income is common for specialists in the industry, as brokers. They make money from commissions. If, later on, you find that you have a knack for real estate and decide you should pursue to become an agent or expert in the field, you can help other investors on their journey and earn from it.
Ancillary Real Estate Investment Income
- This type of income comes not directly from the property you purchased but rather from the different income-generating machines or avenues within the property, such as parking fees, vending machines, a laundromat within the apartment complex, etc.
4. Find help and build your network
Learning about the real estate business is tricky, especially for someone attempting to do things independently. Many real estate investors attribute a part of their success to others who have helped them. The help they receive might be from people unrelated to the industry, like friends or family members who invest in real estate or industry professionals like agents or brokers.
You will get a better chance of understanding the industry by embracing other people’s expertise and help. As you accept help from others, you slowly start to build a network of professionals who can provide you with vital support that would allow you to create opportunities.
There’s No Better Time to Invest Than Today
Getting started in your real estate investment journey is possible if you have the fundamentals down. Don’t be afraid to step out of your comfort zone and get a feel around the market. The preparation is long, but the results are worthwhile. If you’re looking for a way to attain financial freedom, put your back into learning the ins and outs of the industry and watch your savings climb and watch it grow exponentially!
Rose is a licensed real estate broker and the co-founder of RE/MAX Gold Philippines, a real estate company in the Philippines. Acting and real estate have always been her passions since childhood. She confidently helps close record-breaking deals for residential and commercial buyers while leading her team to success. Check out their website at remaxgold.ph.