Investing in stocks, bonds, bank certificates or other over-the-counter investments is easy. Just go to a bank or stock brokerage house, give them your money and you’re done. Real estate investing on the other hand is a little more complicated–but you will find that the returns on your real estate investments will be substantially higher than the institutional investments.
There are many types of investment real estate-some examples include:
- Raw land
- Commercial Industrial
- Commercial Retail
- Mobile Home & RV parks
- Duplexes and fourplexes
- Single-family homes
If you do not have any experience. I suggest starting with single-family homes. Single-family homes are plentiful and with the proper knowledge can be purchased with very little or no cash.
Some of the things you will need to get started include:
Time, energy, motivation, knowledge, a car, a cell phone, office supplies, a computer, a small recorder, maps, access to money, a system for determining property values, and a good team.
Your team should consist of a mentor, a real estate attorney, a CPA, a title company, an insurance agent, one or more realtors, bankers, mortgage brokers, investors, a maintenance contractor, grass cutters, handypeople, house cleaners, and carpet cleaners for a start.
To get started:
- Pick an area–choose some zip codes or mark a section on a map.
- Set your criteria… How many bedrooms, bathrooms, and parking areas. The size, age range, price range, and extras you want and don’t want such as pools and spas.
- Decide on a starting strategy or two. Locate properties that are for sale by the owner, from ads in papers, in foreclosure, or just empty homes. You might also try real estate owned by banks, Housing and Urban Development (HUD), Veteran’s Administration (VA), or you could attend commercial property auctions.
- Use your strategies to find some promising properties. Get into the habit of making daily contacts with realtors, REO bankers, wholesalers, auctions, and FSBO. Set a goal of making for example ten calls each day and talking to at least three sellers. This daily activity will move you toward your goal. Make owner contacts to find properties that have possibilities.
- Ask questions to identify motivated sellers and set up appointments to look at properties. At first, you need to put your feet inside several houses each week. How many houses you look at will depend on how successful you want to be. If you want to purchase one home this month you should plan to visit at least fifteen homes this week.
- Do research, determine the value, and prepare offers. Check with your realtor for current values. While visiting the properties make a list of all the needed repairs.
- Prepare to make offers. Get together maps, tax values, the MLS sheet, comps, and your Turbo-Bidder results. Be sure to offer an amount that will allow you to profit when you sell or rent the property. If presenting an offer to an individual homeowner prepare three offers-all cash, cash and terms, and all terms.
- Prepare contracts and place your bids for the auctions and/or present your offers to sellers. Negotiate with sellers for the best terms possible and get a signed contract to lock in the deal.
- After you have a contract-start preparing for the closing. Get all the money you will need together for the down payment and closing costs. Have your title company prepare the closing documents. Be sure to inspect the closing documents for errors and have them corrected before the day of the closing.
- Go to the closing, sign the papers, and take ownership. Give the address to your maintenance contractor so that he or she may complete the fix-up and start the marketing process to rent or sell the property.
Wow-that sounds complicated!
It is-but there is a much easier way to get started, have some early success and avoid beginner mistakes.
The easiest way to learn how to get started investing in real estate is by employing an experienced real estate mentor. There are two ways to acquire knowledge and those are learning from your own mistakes or learning from others’ mistakes.