You’ve heard a lot of stories how many people were able to make good money by getting into real estate investing, and the thought of building long-term wealth intrigues you. But the question is, how do you start? First, you need to determine if investing is a good fit for you. Answer these four questions to find out!
Have you done your homework?
You wouldn’t show up a hospital to operate on a patient without going through intense training first, and you shouldn’t buy an investment property without learning the industry ropes first. Though reality shows can make it seem like there’s not much to it – you just buy and rent or flip and sell – in real reality, it’s not that simple. You need to understand operating costs, tax implications, how to figure out if you’re going to make money on a property, what your funding options are and much more in order to become successful industry.
Are you financially ready?
Before you purchase anything, it’s important to figure out where you are in terms of finances. Do you have enough capital for the long term? If not, do you have a savings plan in place that will allow you to save up that capital? How’s your credit? Do you already have a tax attorney and a financial planner? If you answered no to any of these questions, take a step back and make sure all your financial ducks are in a row before you move forward.
Do you have realistic expectations?
The most successful investors typically spend years and years building their real estate portfolios. And, since the housing market is fluid and volatile just like the stock market, they are prepared to ride out the highs and lows. To make sure you’re set up for long-term success, you need to understand current market conditions, you’ve calculated what it’ll cost you to own and operate your properties and your financially prepared to absorb losses and manage profits intelligently. Getting a mentor who has been investing in your area for a number of years can be a great way to get a real picture of what your path may look like.
If you feel confident about diving into the world of real estate investing after critically thinking about the four questions outlined above, you’re ready!