Are you ready to diversify your investment portfolio? Maybe you have a passion for real estate you haven’t fully explored. No matter the case, here you are as a first-time real estate investor. You probably find yourself wondering where do I begin? Entering into a new industry can be intimidating. We have a few tips to help with a seamless transition into this new venture.
You don’t need to be an expert, but you do need to do your homework.
Not every investor has experience in the industry they invest in. In fact, it’s fairly common. It’s perfectly normal for someone interested in real estate or who enjoys looking at listings to become a real estate investor. That being said, make sure you do a little research.
As Tom Stewart explains, “You can invest in residential, commercial, or industrial property, and there are also real estate investment trusts (REITs), and other types of investments to consider. Take a look at them all to understand which is the right fit for your goals.” Part of knowing how you want to invest is knowing which sector or approach peaks your interest. Do you want to be a silent investor or are you looking into getting your hands dirty? By reading up on your options, you can make a more informed decision and in turn make smarter investments.
Learn from your predecessors.
While you may be new to the field, many are pros. You can’t be afraid to put yourself out there. Many people working in the industry are eager to help and act as a wealth of knowledge. Ask questions. Take Advice. Seasoned professionals can be an asset so you should use them as such. This doesn’t have to be over-involved or bothersome. As Eva Property described, “Most landlords love to show off their properties. Bear in memory everything they say, local investors have a much better grasp at what works in your area than any other online adviser.”
Don’t bite off more than you can chew.
It’s important to consider how much time and capital you actually have to invest in a property. Be realistic about how involved you want to be. You can take a backseat approach and invest through an investment trust. If your set on flipping your own property then be sure it’s an investment you see a return on. Also ensure that if your projected profit isn’t correct, it won’t make or break you. While you are only entering the industry, a fallback or exit strategy is an important part of planning for a long-term career.
As explained on the Cash Flow Diaries’ blog, “There’s no need to start out by buying a 50-apartment complex or expanded real estate investment. Your best bet is to start small. Get yourself a single condo or house, which allows you to get your feet wet and explore what it’s like to be a landlord.” Give yourself the leeway to experiment with this new chapter without overextending yourself. If you find that you absolutely love this investment opportunity, then expand. You don’t need to dive in head first to be successful.